Loss aversion is one of the most widely used concepts in behavioral economics. We conduct a large-scale, interdisciplinary meta-analysis to systematically accumulate knowledge from numerous empirical estimates of the loss aversion coefficient reported from 1992 to 2017. We examine 607 empirical estimates of loss aversion from 150 articles in economics, psychology, neuroscience, and several other disciplines. Our analysis indicates that the mean loss aversion coefficient is 1.955 with a 95 percent probability that the true value falls in the interval [1.820, 2.102]. We record several observable characteristics of the study designs. Few characteristics are substantially correlated with differences in the mean estimates. (JEL D81, D91)

I test whether retirement plan providers extend preferential corporate loan terms to firms that have an overlapping retirement plan relationship. I find that loans from affiliated retirement plan providers (i.e., relationship loans) have lower spreads than non-relationship loans. Relationship loans are also larger and exhibit longer maturities. These terms benefit shareholders without sacrificing the quality of retirement plans available to employees. The favorable terms within this banking relationship are most likely explained by the ability of retirement plan relationships to alleviate information asymmetries in the corporate loan market rather than a quid pro quo arrangement.

Abstract We exploit the information content of option prices to construct a novel measure of bank tail risk. We document a persistent increase in tail risk for the U.S. banking industry following the global financial crisis, except for banks designated as systemically important by the Dodd–Frank Act. We show that this post-crisis difference in tail risk for large and small banks is consistent with the too-big-to-fail (TBTF) status of large banks being reinforced by the Dodd–Frank designation: Naming the banks whose failure could threaten the financial stability of the U.S. gave investors a list of banks the government deemed as TBTF.

Abstract This study examines the effect of shareholder scrutiny of corporate tax avoidance behavior and its related financial reporting. Specifically, we explore the factors associated with shareholder tax litigation and its effect on the future tax behavior of the sued firm and its peers. We find that sued firms have lower cash and GAAP effective tax rates (ETRs) and engage in extreme tax avoidance before litigation. After litigation, they decrease tax avoidance activities, relative to matched control firms. Peer firms in the same industry as sued firms similarly reduce their level of tax avoidance and the likelihood of extreme tax avoidance after the litigation, relative to control firms. Additional analyses suggest that sued firms change their tax avoidance behavior, rather than merely their tax financial reporting. Finally, the spillover results are strongest for peer firms with the most tax avoidance (i.e., the lowest cash ETRs) when the sued firm's alleged misconduct is revealed.

Professional audit firms increasingly engage in Corporate Social Responsibility (CSR) activities. This paper examines the effect of audit firms' CSR activities on auditors’ reputation. We find that audit firms that engage in CSR experience an increase in the size of their client base compared to audit firms that do not engage in CSR. The effect is stronger for audit firms without existing reputation from a Big 4 brand name or industry specialization. We also find that clients that value CSR are more likely to hire audit firms that engage in CSR. Overall, our results suggest that CSR is an effective tool for audit firms to build their reputation in the marketplace.

Abstract Since the passage of the Sarbanes‐Oxley Act of 2002, many notable frauds have been tied to ineffective audit committee (AC) oversight. As a result, AC oversight is of continuing interest, and regulators continue to debate this issue, garnering a growing body of research focused on the role played by the AC. But little theoretical research exists to guide analytical and empirical researchers investigating AC oversight. The purpose of this study is to provide theoretical guidance by examining AC oversight in a strategic setting. We focus on the AC's role in overseeing internal controls (ICs) and the impact of whether the AC relies on management in designing the controls. We characterize how the nature of control risk changes and how IC strength is associated with the amount of managerial fraud, expected probability of fraud detection (which, on average, equates to audit effort), and audit quality (assessed as 1 − audit risk) across two settings defined by the degree of AC oversight. As one example that highlights the need for theoretical guidance, we consider the literature's presumption that IC strength is negatively associated with audit effort. We find that this association may be positive or negative as IC changes, where the association varies with the degree of direct AC oversight and the change in payoff parameters.

Abstract Despite years of initiatives to improve gender equity in public accounting firms, women continue to be underrepresented at the partner level. Supporting women's aspirations to become partner is important to ensure there are more women in the pipeline of potential partners. However, we argue that challenges during the COVID‐19 pandemic are likely to have negative downstream effects on accounting firms' efforts to improve female partner representation. Therefore, using a survey of 192 certified public accountants (CPAs), we develop and test a theoretical model that examines changes in women's partner aspirations during the COVID‐19 pandemic. Using the conservation of resources (COR) theory, we predict that women experienced disproportionately higher role overload during the pandemic compared to men. We also rely upon COR theory to predict that higher levels of role overload will be associated with weakened partner‐track motivations (i.e., less value placed on the advantages of the partner level and lower willingness to make the sacrifices necessary to pursue the partner level) and weakened partner aspirations. Consequently, we expect that women public accountants experienced weakened partner aspirations through higher role overload during the pandemic. Results support our predictions as we find that women experienced higher levels of role overload, which are associated with weakened partner‐track motivations, which in turn are associated with weakened partner aspirations. In sum, our results suggest that the COVID‐19 pandemic exacerbated pre‐pandemic gender equity challenges within public accounting firms. Fortunately, we also find that higher levels of supervisor support and coworker support help limit role overload and mitigate declines in partner aspirations. We discuss several insights that firms can use to mitigate post‐pandemic declines in women's partner aspirations.