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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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...

Charles M. C. Lee, Edward M. Watts
October 9, 2018

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...

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...

Lisa De Simone, Jing Huang, Linda Krull
September 2018

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

Lin William Cong, Charles M. C. Lee, Yuanyu Qu, Tao Shen
August 20, 2018

This study reports on the current state-of-affairs in the funding of entrepreneurship and innovations in China and provides a broad survey of academic findings on the subject. We discuss the implications of these findings for...

James Copland, David F. Larcker, Brian Tayan
May 30, 2018

Proxy advisory firms have significant influence over the voting decisions of institutional investors and the governance choices of publicly traded companies. However, it is not clear that the recommendations of these firms are correct and...

David F. Larcker, Brian Tayan
May 1, 2018

The hallmark of good corporate governance is an independent board of directors to oversee management. However, it is not clear that independent directors receive the information they need to make fully informed decisions on all...

Lisa De Simone, Jordan Nickerson, Jeri K. Seidman, Bridget Stomberg
May 2018

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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....

Mary E. Barth, Greg Clinch, Paul Ma
April 22, 2018

We address whether mandatory forecasts of earnings announcement dates are informative and what are the informational tradeoffs between mandatory and voluntary forecasts. We find China mandatory forecasts predict actual earnings announcement dates and yet-to-be-announced firm...

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...

Paul Brest, Mark A. Wolfson, Ronald J. Gilson
March 2018

Most investors have a single goal: to earn the highest financial return. These socially-neutral investors maximize their risk-adjusted returns and would not accept a lower financial return from an investment that also produced social benefits....

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...

Kevin Smith, Mirko S. Heinle, Paul E. Fischer
November 9, 2017

We consider a cheap talk setting with two senders and a continuum of receivers with heterogenous preferences. Receivers listen to just one sender, but can choose which sender to listen to. We determine that: (i)...

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...