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作者：Gormley, Todd A.; Kim, Bong Hwan; Martin, Xiumin
作者单位：University of Pennsylvania; American University; Washington University (WUSTL)
摘要：This paper investigates the impact of changes in the banking sector on firms timely recognition of economic losses. In particular, we focus on the entry of foreign banks into India during the 1990s, which likely causes an exogenous increase in lender demand for timely loss recognition. Analyzing variation in both the timing and the location of the new foreign banks entries, we find that foreign bank entry is associated with more timely loss recognition and this increase is positively related t...
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作者：Christensen, Hans B.; Nikolaev, Valeri V.
作者单位：University of Chicago
摘要：Building on contract theory, we argue that financial covenants control the conflicts of interest between lenders and borrowers via two different mechanisms. Capital covenants control agency problems by aligning debt holdershareholder interests. Performance covenants serve as trip wires that limit agency problems via the transfer of control to lenders in states where the value of their claim is at risk. Companies trade off these mechanisms. Capital covenants impose costly restrictions on the ca...
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作者：Gopalan, Radhakrishnan; Jayaraman, Sudarshan
作者单位：Washington University (WUSTL)
摘要：We examine earnings management practices of insider controlled firms across 22 countries to shed light on the link between consumption of private benefits and earnings management. Insider controlled firms are associated with more earnings management than noninsider controlled firms in weak investor protection countries. Consistent with the private benefits motive, insider controlled firms with greater divergence between cash-flow rights and control rights are associated with more earnings mana...
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作者：Nezlobin, Alexander
作者单位：New York University
摘要：This paper studies accrual accounting and equity valuation in the context of a firm that makes repeated and overlapping investments in productive capacity. The analysis identifies a particular accrual accounting (depreciation) rule that is termed replacement cost accounting because the book value of existing capacity assets is set equal to the value that such assets would have if a competitive market were to exist for used assets. It is shown that replacement cost accounting aggregates past in...
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作者：Brown, Nerissa C.; Christensen, Theodore E.; Elliott, W. Brooke; Mergenthaler, Richard D.
作者单位：University System of Georgia; Georgia State University; Brigham Young University; University of Illinois System; University of Illinois Urbana-Champaign; University of Iowa
摘要：We examine the influence of investor sentiment on managers discretionary disclosure of pro forma (adjusted) earnings metrics in earnings press releases. We find that managers propensity to disclose an adjusted earnings metric (especially one that exceeds the GAAP earnings number) increases with the level of investor sentiment. Furthermore, our analyses suggest that, as investor sentiment increases, managers: (1) exclude higher levels of both recurring and nonrecurring expenses in calculating t...
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作者：Libby, Robert; Rennekamp, Kristina
作者单位：Cornell University; University of Illinois System; University of Illinois Urbana-Champaign
摘要：Prior studies document that managers consider a variety of costs and benefits when deciding whether to issue earnings forecasts. Using an abstract experiment and a survey of experienced financial managers, we provide evidence that managerial overconfidence may also contribute to this decision. Our experiment shows that participants engage in self-serving attribution, giving greater weight to internal than external factors as explanations for good performance. This increases confidence in impro...
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作者：Cao, Sean Shun; Narayanamoorthy, Ganapathi S.
作者单位：University of Massachusetts System; University of Massachusetts Amherst; University of Illinois System; University of Illinois Urbana-Champaign
摘要：We find that lower ex ante earnings volatility leads to higher PostEarnings Announcement Drift (PEAD). PEAD is a function of both the magnitude of an earnings surprise and its persistence. While prior research has largely investigated market reactions to the magnitude of the earnings surprise, in this study we show that the persistence of the earnings surprise is equally important. A unique feature of the anomalous PEAD returns documented here concerns the association between abnormal returns ...
