We examine whether option prices correct for predictable bias in stock prices associated with accounting anomalies. Evidence from put-call parity violations suggests that they do not. Rather, option prices accurately track contemporaneous stock prices. Further analysis suggests that high costs...

In 1995 Congress passed the Private Securities Litigation Reform Act (PSLRA), which grants public companies a safe harbor from liability for forward-looking statements (FLS). Because investors cannot reasonably assess the legitimacy of forward-looking information for initial public offerings...