顶刊推送《Journal of Accounting and Economics》2022-73-1

鸣灿王蕊俊苏会计学术联盟 2023-02-24

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Journal of Accounting and Economics

Volume 73, Issue 1

（February 2022）

The Journal of Accounting and Economics(TOP 5) encourages the application of economic theory to the explanation of accounting phenomena. It provides a forum for the publication of the highest quality manuscripts which employ economic analyses of accounting problems. A wide range of methodologies and topics are encouraged and covered:

* The role of accounting within the firm;
* The information content and role of accounting numbers in capital markets;
* The role of accounting in financial contracts and in monitoring agency relationships;
* The determination of accounting standards;
* Government regulation of corporate disclosure and/or the Accounting profession;
* The theory of the accounting firm.

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We also provide many author benefits, such as free PDFs, a liberal copyright policy, special discounts on Elsevier publications and much more. Please click here for more information on our author services.

Catelog

[1]. Are auditors rewarded for low audit quality? The case of auditor lenience in the insurance industry

Matthew S. Ege, Sarah B. Stuber

[2]. Rocking the boat: How relative performance evaluation affects corporate risk taking

Truc Do, Huai Zhang, Luo Zuo

[3]. Financial shocks to lenders and the composition of financial covenants

Hans B. Christensen, Daniele Macciocchi, Arthur Morris, Valeri V. Nikolaev

[4]. The need to validate exogenous shocks: Shareholder derivative litigation, universal demand laws and firm behavior

Dain C. Donelson, Laura Kettell, John McInnis, Sara Toynbee

[5]. The need to validate exogenous shocks: Shareholder derivative litigation, universal demand laws and firm behavior

Ray Ball, Valeri V. Nikolaev

[6]. An information quality-based explanation for loan loss allowance inadequacy during the 2008 financial crisis

Ling Yang

[7]. Client concerns about information spillovers from sharing audit partners

Jung Koo Kang, Clive Lennox, Vivek Pandey

[8]. Internal governance and outside directors’ connections to non-director executives

Udi Hoitash, Anahit Mkrtchyan

[9]. When does forecasting GAAP earnings entail unreasonable effort?

Henry Laurion, Richard Sloan

[10]. The effects of ratings disclosure by bank regulators

Yadav Gopalan

Abstracts

Are auditors rewarded for low audit quality? The case of auditor lenience in the insurance industry

Matthew S.Ege

Sarah B.Stuber

Texas A&M University, USA

Abstract：Using unique disclosures from the insurance industry, we identify instances where auditors plausibly allow clients to opportunistically utilize discretion in accounting estimates to manipulate losses to reported profits (i.e., auditor lenience). Auditing standards and SEC guidance state that auditors should consider whether a misstatement shifts a loss to a profit as a qualitative factor when evaluating the materiality of misstatements. We find that audit office lenience is positively associated with subsequent market share changes. The effect is driven by increases in the likelihood of keeping existing, non-manipulating clients. In generalizability tests, we find similar inferences in the banking industry when using bank-specific disclosures and across all industries when measuring auditor lenience using likelihood of issuing going-concern opinions. These results highlight settings where auditors may be rewarded for lenience, specifically when management values financial reporting discretion and auditors can avoid publicized audit failures.

Keywords:Auditor lenience; Audit quality; Auditor market share; Insurance industry

Rocking the boat: How relative performance evaluation affects corporate risk taking

TrucDo

University of Queensland, Australia

HuaiZhang

Nanyang Technological University, Singapore

LuoZuo

Cornell University, United States

Abstract：We argue that relative performance evaluation (RPE) contracts introduce a tournament among the focal firm and peer firms. We test whether a firm's riskiness is altered by its CEO's incentive to win the tournament. We find that a firm that performed poorly relative to its peers during an interim period takes more risk in the remainder of the evaluation period than a firm with better interim performance. This effect is stronger when the interim assessment date is closer to the end of the evaluation period and when winning the competition is more important to the CEO. Together, our results suggest that RPE contracts create tournament incentives for CEOs and significantly affect corporate risk taking.

