Knowledge that Transforms

Analyst forecasts, Forecasting, Forecast horizons, Forecast consistency

Joseph V. Carcello, Zoe-Vonna Palmrose, Auditor Litigation and Modified Reporting on Bankrupt Clients, Journal of Accounting Research, Vol. 32, Studies on Accounting, Financial Disclosures, and the Law (1994), pp. 1-30

Auditing, Damage-Sharing liability, Auditor liability, Price protection

Auditing, Auditor litigation, Audit failures, Lawsuits

Information content, Cash flows, Working capital, Nonlinear P/E relation

This paper provides evidence on corporate voluntary disclosure practices through an examination of the earnings-related disclosures made by a random sample of 93 NASDAQ firms during 1981-90.' I find that, consistent with prior studies, earnings-related voluntary disclosures occur infrequently (on average, one disclosure for every ten quarterly earnings announcements); good news disclosures tend to be point or range estimates of annual earnings-per-share (EPS), while bad news disclosures tend to be qualitative statements about the current quarter's earnings; the (unconditional) stock price response to bad

Nahum D. Melumad, Toshiyuki Shibano, The Securities and Exchange Commission and the Financial Accounting Standards Board: Regulation Through Veto-Based Delegation, Journal of Accounting Research, Vol. 32, No. 1 (Spring, 1994), pp. 1-37

Value relevance, Earnings reconciliation, Accounting differences, Conservatism

Auditing, Source reliability, Auditor judgment

The authors attempt to account for the covariances between stock markets and to assess their integration. They estimate a factor model for sixteen national stock market returns whose volatility is induced by changing volatility in the factors. Unanticipated returns depend on innovations in economic variables and 'unobservable' factors. Assets risk premia are linear combinations of the factors risk premia. The authors find that idiosyncratic risk is priced and the 'price of risk' is different across stock markets. Besides, only a small proportion of their covariances can be accounted for by 'observable' economic variables. Correlation changes are driven primarily by movements in 'unobservables.'