We explore how an accounting measure of information asymmetry between lead and participating lenders influences syndication structures by examining whether lead lenders' commercial and industrial (C&I) loan loss provision validity affects the fraction of loans they retain. Consistent with C&I...

Although balanced budgets are widely used throughout the world, there is considerable debate on whether they are effective. Poterba (1997) provides two theories on the effectiveness of balanced budget restrictions. The institutional irrelevance view suggests that balanced budget rules are...

We investigate the impact of accounting discretion on managers' incentives to invest in innovative projects. Using a theoretical model in which a manager chooses between an innovative and a conventional project, we show that allowing accounting discretion incentivizes the manager to invest in...

Using proprietary PCAOB data on audit firms' internal inspection programs, we study the effect of audit firm internal governance on auditor behavior and financial reporting quality. Internal inspection programs are an important quality control mechanism within large audit firms. We find that...

This paper investigates whether gubernatorial elections affect state governments’ accounting choices. We identify two accounts, the compensated absence liability account and the unfunded pension liability account, which provide incumbent gubernatorial candidates with flexibility for...

We survey research on financial accounting in the banking industry. After providing a brief background of the micro-economic theories of the economic role of banks, why bank capital is regulated, and how the accounting regime affects banks' economic decisions, we review three streams of...