We examine the relation between firms' voluntary guidance and mandatory 8K filings. We find a negative relation between guidance and 8Ks, which strengthens following the 2004 expansion of mandatory 8K requirements, consistent with firms using the disclosures as substitutes. Increases in 8Ks coincide with declines in firms’ profits, but this negative relation weakens after the 2004 regulation, consistent with firms broadening the scope of information conveyed through 8Ks. Together, our findings suggest firms became more reliant on 8Ks to convey general types of information after the 2004 regulation, rather than primarily negative news, which reduces their incentives to issue guidance.

How do auditors behave during periods of market euphoria? To address this question, we study auditor going-concern opinions around the time of the wave of stressed Internet companies filing to go public on Nasdaq, a period many characterize as the ‘dot com bubble’. We focus on the day the auditor signs the opinion that appears in a stressed, Internet registrants’ IPO filing and document a sharp increase in the number of opinions with dates between January 1999 and April 2000. Contemporaneous with this jump in transaction volume, and for the duration of these 16-months, Big 5 firms were less likely to render going-concern opinions to their stressed, Internet IPO registrant clients. Upon conducting tests for determinants that could lead auditors to shift their decision criteria during this euphoric audit market, we find the presence of a going-concern opinion varies with variables that proxy for client reasons (financial distress, company age, venture backing, IPO cash burn) and for less auditor independence/skepticism (recent fees for clients without venture backing and a rush-to-market for clients with venture backing) by the Big 5 firms. These findings suggest a mixed conclusion regarding the Big 5's behavior; as the presence of a going-concern opinion varies inversely with variables that proxy for both client viability and auditor self interest. As for consequences to investors, our analysis of two, three and four-year post-IPO stock delisting provides some evidence of a decrease in the predictive content (early-warning value) of Big 5 opinions signed during the Internet IPO bubble.

Concerns that goodwill impairments unresponsiveness to declining performance produces inflated goodwill led standard-setters to reconsider post-acquisition impairment-only accounting. We use granular large-scale data to provide institutionally relevant novel descriptive evidence motivated by this hotly debated accounting standard. Comparing goodwill versus other acquired intangibles growth rates for firms reporting goodwill throughout the 2010–2020 post-FAS 141(R) period provides no evidence of runaway goodwill inflation concerns. For firms with goodwill anytime during 2010–2020 we use Shapley values to explore the explanatory power of performance factors affecting goodwill impairments. Consistent with standard-setters’ intent, single-segment market performance explains 81 percent of goodwill impairment incidence variation (controlling for Fama-French-38 industry and time fixed-effects). Limited evidence of reduced impairment incidence after incorporating FASB sanctioned control premia or alternative market values provides little support for discretionary impairment avoidance. Conversely, higher impairment incidence when book values incorporate IFRS (2020) proposed off-balance-sheet headroom or market-to-book decreases supports discretionary impairment recognition. Data Availability: The data used in this study are obtained from commercial sources, including Compustat, Calcbench, I/B/E/S, FactSet Mergerstat/BVR, and Peters and Taylor's intangible capital dataset.