Information asymmetry in stock market can increase the risk of investment which in turn increases the capital cost of firms. Bhattacharya (1979) proposed a hypothesis that states dividend can act as a powerful signal in order to solve information asymmetry problem. We measured information asymmetry by lack of earnings transparency. Therefore we examine the effect of earnings transparency on cap...

We analyze the ability of earnings and non-earnings performance metrics to explain stock returns for industries where we identify, ex ante, an allegedly preferred (for valuation purposes) performance metric. We identify three industries each where earnings before interest, taxes, depreciation and amortization (EBITDA) and cash from operations are preferred, and three industries where specific n...

In this paper, we identify instances in which the auditor-client relationship has been terminated (i.e., the auditor resigns or the client dismisses the auditor) but the auditor continues to complete a subsequent quarterly review. Using discretionary accruals and earnings benchmark tests to proxy for the extent of earnings management, we contrast earnings management behavior during these “lame ...

In this study, I examine firstly the determinants of the wage earnings for immigrants from different countries, and secondly whether their wage earnings converge to those of comparable native-born Swedes. The study is based on a longitudinal dataset, and the data refers to 1991 and 1995, respectively. The empirical results indicate that immigrants in Sweden are heterogeneous, and different inco...

In accounting models of value, dividends typically appear to have a strong positive relationship with value despite theoretical reasons to expect dividend displacement. We show that this result is driven by the relationship between dividends and both core earnings and other information derived from the valuation error in the prior year. Where core earnings can be effectively modelled in a speci...

investment institutions with substantial shareholdings in a firm have the resources and incentives to monitor and influence management decisions. whether the institutions actually monitor and exert pressure on managers is an empirical question.this study is designed to provide insights into the monitoring role of institutional investors by examining whether institutional ownership affects the i...

full, on-time, and with quality disclosure of financial information can lead to the transparency of such information and decreases information asymmetry. among the published information of firms, earnings are of priority importance attended by many users; therefore, the issue of the transparency of accounting earnings is of high importance. the aim of this study is investigating the accounting ...

Prior research shows that firms generating earnings growth by improving profitability create shareholder value, while firms generating earnings growth through investment destroy value. This paper examines whether compensation committees consider this while determining CEO compensation. We first confirm prior results that growth from increased profitability is perceived by markets to add value w...

This study investigates the effect of audit firm tenure on earnings management risk. We perform multivariate regression analyses to examine the empirical relationship between auditor tenure and the probability of earnings manipulation using Beneish’s (1999) framework. The analysis covering a five year time-period surrounding the enactment of SOX produces evidence of a negative relationship betw...

Prior research hypothesizes managers use „real actions,‟ including the reduction of discretionary expenditures, to manage earnings to meet or beat key benchmarks. This paper examines this hypothesis by testing how different types of marketing expenditures are used to boost earnings for a durable commodity consumer product which can be easily stockpiled by end-consumers. Combining supermarket sc...