We discuss “Mandatory IFRS Reporting and Changes in Enforcement” by Christensen, Hail, and Leuz (CHL, in this issue). We begin by discussing CHL in the context of prior literature, and subsequently discuss the research design, results, and inferences. CHL seeks to contribute to the literature by disentangling the liquidity benefits of changes in accounting standards from those of changes in enforcement. Taken at face value, we believe that the evidence in CHL suggests that both change in enforcement and adoption of International Financial Reporting Standards (IFRS) confer liquidity benefits. The largest benefits obtain when the change to IFRS reporting is combined with change in enforcement. This is not to say that enforcement conveys capital market benefits but IFRS reporting does not, or that IFRS reporting conveys capital market benefits but enforcement does not; both are necessary to confer capital market benefits.

ABSTRACT We investigate whether firms manage stock prices in anticipation of share issuance. Warrant exercise results in share issuance and warrant expiration dates are fixed years in advance, which precludes market timing. We predict firms manage stock prices to prevent (induce) warrant exercise when exercise is dilutive (anti-dilutive) to existing shareholders. To test our prediction, we examine stock returns around warrant expiration dates. We find that the difference between out-of-the-money (OTM) and in-the-money (ITM) firms' return patterns (i.e., post-expiration minus pre-expiration returns) is positive, and OTM (ITM) firms' return pattern is positive (negative). Return patterns of three sets of pseudo warrant firms differ from patterns of warrant firms. Return patterns are stronger when more feasible price changes are required to affect warrant expiration status, and firm-issued news items is a mechanism for price management. Thus, our findings provide evidence that firms engage in stock price management in anticipation of share issuance. JEL Classifications: G14; G15; G32; M41.