We empirically examine the effects of intensified scrutiny over non-GAAP reporting on the quality of non-GAAP earnings exclusions. We find that, on average, exclusions are of higher quality (i.e., more transitory) following intervention by the Securities and Exchange Commission (SEC) into...

We examine determinants of weaknesses in internal control for 779 firms disclosing material weaknesses from August 2002 to August 2005. We find that these firms tend to be smaller, younger, financially weaker, more complex, growing rapidly, or undergoing restructuring. Firms with more serious...

CFO resignations are becoming more common among publicly traded firms. We use sudden deaths of CFOs as an exogenous shock to CFO departures to examine how a CFO’s sudden departure affects firm financial reporting quality. We find that when a CFO dies suddenly, the likelihood the firm will...

We examine the association between managerial overconfidence and internal controls. We hypothesize and find that firms with overconfident managers are more likely to maintain ineffective internal controls. Moreover, we find no evidence that these managers are more able to mitigate the known...

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...