Intro to Research

Question 1

Archival Research Methods

Question 2

Boland and Godsell 2020

Local soldier fatalities and war profiteers: New tests of the political cost hypothesis

Answer 2

Findings:
Local defense firms record more income-decreasing accruals with increase in local soldier fatalities

Contribution:
Overcome the key obstacle to causal inference in this prior literature: that firms’ susceptibility to political costs is often endogenous to its policies.

Archival Research Methods

Question 3

Guay et al. 2016

Guiding through the Fog: Financial statement complexity and voluntary disclosure

Answer 3

Findings:
Firms affected by the adoption of complex accounting standards (e.g., SFAS 133 and SFAS 157) increase their voluntary disclosure to a greater extent than unaffected firms.

Contribution:
Managers use different disclosure mediums to manage the information environment.

Archival Research Methods

Question 4

Barrios 2022

Occupational licensing and accountant quality: Evidence from the 150-hour rule.

Answer 4

Findings:
The 150-hour rule reduces CPA exam candidates by 15% but does not improve accountant quality as measured by career outcomes, time to promotion, or communication skills

Contribution:
Challenges the effectiveness of occupational licensing by showing that increased educational requirements restrict supply without improving quality

Archival Research Methods

Question 5

Experimental

Question 6

Joe et al. 2017

Use of High Quantification Evidence in Fair Value Audits: Do Auditors Stay in their Comfort Zone?

Answer 6

Findings:
Managers can provide a high degree of quantified evidence to divert auditors’ attention to performing more objective procedures, consequently distracting them from performing the subjective procedures that test management’s discretionary and potentially opportunistic inputs to FVMs.

Contribution:
management opportunism in FVMs

Experimental

Question 7

Aghazadeh and Joe 2022

Auditors’ response to management confidence and misstatement risk.

Answer 7

Findings:
High management confidence mutes auditors’ appropriate response to risk of material misstatement, leading to insufficient testing and increased reliance on inquiry evidence

Contribution:
Demonstrates how management’s behavioral cues can undermine audit effectiveness despite auditors’ professional skepticism

Experimental

Question 8

Pyzoha et al. 2020.

Can Auditors Pursue Firm-Level Goals Nonconsciously on Audits of Complex Estimates? An Examination of the Joint Effects of Tone at the Top and Management’s Specialist

Answer 8

Findings:
Firm-level goals can be pursued nonconsciously by auditors when performing a complex task. When management’s specialist is absent, a balanced approach reduces auditors’ tendency to agree with management’s estimate compared to a commercial approach; however, it is less effective when management’s specialist is present. We find an audit quality approach reduces auditors’ tendency to accept management’s estimate compared to a commercial approach, regardless of the absence/presence of a specialist.

Contribution:
Firm-level “tone at the top” can subtly prime goals that auditors subsequently pursue nonconsciously when performing complex audit tasks, demonstrating that an audit quality-focused tone at the top effectively reduces auditors’ tendency to accept management’s preferred estimates (thereby improving professional skepticism and audit quality), while a balanced approach emphasizing both commercial and audit quality goals is only effective when management does not use a specialist.

Experimental

Question 9

Capital Markets

Question 10

Bentley et al. 2023

The “What”, “How”, and “Why” of Earnings Announcement Disclosures and Formatting

Answer 10

Findings:
Metric favorability, persistence, value-relevance, and past disclosure choices predictably influences disclosure choices with metric favorability and past disclosure choices most strongly predicting disclosure behavior.

Contribution:
Their measures capture substantive variation in metric mention attributes and that managers strategically use a variety of disclosure tactics across a range of financial metrics.

Capital Markets

Question 11

deHaan et al. 2015

Market (in)attention and the strategic scheduling and timing of earnings announcements

Answer 11

Findings:
“Attention is lower (higher) after (before) market close and on busy (slow) reporting days, but no different on Fridays than on other weekdays.
UE is worse after hours, on Fridays, and decrease when in busy days.
Less attention on EA when less lead annoucement provided, greater attention when the lead time is shorter.”

