Now showing items 1-6 of 6
Financial reporting frequency, information asymmetry, and the cost of equity
Using hand-collected data on firms’ interim reporting frequency from 1951 to 1973, we examine the impact of financial reporting frequency on information asymmetry and the cost of equity. Our results show that higher reporting ...
Tournaments of financial analysts
We argue that financial analysts can be viewed as participants of two tournaments (the “All-star” tournament and the intrafirm tournament) and examine whether analysts are incentivized by the tournament compensation ...
Inventory changes and future returns
We find that the negative relation between accruals and future abnormal returns documented by Sloan (1996) is due mainly to inventory changes. We propose three explanations for this result, derived from the prior literature, ...
The valuation impact of reconciling pro forma earnings to GAAP earnings
Regulation G requires all companies to quantitatively reconcile pro forma earnings with GAAP earnings. This paper provides three findings related to the impact of reconciliations on mispricing of pro forma earnings. First, ...
Rounding-up in reported EPS, behavioral thresholds, and earnings management
Reported earnings per share (EPS) are frequently rounded to the nearest cent. This paper provides evidence that firms manipulate earnings so that they can round-up and report one more cent of EPS. Specifically, we examine ...
Can the earnings fixation hypothesis explain the accrual anomaly?
This paper provides empirical evidence on whether the earnings fixation hypothesis can explain the accrual anomaly originally documented in Sloan (1996). Our analytical model yields the prediction that if investors fixate ...