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作者：Rajan, Madhav V.; Reichelstein, Stefan; Soliman, Mark T.
作者单位：Stanford University
摘要：Return on Investment (ROI) is widely regarded as a key measure of firm profitability. The accounting literature has long recognized that ROI will generally not reflect economic profitability, as determined by the internal rate of return (IRR) of a firm's investment projects. In particular, it has been noted that accounting conservatism may result in an upward bias of ROI, relative to the underlying IRR. We examine both theoretically and empirically the behavior of ROI as a function of two vari...
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作者：Armstrong, Christopher S.; Davila, Antonio; Foster, George; Hand, John R. M.
作者单位：University of North Carolina; University of North Carolina Chapel Hill; Stanford University; University of Navarra; IESE Business School
摘要：This paper studies the properties and determinants of managers' multi-year financial forecasts. Using one- to five-year-ahead forecasts reported by private venture-backed firms, we ask whether, by how much, and why biases in managers' forecasts of revenues, expenses and profits depend on the forecasting horizon and the verifiability of assets. We find that profitability forecasts contain a strategic component, in that [1] one-year-ahead revenue (expense) forecasts are slightly and asymmetrical...
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作者：Xue, Yanfeng
作者单位：University of Texas System; University of Texas Austin
摘要：A firm's board of directors, based on its risk tolerance or appetite, sets the corporate objectives. It is then the management's job to meet the objectives by adopting appropriate strategies. However, the board can design compensation policies to encourage desired management strategy choices. This paper explores the extent to which management compensation policies are aligned with strategy choices for obtaining new technology. Finns obtain new technology either through internal R&D or through ...
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作者：Brown, Stephen; Hillegeist, Stephen A.
作者单位：INSEAD Business School; Emory University
摘要：We examine two potential mechanisms through which disclosure quality is expected to reduce information asymmetry: (1) altering the trading incentives of informed and uninformed investors so that there is relatively less trading by privately informed investors, and (2) reducing the likelihood that investors discover and trade on private information. Our results indicate that the negative relation between disclosure quality and information asymmetry is primarily caused by the latter mechanism. W...
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作者：Ronen, Joshua; Yaari, Varda (Lewinstein)
作者单位：New York University; Morgan State University
摘要：Consider the following puzzle: If earnings management is harmful to shareholders, why don't they design contracts that induce managers to reveal the truth? To answer this question, we model the shareholders-manager relationship as a principal-agent game in which the agent (the manager) alone observes the economic outcome. We show that the limited liability (LL) of the agent, defined as the agent's feasible minimum payment, might explain the demand for earnings management by the principal. Spec...
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作者：Marquardt, Carol A.; Wiedman, Christine I.
作者单位：City University of New York (CUNY) System; Baruch College (CUNY); University of Waterloo
摘要：This paper examines the economic consequences of changes in the financial reporting requirements for contingent convertible securities (COCOs). Using a sample of 199 COCO issuers from 2000 to 2004, we find that issuers are more likely to restructure or redeem existing COCOs to obtain more favorable accounting treatment when the financial reporting impact on diluted earnings per share (EPS) is greater and when EPS is used as a performance metric in CEO bonus contracts. These results provide new...
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作者：Chambers, Dennis; Linsmeier, Thomas J.; Shakespeare, Catherine; Sougiannis, Theodore
作者单位：University of Kentucky; University of Michigan System; University of Michigan; University of Illinois System; University of Illinois Urbana-Champaign
摘要：In this study, we provide evidence on the pricing of other comprehensive income (OCI) that differs from most evidence in prior research. Prior archival research has largely concluded that OCI is not priced by investors. In contrast, we provide evidence in the post-SFAS 130 period that OCI is priced on a dollar-fordollar basis as is predicted by economic theory for transitory income items. We attribute this finding to our use of post-SFAS 130 as-reported measures of OCI rather than pre-SFAS 130...
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作者：Gjesdal, Froystein
作者单位：Norwegian School of Economics (NHH)
摘要：Providing data for the measurement of financial performance is a key objective of financial reporting. Rajan, Reichelstein, and Soliman (2007, Conservatism, growth and return on investment, Review of Accounting Studies, this issue) provide new insights into the well known biases involved in measuring return on investment (ROI) on the basis of accrual accounting. They analyze the relationships among ROIs, growth rates, accrual policies and cash flow profiles in a fairly general steadystate mode...
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作者：Yee, Kenton K.
作者单位：Columbia University
摘要：This article develops a consumption-based valuation model that treats earnings and cash flow as complementary information sources. The model integrates three ideas that do not appear in traditional valuation models: (i) earnings provide information about future shocks to cash flow; (ii) earnings contain indiscernible transient accruals; and (iii) investors use cash flow and earnings to make allocation and consumption decisions and set price. Accordingly, the quality of earnings affects product...
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作者：DeFond, Mark L.; Hung, Mingyi
作者单位：University of Southern California
摘要：We find that analysts are more likely to provide cash flow forecasts in countries with weak investor protection. This finding is consistent with our hypothesis that market participants demand (and analysts supply) cash flow information when weak investor protection results in earnings that are less likely to reflect underlying economic performance. Our results suggest that information intermediaries respond to market-based incentives to attenuate the adverse effects of country-level institutio...