Contribution:
Proxies for market attention; mgmt ex-ante perception of makret reaction is diff than the realizations.

Capital Markets

Question 12

Gomez, Heflin, and Wang 2023

Securities and Exchange Commission Regulation and non-GAAP income statements.

Answer 12

Findings:
SEC comment letters directing firms to stop disclosing non-GAAP income statements worsen information environments, reducing earnings informativeness and increasing information asymmetry

Contribution:
Provides evidence that disclosure regulation can have unintended negative consequences when it reduces useful information

Capital Markets

Question 13

Earnings and Accruals Quality

Question 14

Christensen et al. 2023

Explaining accruals quality over time.

Answer 14

Findings:
Accruals quality improved in the US after 2000 following a decline in the 1990s, with the pattern inversely related to operating cash flow volatility

Contribution:
Challenges conventional wisdom about declining earnings quality and identifies cash flow volatility as the primary driver of accruals quality trends

Earnings and Accrual Quality

Question 15

Lennox et al. 2016

The effect of audit adjustments on earnings quality: Evidence from China

Answer 15

Findings:
Audited earnings are smoother and most persistent, and higher accruals quality (low residuals) compared to pre-audit earnings

Contribution:
Earnings quality measured by smoothness is higher after audit, a proxy that is controversal in the lit.

Earnings and Accrual Quality

Question 16

Jung et al. 2014

Financial Reporting Quality and Labor Investment Efficiency

Answer 16

Findings:
Higher-quality financial reporting is associated with more efficient labor investments, as measured by actual net hiring being closer to expected levels based on economic fundamentals, with this effect being particularly strong in industries with high unionization rates and among financially healthy firms.

Contribution:
High-quality accounting mitigates both over- and under-investment in labor, and showing that abnormal hiring decisions are costly in terms of future firm performance.

Earnings and Accrual Quality

Question 17

Conservatism

Question 18

Tan et al. 2013

Creditor control rights, state of nature verification, and financial reporting conservatism.

Answer 18

Findings:
Conservatism increases after a debt covenant violation

Contribution:
Provides direct evidence supporting the debt contracting explanation for accounting conservatism posited in Watts (2003).

Conservatism

Question 19

Black et al. 2022

Legal expertise and the role of litigation risk in firms’ conservatism choices.

Answer 19

Findings:
Firms with general counsel (GC) in senior management report more conservatively and recalibrate conservatism in response to changes in legal environment (peer litigation, judicial rulings)

Contribution:
First to identify legal expertise as a specific channel through which firms internalize litigation risk in conservatism choices; shows variation in sensitivity to litigation risk

Conservatism

Question 20

D’Augusta and DeAngelis 2020

Does Accounting Conservatism Discipline Qualitative Disclosure? Evidence From Tone Management in the MD&A

Answer 20

Findings:
UTM is negatively associated with several accounting conservatism proxies and this association is stronger for firms where managers have higher incentives to manipulate tone. Conservatism neither encourages downward tone management nor constrains managers from conveying real information about future good news

Contribution:
First empirical study to examine association between conservatism and managers’ manipulation of qualitative disclosure.

Conservatism

Question 21

Disclosure

Question 22

Blankespoor et al. 2023.

The pitch: Managers’ disclosure choice during initial public offering roadshows.

Answer 22

Findings:
IPO roadshows have more positive, less negative, and less uncertain language than SEC filings; roadshow language predicts future accounting performance while filing language does not

Contribution:
First empirical evidence of disclosure differences between roadshow and SEC filing; shows management summaries can be more informative than comprehensive mandatory disclosure

Disclosure

Question 23

Song 2021

The informational value of segment data disaggregated by underlying industry: Evidence from the textual features of business descriptions

Answer 23

Findings:
the more comparable disclosure among industry, the more accruate and less dispersion of forecast, and lower cost for analysts to follow.

