This paper offers an explanation for audit committee failures within a corporate governance context. The management of a firm sets up financial statements that are possibly biased. These statements are audited/reviewed by an external auditor and by an audit committee. Both agents report the...

The Northcote-Trevelyan Report (1854) recommended fundamental changes to public policy which included the replacement of patronage by examination as the basis for recruitment to the British Civil Service and of seniority by merit as the foundation for promotion decisions. This paper examines the...

This study investigates the relationships among industry specialist auditors, outside directors, and financial analysts. Specifically, we examine the effect of analyst coverage on the association between auditor industry specialization and outside directorship. We find that outside directors are...

This paper examines the directional effects of management earnings forecasts on the cost of equity capital. We find that forecasters of bad news experience a significant increase in the cost of equity capital in the month after their disclosure. Conversely, the cost of equity capital for good...

The study uses the idea of a multi-faceted managerial strategy and examines the effects of bounded rationality and ethical compass on insider trading, earnings management, and managerial effort. The analysis establishes that bounded rationality and the ethical compass play an important role in...

Executive compensation, especially cash bonus compensation, has come under fire by the Securities and Exchange Commission (SEC), the US Federal government, and the media for its role in the current economic crisis. Specifically, the SEC has argued that some compensation packages provide...

This research examines the effect on securities case settlements from the public focus on accounting fraud immediately following Enron and other large accounting debacles. In addition, to the extent that an 'Enron-effect' occurred, behavioral theory suggests that such an effect would likely...

We examine whether managers' decisions to capitalize or expense R&D expenditures convey information about the future performance of the firm. Focusing on a French setting where managers can choose to capitalize R&D expenditures under certain circumstances, we find that, after controlling for...

Meeting or beating analysts' forecasts is a topic of considerable interest in the academic and business communities. Some studies indicate a favorable market response when firms meet or beat analysts' earnings forecasts, but others suggest managers opportunistically manage earnings to achieve...

Conflict of interests between controlling shareholders and minority shareholders could affect executive compensation contracts. In this paper, we use data on Chinese listed companies and show that controlling shareholders' tunneling reduces the pay-performance sensitivity of executive...