We examine the unique nature of agency problems within publicly traded family firms by investigating the earnings management decision of dominant family owners relative to nonfamily. To do so, we draw upon literature demonstrating that family owners are loss averse with respect to the family’s socioemotional wealth (SEW), or the affective endowment derived from firm ownership and control. Our t...

The realized size and value premia reflect earnings-induced price surprises that do not fit the rational pricing story. In addition, they seem to have little to do with systematic risks. This is because the majority of value or small firms with persistently high systematic risks are not rewarded with a premium. The premium happens, as a price adjustment, only to the subset of migrating firms wh...

This paper examines how commonly used earnings quality measures fulfill a key objective of financial reporting, i.e., improving decision usefulness for investors. We propose a stock-price-based measure for assessing the quality of earnings quality measures. We predict that firms with higher earnings quality will be less mispriced than other firms. Mispricing is measured by the difference of the...

this paper examines the relationship between accounting conservatism and informational content of earnings using data of 167 firms listed on the tehran stock exchange during 2004-2013. accounting conservatism is measured based on khan and watts' (2009) model and feltham and ohlsson (1995) price model and easton and hariss (1991) return models were used to evaluate the informational content...

Earnings manipulation has become a widespread practice for US corporations. However, most studies in the literature focus on whether certain incentives would facilitate managers to manipulate earnings and there has been little evidence documenting the consequences of earnings manipulation. This paper fills this gap by examining how current accruals affect future earnings (the accrual effect) an...

Existing research suggests that market misvaluations affect corporate investment, often leading to suboptimal investment. I examine whether earnings smoothing reduces the impact of market misvaluations on corporate investment and in turn enhances investment efficiency. I find that earnings smoothing has a strong negative effect on the sensitivity of corporate investment to stock prices. Further...

This paper examines the usefulness of accounting information in predicting earnings management. We investigate a comprehensive sample of firms from 1971-2000 that restated annual earnings. We find that firms restating earnings have high market expectations for future earnings growth and have higher levels of outstanding debt. We also find that a primary motivation for the earnings manipulation ...

We investigate the relative informativeness of earnings and dividends for firms with dual class capital structures. In these firms, two classes of common stock create a separation between cash flow rights and voting rights. Despite the concentrated ownership in the dual class firms, we find significantly lower informativeness of earnings, in the form of a weaker returns-earnings association, th...

Prior research has documented a ‘‘kink’’ in the earnings distribution: too few firms report small losses, too many firms report small profits. We investigate whether boosting of discretionary accruals to report a small profit is a reasonable explanation for this ‘‘kink.’’ Overall, we are unable to confirm that boosting of discretionary accruals is the key driver of the kink. We caution the use ...

This study seeks to examine the determinants of revenue manipulation by focusing on factors that have unique implications for revenue. Based on a sample of financial restatements arising from aggressive accounting, I control for general earnings management incentives by comparing revenue restatement firms with non-revenue restatement firms. I predict and find that firms with (i) higher growth p...