Pub Date : 2024-01-24DOI: 10.1007/s11142-023-09816-2
Hengda Jin, Kenneth J. Merkley, Anish Sharma, Karen Ton
{"title":"Customers’ response to firms’ disclosure of social stances: evidence from voting reform laws","authors":"Hengda Jin, Kenneth J. Merkley, Anish Sharma, Karen Ton","doi":"10.1007/s11142-023-09816-2","DOIUrl":"https://doi.org/10.1007/s11142-023-09816-2","url":null,"abstract":"","PeriodicalId":48120,"journal":{"name":"Review of Accounting Studies","volume":null,"pages":null},"PeriodicalIF":4.2,"publicationDate":"2024-01-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139602393","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-01-24DOI: 10.1007/s11142-023-09817-1
Mei Cheng, Yuan Zhang, Meiling Zhao
{"title":"The role of equity underwriters in shaping corporate disclosure","authors":"Mei Cheng, Yuan Zhang, Meiling Zhao","doi":"10.1007/s11142-023-09817-1","DOIUrl":"https://doi.org/10.1007/s11142-023-09817-1","url":null,"abstract":"","PeriodicalId":48120,"journal":{"name":"Review of Accounting Studies","volume":null,"pages":null},"PeriodicalIF":4.2,"publicationDate":"2024-01-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139600336","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-01-23DOI: 10.1007/s11142-023-09814-4
Qianhua Ling, Andrea Alston Roberts
{"title":"Identical ratios: a red flag of ratio management","authors":"Qianhua Ling, Andrea Alston Roberts","doi":"10.1007/s11142-023-09814-4","DOIUrl":"https://doi.org/10.1007/s11142-023-09814-4","url":null,"abstract":"","PeriodicalId":48120,"journal":{"name":"Review of Accounting Studies","volume":null,"pages":null},"PeriodicalIF":4.2,"publicationDate":"2024-01-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139605137","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-01-22DOI: 10.1007/s11142-023-09815-3
Christopher Armstrong, Jacky Chau, Christopher D. Ittner, Jason J. Xiao
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.
{"title":"Earnings per share targets and CEO incentives","authors":"Christopher Armstrong, Jacky Chau, Christopher D. Ittner, Jason J. Xiao","doi":"10.1007/s11142-023-09815-3","DOIUrl":"https://doi.org/10.1007/s11142-023-09815-3","url":null,"abstract":"<p>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 <i>different benchmarks</i> for the <i>same performance metric</i> 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 <i>more</i> 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.</p>","PeriodicalId":48120,"journal":{"name":"Review of Accounting Studies","volume":null,"pages":null},"PeriodicalIF":4.2,"publicationDate":"2024-01-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139517113","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-01-13DOI: 10.1007/s11142-023-09813-5
Albert Tsang, Kun Tracy Wang, Nathan Zhenghang Zhu
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.
{"title":"Foreign media slant, foreign investors, and informativeness of earnings","authors":"Albert Tsang, Kun Tracy Wang, Nathan Zhenghang Zhu","doi":"10.1007/s11142-023-09813-5","DOIUrl":"https://doi.org/10.1007/s11142-023-09813-5","url":null,"abstract":"<p>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.</p>","PeriodicalId":48120,"journal":{"name":"Review of Accounting Studies","volume":null,"pages":null},"PeriodicalIF":4.2,"publicationDate":"2024-01-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139464778","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-23DOI: 10.1007/s11142-023-09810-8
Zachary King, Thomas J. Linsmeier, Daniel D. Wangerin
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.
{"title":"Differences in the value relevance of identifiable intangible assets","authors":"Zachary King, Thomas J. Linsmeier, Daniel D. Wangerin","doi":"10.1007/s11142-023-09810-8","DOIUrl":"https://doi.org/10.1007/s11142-023-09810-8","url":null,"abstract":"<p>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.</p>","PeriodicalId":48120,"journal":{"name":"Review of Accounting Studies","volume":null,"pages":null},"PeriodicalIF":4.2,"publicationDate":"2023-11-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138527016","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-13DOI: 10.1007/s11142-023-09809-1
Nicholas Guest, Jaewoo Kim
{"title":"The media response to a loss of analyst coverage","authors":"Nicholas Guest, Jaewoo Kim","doi":"10.1007/s11142-023-09809-1","DOIUrl":"https://doi.org/10.1007/s11142-023-09809-1","url":null,"abstract":"","PeriodicalId":48120,"journal":{"name":"Review of Accounting Studies","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-11-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136347389","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-09DOI: 10.1007/s11142-023-09812-6
Richard G. Sloan, Annika Yu Wang
Abstract Previous research finds that EPS growth rates are difficult to predict and reasons that much of the observed cross-sectional variation in valuation ratios is due to variation in implied future stock returns. Yet the observed cross-sectional relation between valuation ratios and realized future stock returns is weak. We revisit these findings using a refined measure of expected EPS growth rates and document robust evidence of predictability in EPS growth rates. Moreover, we find that this predictable growth extends beyond two years into the future and is strongly reflected in observed valuation ratios. We show that combining valuation ratios with our refined measure of expected EPS growth rates improves forecasts of stock returns, though return predictability remains weak. Thus, we conclude that most of the variation in valuation ratios is driven by predictable EPS growth.
{"title":"Predictable EPS growth and the performance of value investing","authors":"Richard G. Sloan, Annika Yu Wang","doi":"10.1007/s11142-023-09812-6","DOIUrl":"https://doi.org/10.1007/s11142-023-09812-6","url":null,"abstract":"Abstract Previous research finds that EPS growth rates are difficult to predict and reasons that much of the observed cross-sectional variation in valuation ratios is due to variation in implied future stock returns. Yet the observed cross-sectional relation between valuation ratios and realized future stock returns is weak. We revisit these findings using a refined measure of expected EPS growth rates and document robust evidence of predictability in EPS growth rates. Moreover, we find that this predictable growth extends beyond two years into the future and is strongly reflected in observed valuation ratios. We show that combining valuation ratios with our refined measure of expected EPS growth rates improves forecasts of stock returns, though return predictability remains weak. Thus, we conclude that most of the variation in valuation ratios is driven by predictable EPS growth.","PeriodicalId":48120,"journal":{"name":"Review of Accounting Studies","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-11-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135192294","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-03DOI: 10.1007/s11142-023-09807-3
Jonas Heese, Gerardo Pérez-Cavazos, Andreya Pérez-Silva
{"title":"Human bias in the oversight of firms: evidence from workplace safety violations","authors":"Jonas Heese, Gerardo Pérez-Cavazos, Andreya Pérez-Silva","doi":"10.1007/s11142-023-09807-3","DOIUrl":"https://doi.org/10.1007/s11142-023-09807-3","url":null,"abstract":"","PeriodicalId":48120,"journal":{"name":"Review of Accounting Studies","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-11-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135868829","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}