This paper creates a model of how management consultants aid clients in their cost reduction programs. It shows the impact of four distinct types of consultants. Brains consultants increase the number of potential options and improve the pool of possible cost reduction techniques. Procedure...

Efficient contracting involves reducing the losses in wealth due to bargaining impasses, time and effort spent in negotiating, delays in implementing profitable projects, and second-best agreements. Properties of accounting systems play a significant role when bargainers haggle over...

Carrizosa and Ryan (2017) explore the use of private information covenants, which contractually oblige borrowers to provide their lenders with private information: projected or intra-quarter financial statements. The authors offer evidence that creditors acquire private information about...

We examine the cost-effectiveness, from the shareholders' perspective, of the accounting standards issued by the FASB during 1973-2009. In particular, we evaluate (i) the stock market reactions of firms affected by the standards surrounding events that changed the probability of issuance of...

Over the past 12 years, financial analysts across the world have been optimistically wrong with their 12-month earnings forecasts by 25.3%. This study may be the first of its kind to assess analyst earnings forecast accuracy at all listed companies across the globe, covering 70 countries. A...

Using a sample of firms experiencing exogenous CEO departures, we investigate whether firms with overconfident CEOs avoid more tax. We find robust evidence of a positive relation between proxies for corporate tax avoidance and CEO overconfidence. Because our empirical tests use a panel of...

We explore the theoretical relation between earnings and market returns as well as the properties of earnings frequency distributions under the assumption that managers use unbiased accounting information to sequentially decide on real options their firms have and report generated earnings...

Risk assessment is a critical audit task, as auditors' accuracy therein affects audit effectiveness and financial reporting quality, as well as audit efficiency. We propose that risk assessment accuracy for client risks that have changed from the prior year is affected by the manner in which...

Recent corporate governance scandals have been attributed to lack of board independence and the influence CEOs have over their boards. However, CEOs can also affect board efficacy without compromising independence by choosing directors strategically. We offer a theoretical framework using a...

Recent corporate governance failures have prompted regulators and legislators to introduce new rules and legislation aimed at improving corporate governance. In this paper, I highlight a potential unintended consequence of such actions by showing that increasing oversight may sometimes be the...