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Algorithmic Trading and Forward‐Looking MD&A Disclosures Journal of Accounting Research (IF 4.446) Pub Date : 2024-04-02 WAYNE B. THOMAS, YIDING WANG, LING ZHANG
This study examines how algorithmic trading (AT) affects forward‐looking disclosures in Management Discussion and Analysis (MD&A) of annual reports. We predict and find evidence that AT relates negatively to modifications in year‐over‐year forward‐looking MD&A disclosures. This evidence is consistent with AT reducing investors’ demand for fundamental information, which reduces managers’ incentives
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The Impact of Information Frictions Within Regulators: Evidence from Workplace Safety Violations Journal of Accounting Research (IF 4.446) Pub Date : 2024-04-01 ANEESH RAGHUNANDAN, THOMAS G. RUCHTI
The Occupational Safety and Health Administration (OSHA) is decentralized, wherein field offices coordinated at the state level undertake inspections. We study whether this structure can lead to interstate frictions in sharing information and how this impacts firms’ compliance with workplace safety laws. We find that firms caught violating in one state subsequently violate less in that state but violate
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Issue Information ‐ Standing Call for Proposals for Journal of Accounting Research (IF 4.446) Pub Date : 2024-03-30
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Issue Information ‐ Request for Papers Journal of Accounting Research (IF 4.446) Pub Date : 2024-03-30
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Issue Information ‐ Request for Registered Reports Journal of Accounting Research (IF 4.446) Pub Date : 2024-03-30
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Social Comparison on Multiple Tasks: Sacrificing Overall Performance for Local Excellence? Journal of Accounting Research (IF 4.446) Pub Date : 2024-03-26 MAXIMILIAN KOHLER, MATTHIAS D. MAHLENDORF, MISCHA SEITER, TIMO VOGELSANG
This field experiment investigates how different levels of aggregation in relative performance information (RPI) impact employee performance in environments with multiple tasks. We randomly assign store employees of a retail chain to three groups: RPI on overall performance (control group), RPI on separate tasks, and RPI on both overall performance and separate tasks. We do not find evidence that providing
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When Employees Go to Court: Employee Lawsuits and Talent Acquisition in Audit Offices Journal of Accounting Research (IF 4.446) Pub Date : 2024-03-25 JADE HUAYU CHEN
I examine whether employee‐initiated lawsuits against an audit office adversely affect its ability to attract high‐quality talent and deliver quality audits. I posit that employee lawsuits erode prospective employees’ perceptions of an office, diminishing their willingness to join. Using a comprehensive data set of individual auditor profiles, I find a decline in the quality of newly hired auditors
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Home Sweet Home: CEOs Acquiring Firms in Their Birth Countries Journal of Accounting Research (IF 4.446) Pub Date : 2024-03-19 ANTONIO MARRA, ANGELA PETTINICCHIO, RON SHALEV
We find that foreign‐born CEOs are more inclined than domestic‐born ones to acquire across borders, and that this inclination is explained by their preference for targets in their birth country. This preference is motivated by foreign‐born CEOs’ information advantage in their birth country and by these CEOs’ desire to give back to the birth country. CEOs’ desire to help their birth country also influences
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Equity Incentive Plans and Board of Director Discretion over Equity Grants Journal of Accounting Research (IF 4.446) Pub Date : 2024-03-13 BRIAN CADMAN, RICHARD CARRIZOSA
Equity compensation is granted out of an equity incentive plan that must be approved by shareholders and cedes discretion over equity grants to boards of directors. We predict and find that equity plan proposals give boards more discretion over grants when the firm faces greater labor market forces and more volatile stock returns. When examining votes, we find that shareholders are less likely to support
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How Does Management Voluntary Disclosure Behavior Influence Auditors’ Judgments? Journal of Accounting Research (IF 4.446) Pub Date : 2024-03-05 SEAN M. HILLISON, KAMBER D. VITTORI
Forward-looking information, often used by auditors to evaluate complex estimates and form conclusions about going-concern audit report modifications, is commonly disclosed voluntarily by U.S. public companies. We experimentally examine how this disclosure behavior affects auditors’ skepticism toward such information. Prior research has shown that investors and analysts frequently interpret voluntarily
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Bank Supervision and Organizational Capital: The Case of Minority Lending Journal of Accounting Research (IF 4.446) Pub Date : 2024-03-05 BYEONGCHAN AN, ROBERT BUSHMAN, ANYA KLEYMENOVA, RIMMY E. TOMY
