We document widespread adoption of adjustments to earnings for performance evaluation; 84% of our sample of S&P 1500 firms use adjusted earnings for bonus compensation. We find that the transactions removed from adjusted earnings vary widely and include both transitory and non-transitory items....

This study investigates the effect of real earnings management on two important aspects of earnings quality: earnings persistence and its informativeness about future cash flows. I focus on real earnings management through the abnormal reduction in discretionary expenditures and investigate how...

Beatty, Liao, and Wu (2013) document that financial misreporting by prominent firms distorts peer firms' capital investment decisions. Using a large sample of firms subject to SEC and DOJ enforcement actions for accounting misstatements, I establish three important generalizations. First, the...

I investigate how top management cohesiveness/bonding affects firms' financial reporting risk. I operationalize team cohesiveness/bonding by measuring the social connections among the top executives of firms through four types of social networks: educational background, employment history,...

On March 21, 2022, the US Securities and Exchange Commission (SEC) proposed new climate change disclosure rules that would require companies to provide extensive and specific disclosures about the impact of climate change on their corporate policies and financial performance in mandatory company...

We find irregular patterns in the distribution of firms’ reported quarterly gross margin percentages. Specifically, there is significant bunching around percentage integers that are highly round (e.g., multiples of 10, such as 30%, 40%, etc.) or are neatly “divisible” (e.g., 25%, 75%)...

We investigate whether investor attention is associated with the pricing (and mispricing) of earnings news where investor attention is measured using social media activity. We find that high levels of investor attention are associated with greater sensitivity of earnings announcement returns to...

We examine the association between disagreement and trading volume around news events using a novel measure of disagreement that overcomes two challenges Bamber et al. (2011) identify as facing earlier measures. Specifically, we measure disagreement based on heterogenous opinions about firm...