We examine whether option prices reflect investor taxes. Existing empirical option pricing literature ignores the potentially important impact of taxes. To assess the effect of investor taxes on option prices, we exploit a unique setting where “index” options on the S&P 500 Index (SPX) and...

We perform the first study of the fundamental financial reporting choices – audit, auditor, accounting standard, internal controls audit – of private funds (e.g., private equity, hedge funds, etc.), which represent an increasingly important component of the economy. We find that nearly 80%...

We use a unique setting of an auditor's acquisition of another auditor to provide new insight into customer responses to mergers broadly, and to study several audit market dynamics. Unlike most merger settings that primarily allow examination of the merging firms and their rivals, this setting...

Voting rights are a basic shareholder-protection mechanism. Outside of the core voting requirements state law imposes (election of directors and votes on fundamental changes), federal law grants shareholders additional voting rights. But these rights introduce concomitant costs into corporate...

Private equity and venture capital funds (“private funds”) are an increasingly important component of the economy and hold substantial ownership in other private firms. These funds have unique legal organizational structures, which academic literature has not yet accounted for. This paper...

Recent U.S. tax proposals under various names (e.g., wealth taxes, estate tax reform, etc.) center on mark-to-market (MTM) taxation, which eliminates investors’ ability to defer or avoid capital gains taxes. To provide insight on potential effects of these tax proposals, we exploit a unique...

Private equity (PE) funds are increasingly important to the economy and now dominate capital markets (e.g., capital formation). However, lack of understanding of PE funds among accounting academics currently prevents accounting research in this area. In this paper, we first describe the PE fund...

Private equity (PE) funds are growing to dominate capital markets. In conjunction with this growth, secondary markets for PE stakes have also grown. Innovative recent work investigates the valuation discount that sellers of PE stakes incur and attributes this discount entirely to the illiquidity...

We comment on the Securities and Exchange Commission’s (SEC’s) proposal to mandate private fund adviser audits, which includes mandatory usage of U.S. Generally Accepted Accounting Principles (GAAP). In summary, existing empirical research finds little evidence that voluntary audit and GAAP...

We examine how the relation between taxpayers and their government affects tax evasion. Specifically, we examine how perceived influence over government policymaking affects firms’ decisions to evade tax. We argue that firms are less willing to comply with tax laws when they perceive the...