We investigate whether improvements in banks' organizational capital and control systems facilitate increased loan origination to minority borrowers. We focus on bank supervisors' enforcement decisions and orders (EDOs) against banks and hypothesize that EDO-imposed improvements in loan policies, internal governance, and employee training mitigate deficiencies in credit assessments and lending decisions
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The Real Effects of Supply Chain Transparency Regulation: Evidence from Section 1502 of the Dodd–Frank Act Journal of Accounting Research (IF 4.446) Pub Date : 2024-02-29 BOK BAIK, OMRI EVEN-TOV, RUSSELL HAN, DAVID PARK
Section 1502 of the Dodd–Frank Act requires SEC-registered issuers to conduct supply chain due diligence and submit conflict minerals disclosures (CMDs) that indicate whether their products contain tantalum, tin, tungsten, or gold (3TG) sourced from the Democratic Republic of the Congo (DRC) or its neighboring countries (“covered countries”). Consistent with the reputational cost hypothesis, we find
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Wrong Kind of Transparency? Mutual Funds’ Higher Reporting Frequency, Window Dressing, and Performance Journal of Accounting Research (IF 4.446) Pub Date : 2024-02-20 XIANGANG XIN, P. ERIC YEUNG, ZILONG ZHANG
This study examines whether mandatory increase in reporting frequency exacerbates agency problems. Utilizing the setting of the 2004 SEC mandate on increased reporting frequency of mutual fund holdings, we show that increased reporting frequency elevates window dressing (buying winners or selling losers shortly before the end of the reporting period). This effect is driven by low-skill fund managers’
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Economics of Information Search and Financial Misreporting Journal of Accounting Research (IF 4.446) Pub Date : 2024-02-14 JUNG MIN KIM
I examine how investors’ search for different types of information affects managers’ reporting decisions. I distinguish investors’ search for information about firm fundamentals (“fundamental search”) from their search for information about managers’ incentives (“incentive search”). Based on a parsimonious model of misreporting, I predict that fundamental search reduces the earnings response coefficient
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Earnings News and Over-the-Counter Markets Journal of Accounting Research (IF 4.446) Pub Date : 2024-02-07 STEFAN J. HUBER, CHONGHO KIM, EDWARD M. WATTS
We document significant increases in bond market liquidity around earnings announcements. These increases are attributed to decreased search and bargaining costs, which arise from the over-the-counter (OTC) nature of bond markets and outweigh increases in information asymmetry during these periods. Our evidence traces reductions in search and bargaining costs to two sources around earnings announcements:
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Payment Practices Transparency and Customer-Supplier Dynamics Journal of Accounting Research (IF 4.446) Pub Date : 2024-02-07 JODY GREWAL, ADITYA MOHAN, GERARDO PÉREZ-CAVAZOS
We exploit the introduction of the Payment Practices Disclosure Regulation in the United Kingdom (UK) to examine the effects of mandating disclosure of customer-supplier payment practices. We find that nondisclosing small and medium-sized enterprises (SMEs) experience a reduction in their accounts receivable by 8.3%, consistent with an acceleration of their trade credit collections. Further, SMEs exhibit
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Fraud Power Laws Journal of Accounting Research (IF 4.446) Pub Date : 2023-12-30 EDWIGE CHEYNEL, DAVIDE CIANCIARUSO, FRANK S. ZHOU
Using misstatement data, we find that the distribution of detected fraud features a heavy tail. We propose a theoretical mechanism that explains such a relatively high frequency of extreme frauds. In our dynamic model, a manager manipulates earnings for personal gain. A monitor of uncertain quality can detect fraud and punish the manager. As the monitor fails to detect fraud, the manager's posterior
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Occupational Licensing and Minority Participation in Professional Labor Markets Journal of Accounting Research (IF 4.446) Pub Date : 2023-12-12 ANDREW G. SUTHERLAND, MATTHIAS UCKERT, FELIX W. VETTER
We examine the staggered adoption of additional educational requirements (“150-hour rule”) for Certified Public Accountants (“CPAs”) to understand the effects of occupational licensing on minority participation in professional labor markets. The 150-hour rule increased the educational requirement for CPAs from 120 to 150 credit hours, effectively adding a fifth year of study. We find a 13% greater
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The Impact of Credit Market Development on Auditor Choice: Evidence from Banking Deregulation Journal of Accounting Research (IF 4.446) Pub Date : 2023-12-06 GUS DE FRANCO, YUYAN GUAN, YIBIN ZHOU, XINDONG ZHU