Contribution:
creaste a measure that capture the industry disaggregation

Disclosure

Question 24

Christensen et al. 2022

Why is Corporate Virtue in the Eye of The Beholder? The Case of ESG Ratings

Answer 24

Findings:
Grater ESG disclosure leads to freater ESG dating disagreement. Raters disagree more about ESG outcome metrics than input metrics and disclosure appears to amplify disagreement more for outcomes.

Contribution:
ESG disclosure generally exacerbates ESG rating disagreement rather than resolves it.

Disclosure

Question 25

Corporate Governance ("G" in ESG)

Question 26

Gow et al. 2018 ## Footnote Managing reputation: Evidence from biographies of corporate directors

Answer 26

Findings: "A directorship on another board is likely to be undisclosed when the other firm experienced an adverse event during the director's tenure, e.g., restatement, securities litigation, or bankruptcy. After disclosing, followed by negative market reaction, lose a current directorship in 2 years." Contribution: the determinants of directors' reputation other than performance, and consequence of the mandate directorship disclosure | Corporate Governance ("G" in ESG)

Question 27

Field et al. 2020 ## Footnote At the table but can not break through the glass ceiling: Board leadership positions elude diverse directors

Answer 27

Findings: Diverse board representation does not reduce the leadership gap. Diverse direcgtors are significantly less likely to serve in leadership positions despite possessing stronger qualifications than nondiverse directors. Contribution: Shows the importance of demographics in the labor market. Study explores the role of race and gender in board appointments and broder executive leadership. Also, contributes to the discussion of the internal dynamics at corporate boards and how leadership is determined. | Corporate Governance ("G" in ESG)

Question 28

Carter et al. 2022 ## Footnote Board committee overlap and the use of earnings in CEO compensation contracts.

Answer 28

Findings: Firms with overlapping audit-compensation committee members rely less on earnings-based performance measures in CEO compensation without reducing overall incentive pay levels Contribution: First to examine how committee overlap affects choice of performance measures in compensation contracts; shows overlap leads to substitution away from earnings measures | Corporate Governance ("G" in ESG)

Question 29

Human Capital and Diversity (“S” in ESG)

Question 30

Li et al. 2022 ## Footnote Employee turnover and firm performance: Large-sample archival evidence

Answer 30

Findings: Turnover is associated with negative furture finanical performance. Contribution: "Relationship between human capital, other than top executives, and firm outcomes; Investors' demand for HR disclosure" | Human Capital and Diversity (“S” in ESG)

Question 31

Gao et al. 2023 ## Footnote Do Internal Control Weaknesses Affect Firms' Demand for Accounting Skills? Evidence from U.S. Job Postings

Answer 31

Findings: There is a significant increase in firms' job postings that list accounting skills after the disclosure of an internal control weakness. Results extend to employees that are not specifically designated as accountants, suggesting a broader role for rank-and-file eimployees in influencing internal control quality. Firms with job postings with accounting skill requirements are associated with improvements in internal controls and higher likelihood of internal control weakness remediation. Contribution: Examines how firms respond to and remediate internal control weaknesses. Firms' demand for accounting skills after public disclosure of an internal control weakness. | Human Capital and Diversity (“S” in ESG)

Question 32

Ahn et al. 2023 ## Footnote The turnover, retention, and career advancement of female and racial minority auditors: Evidence from individual LinkedIn data.