Keywords: Relative performance evaluation; Tournament incentives; Interim performance; Risk taking

Financial shocks to lenders and the composition of financial covenants

Hans B.Christensen

Booth School of Business, University of Chicago, USA

DanieleMacciocchi

Miami Herbert Business School, University of Miami, USA

ArthurMorris

Hong Kong University of Science and Technology, China

Valeri V.Nikolaev

Booth School of Business, University of Chicago, USA

Abstract：We provide evidence that financial shocks to lenders influence the composition of financial covenants in debt contracts. Using two distinct measures of lender-specific shocks—defaults in a lender's corporate loan portfolio that occur outside the borrower's region and industry, and non-corporate loan delinquencies—we show that lenders respond to financial shocks by increasing the number and strictness of performance-based but not of capital-based covenants in debt contracts. We examine two possible channels for this result. We find evidence consistent with lenders using stricter control rights because of concerns about capital depletion (a capital channel) and because of new information about lenders' own screening ability (a learning channel). Our results indicate that lender preferences influence how accounting information is used in debt contracts.

Keywords: Accounting-based covenants; Debt contracting; Financial market shocks

The need to validate exogenous shocks: Shareholder derivative litigation, universal demand laws and firm behavior

Dain C.Donelson

University of Iowa, USA

LauraKettell

The University of Texas at Austin, USA

JohnMcInnis

The University of Texas at Austin, USA

SaraToynbee

The University of Texas at Austin, USA

Abstract：Several recent studies argue that the adoption of universal demand (UD) laws represent an exogenous decline in litigation risk by increasing the procedural hurdles associated with shareholder derivative litigation. This study examines how UD laws affect the incidence of derivative litigation risk and related decisions. We show that the adoption of UD laws had no meaningful impact on derivative litigation from 1996 to 2015. We also find no evidence that UD laws affect aggressive accounting, voluntary disclosure, executive compensation, or corporate governance decisions. Collectively, our findings cast doubt on the validity of using UD laws as an exogenous shock to litigation risk.

Keywords: Derivative litigation; Universal demand; Litigation risk; Financial reporting; Compensation; Corporate governance

On earnings and cash flows as predictors of future cash flows

RayBall

Valeri V.Nikolaev

The University of Chicago, Booth School of Business, 5807 South Woodlawn Avenue, Chicago, IL 60637, USA

Abstract：Do accruals-based earnings provide better information about future operating cash flows than do operating cash flows themselves, as predicted by the Financial Accounting Standards Board's conceptual framework (FASB, 1978)? While this is a foundational issue in accounting, because it addresses the information added by accrual accounting methods, testing it remains unsettled. We show that when comparing the predictive ability of operating cash flows with that of an equivalent earnings measure calculated on an accrual basis, earnings outperform operating cash flows. The result becomes more pronounced when allowance is made for cross-sectional differences in the relation between firms' earnings and future cash flows. In fact, even “bottom line” earnings then have similar explanatory power as operating cash flows.

Keywords: Operating cash flow; Free cash flow; Cash flow forecasts; Accruals; FASB; Firm cross-sectional heterogeneity

An information quality-based explanation for loan loss allowance inadequacy during the 2008 financial crisis

LingYang

Smith School of Business, Queen's University, Goodes Hall 256, Kingston, ON K7M 3N6, Canada

Abstract：I study whether commercial banks' loan loss allowances were inadequate during the 2008 financial crisis because bank managers relied on low-quality information to estimate loan losses. To measure the quality of information collected on bank-held mortgages prior to the crisis, I create a bank exposure-to-mortgage fraud risk index (EFI) that captures overstatement of borrower income in mortgage applications. I find banks that originated more loans in high-risk neighborhoods had less adequate loan loss allowances during the crisis. My study is consistent with the hypothesis that fraudulent borrower information adversely affected banks’ loan loss provisioning.

