We investigate the change in the aggregate earnings-returns relation from negative to positive. We first identify a gradual structural break around the second quarter of 1991. We then find evidence of three contributing factors to the change in the relation. They are: i) an increase in the...

We examine how shocks to perceived accounting quality lead to market prices that reflect an increased weight on prior disclosures of insider trading. We use a sample of firms where industry peers have restated financial information and find that the short-term market reaction to announcements of...

We document widespread adoption of adjustments to earnings for performance evaluation; 84% of our sample of S&P 1500 firms use adjusted earnings for bonus compensation. We find that the transactions removed from adjusted earnings vary widely and include both transitory and non-transitory items....

We examine whether, in the aggregate, margin debt is associated with the divergence of price from accounting fundamentals. We find that investors increase their margin debt following upward price movements away from accounting fundamentals, consistent with these investors being extrapolative in...

This study contributes to the body of research that examines the valuation of initial public offers (IPOs). The aim of this study is to assess the relative predictive ability of residual income valuation against the popular alternative of comparable firm valuation for predicting the offer prices...

This paper examines the intra-day returns to initial public offerings on the first day of trade from an information arrival perspective. We examine underpricing as reflected in the first and subsequent trades on the first day of listing. We find that underpricing is primarily reflected in the...

We examine analysts' implied expected rates of return for recent IPO firms relative to more seasoned firms. We document that analysts have relatively more optimistic expectations about recent IPO firms relative to seasoned firms, and these optimistic expectations persist, on average, for four...

I examine the effect of arbitrage risk on the alignment between stock prices and accounting fundamentals, where arbitrage risk is measured as the lack of close substitutes that can be used as a hedge. I find evidence consistent with the disparity between value and price being positively...