While tax avoidance strategies result in greater after-tax cash flows, they can involve uncertain future outcomes, which can impose significant costs on firms. Thus, the extent to which tax avoidance increases firm risk is unclear. This paper re-examines the relation between tax avoidance and...

While prior research has extensively investigated the association between firm-level attributes and CEO's characteristics, there is little evidence on whether the managerial ability is associated with cash holdings. In this paper, we examine the link between managerial ability and corporate cash...

I examine how an important attribute of financial reporting quality, i.e., accounting conservatism, affects the sensitivity of corporate bond returns to changes in the value of equity (i.e., the hedge ratio). The correlation between stock and bond returns (co-movement) is a fundamental input for...

This paper examines a large sample of accounting, finance, management, marketing, and financial statement analysis texts. The “top 20” ratios in business textbooks are identified and discussed. The paper finds two major problems with ratio presentation in business textbooks: formula...

This paper compares the eleven different versions of computing return on assets that can be found in current business textbooks. To illustrate the practical differences between the different versions, each version of ROA is calculated for eight slightly different example firms. The results are...

This paper examines whether institutional investors exhibit preferences for near-term earnings over long-run value and whether such preferences have implications for firms' stock prices. First, I find that the level of ownership by institutions with short investment horizons (e.g.,...

This paper investigates whether a firm's disclosure practices affect the composition of its institutional investor ownership and, hence, its stock return volatility. The findings indicate that firms with higher AIMR disclosure rankings have greater institutional ownership, but the particular...

We study the balance sheet of liquidity: the relation between the liquidity of the firm's assets and the liquidity of financial claims on the assets, thereby linking corporate finance decisions to stock liquidity. Our model highlights an ambiguous relationship. While greater asset liquidity...

We quantify the relative importance of earnings announcements in providing new information to the share market, using the r-squared in a regression of securities' calendar year returns on their four quarterly earnings announcement window returns. The r-squared, which averages approximately five...

The empirical research examining the association between typical measures of corporate governance and various accounting and economic outcomes has not produced a consistent set of results. We believe that these mixed results are partially attributable to the difficulty in generating reliable and...