In this paper, we compare First Call analyst forecasts to unofficial forecasts of quarterly earnings per share commonly referred to as whisper forecasts. Our analysis yields the following results. First, we find that whispers are, on average, more accurate than First Call forecasts and are...

We rely on the theoretical prediction that financial misreporting peaks before economic busts to examine whether aggregate ex ante measures of the likelihood of financial misreporting improve the predictability of U.S. recessions. We consider six measures of misreporting and show that the...

While it is well-established that diversifying acquisitions by large cash-rich firms destroy shareholder wealth, we document positive abnormal returns to such acquisitions in the tobacco industry. We show these abnormal returns are associated with proxies for lower expected expropriation costs....

The purpose of the paper is to compare unofficial forecasts of earnings known as quot;whispersquot; to forecasts generated by First Call analysts. Our sample consists of approximately 900 whispers found primarily on message boards on investor web sites between 1995 and 1997. Our analysis yields...

This paper investigates the incentives and the penalties related to earnings overstatements primarily in firms that are subject to accounting enforcement actions by the Securities and Exchange Commission (SEC). I find (1) that managers in treatment firms are more likely to sell their holdings...

This paper contrasts technical default, debt service default and bankruptcy, and establishes that the valuation effects of their announcements are significant and increasingly severe. We show the events are interrelated. Specifically, we show that technical default is a timely warning of further...

We examine the stock market effect of changes in the composition of the Dow Jones Industrial Average (DJIA). Unlike Samp;P 500 listing studies, we find that the price and the trading volume of newly listed DJIA firms are unaffected. We attribute this result to a lack of index fund rebalancing,...

This paper contrasts technical default, debt service default and bankruptcy, and establishes that the valuation effects of their announcements are significant and increasingly severe. We show the events are interrelated. That is, technical default increases the likelihood of future debt service...

Costs of default underpin the debt covenant hypothesis-- which predicts that managers have incentives to avoid defaulting on notes and loans--yet prior research yields only limited confirmation of their existence. We provide evidence on the nature and magnitude of default costs, and show that...