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...

Prior research suggests a negative relation between disclosure and costs of capital, but Francis, Nanda, and Olsson (2008; hereafter, FNO) find the relation weakens considerably or disappears after controlling for earnings quality. Their results suggest that prior research may incorrectly attribute...

We investigate changes in financial reporting conservatism arising from disclosure-related shareholder lawsuits filed between 1996 and 2016. We find that sued firms respond to 10b-5 litigation with increased accounting conservatism. Consistent with a spillover effect, we also find that non-sued...

We use the BP, PLC oil spill to provide new evidence regarding the consequences of and motivations for environmental disclosures. We find that among oil and gas firms drilling in U.S. waters, those with greater environmental disclosure suffered smaller negative shareholder wealth effects...

Research suggests certain investors face significant information disadvantages, particularly during earnings announcements. We investigate whether financial analysis on Seeking Alpha, a prominent social media platform hosting original financial analysis, can mitigate this disadvantage. First, we...

Risk is an important earnings attribute in valuation models and the FASB's conceptual framework identifies providing information about risk as a primary objective for earnings. Managers and analysts, however, state that they provide non-GAAP earnings to produce numbers that are more focused on...

We examine commonly used indicators of non-GAAP exclusion quality and find they perform poorly at capturing low-quality (i.e., more persistent) exclusions. Further, low-quality non-GAAP earnings, as identified by any of the indicators used in prior research, are more value relevant than GAAP...

Income reported to shareholders (book income) and income reported to the U.S. Internal Revenue Service (taxable income) are alternative measures of U.S. corporate economic performance discussed in recent research, academic texts, and by U.S. legislators. In measuring economic performance,...

We examine the effect of Regulation FD on stock return volatility. Critics suggest FD has increased volatility by causing firms to (a) disclose less information, resulting in increased noise trading and pricing errors; or (b) substitute essentially continuous communication to the market through...