Previous research argues that earnings quality, measured as the unsigned abnormal accruals, proxies for information asymmetries that affect cost of capital. We examine this argument directly in two stages. In the first stage, we estimate the firm's exposure to an earnings quality factor in the...

We explore the possibility that overnight returns can serve as a measure of firm-specific investor sentiment by analyzing whether they exhibit characteristics expected of a sentiment measure. First, we document short-term persistence in overnight returns, consistent with existing evidence of...

We examine in this study the relevance to investors of information on the capitalization of software development costs, as promulgated in 1985 by the Financial Accounting Standards Board in its Statement No. 86 (SFAS 86). We find that software capitalization is value-relevant to investors: The...

Using a hand-collected sample of 1,246 failed acquisition offers from 1979 to 2016, we investigate whether acquisition premiums are driven by the market’s revaluation of the target (the information hypothesis) or potential synergies (the synergy hypothesis). Partitioning the sample into...

An interesting question in assessing value relevance of accounting numbers is whether measures of value relevance are materially affected by market inefficiencies. We explore this question in the case of price level regressions in two parts: First, we derive a procedure for estimating value...

Although researchers have documented gains from insider trading, the sources of private information leading to information asymmetry and insider gains have not been comprehensively investigated. We focus on research and development (R&D)-an increasingly important yet poorly disclosed productive...