We exploit the staggered state-level adoption of the Riegle-Neal Interstate Banking and Branching Efficiency Act (IBBEA) to examine how banking deregulation and the resulting increase in bank competition affect firms’ auditor choices. We find that an exogenous increase in the degree of interstate branch banking deregulation leads to a reduction in firms’ propensity to engage a Big N or industry expert
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Transparency in Hierarchies Journal of Accounting Research (IF 4.446) Pub Date : 2023-10-20 CHRISTIAN HOFMANN, RAFFI J. INDJEJIKIAN
We use an agency model to address the benefits and costs of transparency in a hierarchical organization in which the principal employs a manager entrusted with contracting authority and several workers, all under conditions of moral hazard. We define the principal's transparency choices as a decision to allow workers to observe their coworkers’ performances (observability) and as an investment in monitoring
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Treatment of Accounting Changes and Covenant Violation Errors Journal of Accounting Research (IF 4.446) Pub Date : 2023-10-19 CHUNMEI ZHU
GAAP provisions in loan contracts specify how to address the effect of accounting changes on financial covenants. I document a pronounced upward trend in and the dominance of frozen-on-request (FOR) GAAP provisions, which incorporate accounting changes unless either the borrower or the lender requests a freeze. FOR GAAP streamlines the process of incorporating accounting changes into covenant calculations
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What Role Do Boards Play in Companies with Visionary CEOs? Journal of Accounting Research (IF 4.446) Pub Date : 2023-10-16 XU JIANG, VOLKER LAUX
Visionary CEOs have strong beliefs about the right course of action for their firms. How should a board of directors that does not necessarily share the visionary CEO's confidence advise and monitor the CEO? We consider a model in which the board can acquire costly information about the firm's optimal strategic direction. The board not only advises the CEO on strategy, but also must approve it, and
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Regulatory Transparency and Regulators’ Effort: Evidence from Public Release of the SEC's Review Work Journal of Accounting Research (IF 4.446) Pub Date : 2023-10-12 RUI GUO, Xiaoli (Shaolee) Tian
Using the public release of comment letters on EDGAR to capture a regime shift toward regulatory transparency, we examine whether an increase in transparency affects regulators’ effort and work performance. We find that the SEC staff reviews more filings and more documents per filing following the disclosure regime shift. These effects are incrementally stronger for firms with comment letters that
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Information Complementarities and the Dynamics of Transparency Shock Spillovers Journal of Accounting Research (IF 4.446) Pub Date : 2023-10-03 SHANTANU BANERJEE, SUDIPTO DASGUPTA, RUI SHI, JIALI YAN
We show that information complementarities play an important role in the spillover of transparency shocks. We exploit the revelation of financial misconduct by S&P 500 firms, and in a “Stacked Difference-in-Differences” design, find that the implied cost of capital increases for “close” industry peers of the fraudulent firms relative to “distant” industry peers. The spillover effect is particularly
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Corporate R&D Investments Following Competitors’ Voluntary Disclosures: Evidence from the Drug Development Process Journal of Accounting Research (IF 4.446) Pub Date : 2023-09-25 YUE ZHANG
This paper examines the role of peer firm disclosures in shaping corporate research and development (R&D) investments. Drawing on models of two-stage R&D races, I hypothesize that a firm could be either deterred or encouraged by peer disclosure of interim R&D success, depending on peer firms’ R&D strength in the race. Using granular, project-level data on clinical trials in the drug development process
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Target Setting in Hierarchies: The Role of Middle Managers Journal of Accounting Research (IF 4.446) Pub Date : 2023-09-15 JAN BOUWENS, CHRISTIAN HOFMANN, NINA SCHWAIGER
We explore how a supervisor's hierarchical rank affects the extent to which employees’ targets reflect their past performance. Literature documents that supervisors do not fully ratchet targets for past performance, arguably because the commitment not to penalize successful employees with more difficult targets alleviates the severity of the ratchet effect. We argue that commitment is less credible
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By What Criteria Do We Evaluate Accounting? Some Thoughts on Economic Welfare and the Archival Literature Journal of Accounting Research (IF 4.446) Pub Date : 2023-09-15 RAY BALL
The economic role of an accounting regime is to increase welfare through its effects—in conjunction with complementary institutions—on firm and household behavior. I review three major streams of the archival literature (real effects; price effects, including value relevance; and costly contracting), in terms of what they can and cannot reveal as proxies for welfare effects. One conclusion is that
