This paper examines the influence of dividend covenants in corporate bonds on investment and operating performance. Prior literature analytically demonstrates that by limiting dividend distribution to shareholders, dividend restrictions effectively place a minimum on investment expenditures...

We examine whether accounting quality is associated with efficient investments in labor. Consistent with high quality accounting mitigating market frictions that lead to sub-optimal levels of investment, we find evidence that abnormal net hiring (measured as the absolute deviation from net...

We examine the role of financial reporting quality in facilitating corporate employment. Labor creates operating leverage due to wage rigidity and lacks collateral value, both of which increase credit risk and the importance of information in debt markets. We use firms' predetermined debt...

We study labor unions, an important stakeholder group that has not been a focus of the earnings smoothing literature. We posit that managers strike a balance between sheltering resources from employees’ profit sharing demands and catering to employees’ aversion to downside risk by smoothing...

We examine whether operating inflexibility posed by labor unions affects goodwill impairment. We predict such inflexibility hinders resource reallocation after acquisition, thereby preventing the acquiring firm from realizing synergies included in goodwill. Consistent with this prediction, we...

Prior literature refers to economic incentives to generate investment banking business and trading commissions as explanations for analyst publication of forecasts of firms' long-term earnings growth (LTG). Prior research also documents wildly optimistic LTG forecasts and a negative relation...

We examine how the adoption of International Accounting Standard No. 27 (hereafter, IAS 27) consolidation rules affects firm level investment efficiency. IAS 27, effective in Taiwan for fiscal years beginning after 2005, defines the “control” criteria for consolidated entities as majority...

We examine whether foreign investors influence a local firm's income smoothing, using a sample of Korean firms from 2000 to 2013. We hypothesize that given innate informational difficulties of overseas investments, foreign investors demand less noisy and more sustainable earnings, and to satisfy...

We examine the relation between a firm’s reliance on high-skill workers and its accounting conservatism. We find that reliance on high-skill workers is negatively related to accounting conservatism, presumably because firms with higher labor adjustment costs are more concerned about the cost...