An enduring issue in financial reporting is whether and how salient summary measures of firm performance (“earnings metrics”) affect market price efficiency. In laboratory markets, we test the effects of salient earnings metrics, which vary in how they combine persistent and transitory...

Stock-based compensation (SBC) reduces the value of shareholder equity, ceteris paribus, and is a significant and growing expense for many firms. Despite its valuation implications and its growing importance, anecdotal evidence suggests that market participants ignore SBC in valuation. We first...

Accounting estimates are measured with varying degrees of uncertainty, and financial statement disclosures provide investors with information about such uncertainty. In two experiments, I test investors' reactions to measurement uncertainty in accounting estimates. In the first experiment, I...

Standard setters and regulators generally assume that making accounting easier to process leads to more efficient markets, thereby benefiting traders. I test that assumption in markets that are prone to price bubbles. Market efficiency will obtain only if reducing complexity in accounting leads...

Many companies regularly disclose non-GAAP performance measures to communicate firm-specific information that does not fit within the mold of GAAP reporting. However, these non-GAAP measures may have low information content or even be misleading to investors. Thus, the question arises of whether...