Showing papers in "Journal of Accounting and Economics in 2015"

TL;DR: In this article, the authors examined the link between corporate governance, managerial incentives, and corporate tax avoidance and found a positive relation between board independence and financial sophistication, but a negative relation for high levels of tax avoidance.

TL;DR: In this paper, the authors investigate whether missing R&D expenditures in financial statements indicate a lack of innovation activity, and they provide simple Monte Carlo simulations to evaluate different methods to handle missing research in empirical research.

TL;DR: This paper examined changes in CEOs' incentive to manage their firms' reported earnings during their tenure and found that earnings overstatement is greater in the early years than in the later years of CEOs' service.

TL;DR: In this paper, the causality of the positive association between CSR expenditures and future firm performance differs from what is claimed in the vast majority of the literature and that corporate accountability reporting is another channel through which outsiders may infer insiders' private information about firms' future financial prospects.

TL;DR: The authors examine annual report text for over 15,000 non-US companies from 42 countries over the period 1998-2011, focusing on the length of disclosure, presence of boilerplate, comparability with US and nonUS firms, and complexity.

TL;DR: In this article, the authors show that firms' ability to avoid taxes is affected by the quality of their internal information environment, with lower effective tax rates (ETRs) for firms that have high internal information quality.

TL;DR: The authors investigated whether managers hide bad news by announcing earnings during periods of low attention, or by providing less forewarning of an upcoming earnings announcement, and found that managers reporting bad news after market hours, on busy days, with less advance notice, and with earnings receiving less attention in these settings.

TL;DR: In this article, the authors estimate the corporate tax savings from financial derivatives and show that a 3.6 and 4.4 percentage point reduction in three-year current and cash effective tax rates (ETRs) can be achieved after a firm initiates a derivatives program.

TL;DR: In this paper, the authors examined whether more sophisticated accounting methods (in the form of accrual accounting) interact with other information sources to reduce information asymmetries between small business borrowers and lenders, thereby lowering borrowers' probability of loan denial and cost of debt.

TL;DR: In this paper, the authors study how geographic proximity affects analyst coverage decisions for U.S. firms that went public during 1996-2009, along with the impact of local coverage on firm visibility.

TL;DR: In this article, the authors investigate whether the initiation of trading in credit default swaps (CDSs) on a borrowing firm's outstanding debt is associated with a decline in that firm's reporting conservatism.

TL;DR: This article found that the well-known zero-earnings discontinuity disappears soon after passage of the Sarbanes-Oxley Act (SOX) and has not returned, and also find that neither the discontinuity nor its disappearance require the effects of widely cited alternative (nonearnings management) explanations.

TL;DR: In this article, the economic determinants of short-sale supply and its consequences for future stock returns are examined, and it is shown that when the supply of lendable shares is binding (non-binding) and when demand is non-binding, short-sales supply is the main predictor of future stock return.

TL;DR: This article examined whether rating agencies cater to borrowers with rating-based performance-priced loan contracts (PPrating firms) and found that this catering is muted in two circumstances when rating agencies' reputational costs are higher than usual: (1) near the investment grade and prime short-term rating thresholds and (2) when Fitch Ratings also provides a rating.

TL;DR: This paper found that insider selling prior to a warning typically does not offset all of the warning's benefit, and that the absence of a warning combined with the presence of selling exacerbates the consequences associated with the individual behaviors.

TL;DR: This article analyzed audit fees and audit risk to extract auditors' assessment of family firms' financial reporting quality and found that superior reporting quality lowers audit risk and the need for greater audit investments, which is why auditors charge family firms less.

TL;DR: In this paper, the authors point out that DE provide no evidence that scaling or sample selection create discontinuities, but only evidence showing that changes in scaling or selection eliminate discontinuity.

TL;DR: This article found that analysts issue recommendations when they face greater demand from investors, when the relative supply of information available on earnings announcements is higher and when they detect mispricings, and these results are consistent with analysts striving to meet the demands of investors by providing useful recommendations after earnings announcements.

TL;DR: In this article, the authors investigate three potential channels of analyst value creation: improving fundamental performance through monitoring, reducing information asymmetry, and increasing investor recognition, and find that changes in investor recognition have consistent explanatory power for the market reaction to coverage initiations and terminations.

TL;DR: In this paper, the authors investigate the consequences of the "revolving door" for trial lawyers at the SEC's enforcement division and find evidence of "rent seeking" when SEC lawyers are based in Washington DC and when defense firms employ more former SEC lawyers.

TL;DR: This paper examined the global equity supply chains of U.S. multinationals to explore how tax and nontax country characteristics affect whether firms use foreign holding companies and where they locate them.

TL;DR: In this paper, the authors used Regulation Fair Disclosure (FD) as a plausibly exogenous shock to the information environment to identify the causal effect of information asymmetry on corporate financing behavior.

TL;DR: This paper found that companies dramatically raise their incumbent executives' pay, especially equity-based pay, after losing executives to other firms, and that the pay raise is larger when incumbent executives have greater employment mobility in the labor market, when companies lose senior executives, and when job-hopping executives receive favorable job offers in their new firms.

TL;DR: In this paper, the authors examine the demand for disclosure rules by informed managers interested in increasing the market price of their firms and find that disclosure rules are asymmetric with greater levels of disclosure over adverse events.

TL;DR: This paper examined the information environments of firms following large, non-recurring charges (baths) and found that after a bath, earnings become smoother, information asymmetry decreases, and stock returns become more responsive to unexpected earnings.

TL;DR: This paper found that 80% of CEO stock option grants are timed to occur on or before the stock split announcement date and that about two-thirds occur after the split announcement, resulting in an average gain of $345,613.

TL;DR: In this paper, the authors propose that high return dispersion (RD) is associated with economic conditions characterized by high discount rates, which are not conducive to growth and investment and propose that RD risk can explain the accrual and investment anomalies.

TL;DR: The authors found that the use of discretion is negatively associated with states' decisions to increase taxes and cut spending, and that the funding gap understatement is positively associated with higher future labor costs, which suggests that the GASB approach is associated with policy choices that have the potential to exacerbate fiscal stress.

TL;DR: Li and You as discussed by the authors study public firms' common stock return reactions to two events: when analysts initiate coverage of the firm and when they terminate coverage, and find consistent support for analysts adding value by increasing demand, but not monitoring or by reducing information asymmetry.

TL;DR: The authors consider accounting data-driven anomalies as one of the possible exogenously determined variables in the equilibrium of the equity loan market, and consider a potentially new take that considers accounting-data-driven anomalous changes in the market for borrowing stock.