Journal of Corporate Accounting and Finance最新文献

This study leverages the adoption of ASC 606, “Revenue from Contracts with Customers,” to examine the effects of transitioning from a rules-based to a principles-based approach on the information content of earnings along with two of its most important attributes: predictive value and asymmetry. By introducing a common principles-based framework, ASC 606 resolves inconsistencies found in earlier rules-based standards and fosters uniformity in financial reporting. However, this change might also diminish the uniqueness of financial information, a critical factor in the decision-making process. The findings reveal a significant increase in the overall market's information content of earnings post-ASC 606 implementation. Industries with complex revenue recognition processes and long-term contracts, such as information technology, real estate, and communications, experienced the most significant improvements. These industries benefited from the increased flexibility and professional judgment allowed under ASC 606, resulting in more accurate future earnings forecasts. However, the study also finds that ASC 606 has increased information asymmetry, particularly in industries with complex transactions. This suggests that while the principles-based approach enhances the informativeness and predictive value of earnings, it also introduces challenges in interpreting and applying the new standards, leading to increased information asymmetry. These findings have important implications for standard setters, regulators, and practitioners in financial reporting.

In the United States, prior research links government subsidies to corporate misconduct and income smoothing, fueling debates over the elimination of these subsidies. Contrasting these findings, our study investigates the association between government subsidies and operational efficiency in US firms from 2004 to 2022, using data from the Subsidy Tracker database. We find a significant positive association between government subsidies and operational efficiency, suggesting that these subsidies enhance firms’ resource management and competitive positioning. Further analysis indicates that subsidies exert a more pronounced positive effect on firms with substantial R&D investments. Additionally, we find that government subsidies are positively related to corporate innovation activities and new hiring, highlighting the diverse benefits of subsidies in stimulating innovation and economic growth. This study provides essential insights into the potential of government subsidies as a strategic tool for enhancing operational efficiency, innovation, and employment within the corporate landscape.

This paper investigates the effect of the Tax Cuts and Jobs Act of 2017 (TCJA) on stock liquidity. The TCJA brought significant changes, including a reduction in corporate tax rates and provisions incentivizing the repatriation of foreign earnings. We find a negative association between TCJA-related events and the liquidity of U.S. stocks, persisting even up to 60 days following legislative announcements. However, despite the negative impact on liquidity, there is evidence of improved price efficiency following the TCJA enactment, driven by increased informed trading. Additionally, our analysis extends to non-U.S. stocks traded in U.S. markets and indicates similar relations.

This study explores the impact of data breaches on corporate tax planning in the United States. The results reveal that when a firm's headquarter is located in a state that has adopted a data breach notification (DBN) law, there is a significant 3.8% decrease in the long-term effective tax rate. This reduction translates to annual tax savings of approximately $8.13 million. Furthermore, tax sheltering is found to decrease by 19.17% compared to the sample average. These effects are particularly pronounced in financially constrained firms and those operating in high-tech industries. The findings suggest that after the introduction of mandatory data breach disclosure requirements, firms are less inclined to engage in aggressive tax avoidance practices, which could otherwise lead to increased litigation costs. Instead, they prioritize efficient tax planning strategies to improve after-tax cash flows.

This study examines the relationship between financially material content in corporate social responsibility (CSR) reports and the decision usefulness of these reports. Utilizing sustainability disclosure standards and a machine learning topic modeling algorithm, a firm-specific quantitative measure of financially material content in CSR reports is developed. It is hypothesized that firms providing greater amounts of financially material CSR content enhance their information environment, which enables analysts to make more accurate earnings predictions. The findings confirm a positive relationship between the extent of financially material CSR content disclosed and analyst forecast accuracy. This research demonstrates the effectiveness of using machine learning to identify financially material content within unstructured voluntary disclosures and contributes to the literature on the financial materiality of CSR activities and their related disclosures.

In this study, I investigate the relationship between large book-tax differences (BTDs) and the probability of firm bankruptcy and financial distress. I argue that large BTDs provide valuable information regarding corporate bankruptcy. Using the Altman Z-score and Ohlson O-score models, I find that firms with large negative BTDs (LNBTDs) are less likely to experience financial difficulty and bankruptcy. In contrast, firms with large positive BTDs (LPBTDs) show a higher likelihood of financial distress and bankruptcy. Additionally, the LNBTD subset, contrary to the LPBTD group, demonstrates higher firm efficiency.

This paper examines the impact of public awareness and regulatory changes on earnings management over time. Despite scrutiny from regulators, auditors, and investors, the deterrents of earnings management remain unclear. I explore whether public awareness, through the dissemination of research, can influence market behaviors and reduce earnings management activities due to increased detection and penalties. Alternatively, I investigate if stricter regulation plays a role in curbing earnings manipulation. Using Benford's Law, I apply Thomas’ (1989) approach and compare data from 1950 to 1985, 1990 to 2002, and 2003 to 2020. My findings indicate that while public awareness alone does not deter earnings management, heightened regulation, particularly post-Sarbanes-Oxley Act (SOX), significantly reduces such practices. This study contributes to the literature by highlighting the comparative impact of public awareness and regulatory changes on earnings management.

This paper examines the impact of political favoritism on the value of corporate cash holdings. We define stock ownership by a member of the US Congress as a measure of political favoritism to a firm. We hypothesize that political investment in a firm influences the value of cash holdings. Consistent with our hypothesis, this study finds cash holding, on average, is less valuable for politically favored firms. Economically, political favoritism is associated with a decrease of $0.44 in value for a $1.00 cash holding. We also find that political favoritism negatively affects cash value in financially unconstrained firms, which is consistent with the overinvestment hypothesis. The results are robust to controlling for many firm-level characteristics and a spectrum of robustness tests. This study extends the literature on the role of political economy in the value of corporate cash holdings by documenting political favoritism as the stock ownership of the US Congress members and evaluating its effect on the value of corporate cash holdings.