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Working Paper

Inventory Growth and Future Performance: Can It Be Attributed to Risk?

This paper uses information external to the firm to condition forecasts of future firm performance, starting with the well-known negative relation between inventory growth and future firm performance.

Working Paper

Earnings Quality and Financial Reporting Credibility: An Empirical Investigation

Firms with extremely high accruals experience subsequent reductions in earnings and are more likely to be subject to SEC enforcement actions. Do analysts anticipate the earnings reductions in their forecasts? We investigate here.

Working Paper

Does Credible Mean Reliable?

Are independent revaluations more reliable than those conducted by corporate directors? We examine whether high quality independent valuers provides a credible evaluation about the underlying reliability of recognized asset revaluations.

Working Paper

Do Short Sale Transactions Precede Bad News Events?

It's argued that short sellers are a sophisticated subset of investors given the relative costs of short selling, and prior research suggests that short sellers are, on average, able to predict lower future performance. We test these assertions here.

Working Paper

Deleveraging Risk

Using various measures of short selling activity for a large sample of U.S. securities, we find evidence that deleveraging risk—the risk of losses due to a sudden and widespread reduction in stocks held by levered investors—affects equity returns.

Working Paper

Are Benchmark Beaters Doing Anything Wrong?

We investigate “benchmark beater" firms and compare them to the distribution of all other firms. It is often assumed that firms “manage” earnings to beat expectations, but little evidence exists on how benchmarks are beaten or why firms do so.

Working Paper

An Accounting-Based Characteristic Model for Asset Pricing

Prior research documents robust correlations between firm characteristics and future stock returns, but provides little insight on why. Our firm characteristic model provides a structure to interpret these observed correlations.

Working Paper

Accruals and Short Selling: An Opportunity Foregone

Short sellers have strong incentive to use accrual information as they seek to profit from expected lower future performance of high-accrual firms. But we find that short sellers do not use the content of current accruals to choose which stocks to short.

Working Paper

Accounting for Taste: Board Member Preferences and Corporate Policy Choices

Are individual board members’ preferences or skills reflected in their firms’ corporate policies? We believe they are. Our results show that a board of directors can determine a broad range of governance, disclosure, financial and strategic policy choices.

Journal Article

Fees Paid to Audit Firms, Accrual Choices and Corporate Governance

Research has shown that auditors’ tolerance for aggressive corporate accounting is correlated with the amount of fees the corporate client pays to the auditor for both audit and non-audit services.