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Audit Partners’ Role in Material Misstatement Resolution: Survey and Interview Evidence Journal of Accounting Research (IF 4.446) Pub Date : 2023-08-18 ELDAR MAKSYMOV, MARK PEECHER, ANDREW SUTHERLAND, JOSEPH WEBER
Auditors are expected to identify and resolve material misstatements (MMs) in management's financial statements. However, beyond the audit opinion, the audit process is opaque. To address this, we independently survey 462 audit partners and interview 24 audit partners, CFOs, and audit committee members on how partners assess and address MM risk, resolve MMs, and the consequences of MMs. Partners identify
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How Does Carbon Footprint Information Affect Consumer Choice? A Field Experiment Journal of Accounting Research (IF 4.446) Pub Date : 2023-08-14 BIANCA BEYER, RICO CHASKEL, SIMONE EULER, JOACHIM GASSEN, ANN-KRISTIN GROßKOPF, THORSTEN SELLHORN
This paper reports the results of a field experiment investigating how attributes of carbon footprint information affect consumer choice in a large dining facility. Our hypotheses and research methods were preregistered via the Journal of Accounting Research’s registration-based editorial process. Manipulating the measurement units and visualizations of carbon footprint information on food labels,
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Out of Site, Out of Mind? The Role of the Government-Appointed Corporate Monitor Journal of Accounting Research (IF 4.446) Pub Date : 2023-08-09 LINDSEY A. GALLO, KENDALL V. LYNCH, RIMMY E. TOMY
We study the role of a relatively new type of external firm monitor, an on-site government-appointed Corporate Monitor, and assess whether such appointments reduce firms' propensity to violate laws. Using a sample of deferred and nonprosecution agreements, we first document the determinants of Monitor appointment. We find firms that voluntarily disclose wrongdoing and have more independent directors
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The Effect of Client Industry Agglomerations on Auditor Industry Specialization Journal of Accounting Research (IF 4.446) Pub Date : 2023-08-09 W. ROBERT KNECHEL, DEVIN WILLIAMS
Prior research on auditor industry specialization documents fee premiums for local audit offices that are industry specialists. This research assumes that the effects of specialization are uniform across markets. We examine industry specialization based on the economic theory of industry agglomeration (geographic areas with high industry concentration). Agglomeration economies can facilitate access
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Ethnic Minority Analysts’ Participation in Public Earnings Conference Calls Journal of Accounting Research (IF 4.446) Pub Date : 2023-08-08 RACHEL W. FLAM, JEREMIAH GREEN, JOSHUA A. LEE, NATHAN Y. SHARP
We investigate ethnic minority and nonminority sell-side analysts’ participation in public earnings conference calls. We find that minority analysts are underrepresented in conference call Q&A sessions, and minority analysts who do participate on the calls experience lower levels of prioritization than do nonminority analysts. Minority analysts’ lower participation rates are partially but not fully
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Externalities of Financial Statement Fraud on the Incoming Accounting Labor Force Journal of Accounting Research (IF 4.446) Pub Date : 2023-08-04 ROBERT R. CARNES, DANE M. CHRISTENSEN, PAUL E. MADSEN
Financial statement fraud generates many negative effects, including reducing people's willingness to participate in the stock market. If it also stigmatizes accounting, it may similarly adversely affect the quantity and quality of workers willing to become accountants, thereby potentially creating negative effects for years to come. We examine the impact of fraud on the labor force entering the accounting
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Reciprocity in Corporate Tax Compliance—Evidence from Ozone Pollution Journal of Accounting Research (IF 4.446) Pub Date : 2023-07-26 TRAVIS CHOW, ZHONGWEN FAN, LI HUANG, OLIVER ZHEN LI, SIMAN LI
In a tax—public goods reciprocity framework between citizens and the state, managers view taxes as a payment to the government in exchange for public goods, and hence they adjust their willingness to pay taxes as public good quality changes. We show that corporate tax planning intensity increases with ground-level ozone pollution. Revisions in ozone pollution regulations cause counties that failed
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The Financially Material Effects of Mandatory Nonfinancial Disclosure Journal of Accounting Research (IF 4.446) Pub Date : 2023-07-18 BRIAN GIBBONS
