Abstract This paper examines the relationship of financial reporting to corporate innovation. Given importance a high‐quality information system and coordination innovation, I predict positive association between quality future My empirical evidence is consistent with this prediction. also find some that innovation more pronounced for firms intensive internal research development activities in competitive industries. The main findings are robust using an instrumental variable approach as...

Abstract Prior research provides evidence consistent with managers using real earnings management (REM) to increase earnings. This study examines whether short sellers exploit the overvaluation of firms employing REM. I find that more REM have higher subsequent interest. The positive relation between and interest is pronounced in settings where costs associated accrual‐based are high, such as when a firm has low accounting flexibility or faces greater scrutiny from high quality auditor. also...

Purpose The purpose of this paper is to examine the relation between executive compensation peer firms and earnings management. Given prevalence competitive benchmarking practice in compensation, chief officer (CEO) potential can influence behavior CEOs at their current firms. Design/methodology/approach This employs an ordinary least squares regression model test whether CEO other similar product markets associated with a firm’s accruals It also firm fixed effects regressions control for...

ABSTRACT A growing literature provides evidence that peer considerations play a central role in shaping firm’s behavior. This paper documents the frequency of forced CEO turnovers by product market firms is negatively associated with real earnings management. I find disciplinary turnover explains observed relation. These effects are stronger when suspected to engage management meet or just beat benchmarks. some peers’ reveal link between and subsequent operating failure. Overall, my findings...

Climate disasters not only impose substantial economic costs on firms that are directly exposed, but they also generate significant externalities. In this study, I examine how climate hitting product market peers affect management forecasts of a firm was exposed to disasters. find is less likely issue an earnings forecast when its experienced The spillover effects mitigated by the focal firm's past disaster experience or change-related regulatory intervention. My findings robust controlling...

Purpose The purpose of this paper is to investigate whether sell-side equity analysts use labor cost information when forming expectations future earnings. availability disaggregated earnings components will benefit financial statement users the extent that additional released by a firm useful infer differential persistence components. Design/methodology/approach This employs ordinary least squares, logit, and two-stage Heckman (1979) regressions which test incorporate into their forecasts...

Purpose This study examines the relation between pay inequalities in top management teams and how efficiently firms convey valuation-relevant information to investors. Given that reward comparisons with reference groups create feelings of inequity, team can impair environment. manifests into lengthier or less readable financial reports. Design/methodology/approach paper employs an ordinary least squares (OLS) regression model test whether distribution is associated readability annual report....

Abstract Research Question/Issue This study addresses how financial analysts’ information environment varies with the extent to which insiders’ voting rights diverge from their cash flow (i.e., control divergence) in firm. Findings/Insights finds evidence that both public and private precisions are decreasing divergence for a sample of US dual class share firms. Dual firms feature ownership structures allow us measure between rights. Furthermore, we document these effects more pronounced...

Climate disasters not only impose substantial economic costs on firms that are directly exposed, but they also generate significant externalities. In this study, I examine how climate hitting product market peers affect management forecasts of a firm was exposed to disasters. find is less likely issue an earnings forecast when its experienced The spillover effects mitigated by the focal firm’s past disaster experience or change-related regulatory intervention. My findings robust controlling...

Purpose The purpose of this paper is to examine whether and how product market relationships are related firms’ real activities manipulation (RAM), which refers managers’ aggressive operating practices. Given the importance suppliers’ relationship-specific investments a firm’s competitiveness, need for expected influence RAM. Design/methodology/approach This adopts Nunn’s (2007) proxy relationship-specificity four proxies It employs an ordinary least squares regression model test firm...