Review of Accounting Studies最新文献

Mutual funds regularly issue factsheets to communicate their performance in a short summary form. I investigate whether the release of factsheets in Morningstar plays a role in the trading behavior of retail investors. I find that retail investors react more to performance measures in factsheets when these are disseminated through Morningstar, and therefore made salient, than when they are not. The results cannot be explained by dissemination via alternative platforms, fund advertising, marketing by financial intermediaries, funds’ anticipation of investor reaction, or selective reporting of performance measures. Additional analysis suggests that factsheets do not help improve retail investors’ investment allocation decisions; if anything, I find some evidence consistent with overreaction to performance measures disseminated via factsheets, while mandatory fund disclosures tend to mitigate this overreaction. Taken together, these findings contribute to a more nuanced understanding of summary disclosures by highlighting the unintended consequence of investor overreaction.

This paper investigates if the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) convergence project changed the underlying natures of both sets of accounting standards. Using the rules-based continuum score and a new principles-based continuum score, we find that before convergence, US Generally Accepted Accounting Principles (US GAAP) contained more rules-based standards, while International Financial Reporting Standards (IFRS) contained more principles-based standards. After the convergence project, US GAAP became relatively more principles-based, while IFRS became relatively more rules-based, consistent with both standard-setters compromising in their approaches to standard setting in order to facilitate convergence. Overall, our results suggest that the convergence project achieved its goal of improving alignment between US GAAP and IFRS. However, it appears to have had a possibly unintended consequence of making IFRS contain more rules-based characteristics.

Bond defaults are undesirable yet natural outcomes of risky investments. What is also crucial but hitherto underexplored is the unexpectedness of defaults. We develop a parsimonious measure of default unexpectedness and highlight its economic importance by demonstrating that unexpected defaults are associated with unfavorable recovery outcomes and adverse price changes in peer firm bonds. We then examine how default unexpectedness relates to information opacity. We find that firms with opaque financial reporting and weak voluntary disclosure experience more unexpected defaults. Defaults also occur more unexpectedly when the external information environment is opaque—when rating agencies disagree on a firm’s credit risk and when the media coverage is low. We further report evidence on a specific case in which transparent firms suffer unexpected defaults—when creditors’ run incentives are particularly high. Overall, our paper introduces default unexpectedness as an economically relevant construct, offers a tractable measure, and highlights the role of transparency in mediating this phenomenon.

We use COVID-19 and sell-side analysts as an experiment to study the effects of gender on labor productivity. We find that the forecast accuracy of female analysts declined more than that of male analysts, especially when schools were closed and among analysts who were more likely to have young children, were inexperienced, were busier, or lived in southern states of the US. Relative to male analysts, females also reduced their forecast timeliness and resorted to more heuristic forecasts but did not reduce coverage or updating frequency. Relative to pre pandemic, female analysts’ careers were more negatively affected than male analysts’. Overall, our results show that the pandemic impacted female analysts more than males through the quality of their forecasts but not the quantity.

We identify a novel force behind the benefit of misaligned preferences in corporate governance. Our model entails a CEO who encounters a project and, after gathering information, decides whether to seek the approval of a corporate board. The CEO may be able to choose the properties of the collected information—this may happen if the project is “novel,” i.e., explores a new technology, business concept, or market and directors are less knowledgeable about it. We find that only sufficiently conservative and expansion-cautious directors can discipline the CEO’s empire-building tendency and opportunistic information collection. Such directors, however, underinvest in projects that are not novel. The board that maximizes firm value is either conservative or neutral (has interests aligned with the shareholders) and always overinvests in innovations. Boards with greater expertise are more likely to be conservative, but their bias is less severe. The board’s commitment power and bias are substitutes.

State tax revenue forecasting is critical to states’ fiscal planning because many states have constitutions or laws that require a balanced budget and restrict borrowing to fund deficits. We develop and compare four measures of aggregate corporate earnings growth. We find that a state-specific industry-weighted measure of earnings growth predicts future state tax revenue growth, incremental to states’ actual forecasts (i.e., it increases explanatory power by a factor of 1.86). Earnings growth also improves states’ component forecasts of personal income, sales, and corporate income tax revenues. We also find that both forecast errors and lagged earnings growth can explain midyear spending cuts, suggesting that there are real consequences to omitting earnings growth from tax revenue forecasts. Because accurate revenue forecasts are necessary for the efficient allocation of government resources, these findings should be useful to those who prepare, monitor, or are otherwise affected by state tax revenue forecasts and budgets.

We analyze the motivational effects of managing by walking around (MBWA), a management style that emphasizes managers’ visits to the rank and file of the company. We do so by conducting a field experiment in the retail division of a Latin American bank. We find that branches significantly increase sales productivity following the management visit, an effect that begins prior to the top manager’s visit and persists for at least a month afterward. We also find a higher impact of the visit on high-performing branches. Our results indicate that motivation is a significant channel through which MBWA improves employee performance.

Research concludes that managers’ political orientation influences their decision-making and offers the political connections and risk tolerance hypotheses as explanations. We investigate partisan bias as an additional way political orientation may influence managers’ decisions. Partisan bias results in individuals whose partisan orientation aligns with that of the US president expressing more optimistic economic expectations. We examine whether partisan bias is present in managers’ annual earnings forecasts. We find that firms with CEOs whose partisanship aligns with that of the US president issue more optimistically biased annual earnings forecasts than firms with other CEOs. Higher-ability CEOs, however, are less susceptible to partisan bias. Additionally, we find that overestimating customer demand contributes to the forecast over-optimism of partisan-aligned CEOs and results in greater firm overinvestment. Furthermore, investors fail to discount the news in forecasts of partisan-aligned CEOs, and their firms’ post-forecast abnormal returns are lower.

We examine how locked-in CEO equity attributable to large unrealized capital gains tax liabilities influences the cost and restrictiveness of debt contracts. We find that firms enjoy lower loan spreads and are more (less) likely to receive ratings upgrades (downgrades) when their CEO has a large tax burden. Using the capital gains tax rate decrease in the Tax Reform Act of 1997 as an exogenous shock to CEO tax burdens, we find that CEOs with large tax burdens before the tax cut experience a sharp increase in loan spreads afterward. This increase in spreads is larger when the firm has low profitability, high bankruptcy risk, and when loans are unsecured. Further, CEO tax burdens decrease the restrictiveness of nonprice loan terms, increase syndicate size, and decrease issue costs.

This study investigates the influence of central bank private-sector quantitative easing (QE) policies on firms’ voluntary disclosures. While the effects of QE on borrowing costs and asset prices are well documented, spillovers in the disclosure realm remain understudied. This study specifically analyzes the effects of the Corporate Sector Purchase Program (CSPP), a private-sector QE policy implemented by the European Central Bank (ECB) in 2016 targeting corporate bonds in the euro area. Applying a difference-in-differences methodology to pre- and post-CSPP periods, I find that firms whose bonds the central bank purchased under the CSPP decreased their voluntary disclosures, particularly those related to cash flows and liabilities. My analysis attributes this decrease to reduced demand for firm-specific information from the central bank. My findings highlight the indirect consequences of QE monetary policy tools on corporate disclosure and contribute to the understanding of the transmission of monetary policy and investor-clientele dynamics.