Showing papers in "Journal of Accounting and Economics in 1997"

TL;DR: In this paper, the authors interpret conservatism as resulting in earnings reflecting "bad news" more quickly than "good news" and find that negative earnings changes are less persistent than positive earnings changes.

TL;DR: In this article, the authors provide evidence that firms manage reported earnings to avoid earnings decreases and losses and find evidence that two components of earnings, cash flow from operations and changes in working capital, are used to achieve increases in earnings.

TL;DR: In this paper, the authors investigated systematic changes in the value-relevance of earnings and book values over time and reported three primary findings: (1) the combined value relevance of the two metrics has not declined over the past forty years and, in fact, appears to have increased slightly.

TL;DR: The authors found evidence that when current earnings are poor and expected future earnings are good, managers "borrow" earnings from the future for use in the current period, whereas when current profits are "good", managers "save" current profits for possible use in future periods.

TL;DR: In this article, the authors provide evidence on whether managers can reduce stockholder litigation costs by disclosing adverse earnings news early, and they find some evidence that more timely disclosure is associated with lower settlement amounts.

TL;DR: A model of rational trade with both features and implications is introduced, based exclusively on one type of information, of private information gathered in anticipation of a public disclosure.

TL;DR: In this article, the authors test assertions that economic value added (EVA) is more highly associated with stock returns and firm values than accrual earnings, and evaluate which components of EVA, if any, contribute to these associations.

TL;DR: In this article, the authors examined the association between free cash flow (FCF) and audit fees and found that the positive FCF/audit fees association is weaker for low growth firms with high debt than for similar firms with low debt.

TL;DR: In this paper, the authors examine the cable television industry during periods of Congressional scrutiny and find that firms for which proposed regulations are expected to be more harmful have higher income-decreasing accruals.

TL;DR: In this article, the authors examine whether firms benefit from increasing analyst following or correcting mispricing, and whether analysts gain by acquiring information that improves the frequency or quality of their forecasts.

TL;DR: In this article, a sample of firms that began using a residual income performance measure in their compensation plans and compared their performance to a control sample that continue to use traditional accounting earnings-based incentives was evaluated.

TL;DR: In this paper, the authors investigate factors affecting firms' uses of three types of performance metrics to evaluate division mangers: division accounting metrics, firm accounting metrics and firm stock price, and find that division accounting metric use increases with the divisions' industry's price-earnings correlation and decreases with divisional growth opportunities.

TL;DR: This article investigated the role of book-tax conformity in firms' financial reporting activities using a unique set of publicly traded firms that were forced to switch for tax purposes from the cash method to the accrual method.

TL;DR: This article examined the relation between ownership structure, as revealed by the percentage of outstanding shares held by institutional investors, and trading volume at earnings announcement dates and found that volume response as a function of institutional ownership is quadratic with the quadratically curve that reaches a maximum at around 50% institutional ownership when risk tolerances are identical across investor types.

TL;DR: In this paper, the authors examined discretionary disclosures and stock price effects for 81 UK firms that received first-time modified audit reports during 1982-1990 and found that managers of many of the 58 stressed sample firms make disclosures about expected future performance that are overly optimistic relative to financial outcomes.

TL;DR: In this article, the authors demonstrate the value relevance of foreign earnings for US multinational firms by examining the associations between annual abnormal stock performance and changes in firms' domestic and foreign incomes.

TL;DR: Using data from Washington State, it is found that hospitals responded by increasing outpatient services to Medicare patients -- the ratio of Medicare outpatient revenues as a percentage of total Medicare revenues increased after 1983 to a significantly greater extent than for non-Medicare patients.

TL;DR: In this article, the effects of taxes on cross-border dividend, interest, royalty, and management fee payments between foreign affiliates of U.S. multinationals were examined and no evidence management fees are structured to mitigate non-U.S taxes.

TL;DR: It is shown that muted incentive contracts may be sufficient to motivate team members by having the team repeat a task, and explicit (contractual) incentives can be substituted by implicit incentives team members provide to each other.

TL;DR: In this paper, it was shown that a portion of the single-equation bias can be mitigated via joint estimation of the permanent component of earnings and the price-earnings relation.

TL;DR: This article examined the timing of security returns associated with industry-wide earnings and firm-specific earnings, and found that returns that associated with differences in performance across industries begin and end earlier than those associated with different performance within industries.

TL;DR: Wang et al. as discussed by the authors studied how Chinese tax authorities implement international transfer pricing legislation and found that tax audits on transfer pricing are confined mainly to medium and small-sized foreign investments, lower-technology companies and transfer of tangible goods, and tend to focus on certain nationality and forms of foreign investment.

TL;DR: It is illustrated how stochastic frontier estimation (SFE) can be used to estimate benchmark performance standards which control for differences in the environments of the benchmarked operating units.

TL;DR: This article found that parent leverage, unexpected write-offs in the carveout year, the carve-out gain size, and unexpected future earnings generate predicted probabilities that are concordant with 78% of the observed equity versus net income choices and 73% of tax versus no-tax choices.

TL;DR: In this paper, the authors used experimental methods to assess how different legal regimes affect the frequency and amounts of settlements in a three person setting (one plaintiff and two defendants) and found that the lowest settlement frequencies occur in regimes with joint and several allocation rules.

TL;DR: In this paper, the authors investigate stock price behavior associated with the allowance of LIFO for tax purposes and conclude that the market revised its probabilities that firms most likely to benefit would avail themselves of the opportunity to use lifO and defer taxes on inventory profits.