We introduce a new approach to predicting market returns using the cross-section of earnings and book values to explain current stock prices and extract aggregate expected returns. The proposed measure is countercyclical; it portends a significant fraction of the time-series variation in stock...

What incentives do managers face that might give rise to inefficient investments in leases? If managers make inefficient investments in leases, what economic consequences arise for those managers and their firms? We develop a model of expected investments in leased assets and use the residuals...

Earnings asymmetric timeliness in recognizing losses versus gains is the most commonly used measure of conditional accounting conservatism. However, this measure captures both accrual asymmetric timeliness and operating cash flow (CFO) asymmetric timeliness. Because cash flow asymmetry is not...

We examine why, as a summary statistic, earnings is better than cash flows at explaining contemporaneous returns despite being a worse predictor of future operating cash flows. Several studies compare the ability of earnings and operating cash flows to predict valuation-related outcome variables...

We examine whether earnings myopia among publicly traded companies motivates private equity firms to acquire them. Using a sample of private equity takeovers, we show that multiple measures of myopia increase the likelihood of takeover by private equity buyers. In contrast, private takeovers...

We examine whether firms in industries with greater labor mobility exhibit less myopic behavior. Using an occupation-based measure of labor mobility for a large sample of US firms, we show that greater labor mobility is associated with fewer myopic operating decisions. This association is...

We examine whether managers convey more information via voluntary disclosure channels when standard-setters limit managers' discretion in GAAP. We estimate the extent to which standard setters limit managers' discretion by counting the number of times obligatory modal verbs are mentioned in the...

Prior accounting research uses the width of management range forecasts as a measure of managers' uncertainty about future earnings. However, range forecasts do not provide any information about the likelihood that future earnings will fall within the forecast bounds. The absence of information...

We investigate whether economic bargaining incentives between suppliers and customers affect financial reporting decisions. We posit that firms with major customers will strategically classify certain costs as cost of goods sold rather than as selling, general, and administrative expenses in...