Journal of Accounting & Economics最新文献

Binz, Ferracuti, and Joos (2023) examine whether better internal information systems can mitigate the association between inflation and investment. According to Real Business Cycle models, inflation should not impact real decisions like investment, yet empirically the two are positively related. Lucas (1972) theorizes that imperfect information can cause agents to rationally extrapolate from their local set of information to make conclusions about what is happening in aggregate. Motivated by this model, the authors argue that better internal information systems allow managers to disentangle firm-level real shocks from nominal shocks. My discussion evaluates the measurement of internal information quality and questions how distinct it is from external information quality. Next, I relate the findings to a growing literature that examines how individuals and firms form economic expectations. Finally, I consider whether and how these findings can inform policy.

This paper examines whether portfolio disclosure requirements for actively managed investment funds affect the investment decisions of the firms they own. We argue that mandatory portfolio disclosures reduce fund managers' incentive to collect and trade on private information, which reduces the stock price informativeness of their portfolio, and thus portfolio firm managers' ability to learn from their firms' stock prices. Using a difference-in-differences design around the May 2004 SEC regulation requiring more frequent fund disclosure, we find that investment sensitivity to stock price declines for firms with significant ownership held by actively managed funds affected by the regulation. The decline in investment-price sensitivity is concentrated among firms that are (i) owned by funds with larger expected proprietary costs and (ii) more likely to learn from price. Our results suggest that portfolio disclosure requirements have spillover effects on corporate investment by curtailing managers’ opportunities to learn from price.

Extensive evidence suggests that managers strategically choose the complexity of their descriptive disclosures. However, their motives in doing so appear mixed, as complex disclosures are used to obfuscate in some cases and to provide information in others. Building on these observations, we first identify a novel stylized fact: disclosure complexity is non-monotonic in firm performance. We develop a model of disclosure complexity that incorporates the dual roles of complexity and can explain this stylized fact. In the model, a manager discloses to investors of heterogeneous sophistication and can adjust the complexity of the disclosure to either provide more precise information or to obfuscate. When the firm's investor base is largely unsophisticated, the manager issues a complex disclosure only upon observing negative news. In contrast, when the firm's investor base is more sophisticated, the manager issues a complex disclosure upon observing either highly positive or negative news. As a result, the market may react more positively to complex information releases than to simple releases, complex disclosures generate heightened return volatility, and firms with more inherently complex information are more likely to use their discretion to simplify their disclosures.

SEC-mandated, machine-readable structured filings are an alternative source to Compustat for companies' accounting data. Discrepancies between as-filed and Compustat data, potentially a result of Compustat's standardizations, are more pronounced for firms with complex financial reporting. We show that these data discrepancies affect inferences in four research settings: (i) properties of accrual accounting, including accruals-cash flow relationships and abnormal accruals; (ii) real earnings management; (iii) the existence and magnitude of six of 21 accounting-based anomalies examined, including the accruals anomaly; and (iv) disclosure quality assessments based on the hierarchical structure of financial statement items. FactSet data also exhibit significant and often larger discrepancies from as-filed data. Our findings demonstrate the importance of these data discrepancies for the interpretation of empirical tests.

We document a novel trend in syndicated lending where some participants voluntarily waive their rights to borrowers' private information. We posit that “public-side” lending emerged to facilitate broad lender participation in the syndicated loan market by mitigating concerns about the leakage of borrowers' private information into public securities markets. In line with this proposition, we find that public-side lending facilitates the loan market participation of lenders for which maintaining robust information barriers is particularly costly. Furthermore, while public-side lending increases within-syndicate information asymmetry, our findings indicate that it does not materially increase interest spreads and is associated with lower coordination costs among syndicate participants. Collectively, we document how debt contracting practices evolved to address frictions associated with the protection of borrowers’ private information and the related changes in loan contracting equilibria.

This paper explores the shock of school closures caused by the COVID-19 pandemic to study the effect of childcare responsibilities on analyst forecasts. With manually collected data on whether analysts have children, I find that female analysts with children (mother analysts) are less likely to issue timely forecasts after school closures, compared to male analysts with children (father analysts). Mother analysts’ forecasts also become less accurate after school closures, but the negative effect only exists among forecasts for firms with relatively low institutional ownership, suggesting that mother analysts prioritize maintaining the forecast accuracy for firms that are more important to their careers. Additionally, mother analysts shift forecast release times to avoid childcare hours. My findings imply that childcare responsibilities hurt the productivity of mother analysts more than that of father analysts, even though these women have established themselves in a competitive industry.

We examine whether individual-level taxes affect executives' propensity to use nonpublic information in insider trades. We predict and find a positive relation between abnormal insider trading profitability and income tax rates. Using plausibly exogenous variation in state income tax rates, we estimate that the average executive uses insider trading profits to offset between 12.2% and 19.6% of the effect that income taxes have on their net compensation. We show that the sensitivity of these profits to tax rates varies predictably with the executives' compensation and shareholdings, firm monitoring effectiveness, and information asymmetry between insiders and outside investors. We also demonstrate a positive association between SEC enforcement actions and tax rates, suggesting that tax-rate-driven changes in abnormal trading profits expose insiders to legal risk. We find that insider trading volume exhibits little sensitivity to tax rates. Our findings show that income taxes affect executives’ tendency to use private information in their trades.

Public accounting firms are owned by all equity partners, but day-to-day management is generally delegated to a team of leaders. Using data from China, this study examines which equity partners are selected to the firm's national leadership team, and whether firmwide audit quality is related to leadership attributes. We find that a partner is more likely to be selected as a leader if the partner is more experienced in public company auditing and has attracted more new clients to the firm. Firmwide audit quality is higher when leaders are more experienced in public company audits or have a past record of larger audit adjustments, and is lower when leaders have attracted more high-risk new clients to the firm. Leadership attributes exhibit a relatively strong (weak) association with audit quality at the headquarters (branch offices). Moreover, audit quality is higher when a firm has more leaders in an audit-quality role.