Showing papers in "Journal of Accounting and Economics in 2007"

TL;DR: The authors examined the determinants of weaknesses in internal control for 779 firms disclosing material weaknesses from August 2002 to 2005 and found that these firms tend to be smaller, younger, financially weaker, more complex, growing rapidly, or undergoing restructuring.

TL;DR: This paper found that family firms have larger analyst following, more informative analysts' forecasts, and smaller bid-ask spreads than non-family firms, and they report better quality earnings, are more likely to warn for a given magnitude of bad news, but make fewer disclosures about their corporate governance practices.

TL;DR: In this paper, the authors use internal control deficiency (ICD) disclosures prior to mandated internal control audits to investigate economic factors that expose firms to control failures and managements' incentives to discover and report control problems, finding that firms disclosing ICDs have more complex operations, recent organizational changes, greater accounting risk, more auditor resignations and have fewer resources available for internal control.

TL;DR: The authors investigated the economic consequences of the Sarbanes-Oxley Act (SOX) by examining market reactions to related legislative events and found that U.S. firms experienced a statistically significant negative cumulative abnormal return around key SOX events.

TL;DR: Using three different measures of conservatism, the authors found that the percentage of inside directors is negatively related to conservatism, and the percentage outside directors shareholdings is positively related to conservative.

TL;DR: In this article, the authors investigate the relation between two extensively used measures of conservatism: asymmetric timeliness of earnings and the market-to-book ratio (MTB).

TL;DR: This paper showed that firms provide stronger incentives when industry competition is greater, competition is multi-dimensional in its relation to incentives, and industry characteristics play a major role in influencing incentives, while some studies suggest that competition can reflect several dimensions: product substitutability, market size and entry costs, given the level of industry concentration.

TL;DR: In this article, the authors investigate firms' going-private decisions in response to the passage of the Sarbanes-Oxley Act of 2002 (SOX) and find that the quarterly frequency of going private transactions has increased after the enactment of SOX.

TL;DR: The authors investigate whether earnings guidance affects aggregate stock returns through its effects on expectations about overall earnings performance and/or aggregate expected returns, and find that aggregate guidance, especially relative levels of quarterly downward guidance, is associated with analyst- and time-series-based measures of aggregate earnings news.

TL;DR: In this article, the authors draw on the investor protection literature to identify structural factors in the financial reporting environment that are likely to explain cross-country differences in the information content of annual earnings announcements.

TL;DR: In this article, the authors investigate earnings management in fiscal year earnings relative to these alternative measures of firms' annual earnings and find evidence suggesting earnings management is responsible for the discontinuities.

TL;DR: Zhang et al. as mentioned in this paper discussed evidence on the costs of the Sarbanes-Oxley Act (SOX) from stock returns and going-private decisions and concluded that SOX imposes significant costs on firms.

TL;DR: This article examined how CEO compensation is related to firms' capital structures and found that stock option policy is the component of CEO pay that is most sensitive to differences in capital structure, and the hypothesis that debt reduces manager-shareholder conflicts can explain some but not all of the results.

TL;DR: In this article, the authors show that tests of market efficiency are sensitive to the inclusion of delisting firm-years and that when included, trading strategy returns based on anomaly variables can increase (for strategies based on earnings, cash flows and the book-to-market ratio) or decrease (for a strategy based on accruals).

TL;DR: For example, the authors found that insiders condition their trades on foreknowledge of price-relevant public disclosures, but avoid profitable trades when the jeopardy associated with such trades is high, such as immediately before earnings announcements.

TL;DR: In this paper, the authors examine whether financial reporting frequency affects the speed with which accounting information is reflected in security prices and conclude that there is little evidence to support the claim that regulation forcing firms to report more frequently improves earnings timeliness.

TL;DR: The authors found that forecast accuracy and task-specific experience are correlated for those analysts who survive the longest and presumably have the greatest innate abilities, and furthermore, forecast accuracy is associated with both their innate ability and task specific experience.

TL;DR: In this article, the authors show that a high proportion of firms with small cumulative profits or losses at the beginning of the fourth quarter report small annual profits rather than small annual losses, which suggests that upward earnings management causes the kink and indicates which firms are likely to manage earnings upward.

TL;DR: In this article, the authors compare the value and credit relevance of financial statements under fair-value and smoothing (SFAS-87) models of pension accounting and conclude that while fair value improves the credit relevance, it does not improve its value relevance.

TL;DR: This article examined the factors underlying the presence of earnings announcement premia and found that the premia persist beyond the sample period examined in prior studies (ending in 1988), although they decline in magnitude after 1988.

TL;DR: In this article, Zhang et al. provided theory and evidence showing how accounting variables explain cross-sectional stock returns, and they derived returns as a function of earnings yield, equity capital investment, and changes in profitability, growth opportunities, and discount rates.

TL;DR: In this article, the intrinsic value of unexercisable in-the-money options, the time value, and the value of restricted shares are inversely related to voluntary executive turnover.

TL;DR: In this paper, the role of analyst following in coordinating mutually beneficial disclosure among competing firms is considered, and it is shown that the desire to attract analyst following can make a policy of joint disclosure viable.

TL;DR: In this article, it is shown that in a partial disclosure equilibrium, the firm discloses average information and withholds bad and good information, and that disclosure of average information arises to attract the investor's capital away from the risk free asset.

TL;DR: This paper analyzed the loss-reserving practices of 562 insurance companies in 1993 to assess the relation between client influence and auditor oversight and found that financially struggling insurers tend to under-reserve when the weak insurer is important to the local practice office of the auditor.

TL;DR: In this paper, the authors show that less independent boards can sometimes be more effective at monitoring than boards with inside directors, if the boards cannot commit ex ante to monitoring ex-post.

TL;DR: This paper found that the cost of equity capital decreases by 1.02% and that the decline is smaller for firms largely held by institutional investors to whom the tax rate reduction does not apply.

TL;DR: Ashbaugh, Collins, and Kinney as discussed by the authors provide evidence relating firm characteristics to internal control deficiencies (ICDs) reported under new disclosure requirements, and provide alternative explanations and provide some descriptive evidence that is consistent with these alternative explanations.

TL;DR: In this paper, the authors highlight the uncertainty of investors about the reporting objective of managers as another explanation for suppressing disclosure, exploring that the common intuition regarding these factors does not always carry over to environments with an uncertain reporting objective.

TL;DR: Ali et al. as mentioned in this paper investigated the relationship between corporate governance and the quality of corporate disclosure and found that family firms face lower overall agency costs and provide higher quality corporate disclosures than non-family firms.