Thousands of publicly traded U.S. firms are exempt from auditor oversight of internal control effectiveness disclosures (Section 404(b) of the Sarbanes-Oxley Act of 2002). We provide initial estimates of the measurable benefits and costs of this exemption. We measure the benefit of exemption...

More companies are disclosing free cash flow in their earnings announcements. Companies choose a range of definitions, almost none of which correspond to the theoretical finance definition. The most common definition (in 40% of free cash flow disclosures) is operating cash flow minus gross...

We document that, when revising their short-term earnings forecasts in response to management guidance, analysts wishing to curry favor with management weight the guidance more heavily than predicted based on the credibility and usefulness of the guidance. This overweighting of guidance is...

We document that, when revising their short-term earnings forecasts in response to management guidance, analysts wishing to curry favor with management weight the guidance more heavily than predicted based on the credibility and usefulness of the guidance. This overweighting of guidance is...

We investigate whether ineffective internal control over financial reporting has implications for firm operations by examining the association between inventory-related material weaknesses in internal control over financial reporting and firms' inventory management. We find that firms with...

We investigate whether historical cost measurement of assets lowers the usefulness of DuPont analysis for investors. Because firms report assets at modified historical cost under US GAAP, accounting ratios can be biased upward when assets have appreciated. Thus, variation in asset turnover,...

Earnings are an important input for equity investors’ valuation decisions. Managers and analysts increasingly report non-GAAP earnings on an ongoing basis, routinely removing recurring items, such as amortization and stock-based compensation, from GAAP earnings. We document that by 2019,...