Following Sloan (1996), numerous studies document that the accrual component of earnings is less persistent than the cash flow component of earnings. Disagreement exists, however, as to the explanation for this result. One stream of literature follows Sloan's lead in arguing that this result is attributable to accounting distortions (Xie 2001; Dechow and Dichev 2002; Richardson et al. 2005). A second stream of literature argues that this result is attributable to a more general growth effect and that growth-related factors such as diminishing returns to new investment explain the lower persistence of accruals (e.g., Fairfield et al. 2003a; Cooper et al. 2005). We provide new evidence indicating that temporary accounting distortions are a significant contributing factor to the lower persistence of the accrual component of earnings. Our evidence indicates that the lower persistence of accruals extends to accruals that are unrelated to sales growth and that extreme accruals are systematically associated with alleged cases of earnings manipulation.

The article focuses on the proceedings of the twelfth annual convention of the American Association of University Instructors in Accounting, held at Washington D.C., between December 28 and 29, 1927. After some introductory remarks by the organizers, papers were read by W. W. Nissley of the American Institute of Accountants, John R. Wildman of the company Haskins and Sells, David Himmelblau of Northwestern University, Evanston, Illinois, William A. Paton of the University of Michigan, Ann Arbor, Michigan, and J. L. Dohr of Greene and Hurd and of Columbia University, New York, New York. The second program meeting was given over to a discussion of various features of the federal income tax law. Johns Hopkins University's, Baltimore, Maryland, professor presided at the session and opened it with a brief statement introducing the speakers of the afternoon, all of whom were representatives of the Bureau of Internal Revenue. The third program session consisted of a joint meeting with the American Association of Collegiate Schools of Business. The general topic for discussion was "The Place of Accounting in Commerce Curriculum."

We provide evidence that democracy has a positive effect on GDP per capita. Our dynamic panel strategy controls for country fixed effects and the rich dynamics of GDP, which otherwise confound the effect of democracy. To reduce measurement error, we introduce a new indicator of democracy that consolidates previous measures. Our baseline results show that democratizations increase GDP per capita by about 20 percent in the long run. We find similar effects using a propensity score reweighting strategy as well as an instrumental-variables strategy using regional waves of democratization. The effects are similar across different levels of development and appear to be driven by greater investments in capital, schooling, and health.

We measure the capitalization of housing market externalities into residential housing values by studying the unanticipated elimination of stringent rent controls in Cambridge, Massachusetts, in 1995. Pooling data on the universe of assessed values and transacted prices of Cambridge residential properties between 1988 and 2005, we find that rent decontrol generated substantial, robust price appreciation at decontrolled units and nearby never-controlled units, accounting for a quarter of the $7.8 billion in Cambridge residential property appreciation during this period. The majority of this contribution stems from induced appreciation of never-controlled properties. Residential investment explains only a small fraction of the total.

Using a dataset constructed through textual analysis and manual data collection, we show that, prior to ASC 606, firms with principal-versus-agent (PA) exposure face heightened GAAP compliance risk, reflected in a greater likelihood of receiving revenue-related SEC comment letters and higher audit fees. Following the adoption of ASC 606, these differences decline, consistent with the standard’s stated goal of simplifying PA assessments and reducing implementation challenges. Overall, our findings provide the first large-sample evidence on PA considerations and show that ASC 606 mitigates compliance risk, although further analyses suggest additional disclosure may be needed to mitigate information challenges associated with PA assessments. Data Availability: Data are available from the public sources cited in the text.

We exploit a one-month period when SEC activity largely stopped during a U.S. government shutdown to examine whether variation in SEC scrutiny affects its ability to enforce insider trading. Difference-in-differences analyses suggest insiders earn abnormal profits during the shutdown, and the findings are robust to using different control periods and groups. We estimate that it takes roughly one week before the abnormally profitable trading begins, consistent with insiders updating their beliefs regarding the duration and disruption of the shutdown. Supporting the claim that SEC regulatory activity drops with the shutdown and does not fully recover afterward, we find a decline in the frequency of insider trading enforcement releases, investigations, and comment letter issuances after the SEC resumes operations. Our study speaks to the SEC insider trading enforcement literature and economic consequences of a regulatory discontinuity in a divisive political climate. Data Availability: All data are available from public sources.

Using a large sample of U.S. firms spanning the period 2000–2010, we document a strong positive association between the sensitivity of CEO compensation portfolio to stock return volatility (vega) and audit fees. We also show that the positive association between vega and audit fees is weaker in the post-Sarbanes-Oxley Act (SOX) period. In supplementary tests, we show that the relation between vega and audit fees is stronger for firms with older CEOs and in firms where the CEO is also chairman of the board. Collectively, our results suggest that audit firms incorporate executive risk-taking incentives in the fees they charge for their services.

Reviews several books. "Secrets of the Tax Revolt," by James Ring Adams; "Financial Statement Analysis: Theory, Application, and Interpretation," 3rd ed., by Leopold A. Bernstein; "Perspectives in Auditing," 4th ed., by D.R. Carmichael and John J. Willingham; "Tax Shelter Alternatives: Measuring the Risks," by Michael N. Fitzerald.

We investigate the causal impact of public discourse on socially responsible market behavior. Across three laboratory experiments, having market participants engage in public discourse generally increases market social responsibility. These positive impacts are robust to variation in several characteristics of the discourse. We provide evidence that discourse strengthens beliefs that others support socially responsible exchange. However, relaxing requirements to engage in discourse sharply reduces its effectiveness. Our findings suggest that campaigns encouraging discussion of appropriate market behavior can have sizable impacts on addressing inefficiencies due to market failures but that policies encouraging broad public engagement may be important.

We design three field experiments to estimate how workers' social preferences toward their employer motivates their work effort. We vary the pay rates offered to workers, the return to the employer, and employer generosity demonstrated via unexpected gifts. Workers exert effort even without private incentives, but their effort is insensitive to the return to the employer. This is consistent with “warm glow” but not pure altruism. The gifts have no effect on productivity, but engender extra work. This difference is explained partly by the finding that extra work is much more responsive to incentives than is productivity.