Answer 32

Findings: Same-group representation at peer and leadership levels reduces turnover likelihood for diverse auditors. Women and racial minorities are more likely to join organizations with greater same-group representation. Extended tenure benefits career outcomes. Contribution: First study using detailed individual-level auditor data to examine diversity-related turnover patterns, demonstrating the importance of homophilic networks in retention and challenging traditional socialization assumptions. | Human Capital and Diversity (“S” in ESG)

Question 33

Qualitative Research in Accounting

Question 34

Cunningham et al. 2023 ## Footnote A Broken Cycle: How a Lack of Feedback Hampers Disclosures of Audit Committee Oversight

Answer 34

Findings: Current disclosure process creates a focus on standardized language that fails to provide investors with the ability to distinguish audit committee oversight quality across companies. High-quality audit committees are willing to expand disclosures to signal their oversight acivities whe they receive investor feedback about the usefulness of these disclosures. Contribution: Provides an in-depth understanding of how audit committees determine the level of deatil to disclose about their oversight activities and why most companies currently adopt an isomorphic approach. | Qualitative Research in Accounting

Question 35

Courtois et al. 2020 ## Footnote The show must go on! Legitimization processes surrounding certified fraud examiners’ claim to expertise

Answer 35

Findings: members are receptive to performances aiming to promote pragmatic legitimacy; perceptions of misrepresentations do not abound regarding these performances. However, the perception of moral and epistemic legitimacy is fragile. Contribution: little is known about the actions taken by professional associations to gain and maintain legitimacy with their members. | Qualitative Research in Accounting

Question 36

Baudot et al. 2022 ## Footnote Contemporary conflicts in perspectives on work hours across hierarchical levels in public accounting.

Answer 36

Findings: Junior-level personnel embrace "work-life actualization" perspective while senior levels maintain "work-prioritization" perspective. Firms adapt through alternative work arrangements, offshoring, and technology to reconcile conflicting perspectives. Contribution: Shows how accounting firms are adapting to generational differences in work perspectives through institutional complexity theory, revealing major shifts in traditional socialization processes in public accounting. | Qualitative Research in Accounting

Question 37

Tax Research

Question 38

Bozanic et al. 2017 ## Footnote IRS attention.

Answer 38

Findings: IRS attention to public disclosures increased after FIN 48 but decreased after Schedule UTP. Firms increased tax footnote disclosures when tax-related proprietary costs decreased following Schedule UTP. Contribution: First study to examine tax enforcement using data derived independently of the IRS, demonstrating how public and private disclosure requirements interact to influence both regulatory enforcement and firm disclosure behavior. ## Footnote Tax Research

Question 39

Seidman et al. 2022 ## Footnote The effect of tax authorities on corporate tax planning: Insights from tax executives.

Answer 39

Findings: "Tax executives engage external advisors, be transparent, implement positions with strong technical support, gather strong documentation and exchange information with peers are a few actions they usually take to maximize the net benefits of implemented tax planning strategies. The five most common challenges of the audit that increase the cost of tax planning by requiring additional time and resources to settle positions are 1) low-quality tax agents, 2) excessively bureaucratic tax authority processes, 3) tax authority resource constraints, 4) unreasonable tax agents, and 5) uncertainty about the resolution of the audits and settlements. Actions companies take to mitigate the costs of perceived challenges during an audit are 1) form cooperative relationships with tax agents, 2) exchange information with peers, 3) educate tax agents, 4) engage external advisors, and 5) interact strategically with tax agents." Contribution: "1) The study conducts a qualitative approach to complement and enhance the literature on corporate tax planning (Bloomfield, Nelson, and Soltes 2016). 2) They offer new insights into the confidential audit process by documenting perceived challenges during the audit process that are not often explicitly incorporated into analytical or archival studies. 3) The regulatory implications should be of interest to politicians who set tax authority budgets in any jurisdiction as well as to those charged with allocating tax authority resources." ## Footnote Tax Research

Question 40

Desai and Dharmapala 2006 ## Footnote Corporate tax avoidance and high-powered incentives

Answer 40

Findings: Increases in incentive compensation tend to reduce the level of tax sheltering. This negative effect is is driven primarily by firms with relatively weak governance arrangements. Contribution: It constructs a novel measure for corporate tax avoidance. It allows for an investigations of the link between tax avoidance and incentive compensation. ## Footnote Tax Research