This study examines whether an increase in the transparency of investment transactions facilitates portfolio mimicking. While there are reported benefits of transparency in enhancing regulatory monitoring and discipline, an increase in the transparency of investment transactions can also facilitate mimicking of peer firms’ investment strategies. I exploit an exogenous increase in the broad dissemination of transaction-level investment disclosures of U.S.-based insurers and find a significant increase in portfolio similarity at the individual security level. Increases in portfolio similarity are more pronounced in smaller, less sophisticated insurers mimicking their larger, more sophisticated peers. Shared asset positions and common exposures to risk can exacerbate collective risk across firms. Accordingly, I find that the detectable increases in portfolio similarity are positively associated with measures of systemic risk, especially in those smaller insurers mimicking their peers. This study adds to a nascent literature on portfolio mimicking and highlights a potential negative externality of increased transparency.

The new lease standard (ASC 842) allows firms to keep variable leases off balance sheet, in part based on the assumption that future expenses are difficult to estimate reliably. We show that variable lease expenses are both prevalent and substantial, exhibiting persistence and predictability comparable to operating lease expenses while showing limited sensitivity to revenue changes. These patterns are consistent with variable lease payments being based on stable drivers. Following ASC 842 adoption, firms report lower minimum operating lease commitments and higher variable lease expenses, suggesting a substitution from operating to variable leases. Neither equity betas nor credit ratings reflect potential variable lease liabilities. Conservative estimates show that recognition of variable lease liabilities would increase debt by 7.1% on average. Our findings provide evidence on the properties of variable leases and the potential implications of keeping them off balance sheet.

Abstract The choice between historical cost and fair value measurement is one of the most debated issues among accounting academics and practitioners. We use the election of the fair value option (FVO) to study the effects of entities’ measurement choices on accounting comparability. The FVO enables entities to use different measurement bases for similar assets and liabilities, raising questions about whether the FVO compromises or enhances comparability. Using a sample of US banks, we find that FVO elections increase comparability both across FVO electing banks and between FVO electing banks and banks that never elect the FVO but only if the FVO elections comply with the intent of the standard setters to remedy accounting mismatches. Overall our results suggest that banks elect the FVO to better present their economics, yielding higher comparability.

While prior work in management accounting has mainly focused on results controls, this study investigates how action accountability as an action control and job autonomy are jointly used by supervisors in a setting in which results controls at the individual employee level are of little relevance. We analyze our research question by collecting survey data among nurses from Swiss public hospitals. We predict and find that when task complexity is high, job autonomy and action accountability are used as substitutes by the supervisor. When task complexity is low, job autonomy and action accountability have a less substitutive relation than when task complexity is high. In supplemental analyses, we also find that action accountability and job autonomy act as substitutes with respect to employee loyalty and effort when task complexity is high and less so when it is low, consistent with supervisors’ control choices. We also collect additional archival and experimental data to provide supplemental evidence for our underlying theory. Our study enhances the understanding of the use and effects of action controls in settings in which results controls at the individual employee level are of little relevance.

Abstract The presence of pricing power in housing markets significantly impacts our understanding of the housing supply. It biases estimates of housing production functions, supply elasticities, the effects of land-use policies, and the results of quantitative spatial models. We test for the existence of pricing power in the New York City rental market. Using tax policy changes, we conduct complementary difference-in-differences and instrumental variable analyses. An idiosyncratic increase in a single building's costs leads to a proportional rent increase, holding market-level rents constant. Our findings support the existence of pricing power and challenge the prevailing perfect competition framework.

Using the IPO setting, we test whether firms signal the quality of their investments in innovation activities by claiming R&D tax credits. We find the presence and amount of the R&D credit are each associated with lower information asymmetry and with higher investor demand at IPO. Conservatively, we estimate that sample firms realize additional IPO proceeds of 32–45 percent of their creditable R&D expenditures, indicating economically significant non-tax benefits associated with the R&D credit. We verify the R&D credit signal by showing its positive association with firms’ future patenting activity, patent citations, and post-IPO stock returns. Results from these tests are concentrated among firms limited in their ability to obtain tax benefits from R&D credits, consistent with the R&D credit providing nontax benefits as a signal of innovation investment quality.