This study examines whether application of IFRS by non-US firms results in accounting amounts comparable to those resulting from application of US GAAP by US firms. IFRS firms have greater accounting system and value relevance comparability with US firms when IFRS firms apply IFRS than when they...

We analyze the earnings information and stock prices of S&P500 firms and find that investors following S&P500 stocks (i) respond more to pro forma earnings than to GAAP earnings, (ii) respond to an emphasis on pro forma earnings, and (iii) are fixated on pro forma earnings. We provide the first...

I argue that external financial reporting quality has at best a 2nd order effect on firm value of U.S. publicly traded companies and that attempts to improve a firm's external reporting quality has a 3rd order effect on these firms' value. Recognizing that external financial reporting quality is...

This paper analyzes the impact of agents' risk aversion and other agency parameters on optimal bias in the performance measures used for incentive contracts. Prior research has shown that the limited liability of the agent results in a demand for accounting systems that are stringent compared to...

We model the dynamic survival of earnings fixated investors in a competitive securities market that allows for learning and arbitrage and that is populated by heterogeneous investors. Our model is distinct from those based on aggressive trading by overconfident investors. We prove that in the...

This paper studies how investors infer CEO commitment to honesty from earnings management and how these perceptions – in conjunction with investors’ own social and moral preferences – shape their investment choices. We conduct two laboratory experiments simulating investment choices. Our...

This article provides a comprehensive assessment of private firms' financing sources and their relation with financial reporting practices. We consider debt financing (bank financing, leasing, and government guarantees), equity financing (family ownership, government ownership, employee...

Recent accounting research examines the impact of the individual style of corporate decision-makers on corporate accounting policies. Based on this line of research, we explore how a chief financial officer's (CFO) preference for accounting conservatism affects accounting quality. We provide...