-
作者：Lennox, Clive S.; Wu, Xi
作者单位：University of Southern California
摘要：This study examines whether audit adjustments are a mechanism that links the effect of mandatory internal control audits (MICAs) on financial reporting quality. We argue that the requirement for auditors to publicly disclose internal control weaknesses exacerbated auditor-client conflicts and that this resulted in auditors being less likely to detect (and correct) misstatements in their clients' pre-audit financial statements. Consistent with this argument, we find significant reductions in au...
-
作者：Green, Danielle H.; Henry, Erin; Parsons, Sarah M.; Plesko, George A.
作者单位：Fordham University; University of Arkansas System; University of Arkansas Fayetteville; Sacred Heart University; University of Connecticut; University of Arkansas System; University of Arkansas Fayetteville; Sacred Heart University
摘要：We examine whether public financial statement information is incrementally useful in forecasting confidential taxable income. More precise firm-level taxable income forecasts can improve policymakers' modeling of the tax system and the analysis of proposed changes in corporate tax law, while more accurate macro-level forecasts of corporate taxable income can improve estimates of corporate tax revenues, a significant component of the federal budget. We find the addition of financial statement i...
-
作者：Baloria, Vishal P.; Lo, Alvis K.; Shu, Susan
作者单位：University of Connecticut; Boston College
摘要：We examine whether the media can act as a friction that hampers the efficiency of corporate labor investment, a decision that attracts significant media attention. We develop a new measure of media exposure that takes into account the circulation and geographic proximity of a comprehensive set of media outlets. We show media exposure leads to greater labor investment inefficiency. Closer examination reveals that media exposure is associated with firms underhiring, but not underfiring. This und...
-
作者：Hinson, Lisa A.; Pundrich, Gabriel P.; Zakota, Mark
作者单位：State University System of Florida; University of Florida; University System of Maryland; University of Maryland College Park
摘要：The disclosure requirements of ASC 606 significantly expanded the volume and granularity of revenue information. However, because of the significant judgment associated with the standard, it is unclear whether the new disclosures increased the decision-usefulness of financial reports. To shed light on this question, we investigate the revenue disaggregation requirements of ASC 606. These requirements had significant disclosure consequences, illustrated by an over two-fold increase in the media...
-
作者：Arya, Anil; Mittendorf, Brian; Ramanan, Ram N., V
作者单位：University System of Ohio; Ohio State University; State University of New York (SUNY) System; Binghamton University, SUNY
摘要：When a firm's input supplier can acquire and misreport private information to gain an edge in negotiations, we show that the firm can blunt the supplier's informational advantage by permitting inefficiencies in its own internal production. Specifically, we establish that a modest increase in the cost of the input(s) a firm makes internally credibly commits it to be more aggressive in negotiations with a supplier for the input(s) the firm buys. Recognizing that its potential information rents w...
-
作者：Gale, Brian
作者单位：University of Washington; University of Washington Seattle
摘要：Review correspondence between the SEC and firms is a potentially valuable resource for investors, revealing important information about firms' financial reporting quality. Research suggests that reducing access costs (i.e., the amount of effort required to access review correspondence) could increase investors' processing of this important information. Drawing on psychology theory, I predict and find that access costs interact with another key characteristic within the SEC's control-review amb...
-
作者：Beneish, Messod D.; Vorst, Patrick
作者单位：Indiana University System; Indiana University Bloomington; IU Kelley School of Business; Maastricht University
摘要：We compare seven fraud prediction models with a cost-based measure that nets the benefits of correctly anticipating instances of fraud against the costs borne by incorrectly flagging non-fraud firms. We find that even the best models trade off false to true positives at rates exceeding 100:1. Indeed, the high number of false positives makes all seven models considered too costly for auditors to implement, even in subsamples where misreporting is more likely. For investors, M-Score and, at high...
-
作者：Fiechter, Peter; Novotny-Farkas, Zoltan; Renders, Annelies
作者单位：University of Neuchatel; Vienna University of Economics & Business; Maastricht University
摘要：Exploiting detailed disclosures mandated by Accounting Standard Codification (ASC) 820, we provide evidence for the return relevance of Level 3 fair value remeasurements for a comprehensive sample of U.S. listed banks. We find that Level 3 remeasurements recognized in earnings are more return relevant than those recognized in other comprehensive income (OCI). Our results suggest that Level 3 remeasurements in OCI partially reflect transitory illiquidity discounts that are less relevant when ba...
-
作者：Bonner, Sarah E.; Kadous, Kathryn; Majors, Tracie M.
作者单位：University of Southern California; Emory University
摘要：We experimentally examine whether audit seniors??? use of simple cognitive processes for a complex task is affected by the strength of habits that they developed as staff. A habit is a mental association between a behavior and a specific context. We propose that, for seniors with stronger habits to use simple processes, the typical audit room context automatically activates those processes, making it harder to select the processes that are more effective for a complex task. As predicted, we fi...
-
作者：Heitzman, Shane; Lester, Rebecca
作者单位：University of Southern California; Stanford University
摘要：We examine the relation between corporate cash holdings and tax net operating loss carryforwards (NOLs). The literature demonstrates that firms should distribute cash to shareholders rather than retain it and generate passive investment income taxed at both corporate and investor levels. However, if the firm's tax rate on passive income is lower than shareholders'-as when the firm has NOLs-theory also shows that the firm should retain cash and invest on the shareholders' behalf. Consistent wit...
