A clawback provision is the right of a firm to recover from an executive’s compensation as the result of triggering events, such as a financial restatement. We argue that the adoption of clawback provisions may exacerbate a manager’s incentive to avoid financial restatements via earnings management. Only when the accounting verifiability is high, making earnings management very costly, can claw...

Capital Market Pressures and Earnings Management: Evidence from U.S. Dual-Class Firms Feng Chen In a dual-class share structure, one class of common stock typically has more votes per share than the other, but both classes have equal or similar cash flow rights per share. While this dual-class structure is likely to entrench management, it potentially reduces capital market pressures on manager...

I analyze the effect of an unexpected influx of immigrants on the price of skill and hence on the earnings, human capital accumulation, and educational attainment of native workers. In order to study these effects, I develop a general equilibrium model with heterogeneous workers who differ in their level of skill and in their ability to learn new skills. These workers accumulate human capital o...

In this article, the author uses large, Social Security administrative data sets to examine changes in earnings distributions in the United States over the 1980s through the mid-1990s. Because the earnings information contained in these data sets comes directly from the W-2 forms field by employers, self-reporting errors and top-coding problems, common in other data used for this type of analys...

In this article, the author uses large, Social Security administrative data sets to examine changes in earnings distributions in the United States over the 1980s and early 1990s. Because the earnings information contained in these data sets comes directly from the W-2 forms filed by employers, self-reporting errors and top-coding problems, common in other data used for this type of analysis, ar...

We ask whether stock returns in France, Germany, Japan, the UK and the US are predictable by three instruments: the dividend yield, the earnings yield and the short rate. The predictability regression is suggested by a present value model with earnings growth, payout ratios and the short rate as state variables. We find the short rate to be the only robust short-run predictor of excess returns,...

Both intuition and empirical evidence suggest that higher revenues increase value whereas higher expenses, including higher tax expense, decrease value. Some prior research, however, suggests that higher tax expense may be good news, despite the resulting reduction in after-tax earnings. We conduct a comprehensive investigation and find that surprises in both the current and deferred components...

We construct term structures for expected earnings growth by indexing analyst forecasts according to their maturity. Growth stocks, large stocks, and past losers have relatively steep convex earnings term structures in comparison to value stocks, small stocks, and past winners respectively. These initial earnings term structures overestimate (underestimate) the expected earnings growth of growt...

Dechow, Myers, and Shakespeare (DMS, 2009) find a negative relation between income from securitization activities and income from non-securitization activities. DMS interprets this finding as indicating that managers use the flexibility available in fair value accounting rules to smooth earnings. We clarify the role of fair value in accounting for asset securitizations, discuss alternative expl...