Complaints from institutional investors suggest that principles-based disclosure regimes that rely on financial materiality standards produce inadequate nonfinancial environmental and social (E&S) information. Using the staggered introduction of 40 country-level regulations that mandate disclosure, I document that reporting E&S information relates to increased investment from institutional owners and
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Economic Consequences of Transparency Regulation: Evidence from Bank Mortgage Lending Journal of Accounting Research (IF 4.446) Pub Date : 2023-06-23 ALLISON NICOLETTI, CHRISTINA ZHU
We examine the economic consequences of a rule designed to improve consumers' understanding of mortgage information. The 2015 TILA-RESPA Integrated Disclosures rule (TRID) simplifies the mortgage disclosures provided to consumers. As a consequence, TRID-affected mortgages become a less attractive investment opportunity to banks. Our main results document that mortgage applications affected by TRID
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Do Governments Hide Resources from Unions? The Influence of Public Sector Unions on Reported Discretionary Fund Balance Ratios Journal of Accounting Research (IF 4.446) Pub Date : 2023-06-21 ANGELA K. GORE, YUAN JI, SUSAN L. KULP
We explore whether municipalities with public sector unions exploit aspects of governmental (or “fund”) accounting to obscure the availability of discretionary resources in fund balance accounts, relative to municipalities without public sector unions. We first investigate whether governments with unions report higher proportions of discretionary resources outside of the general fund, a primary measure
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Price Rigidities and the Value of Public Information Journal of Accounting Research (IF 4.446) Pub Date : 2023-06-08 LIFENG GU, JIN XIE
Firms' inflexibility in adjusting output prices to economic shocks exacerbates information asymmetry with respect to firms' profits, but public information on firms' cost structure mitigates this problem. We construct a novel form of public information from economic statistics disclosed by the government and find that such public information significantly reduces inflexible-price firms' bid–ask spreads
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The Real Effects of Modern Information Technologies: Evidence from the EDGAR Implementation Journal of Accounting Research (IF 4.446) Pub Date : 2023-06-08 ITAY GOLDSTEIN, SHIJIE YANG, LUO ZUO
Using the implementation of the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system from 1993 to 1996 as a shock to information dissemination technologies, we examine how a significant reduction in disclosure processing costs affects the real economy. We find that the EDGAR implementation leads to an increase in corporate investment and that this effect is concentrated in value firms
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Does Public Firms’ Mandatory IFRS Reporting Crowd Out Private Firms’ Capital Investment? Journal of Accounting Research (IF 4.446) Pub Date : 2023-05-26 JIANCHENG (DUNCAN) LIU, WEI SHI, CHENG ZENG, GUOCHANG ZHANG
We investigate how the mandatory adoption of International Financial Reporting Standards (IFRS) by publicly listed firms in the European Union affects peer private firms. We find that private firms’ capital investment decreases significantly after the IFRS mandate, relative to public firms. Private firms also display decreased investment when benchmarked against firms relatively insulated from the
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2022 Excellence in Refereeing Journal of Accounting Research (IF 4.446) Pub Date : 2023-05-17 Mycah L. Harrold
The Journal of Accounting Research is proud to recognize our top referees of the previous calendar year. The senior editors selected those named below for their “2022 Excellence in Refereeing” based on the quality and the number of reviews they had performed for the journal during the 2022 calendar year. We thank the referees for their invaluable services to the journal. Jannis Bischof, University
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Private Equity and Local Public Finances Journal of Accounting Research (IF 4.446) Pub Date : 2023-05-11 MARCEL OLBERT, PETER H. SEVERIN
We study the economic impact of private equity (PE) investments on local governments, which are important corporate stakeholders. Examining over 11,000 deals and private firm data in Europe, we document that target firms' effective tax rates and total tax expenses decrease by 15% and 13% after PE deals. At the same time, target firms expand their capital expenditures and firm boundaries, but do not
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Flu Fallout: Information Production Constraints and Corporate Disclosure Journal of Accounting Research (IF 4.446) Pub Date : 2023-05-02 CHEN CHEN, LEONARD LEYE LI, LOUISE YI LU, RENCHENG WANG
Using influenza epidemic data, we examine how constraints on corporate information production affect disclosure policies. We find that firms in areas with higher flu activity are less likely to issue short-run earnings forecasts and more likely to issue long-run earnings forecasts. These results are more pronounced when the information production process is more complex, when managers face a greater
