The corporate information environment develops endogenously as a consequence of information asymmetries and agency problems between investors, entrepreneurs, and managers. We review current research on the three main decisions that shape the corporate information environment in capital market settings: (1) managers’ voluntary disclosure decisions, (2) disclosures mandated by regulators, and (3) reporting decisions by analysts. We conclude that, in the last ten years, research has generated several useful insights. Despite this progress, we call for researchers to consider interdependencies between the various decisions that shape the corporate information environment and suggest new and interesting issues for researchers to address.

To mitigate holdup by an informed incumbent lender, a private borrower may publicly share information in order to increase lender competition. Despite proprietary costs, a subset of private borrowers voluntarily share private information in loan and credit underwriting agreements. These borrowers switch lenders at a 16% higher rate and receive lower loan financing costs. For private firms that go public, we analyze changes in the net benefits of information sharing and study the potential estimation bias from unobservable borrower quality. This setting corroborates our inference that voluntary information sharing reduces lender holdup and alleviates financial constraints for private firms. Received May 25, 2017; editorial decision August 8, 2018 by Editor David Denis.

We examine an econometric model of counts of worker absences due to illness in a sluggishly adjusting hedonic labor market. We compare three estimators that parameterize the conditional variance—least squares, Poisson, and negative binomial pseudo maximum likelihood—to generalized least squares (GLS) using nonparametric estimates of the conditional variance. Our data support the hedonic absenteeism model. Semiparametric GLS coefficients are similar in sign, magnitude, and statistical significance to coefficients where the mean and variance of the errors are specified ex ante. In our data, coefficient estimates are sensitive to a regressor list but not to the econometric technique, including correcting for possible heteroskedasticity of unknown form.

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We study the stock market's reaction to the unexpected death of a top executive or board chair for insight into grey director incentives. Whereas there is little debate as to the motives of inside and strict outside directors, the allegiance of grey directors is less certain. We find that grey directors' dominant incentive depends on whether the firm has a succession plan or not. In firms with a succession plan, grey directors' primary motive is to maintain their business ties to the firm. Absent a succession plan, the stock market expects grey directors to use their influence to hire a higher quality replacement, particularly when these directors hold a large equity stake. Our findings suggest that grey directors place their interests as shareholders first when a replacement decision is likely to weaken their business ties with the firm. Grey directors appear to influence the choice of a higher quality replacement whether that person is an insider or outsider.

Reviews the book "Corporate Financial Disclosure in the UK and the USA," by George J. Benston.

Using European stock data from two different venues and time periods for which we can identify each trade's aggressor, we test the performance of the bulk volume classification (Easley et al. (2016); BVC) algorithm. BVC is data efficient, but may identify trade aggressors less accurately than “bulk” versions of traditional trade-level algorithms. BVC-estimated trade flow is the only algorithm related to proxies of informed trading, however. This is because traditional algorithms are designed to find individual trade aggressors, but we find that trade aggressor no longer captures information. Finally, we find that after calibrating BVC to trading characteristics in out-of-sample data, it is better able to detect information and to identify trade aggressors. In the new era of fast trading, sophisticated investors, and smart order execution, BVC appears to be the most versatile algorithm.

We provide evidence that some managers use a multi‐period, coordinated strategy involving inflated current‐period discretionary accruals and optimistic forecasts of future earnings to delay the revelation of bad news. Inflating discretionary accruals increases investor expectations of future performance, and issuing optimistic earnings forecasts of future earnings supports the inflated accruals and extends the horizon for managers to benefit. This strategy is more pronounced for firms that engage in earnings management outside of GAAP, suggesting intentional behavior. Our evidence indicates that managers use this coordinated strategy when firms experience significant bad news and cannot delay revealing all of the bad news through accrual management. We also find that managers use this coordinated strategy when focusing on short‐term performance due to career concerns (i.e., dismissal) or retirement or when they have shorter stock option vesting schedules, which motivates them to inflate investor expectations for shorter‐term personal benefits. Furthermore, managers using this strategy do not hold deep in the money exercisable stock options, which is consistent with managers' private assessment of a higher (lower) likelihood of releasing bad (good) news in the future.

We use a threshold-based design to study ex post discretion in lenders’ contractual enforcement of covenant violations. At preset thresholds, lenders enforce contractual breaches only infrequently, but this enforcement is associated with material consequences (e.g., fees and renegotiations). Enforcement varies significantly over time and peaks when credit conditions are tightest, indicating that enforcement is procyclical. Costly coordination reduces enforcement: Syndicates with ex ante restrictive voting requirements enforce at lower rates. Consistent with theories of lender competition and implicit contracting, enforcement rates are lower for borrowers with access to alternative sources of financing and well-reputed lead arrangers.

Recent progress has outmoded many traditional standards of financial administration of governmental units. Among the more significant changes in concept are (1) greater recognition that financial management must be an integral part of total management at each level to be effective; (2) greater emphasis on the inter-relationships of programming, budgeting, accounting and reporting, and (3) greater awareness and acceptance of the need for variable patterns of accounting compatible with assignments of managerial responsibility and the type of operation being conducted. This proposed statement is an effort to express in broad terms the current accounting and related standards of governmental financial administration. Preparation of a budget for a governmental unit should begin with a determination of the work to be done and the expenses of doing it. Such a cost-based budget and the cash requirements stemming therefrom should be submitted to the legislative branch as a basis for appropriation action. After legislative action, cost-based budgets should be used to control work being done. The cost-based budget is the standard against which the actual costs incurred are to be measured. Responsibility for review, appraisal and action rests on supervision at every level. An independent financial examination and review of operations should be made.