Journal of Accounting & Economics最新文献

This paper shows that mandating some firms to disclose more while leaving other firms disclosing voluntarily is less effective in improving and may even harm the overall information environment when firms' disclosures are endogenous. Although the regulated firms' increased disclosure directly reduces all firms' cost of capital, it crowds out the unregulated firms' voluntary disclosure and thus increases all firms’ cost of capital indirectly. Under certain circumstances, the negative indirect effect can outweigh the direct benefit. These results are consistent with the scant evidence on the cost-of-capital effect of mandatory disclosure. The model highlights the importance of the market-wide effects of disclosure regulation and facilitates quantitative cost-benefit analyses for specific regulatory proposals.

While Sani, Shroff and White (2023) examine a plausibly exogenous shock to the information acquisition landscape that arguably changes informed traders’ incentives to generate private information without the focal firm changing its disclosure policy, the causal chain underlying their analyses shares the implicit assumptions employed in the extant empirical literature that tests the Learning Hypothesis. Thus, the focus of our discussion is to make explicit the implicit assumptions and highlight the resulting challenges faced by authors who wish to interpret Investment Sensitivity to Price as evidence of managerial learning. In the end, we suggest future research work to extend our understanding by exploring in greater detail and more directly the What and the How managers learn from outsiders.

We examine whether the potential for costly sabotage is a deterrent to firms' use of relative performance evaluation (“RPE”) in CEO pay plans. We exploit illegal cartel membership as a source of variation in the potential for costly sabotage and document that firms are more likely to use RPE if they are currently cartel members. Moreover, firms frequently drop RPE from their CEOs’ pay plans immediately after their cartels are detected, dissolved and punished. We further provide suggestive evidence that the potential for costly sabotage explains these patterns; cartel membership severs the empirical association between RPE and competitive aggression.

We describe the taxation landscape in the cryptocurrency markets, especially concerning U.S. taxpayers, and examine how recent increases in tax scrutiny have led to changes in crypto investors' trading behavior. We argue conceptually and then empirically document that increased tax scrutiny leads crypto investors to utilize conventional tax planning with tax-loss harvesting as an alternative to non-compliance. In particular, domestic traders increase tax-loss harvesting following the increase in tax scrutiny, and U.S. exchanges exhibit a significantly greater amount of wash trading. Additional findings suggest that broad-based and targeted changes in tax scrutiny can differentially affect crypto traders’ preference for U.S.-based exchanges. We also discuss other gray areas for tax regulation related to new crypto assets, such as Non-Fungible Tokens and Decentralized Finance protocols, that further highlight the importance of coordinating tax policy and other regulations.

Exploiting the unique features of the CDP, the world-leading platform of corporate climate risk disclosures, we study the relationship between institutional investors' demand for climate-related information (as reflected in their CDP signatory status), firms' decision to disclose this information, and corporate carbon emissions. We provide systematic international evidence that ownership by CDP signatories is positively associated with the probability of disclosing information to the CDP, and that such disclosure is associated with subsequent lower carbon emissions. We also observe that CDP signatories are more likely to engage with and divest from top emitters disclosing to the CDP. Overall, these results are consistent with the notion that investor demand for climate-related information results in greater corporate disclosure and contributes to firms’ decisions to lower future carbon emissions.

Bloomfield, Marvão, and Spagnolo (2023) establish an interesting yet puzzling finding: Firms in concentrated industries that form cartels are more likely to use relative performance evaluation (RPE) compensation arrangements for their top managers. The paper interprets this as evidence that cartel members constrain managers' incentives to engage in costly sabotage when their compensation depends on their peer firms' performance. I argue that successful costly sabotage to gain an RPE advantage is extremely unlikely and that costly sabotage is more likely among cartel firms than non-cartel firms. It therefore is an unlikely explanation of the paper's main finding. I propose an alternative explanation, that RPE benchmarks include firms that are not cartel member firms.

Aghamolla and Smith (2023) make a significant contribution to enhancing our understanding of how managers choose financial reporting complexity. I outline the key assumptions and implications of the theory, and discuss two empirical implications: (1) a U-shaped relationship between complexity and returns, and (2) a negative association between complexity and investor sophistication. However, the robust equilibrium also implies a counterfactual positive market response to complexity. I develop a simplified approach in which simple disclosures indicate positive surprises, and show that this implies greater investor skepticism toward complexity and a positive association between investor sophistication and complexity. More work is needed to understand complexity as an interaction of reporting and economic transactions, rather than solely as a reporting phenomenon.

We examine whether the quality of firms' internal information systems influences the relation between inflation shocks and corporate investment, as posited by imperfect information models. Inconsistent with RBC models’ prediction that nominal variables (e.g., inflation) do not affect real variables (e.g., corporate investment) but consistent with the presence of information frictions, we first document a positive relation between inflation shocks and firm-level investment. Next, we show that higher internal information system quality, measured through responses to the World Management Survey, mitigates the positive relation between inflation shocks and firm-level investment. This result suggests that internal information quality serves as a channel through which aggregate-level nominal variables affect firm-level real variables. We then document that firms with higher internal information system quality make relatively more efficient investment decisions following inflation shocks. Our inferences are robust to using the 8th EU Company Law Directive as a shock to internal information system quality and to several additional tests.

This comment explains that while taxpayers may increase loss harvesting in crypto, they are wrong if they believe such losses will be upheld if challenged by the IRS.

This paper summarizes and discusses Cohen et al. (2023), including how their results fit into a larger set of open questions about how sustainability-oriented information gets used in capital markets. Two key messages emerge. The first is that investors are not a monolith. The second message is that the information environment in which investors have been operating has changed dramatically over the past two decades and is likely to continue to evolve for the foreseeable future. Both messages have important implications for researchers when thinking about how to design empirical tests of theoretical relationships.