This paper discusses Hirshleifer and Teoh's modeling and analysis of "inattentive investors," stock price valuation, and accounting recognition rules and disclosures. The paper derives many plausible empirical predictions from an equilibrium model in which some investors do not process...

Our paper (1) documents public companies' most frequent choices of critical accounting policies, (2) tests whether the number and quality of critical accounting policies disclosures increased from the first to second year after the release of SEC cautionary advice on critical accounting policy...

To increase investor awareness of the sensitivity of financial statements to the methods, assumptions, and estimates underlying their preparation, the Securities and Exchange Commission proposed that firms include disclosures about critical accounting policies in their 10-Ks. Using a large...

Regulators and corporate governance experts all over the world consider disclosure and transparency to be fundamental conditions for properly functioning securities markets. In the U.S., rules and regulations, as well as regulatory pronouncements, place public companies under strict obligations...

We examine whether financial statement note disclosures play an enhanced role in value relevance when managers lose the ability to convey information via financial statement placement discretion. Specifically, we consider the setting of ASU 2011-05, which removed the option for firms to report...

After restating their financial statements, companies may voluntarily restate their previously issued internal control (IC) reports for the financial statement (FS) misstatement periods, changing them from “effective” to “ineffective.” This paper examines the determinants and...

Firms are required to provide financial information via the financial statements and the MD&A—a narrative explanation of the financial statements. Our study examines how firms use the MD&A channel when their financial statement channel is inadequate. We proxy for the adequacy of the financial...

We examine whether managers provide more voluntary disclosure when GAAP limits their reporting discretion in financial statements. We find managers are more likely to disclose non-GAAP earnings, issue more management forecasts, and provide longer yet more readable management discussion and...

Research Question/Issue: This paper examines whether CEOs whose writing is more difficult to read is a signal or proxy for difficulty in monitoring their activities, resulting in increased monitoring costs. If so, does this increased monitoring cost result in higher performance-pay sensitivity...