We examine whether and how auditors incorporate rollover risk in assessing a client’s risk. Rollover risk is the risk associated with long-term debt maturing in one year, which has to be refinanced of settled shortly. Debt has two counteracting effects on firms’ riskiness: increased...

We first review the recent research published in the Journal of International Accounting Research (JIAR) on the influence of international institutions on accounting practices and follow it with a discussion of the literature studying the influence of institutions on tax avoidance and tax...

We propose a method of measuring the comparability of reported accounting numbers from the perspective of creditors. Our measure reflects the relationship between market variables related to default probabilities and key accounting numbers of interest to lenders. We demonstrate that this measure...

Prior research indicates that social capital constrains opportunistic behavior and facilitates cooperation in bilateral relationships (Coleman 1988; Guiso 2010). We hypothesize that firms conducting business with high social capital customers are perceived by their banks as having lower supply chain...

Using an international sample of IPO firms from 36 countries and a country-level index for societal trust, we find strong evidence that societal trust is negatively associated with the degree of IPO underpricing. In cross-sectional analyses, we find that the effect of societal trust in reducing...

We examine how the threat of exit by non-blockholders (investors with ownership 5%) relates to firms’ income smoothing. Unlike informed blockholders, non-blockholders lack private information and therefore rely more on reported accounting numbers to evaluate firm performance. To isolate the...

Starting in October 2013, auditors of premium-listed firms in the United Kingdom are mandated to prepare an expanded auditor’s report that provides details on audit procedures, risks of material misstatement (RMMs), and materiality thresholds. This regulatory change is important to study,...

We investigate the association between large CEO pay and the underlying economic determinants of pay, governance variables, variables capturing director pay, and other potential variables that may explain large CEO payouts. We also examine whether firms with large CEO pay have better future...

A widely cited finding from Grinblatt et al. (1984) (hereafter GMT) is that the market response to the announcement of a small stock distribution is greater than the response to a large one. However, the GMT result is not found for distributions declared from the early 1980s through the end of...