Working Papers

These papers are working drafts of research which often appear in final form in academic journals. The published versions may differ from the working versions provided here.

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Charles M. C. Lee, Yuanyu Qu, Tao Shen
March 13, 2018

We study firms’ choice to go public through reverse mergers (RMs) versus initial public offerings (IPOs) in a regime with strict entry regulations. Using a manually-assembled data set from China, we show that Chinese RM...

Jung Ho Choi
January 2018

I evaluate the role of accrual accounting in improving rms’ production decisions and resource allocation across rms. I introduce both cash ow and accounting earnings as imperfect measures of performance into a general equilibrium model...

Mary E. Barth, wayne R. Landsman
January 2018

Whether fair value accounting should be used in financial reporting has been the subject of debate for many years. A key dimension to this debate is whether fair value earnings can provide information to financial...

David F. Larcker, Peter C. Reiss, Brian Tayan
November 16, 2017

The board of directors is expected to ensure that management has identified and developed processes to mitigate risks facing the organization, including risks arising from data theft and the loss of information. Unfortunately, recent experience...

Maureen McNichols, William H. Beaver, Zach Zhiguang Wang
November 9, 2017

This study examines the factors contributing to a striking increase in information content of quarterly earnings announcements, measured as the absolute magnitude of stock price revision at earnings announcements relative to price revision at other...

Charles M. C. Lee, Stephen Teng Sun, Rongfei Wang, Ran Zhang
October 23, 2017

This paper finds evidence of return predictability across technology-linked firms.  Employing a classic measure of technological closeness between firms, we show that the returns of technology-linked firms have strong predictive power for focal firms’ returns. ...

Charles M. C. Lee, Christina Zhu
October 1, 2017

We use trade-level data to examine the role of mutual funds (MFs) in earnings news dissemination. MFs trade (172%) more on earnings announcement (EA) days than on non-EA days. The EA trades made by MFs...

Charles M. C. Lee, Yuanyu Qu, Tao Shen
September 9, 2017

Using a comprehensive sample of reverse merger (RM) transactions, we examine the effects of China’s IPO regulations on the prices and returns of its publicly listed stocks. During 2007-2015, unlisted Chinese firms paid an average...

Lisa De Simone, Lillian F. Mills, Bridget Stomberg
August 22, 2017

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We use confidential Internal Revenue Service (IRS) data on the magnitude of U.S.-foreign intercompany transactions to develop a financial statement-based measure of the likelihood that U.S. multinational entities (MNEs) make...

John E. Bistline, Stephen D. Comello, Anshuman Sahoo
August 5, 2017

Many irreversible long-run capital investments entail opportunities for managers to respond flexibly to changes in the economic environment. However, common levelized cost measures used to guide decision-making, such as the levelized cost of electricity, implicitly...

Peter C. Psarras, Stephen Comello, Praveen Bains, Panunya Charoensawadpong, Stefan J. Reichelstein, Jennifer Wilcox
August 2017

The fabrication and manufacturing of industrial commodities such as iron, glass and cement is carbon-intensive. A major reason capture of carbon dioxide from flue gases of industrial processes has not been widely adopted as a...

Brandon Gipper, Luzi Hail, Christian Leuz
August 2017

This paper provides the first partner tenure and rotation analysis for a large cross-section of U.S. publicly listed firms over an extended period. We analyze the effects on audit quality as well as economic tradeoffs...

Lisa De Simone, Richard Sansing
July 18, 2017

This study investigates the use of a cost sharing arrangement (CSA) by a multinational corporation (MNC) to shift the income attributable to valuable intellectual property (IP) to low-tax foreign jurisdictions. Using a strategic tax compliance...

Shannon Chen, Lisa De Simone, Michelle Hanlon, Rebecca Lester
July 10, 2017

We study whether innovation box tax incentives, which reduce tax rates on innovation-related income, are associated with tax-motivated income shifting and local investment in the countries that implement these regimes. Using a matched sample...

Lisa De Simone, Jordan Nickerson, Jeri K. Seidman, Bridget Stomberg
June 27, 2017

Can common empirical tests reliably identify tax avoidance? This is an important question because our understanding of the determinants of tax avoidance largely depends on results generated using such tests. We address this question...

Charles M. C. Lee, Eric C. So, Charles C. Y. Wang
June 3, 2017

We argue, from an extensive literature review, that in the vast majority of research settings, biases in alternative expected-return proxies (ERPs) are irrelevant. Therefore, in most settings, the choice between alternative ERPs should be based...

Ian D. Gow, David F. Larcker, Brian Tayan
May 25, 2017

CEO succession at many companies occurs in a black box. Shareholders are not privy to boardroom discussions prior to the announcement of a CEO departure, and press releases announcing the change contain boilerplate language that...

Lisa De Simone, Jing Huang, Linda Krull
May 17, 2017

We investigate how R&D contributes to foreign profit margins in U.S. multinational corporations (MNCs) through wage savings and tax incentives. Our results suggest that although wage savings increase foreign profit margins attributable to foreign...

Elizabeth Blankespoor, Ed deHaan, Christina Zhu
May 10, 2017

Accepted at Review of Accounting Studies

In 2014, the Associated Press (AP) began using algorithms to write media articles about firms’ earnings announcements. These “robo-journalism” articles synthesize information from firms’ press releases, analyst...