This study examines how the quality of corporate disclosures impacts the precision of information that financial analysts incorporate into their forecasts of annual earnings. Our empirical measures distinguish between individual analysts' common and idiosyncratic (uniquely private) information...

We rely on the theoretical prediction that financial misreporting peaks before economic busts to examine whether aggregate ex ante measures of the likelihood of financial misreporting improve the predictability of U.S. recessions. We consider six measures of misreporting and show that the...

Leone et al. (2006) conclude that CEO cash compensation is more sensitive to negative stock returns than to positive stock returns, due to Boards of Directors enforcing an ex post settling up on CEOs. Dechow (2006) conjectures that Leone et al.'s (2006) results might be due to the sign of stock...

We study the relation between the percentage of outstanding shares held by a firm's largest institutional owner and the bid-ask spread on that firm's shares, a measure of information risk. We find that the greater the percentage of shares held by the largest institutional investor, the greater...

This study examines the usefulness of interim income tax disclosures in predicting future earnings and analysts' forecast errors. The integral view of interim financial reporting requires managers to make their best estimate of the effective income tax rate expected to be in effect for the year....

We find that firms with higher quality disclosures have lower effective bid-ask spreads and lower adverse selection spread components. In contrast, we also find that firms with higher quality disclosures have lower quoted depths, resulting in no unambiguous conclusion regarding market liquidity...

Existing research suggests adverse selection spread components are positively related to trade size, consistent with informed traders trading in larger sizes. However, if market makers use quoted depth to limit losses to informed traders, the size of a trade relative to the depth quoted at the...

We evaluate the ability of the mean analyst forecast to effectively summarize analysts' information. We show analytically that even if analysts possess the ability and intention to forecast earnings truthfully, the mean forecast underweights analysts' private information. Thus, the mean does not...

This study examines whether and why the stock market assigns an incremental premium to the act of beating analyst earnings forecasts when the economy is unforecastable. Our study uses a novel measure of macroeconomic (macro) uncertainty from Jurado et al. (2015) that captures periods during...

Equity trading volume is increasingly moving to dark venues from lit exchanges. Theory provides opposing predictions about the effect of dark trading on stock price crash risk. The price efficiency theory predicts a negative relation while the liquidity externality theory predicts a positive...