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Auditors’ Use of In-House Specialists Journal of Accounting Research (IF 4.446) Pub Date : 2023-04-23 ALEKSANDRA “ALLY” B. ZIMMERMAN, DERECK BARR-PULLIAM, JOON-SUK LEE, MIGUEL MINUTTI-MEZA
Using Public Company Accounting Oversight Board (PCAOB) inspection data from 2006 to 2018, we examine the use of auditor-employed specialists in audit engagements. First, we find that the use of specialists is increasingly prevalent and related to clients’ size and complex accounting estimates. Second, the use of specialists is positively associated with the incidence of audit process deficiencies
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Racial Diversity Exposure and Firm Responses Following the Murder of George Floyd Journal of Accounting Research (IF 4.446) Pub Date : 2023-04-13 KARTHIK BALAKRISHNAN, RAFAEL COPAT, DANIELA DE LA PARRA, K. RAMESH
George Floyd's murder caused many firms to reveal how exposed they are to racial diversity issues. We examine investor and firm behaviors after this socially significant event to provide evidence on the valuation effects of the exposure and ensuing corporate responses. We develop a text-based measure of a firm's exposure to racial diversity issues from conference call transcripts and find that, after
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Gaming the IRS’ Third-Party Reporting System: Evidence from Pari-Mutuel Wagering Journal of Accounting Research (IF 4.446) Pub Date : 2023-04-06 DUKE FERGUSON
This study examines whether taxpayers intentionally avoid Internal Revenue Service (IRS) third-party reports. In 2017 an IRS amendment created a quasi-exogenous shock that reduced third-party tax reporting of pari-mutuel gambling winnings from certain types of wagers. I consider the effect that this rule change had on taxpayer behavior. Using a difference-in-differences research design comparing thoroughbred
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The Impact of Open Data on Public Procurement Journal of Accounting Research (IF 4.446) Pub Date : 2023-04-04 RAPHAEL DUGUAY, THOMAS RAUTER, DELPHINE SAMUELS
We examine how open procurement data affect the competitiveness of award procedures and the execution of government contracts. The European Union recently made its historical procurement notices available for bulk download in a cohesive and user-friendly database. Comparing government contracts above and below EU procurement size thresholds, we find that, after the open data initiative, procurement
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Executive Compensation Tied to ESG Performance: International Evidence Journal of Accounting Research (IF 4.446) Pub Date : 2023-03-30 SHIRA COHEN, IGOR KADACH, GAIZKA ORMAZABAL, STEFAN REICHELSTEIN
Using a wide sample of international publicly traded firms, this paper studies the rapidly increasing practice of incorporating Environmental, Social, and Governance (ESG) metrics in executive compensation contracts. Our evidence suggests that this compensation practice varies at the country, industry, and firm levels in ways that are consistent with efficient incentive contracting. We also observe
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Did the FASB Codification Reduce the Complexity of Applying U.S. GAAP? Journal of Accounting Research (IF 4.446) Pub Date : 2023-03-27 Oliver Binz, Robert Hills, Matthew Kubic
We examine whether the Financial Accounting Standards Board (FASB) Codification made it easier for preparers and auditors to locate relevant accounting guidance. We find that areas of U.S. GAAP with more dispersed and voluminous guidance before the Codification experience a larger post-Codification reduction in restatements. We find a similar decline in SEC comment letter questions referencing areas
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How Do Firms Respond to Political Uncertainty? Evidence from U.S. Gubernatorial Elections Journal of Accounting Research (IF 4.446) Pub Date : 2023-03-27 ANDREW BIRD, STEPHEN A. KAROLYI, THOMAS G. RUCHTI
We examine the joint response to political uncertainty along two margins: changes in real activity and voluntary disclosure. We focus on within-firm variation in exposure to ex ante competitive U.S. gubernatorial elections using data on preelection poll margins and firms’ state exposures. Despite real activity falling in the years leading up to a close election, we find that voluntary disclosure increases
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Transmission Effects of ESG Disclosure Regulations Through Bank Lending Networks Journal of Accounting Research (IF 4.446) Pub Date : 2023-03-26 LYNN LINGHUAN WANG
This paper studies whether and how environmental, social, and governance (ESG) disclosure regulations imposed on banks generate transmission effects along the lending channel. I use a setting of U.S. firms borrowing from non-U.S. banks and exploit the staggered adoption of ESG disclosure regulations in banks’ home countries. I find that exposed borrowers of affected banks improve their environmental
