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Review of Accounting Studies OnlineFirst articles


Using accounting earnings and aggregate economic indicators to estimate firm-level systematic risk

We revisit the literature on using accounting earnings to estimate firm-level systematic risk, using macroeconomic indicators rather than listed-firm indexes to measure aggregate risk. Conventional listed-firm indexes reflect an unrepresentative …

Ray Ball, Gil Sadka, Ayung Tseng

10.06.2021 | Correction

Correction to: Earnings announcement return extrapolation

A Correction to this paper has been published: …

Aytekin Ertan, Stephen A. Karolyi, Peter W. Kelly, Robert Stoumbos


Explaining firms’ earnings announcement stock returns using FactSet and I/B/E/S data feeds

Since 2001, the number of financial statement line items forecasted by analysts and managers that I/B/E/S and FactSet capture in their data feeds has soared. Using this new data, we find that 13 item surprises—11 income statement-based and 2 cash …

John R. M. Hand, Henry Laurion, Alastair Lawrence, Nicholas Martin


Voluntary disclosure when private information and disclosure costs are jointly determined

Classical models of voluntary disclosure feature two economic forces: the existence of an adverse selection problem (e.g., a manager possesses some private information) and the cost of ameliorating the problem (e.g., costs associated with …

Jung Min Kim, Daniel J. Taylor, Robert E. Verrecchia

13.05.2021 | Correction

Correction to: The unintended benefit of the risk factor mandate of 2005

An Erratum to this paper has been published: …

Allen H. Huang, Jianghua Shen, Amy Y. Zang


Are corruption and corporate tax avoidance in the United States related?

We examine whether state-level corruption and corporate tax avoidance in the United States (U.S) are related. Using a sample of 36,078 U.S. firm-year observations from 1998 to 2014, we find that corruption is significantly positively related to …

Ahmed Al-Hadi, Grantley Taylor, Grant Richardson

07.05.2021 Open Access

Does litigation change managers’ beliefs about the value of voluntarily disclosing bad news?

Research suggests that earnings-disclosure-related litigation causes managers to reduce subsequent disclosure, perhaps stemming from a belief that even their good faith disclosures will cause them trouble. This paper considers unexplored …

Mary Brooke Billings, Matthew C. Cedergren, Svenja Dube


IAS 7 and value relevance: the direct method versus the indirect method

We identify and predict circumstances where the direct method statement of cash flows is expected to provide more value relevant information to financial statement users. We predict the direct method is more informative when earnings are of lower …

Richard Kent, Jacqueline Birt


The value of board commitment

Boards can learn about the environment of their firms through information gathering and communicating with the CEO. In the post-Sarbanes-Oxley environment, some boards have taken steps to shape the communication more proactively by committing to …

Tim Baldenius, Xiaojing Meng, Lin Qiu


Earnings announcement return extrapolation

We propose that extrapolative beliefs about earnings announcement (EA) returns may contribute to the understanding of EA return patterns. We construct a theoretically motivated measure of extrapolative investors’ expectations based on a stock’s …

Aytekin Ertan, Stephen A. Karolyi, Peter W. Kelly, Robert Stoumbos


Status motives and agent-to-agent information sharing

Although decision-making within firms improves when agents share information with one another, agents often have limited motivation to share because doing so takes effort and time. In four experiments, we examine how agents’ responses to …

Jasmijn C. Bol, Justin Leiby

24.04.2021 | Non-Conference Submission

Accounting-based thresholds and growth decisions in the banking industry

This paper examines the effects of accounting-based thresholds in regulation on growth decisions in the banking industry. To investigate this relation we study changes in growth around the $10 billion asset threshold specified in the Dodd-Frank …

Hailey Ballew, Michael Iselin, Allison Nicoletti


Languages and corporate tax avoidance

This paper examines the effect of languages on corporate tax avoidance. We hypothesize and find that managers of firms in countries with languages that grammatically distinguish the future from the present (languages with a strong future time …

Ke Na, Wenjia Yan

14.04.2021 Open Access

The unintended benefit of the risk factor mandate of 2005

In 2005, the SEC mandated that firms disclose risk factors to provide useful information about firm risk. An unintended effect of the mandate is that mandatory risk factor (RF) disclosure may constitute “meaningful cautionary language” as defined …

Allen H. Huang, Jianghua Shen, Amy Y. Zang


Buying products from whom you know: personal connections and information asymmetry in supply chain relationships

This study investigates the role personal connections play in a crucial element of the supply chain—supplier selection. We find that the likelihood that a potential supplier (hereafter, a vendor) is selected to be an actual supplier (hereafter …

Ting Chen, Hagit Levy, Xiumin Martin, Ron Shalev


Major government customers and loan contract terms

We examine the relation between the presence of U.S. government as a major customer and a supplier firm’s loan contract terms, using major corporate customers as a benchmark. We find that firms with major government customers are associated with …

Daniel Cohen, Bin Li, Ningzhong Li, Yun Lou


Re-examining the impact of mandatory IFRS adoption on IPO underpricing

In the mid-2000s, the European Union adopted a number of regulatory reforms intended to increase transparency and disclosure for IPO firms, including mandating the use of International Financial Reporting Standards (IFRS). The reforms also …

Donal Byard, Masako Darrough, Jangwon Suh


FSA in an ETF world

This paper models the value of conducting financial statement analysis (FSA) in the presence of an electronically traded fund (ETF) that gives exposure to the firm’s systematic value. FSA is characterized as a costly process that yields a private …

Russell J. Lundholm


The use of adjusted earnings in performance evaluation

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 …

Asher Curtis, Valerie Li, Paige H. Patrick


Prepare for takeoff: improving asset measurement and audit quality with drone-enabled inventory audit procedures

Auditors increasingly employ technologies to improve audit quality. Using a design science approach, we examine whether using drones and automated counting software can improve audit quality and thus financial reporting. We assess three dimensions …

Margaret H. Christ, Scott A. Emett, Scott L. Summers, David A. Wood