We document that accrual-based earnings management increased steadily from 1987 until the passage of Sarbanes-Oxley Act (SOX) in 2002, followed by a significant decline after SOX. Conversely, level real activities declined prior to SOX and significantly SOX, suggesting firms switched methods also were particularly high period immediately preceding Consistent with these results, we find just achieved important benchmarks used less accruals more when compared similar before In addition, our...

Fiscal policy Nouriel Roubini and Jeffrey Sachs This paper examines the evolution of size government budget deficits in OECD economies. We highlight rapid increase spending 1970s, sharp rise public debt after 1973, reversal these trends 1980s. The was associated part with slowdown growth but also reflected gradual adjustment ratio to output towards a long-run target which depends on political institutional characteristics economy – orientation government, degree wage indexation, stability...

We document that accrual-based earnings management increased steadily from 1987 until the passage of Sarbanes Oxley Act (SOX) in 2002, followed by a significant decline after SOX. Conversely, level real activities declined prior to SOX and significantly SOX, suggesting firms switched methods also find evidence were particularly high period immediately preceding Consistent with these results, we just achieved important benchmarks used less accruals more when compared similar before Finally,...

The corporate information environment develops endogenously as a consequence of asymmetries and agency problems between investors, entrepreneurs, managers. We provide framework for analyzing the three main decisions that shape in capital markets setting: (1) managers' voluntary reporting disclosure decisions, (2) disclosures mandated by regulators, (3) third-party intermediaries (analysts). review current research on regulation, intermediaries, determinants economic consequences financial...

We examine earnings management behavior around SEOs, focusing on both real activities and accrual-based manipulation. Although research has addressed the issues of SEOs via manipulation, ours is first paper to put these two together. make three contributions literature. First, we document that firms use real, as well accrual-based, tools SEOs. Second, show how tendency for tradeoff versus varies cross-sectionally. find choices vary predictably a function ability accrual costs doing so. Our...

We document that firms' management of accounting earnings increased steadily from 1987 until the passage Sarbanes Oxley Act (SOX), with a significant increase during period prior to SOX, followed by decline after SOX. However, in preceding SOX was primarily poorly performing industries. also show informativeness over time, and there no change following Further, we find absolute earnings, but reduced for given surprise, as well abnormal return amount surprise. Finally, evidence supports...

We address two research questions in this study. First, is there a change the prevalence of expectations management to meet or beat analysts' earnings aftermath 2001–2002 accounting scandals and passage 2002 Sarbanes-Oxley Act (SOX)? Second, did mix among three mechanisms used for meeting beating expectations: accrual-based management, real Post-SOX period? hypothesize provide empirical evidence that observed drop frequency just associated with both (1) decline use downward upward period...

ABSTRACT We examine whether customer-base concentration has a differential impact on profitability for firms contracting with major government customers versus corporate customers. document that firm increases the of customers, but decreases attribute contrasting results to and demand uncertainty. Specifically, face lower uncertainty enables them realize more efficiency gains from customer-specific investments, whereas are exposed higher reduces investments. Overall, our study suggests...

We investigate the mechanism through which Sarbanes Oxley Act ( SOX ) was associated with changes in corporate investment strategies. document that passage of governance regulations followed by a significant decline pay‐performance sensitivity (Delta) and incentives to take risk (Vega) CEO s' compensation contracts. These contracts are related investments, including research development expenditures, capital investments acquisitions. Moreover, consistent rules directly affecting risk, we...

ABSTRACT To test hypotheses about earnings management, many studies investigate managers' manipulation of real activities (real REM). Tests using measures abnormal REM hinge critically on the measurement normal activities. Yet, there is no systematic evidence statistical properties commonly used measures. We provide such by documenting Type I error rates and power in literature. find these are often misspecified with that deviate from nominal significance level test, especially samples firms...

I investigate the determinants and economic consequences associated with firms' financial reporting choices. Recognizing endogeneity these choices, find evidence of a positive association between investors' demands for firm-specific information quality. also that higher proprietary costs are lower quality information. As consequences, suggests firms high policies have reduced asymmetries. However, after accounting choice, no significant choosing to provide enjoy cost equity capital. These...

Journal Article How Should Control Theory Be Used to Calculate a Time-Consistent Government Policy? Get access Daniel Cohen, Cohen CEPREMAP, Paris Search for other works by this author on: Oxford Academic Google Scholar Philippe Michel Universite de 1 The Review of Economic Studies, Volume 55, Issue 2, April 1988, Pages 263–274, https://doi.org/10.2307/2297581 Published: 01 1988 history Received: June 1985 Accepted: November 1987

Controlling for firm-specific characteristics determining financial reporting quality, this paper finds evidence of a negative association between firms' total risk and quality. While the results imply that firms providing information higher quality do not necessarily enjoy lower cost equity capital, significant relation is documented idiosyncratic risk. This suggests accounting an additional systematic priced factor as suggested in recent studies. The reported demonstrates importance...