Keywords: BanksLoan loss allowances; Information quality; Reporting transparency; Mortgage fraud; The 2008 financial crisis

Client concerns about information spillovers from sharing audit partners

Jung KooKang

Harvard Business School, USA

CliveLennox

University of Southern California, USA

VivekPandey

University of Southern California, USA

Abstract：We hypothesize that companies in the same product market avoid sharing the same audit partner when they are concerned about possible information spillovers. Consistent with our hypothesis, we find that product market rivals are less likely to share the same partner when they perceive that information spillovers are more costly. While concerns about information spillovers significantly reduce the likelihood of product market rivals sharing the same audit partner, we find that such concerns do not deter them from sharing the same audit office. Lastly, when companies are unconcerned with information spillovers, our results suggest that partner sharing can be beneficial because it can result in lower audit fees and fewer accounting misstatements.

Keywords: Information spillovers; Audit partners; Proprietary costs; Product market rivals; Audit fee; Audit quality

Internal governance and outside directors’ connections to non-director executives

UdiHoitasha

D’Amore-McKim School of Business, Northeastern University, Boston, MA 02115, USA

AnahitMkrtchyanb

Haskayne School of Business, University of Calgary, Calgary, AB T2N 1N4, Canada

Abstract：The monitoring effectiveness of outside directors is curtailed by information asymmetry between boards and management. Connections between outside directors and executives who do not serve on the board (internal ties) may help overcome this challenge by facilitating information sharing between the connected parties. Internal ties can also empower connected executives to withstand pressure from CEOs to take actions that might endanger their reputation in the long term. Alternatively, internal ties may entrench executives by insulating connected executives from adverse outcomes. Consistent with the former, we find that earnings restatements, class-action litigations, and real earnings management decrease when directors are connected with executives responsible for these areas. Connected boards also make better decisions related to CEO turnover, CEO succession and acquisitions. Overall, our results show that internal ties are associated with improved internal governance, thereby suggesting that boards may benefit from forging stronger relationships with non-director executives.

Keywords: Board monitoring; Internal governance; Information asymmetry; Financial reporting manipulation; Social networks

When does forecasting GAAP earnings entail unreasonable effort?

HenryLauriona

Leeds School of Business, University of Colorado, United States

RichardSloanb

Marshall School of Business, University of Southern California, United States

Abstract：SEC rules require managers to reconcile their non-GAAP earnings forecasts with the most directly comparable GAAP forecasts unless doing so would entail ‘unreasonable effort.’ A significant number of managers rely on the unreasonable efforts exception to justify the omission of comparable GAAP forecasts. We analyze firms that rely on the unreasonable efforts exception and find that their non-GAAP earnings forecasts are more likely to exclude significant recurring expenses that are not excluded by analysts. Our results suggest that almost a third of managers exploit the unreasonable efforts exception to exclude significant recurring expenses from their earnings guidance.

Keywords: Non-GAAP earnings; Earnings guidance; Opportunistic behavior; Unreasonable effort

The effects of ratings disclosure by bank regulators

YadavGopalan

Kelley School of Business, Indiana University, Federal Reserve Bank of St. Louis (St. Louis Fed), USA

Abstract：I examine how banks change their risk management practices in response to the private disclosure of regulatory ratings that summarize bank risk-taking. Upon ratings disclosure, affected banks increase the timeliness of their loan loss provisioning. These effects are concentrated among banks that lie below key rating thresholds and those headquartered in states with low competition. After ratings disclosure, deficient banks decrease commercial lending while shifting assets into cash. Overall, my findings highlight how performance measures produced and privately disclosed by a third party can influence actions within a firm.

Keywords: Disclosure; Financial reporting; Financial regulation; CAMELS ratings; Bank supervision; Loan loss provisions

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