Journal ArticleDOI
Managerial Ability and Earnings Quality
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TLDR
This article examined the relation between managerial ability and earnings quality and found that more able managers are associated with fewer subsequent restatements, higher earnings and accruals persistence, lower errors in the bad debt provision, and higher quality accrual estimations.Abstract:
: We examine the relation between managerial ability and earnings quality. We find that earnings quality is positively associated with managerial ability. Specifically, more able managers are associated with fewer subsequent restatements, higher earnings and accruals persistence, lower errors in the bad debt provision, and higher quality accrual estimations. The results are consistent with the premise that managers can and do impact the quality of the judgments and estimates used to form earnings. Data Availability: Data are publicly available from the sources identified in the text.read more
Citations
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Managerial Compensation and Stock Price Manipulation
TL;DR: In this paper, the role of optimal managerial compensation in reducing uncertainty about manager reporting objectives is investigated, and it is shown that firm owners allow managers with higher propensity to manipulate the short-term stock price to push for higher powered and more shortterm focused equity incentives.
Journal ArticleDOI
Audit Quality: An Analysis of Audit Partner Cultural Proximity to Client Executives
TL;DR: The authors found that cultural proximity between auditors and CFOs is associated with audit quality and audited earnings are of higher quality when the engagement audit partner is culturally close to the CFO.
Journal ArticleDOI
Are more able managers good future tellers? Learning from Japan
TL;DR: In this article, the authors extend the literature by exploring whether the relationship between managerial ability and forecast accuracy is unique to the U.S. disclosure system, and how high-ability managers increase their forecast accuracy.
Journal ArticleDOI
Are CFO debt-like compensation incentives associated with financial reporting quality?
Mark J. Kohlbeck,Xin Luo +1 more
TL;DR: In this paper, the authors investigate whether CFO debt-like compensation incentives and their alignment with CEO debt like compensation incentives are associated with financial reporting quality, and they find that the CFO effect dominates that of the CEO when examining discretionary accruals and complements the CEO effect for accrual quality.
Journal ArticleDOI
Risk disclosure and firm operational efficiency
TL;DR: Examination of a unique database of nonfinancial, and non-utility French firms belonging to the SBF 120 index over the period 2007–2015 suggests that firms tend to be relatively more efficient when they disclose more about their risk exposure, suggesting that stakeholders perceive transparent firms positively.
References
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Journal ArticleDOI
Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches
TL;DR: In this article, the authors examine the different methods used in the literature and explain when the different approaches yield the same (and correct) standard errors and when they diverge, and give researchers guidance for their use.
Journal ArticleDOI
Industry costs of equity
Eugene F. Fama,Kenneth R. French +1 more
TL;DR: In this paper, the authors show that standard errors of more than 3.0% per year are typical for both the CAPM and the three-factor model of Fama and French (1993), and these large standard errors are the result of uncertainty about true factor risk premiums and imprecise estimates of the loadings of industries on the risk factors.
Journal ArticleDOI
Interaction terms in logit and probit models
Chunrong Ai,Edward C. Norton +1 more
TL;DR: In this article, the authors present the correct way to estimate the magnitude and standard errors of the interaction effect in nonlinear models, which is the same way as in this paper.
Journal ArticleDOI
The Quality of Accruals and Earnings: The Role of Accrual Estimation Errors
TL;DR: In this paper, the authors suggest a new measure of one aspect of the quality of working capital accruals and earnings, i.e., the ability to shift or adjust the recognition of cash flows over time so that t...
Journal ArticleDOI
Audit committee, board of director characteristics, and earnings management
TL;DR: In this paper, the authors examined whether audit committee and board characteristics are related to earnings management by the firm and found a negative relation between audit committee independence and abnormal accruals.