Review of Accounting Studies最新文献

Automation—such as machine learning, robotic process automation, and artificial intelligence—is the next major technological leap in accounting and financial reporting, and I empirically study whether public firms’ use of automation technology improves their financial reporting, specifically focusing on the internal control environment. I document two critical inferences. First, I find evidence which suggests that automation improves financial reporting quality. Specifically, firms’ use of automation in the financial reporting process is associated with a reduction in internal control material weaknesses. This association is consistent in a levels analysis with firm and year fixed effects, in a changes analysis, and in a propensity score matched difference-in-differences analysis. Second, I find evidence which suggests that monitoring of the financial reporting process decreases after automation, likely because of a perception that automation reduces the need for monitoring vis-à-vis stronger internal controls. Specifically, automation is associated with higher external audit fees and audit committee meetings in the initial years after a firm implements automation but associated with lower external audit fees and audit committee meetings in subsequent years. I also find evidence which suggests that this decreased monitoring may be costly: when internal control failures do happen for firms with automation, the failures are more material, as proxied by stronger negative market reactions. In aggregate, my evidence provides nuanced insights regarding whether automation technology improves financial reporting.

This study examines the properties of innovation disclosures contained in new product announcements, a form of voluntary, nonfinancial disclosure. We analyze these properties using a novel, text-based measure of the extent of product innovation disclosed in new product announcements. We find that stock prices react more positively to announcements with more extensive innovation disclosure. In our main analyses, we first find that a higher level of innovation disclosure predicts a greater increase in future sales. We further find that this predictive ability falls when managers have stronger incentives to maximize their wealth and when the corporate governance structure and customers’ bargaining power weaken. Our research enhances the understanding of the properties of managerial voluntary, nonfinancial disclosures and contributes a text-based measure of innovation that captures managerial assessment of the extent of product innovation. This new measure is more generalizable and incrementally informative for firm value and future performance than conventional innovation measures that depend on the existence of patents or research and development expenses.

Abstract

Many of America’s top corporate donors share a common feature: the bulk of their giving is in the form of in-kind products, not cash. This phenomenon is not a coincidence but rather closely tied to the tax code creating such a preference due to an enhanced deduction for inventory donations. We examine a model of inventory choice under uncertainty and demonstrate that enhanced tax deductions not only promote giving, they also notably influence inventory planning and accelerate learning of customer demand. The results confirm that enhanced deductions can be used to promote pro-social behaviors such as boosting charitable giving, aligning inventories with consumer needs, and alleviating supply chain shortages. The results also demonstrate the potential risks of excessive tax preferences for inventory donations, including inflated retail prices and additional environmental waste.

We examine differences in CEOs’ achievement of earnings per share (EPS) targets related to (1) analysts’ forecasts and (2) internal cash bonus payouts. Our focus on firms with different benchmarks for the same performance metric enables us to assess the relative importance of the incentives that each EPS target provides based on its revealed achievement. Most CEOs meet analysts’ final consensus EPS forecasts but are unlikely to meet bonus EPS targets that exceed forecasted EPS. Nearly all CEOs receive some EPS-based cash bonus, even when missing the forecast. Moreover, CEOs with bonus targets that are easier to achieve than the consensus forecast tend to receive more annual pay, suggesting that boards often set more achievable EPS targets to provide extra compensation to CEOs while maintaining the appearance of pay-for-performance. Our results highlight the importance of considering both types of EPS targets simultaneously when assessing their respective incentive properties.

Although foreign media outlets comprise a substantial proportion of the media covering U.S. financial markets, their characteristics and role in these financial markets have not been explored. Using a novel, manually collected dataset covering 1,126 media outlets from 48 countries, we explore whether there are systematic differences in the reporting properties of foreign and domestic media when they cover U.S. firm earnings announcements. We find that the coverage of foreign media outlets tends to exhibit a more negative slant than does the coverage of domestic media outlets. We further find that the negative slant of foreign media coverage is more pronounced for media outlets from countries that are less economically, politically, and culturally proximate to the United States. We also document that a greater amount of foreign media coverage amplifies the stock market’s reaction to earnings news, increases abnormal trading volume, and reduces information asymmetry between firms and investors. We find these effects to be stronger for firms with greater foreign ownership. Further analyses show that foreign media coverage plays a more significant role than domestic coverage in facilitating the incorporation of future earnings news into current stock prices.

Motivated by investor criticisms of current accounting standards, this study investigates whether differences exist in how acquired identifiable intangible assets relate to investors’ expectations about the entity’s cash flow prospects. Some investors assert that all acquired intangibles should be subsumed within goodwill, while others prefer separate recognition of identifiable intangibles only when they are strategically important sources of future cash flows. Still other investors call for separate recognition from goodwill only when identifiable intangibles are separable from the business, have defined useful lives, and have identifiable revenue streams (i.e., “wasting” intangibles). Consistent with some investor views, we find cross-sectional variation in the value relevance of identifiable intangibles based on differences in underlying asset characteristics. Our primary findings suggest that strategically important and wasting intangibles provide information different from that provided by goodwill. These findings inform standard setters as they evaluate recognition and disclosure alternatives for identifiable intangible assets.