We provide evidence on the characteristics of local generally accepted accounting principles (GAAP) earnings for firms cross-listing on U.S. exchanges relative to a matched sample of foreign firms currently not cross-listing in the United States to investigate whether U.S. listing is associated with differences in accounting data reported in local markets. We find that cross-listed firms differ...

In this study I examine whether insiders exercise employee stock options based on private information, and furthermore, whether the private information is associated with earnings management within firms. Using a unique sample of over 30,000 option exercises by top executives at 2,741 firms from 1996 to 2002, I document strong evidence of insider trading by top managers who exercise large optio...

Managers use real earnings management (REM) to influence reported earnings through the manipulation of real business activities. Extant literature generally employs crosssectional analysis to identify REM, but newer studies suggest that these traditional REM measures are severely mis-specified. In this study, we employ a new methodology that utilizes firm-specific time-series characteristics of...

In this paper, we examine the stock price benefit of meeting or beating earnings expectations. Using a general methodology, we find no evidence that the timing of earnings news has any benefit for firms’ stock returns. In fact, in many cases we find firms attempting to engineer positive earnings surprises by beating down expectations only to discover that their efforts are counterproductive. Ou...

This study develops a theoretical model and presents empirical evidence on crosssectional variation in managers’ choice of AEM and REM. In particular, it studies how AEM and REM are jointly affected by firms’ growth prospects, managers’ market-based compensation incentives, and the cost of real earnings management. The model yields several testable hypotheses. First, when the firm’s growth pros...

This paper models the arrival rate of voluntary news announcements of the FTSE AllShare firms. We test to see if the earnings environment affects the volume of news announcements that firms release to the stock market. We also examine whether the other factors such as the size of a firm and the external coverage a firm receives affects the pattern of news disclosures. Our results show that firm...

This study examines how takeover decisions are influenced by the quality of information in target firms’ earnings. We find that bidders are more likely to prefer negotiations in deals involving targets with poor earnings quality. Moreover, in such deals, earnings quality and takeover premiums are negatively related, suggesting that bidders obtain valuable private information through negotiation...