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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Rebecca Lester, Lisa De Simone, Aneesh Raghunandan
November 6, 2019

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We examine the association between thousands of state and local firm-specific tax subsidies and business activity in the surrounding county, measured as the number of employees, aggregate wages, per capita employment,...

Charles M. C. Lee, Yuanyu Qu, Tao Shen
October 2019

We study firms that go public through reverse mergers (RMs) versus initial public offerings (IPOs) in China. Using a manually assembled data set, we show...

Brandon Gipper, Luzi Hail, Christian Leuz
October 2019

We provide the first partner tenure and mandatory 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 on audit...

Lisa De Simone, Marcel Olbert
October 2019

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We investigate the effects of mandatory private Country-by-Country (CbC) disclosure to European tax authorities on economic activity. Using rich data on the operations of multinational firms, we exploit the threshold-based application...

Lisa De Simone, Ken Klassen, Jeri Seidman
September 2019

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Do firms balance tax and operating considerations when making investment decisions? We investigate whether income-shifting aggressiveness affects new investments and predict firms that aggressively shift income will choose affiliate-level investments driven...

Charles M. C. Lee, Christina Zhu
August 2019

We use trade-level data to examine the role of actively managed funds (AMFs) in earnings news dissemination.   AMFs trade 170 percent more on earnings announcement (EA) days than on non-EA days.  Abnormal AMF participation is...

Charles M. C. Lee, Yanruo Wang, Qinlin Zhong
August 2019

We develop a Loan Portfolio Risk (LPR) variable that measures time-varying volatility in default risk for a portfolio of bank loans.  An Equity-to-LPR ratio (ELPR) is incrementally important in predicting bank failure up to five...

Philip G. Berger, Jung Ho Choi, Sorabh Tomar
June 9, 2019

Does decomposing cost of goods sold entail significant competitive costs? We examine this question using a relaxation of disaggregated manufacturing cost disclosure requirements in Korea. Our survey evidence indicates managers perceive these disclosures to provide...

Shannon Chen, Lisa De Simone, Michelle Hanlon, Rebecca Lester
June 2, 2019

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

Charles M. C. Lee, Edward M. Watts
May 9, 2019

This study examines how an increase in tick size affects algorithmic trading (AT), fundamental information acquisition (FIA), and the price discovery process around earnings announcements (EAs). Leveraging the SEC’s randomized “Tick Size Pilot” experiment, we...

Jung Ho Choi, Brandon Gipper
May 2019

We examine employment effects, such as wages and employee turnover, before, during, and after periods of fraudulent financial reporting. To analyze these effects, we combine U.S. Census data with SEC enforcement actions against firms with...

David F. Larcker, Edward M. Watts
February 22, 2019

This study investigates whether investors are willing to trade-off wealth for societal benefits. We take advantage of unique institutional features of the municipal securities market to provide insight into this question. Since 2013, over $23...

David F. Larcker, Charles McClure, Christina Zhu
February 11, 2019

We examine the selection of peer groups that boards of directors use when setting the level of CEO compensation. This choice is controversial because it is difficult to ascertain whether peer groups are selected to...

Lisa De Simone, Bridget Stomberg, Brian Williams
2019

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Tax enforcement around the world has received increased attention since the Global Financial Crisis, with much stated focus on curbing perceived harmful tax practices of multinational entities. Yet multinationals have opportunities...

Sharma Eesha, Stephanie M. Tully, Cynthia Cryder
2019

Abstract coming soon.

David F. Larcker, Brian Tayan
December 3, 2018

Companies are required to have a reliable system of corporate governance in place at the time of IPO in order to protect the interests of public company investors and stakeholders. Yet, relatively little is known...

Kevin Smith
November 9, 2018

In this paper, I study the impact of a firm’s risk disclosure on investors’ desire to acquire information about the firm. I first show that risk disclosure complements private learning by enabling sophisticated investors to...

Kevin Smith
October 25, 2018

In this paper, I develop an option-pricing model that formally incorporates a disclosure event. Using the model, I first theoretically examine how two properties of the disclosure – its overall informativeness and its informativeness given...

Ed deHaan, David F. Larcker, Charles McClure
October 3, 2018

We examine the long-term effects of interventions by activist hedge funds. Prior papers document positive equal-weighted long-term returns and operating performance improvements following activist interventions, and typically conclude that activism is beneficial. We extend prior...