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Financial Reporting Quality and Wage Differentials: Evidence from Worker-Level Data Journal of Accounting Research (IF 4.446) Pub Date : 2023-03-18 JUNG HO CHOI, BRANDON GIPPER, SARA MALIK
We examine whether financial reporting quality affects worker wages using employer-employee matched data in the United States. We find that low financial reporting quality is associated with a compensating wage differential—that is, a risk premium—using three distinct approaches while controlling for worker characteristics by (1) regressing wages on firm-year–level and firm-level reporting quality
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Beyond Performance: Does Assessed Potential Matter to Employees’ Voluntary Departure Decisions? Journal of Accounting Research (IF 4.446) Pub Date : 2023-03-08 CAROLYN DELLER
Firms are increasingly implementing performance–potential assessment systems, whereby supervisors evaluate employees’ current performance and future-oriented potential (i.e., promotion prospects). Whether retention is greatest for high performance–high potential (HiPo) employees under such a system is an empirical question—while the “promise” of a promotion may aid retention, these employees likely
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Assessing the Social Impact of Corporations: Evidence from Management Control Interventions in the Supply Chain to Increase Worker Wages Journal of Accounting Research (IF 4.446) Pub Date : 2023-02-08 GREGORY DISTELHORST, JEE-EUN SHIN
This study examines an initiative by a large multinational garment retailer (H&M Group) to increase wages at its supplier factories by intervening in their wage-related management practices. Difference-in-differences estimates based on eight years of data from over 1,800 factories show that the interventions were associated with an average real wage increase of approximately 5% by the third year of
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Promote Internally or Hire Externally? The Role of Gift Exchange and Performance Measurement Precision Journal of Accounting Research (IF 4.446) Pub Date : 2023-02-06 ERIC W. CHAN, JEREMY B. LILL, VICTOR S. MAAS
Managers often face the choice between promoting an internal employee and hiring an external candidate. Using an interactive experiment, we examine the drivers of managers’ promote/hire decisions and internal employees’ behavior before and after those decisions. Consistent with gift exchange theory, we find that employees exert costly effort to increase the chance of being promoted, and they raise
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Do Jobseekers Value Diversity Information? Evidence from a Field Experiment and Human Capital Disclosures Journal of Accounting Research (IF 4.446) Pub Date : 2023-02-03 JUNG HO CHOI, JOSEPH PACELLI, KRISTINA M. RENNEKAMP, SORABH TOMAR
We examine how information about the diversity of a potential employer's workforce affects individuals’ job-seeking behavior. We embed a field experiment in job recommendation emails from a leading career advice agency in the United States. The experimental treatment involves highlighting a diversity metric to jobseekers. Our results indicate that disclosing diversity scores in job postings leads jobseekers
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Greenhouse Gas Disclosure and Emissions Benchmarking Journal of Accounting Research (IF 4.446) Pub Date : 2023-02-02 SORABH TOMAR
I examine the effects of the U.S. Greenhouse Gas (GHG) Reporting Program, which requires thousands of industrial facilities to measure and report their GHG emissions. I show that facilities reduce their GHG emissions by 7.9% following the disclosure of emissions data. The evidence indicates that benchmarking—whereby facilities use the disclosures of their peers to assess their own relative GHG performance—spurs
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Financial Reporting and Employee Job Search Journal of Accounting Research (IF 4.446) Pub Date : 2023-01-02 ED deHAAN, NAN LI, FRANK S. ZHOU
We investigate the effects of financial reporting on current employee job search, that is, whether firms' public financial reports cause their employees to reevaluate their jobs and consider leaving. We develop theory for why current employees use earnings announcements (EAs) to inform job search decisions, and empirically investigate job search based on employees' activity on a popular job market
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Standard Error Biases When Using Generated Regressors in Accounting Research Journal of Accounting Research (IF 4.446) Pub Date : 2022-12-26 WEI CHEN, PAUL HRIBAR, SAM MELESSA
We analyze the standard error bias associated with the use of generated regressors—independent variables generated from first-step regressions—in accounting research settings. Under general conditions, generated regressors do not affect the consistency of coefficient estimates. However, commonly used generated regressors can cause standard errors to be understated. Problematic generated regressors