The going concern (GC) assumption forms the basis for preparing financial statements unless liquidation becomes imminent. ASU 2014-15 requires management to evaluate GC uncertainties quarterly and provide disclosures in the notes. I compare management GC disclosures between the pre-standard and post-standard regimes. I find that the market reacts negatively to substantial doubt in GC only after ASU 2014-15. Next, I find the effect of ASU 2014-15 for quarterly reports, but not annual reports. More importantly, by employing detailed textual analysis to extract and categorize mitigation-plan discussions, I show that certain types of management mitigation plans are interpreted more positively by investors after ASU 2014-15, thereby alleviating the negative market reaction. These plans include issuing debt, debt restructuring, increasing revenue, and selling assets. Finally, I demonstrate that management GC conclusions are more indicative of corporate failures after ASU 2014-15 and that mitigation-plan discussions are associated with firms' future viability.

Accounting big baths are pervasive in practice. While big baths can improve the information environment and reduce information asymmetry, they can also degrade the information environment and obscure operating performance. In this study, we examine the role of management ethics. Specifically, we investigate whether managers’ truthfulness (or conversely, deceptiveness) affects how investors perceive big baths. Using linguistic analysis on earnings-conference calls to measure managerial deception and employing a difference-in-differences research design with propensity-score matching, we find that information asymmetry is significantly higher following big baths taken by deceptive CEOs, compared with big baths taken by less deceptive CEOs.

We study the effects of mandatory environmental reporting on greenwashing. Our setting is a regulation in the United Kingdom requiring firms to report carbon emissions, or mandatory carbon reporting (MCR). Measuring greenwashing as the discrepancy between companies’ external carbon-related discussions in corporate social responsibility (CSR) reports and their underlying carbon performance, we find MCR leads to a decline in three types of greenwashing: excessive length, over-optimism, and vague commitments, relative to performance. MCR also curtails greenwashing in other (noncarbon) environmental disclosures, suggesting a spillover from MCR to firms’ broader environmental reporting. Drivers are shown to include higher expected reputational and regulatory risks for noncarbon issues after MCR, and a governance spillover, where the governance resources allocated to MCR also benefit noncarbon reporting. Data Availability: Data are publicly available from sources indicated in the text.