Journal of Accounting Research最新文献

This paper investigates how U.S. private firms communicate with investors around private securities offerings. Using multiple research methods including survey, interview, and archival analysis, I provide systematic evidence on private firms' public and private disclosure practices. I find that despite engaging in a low level of public disclosures, private firms actively communicate with investors through private communication channels, with notable variation across firms in terms of content and frequency. Consistent with managers providing relevant information, financial information is disclosed when it is particularly useful for investors' decision-making. Furthermore, I explore the relation between private communication and public disclosure preferences and find a substitutive effect, suggesting that private firms may strategically manage communication channels to effectively engage with investors. This study contributes to the literature by describing the existing disclosure landscape of private firms.

We introduce the idea of cross-regulatory disclosure avoidance, whereby firms attempt to counteract expansions of disclosure under one regulation through actions that reduce disclosure under a different one. We study whether firms redact information from material contracts when they face new rules to disclose segment information. Using SFAS No. 131 as a plausibly exogenous shock to segment disclosure, we find that firms increasing the number of reported segments after the rule change exhibit a greater increase in redaction than firms maintaining the same number of segments. Consistent with proprietary cost motives, the increases are concentrated among firms with greater divergence in profitability across segments, higher abnormal segment profitability, and more negative abnormal stock returns in response to the finalization of the rule. Also, treated firms that redact after the rule change have abnormally profitable segments that they previously did not disclose. Firms that observables predict would increase redaction but did not experience declines in sales growth and profit margin. We find no evidence that agency cost motives drive the increases in redaction or, more generally, nondisclosure of segment performance before SFAS No. 131.

We estimate the prevalence and drivers of short squeezes after short-selling attacks. Positive returns after attacks have a disproportionate tendency to fully reverse and are accompanied by heightened short covering, consistent with the presence of short squeezes. We assess and find no support for non-squeeze drivers of these positive return reversals and show they are more likely to be accompanied by squeeze-related news articles, increased stock volatility, and disruptions in the stock lending market. Using positive return reversals as a proxy for short squeezes, we estimate that 15% of short attacks experience squeezes, and squeeze risk increases with short sellers’ visibility but decreases with the credibility of their evidence. Additionally, squeezes appear to be precipitated by actions of firms and investors, including insider purchases, share recalls, retail investor trading, and firm disclosures. Our findings quantify a material risk and check on activist short selling and are especially timely given recent proposed short-selling restrictions.

The Organization for Economic Cooperation and Development introduced country-by-country reporting (CbCR) for multinational enterprises (MNEs) to help tax authorities combat tax-motivated income shifting. This study uses confidential U.S. tax administrative data from 2011 to 2018 to examine the effect of U.S. CbCR adoption on the tax-motivated income shifting and real activities of U.S. MNEs. We first document that while U.S. CbCR provides the Internal Revenue Service with incremental information about the location of U.S. MNEs’ global activities relative to existing U.S. tax return disclosures, substantial overlap exists between U.S. CbCR and existing disclosures. In contrast with prior CbCR studies in cross-country settings, we fail to find evidence of a change in U.S. MNEs’ tax-motivated income shifting or a reallocation of real activities based on tax incentives in response to U.S. CbCR using multiple empirical approaches. Overall, our study leverages U.S. tax administrative data to provide insights into the impact of the CbCR initiative on U.S. MNEs.

We investigate how audit firms balance the tension between professional responsibility and client service by examining changes in partner assignments following adverse internal control opinions (ICOs). We find that partners are significantly more likely to be reassigned when they issued an adverse ICO to any of their clients in the previous year. Further, partners issuing adverse ICOs experience unfavorable changes in their client portfolios in the form of lower fees and less prestigious assignments. We find that consequences are more negative when adverse ICOs are issued to clients that are more important to the local office and that there are no consequences when partners issue continuing adverse opinions to clients they have “inherited” from an original adverse ICO partner. We also find that the consequences are stronger for partners of non-Big 4 audit firms that are likely to be more sensitive to client service considerations. The negative portfolio effects we observe persist for at least three years, and our findings are robust to restrictions involving mandatory partner rotation and adverse ICOs that lead to client loss. Overall, our results are consistent with adverse ICO partners experiencing negative consequences as audit firms respond to client service incentives in the area of internal controls over financial reporting.

Technology acquirers face significant information asymmetry when identifying appropriate acquisition targets. We exploit plausibly exogenous variation in the costs of gathering technological information as the result of patent library openings. We find that, after local patent libraries open, firms become more active in technological acquisitions, acquirers prefer targets that are geographically or technologically close to a lesser extent, completion rates for technology M&A increase, and performance improves. Post-merger innovation output is enhanced through more collaboration between inventors of acquirers and their targets. Overall, our study sheds new light on the importance of information-gathering costs in corporate takeovers and on the search for human capital synergies.

We examine if the effectiveness of business tax subsidies varies based on state disclosure laws. The prior accounting literature on government disclosure documents substantial variation in the quality of such disclosures, raising questions about their effectiveness for monitoring. State and local business subsidies for investment and employment have tripled in size over the past 30 years, but transparency problems inhibit clear assessments of whether subsidies achieve their intended outcomes. We examine both internal disclosure laws, which mandate subsidy reporting by the granting state agency to other state oversight agencies, and external disclosure laws, which mandate reporting to the public. We find positive effects of subsidies on local employment when subsidies are subject to internal disclosure laws; by implementing such regimes, governments could forego 1.2–1.7 subsequent subsidies per county, saving $419.0–$593.5 million in aggregate. In contrast, we observe little effect of external disclosure, which we show is due to governments either substituting to other types of incentives or posting stale information that impedes public monitoring. We contribute to the government disclosure literature by demonstrating the real employment effects of internal government disclosures, and we provide policy-relevant evidence about the conditions under which external disclosure regimes facilitate public monitoring.