Kathy Ruby Petroni

Learn More
We examine the usefulness of deferred tax expense as compared to various accrual measures employed in prior research in detecting earnings management in three settings where earnings management likely occurs. The motivation for using deferred tax expense to detect earnings management is that there is typically more discretion under generally accepted(More)
Close corporations account for 51 percent of the private sector output and 52 percent of all private employment in the US. Understanding governance issues and agency problems facing these firms is therefore of considerable importance. Legal scholars extensively recommend that the main shareholder in close firms surrender some control to minority(More)
This study examines the association between chief financial officer (CFO) equity incentives and earnings management. Chief executive officer (CEO) equity incentives have been shown to be associated with accruals management and the likelihood of beating analyst forecasts (Bergstresser and Philippon, 2006; Cheng and Warfield, 2005). Because CFOs’ primary(More)
Firms can report comprehensive income in either an income-statementlike performance statement or the statement of equity. Traditional theories of contracting incentives cannot explain this reporting location choice that only affects where comprehensive income data appear, because the contractible values of net income, other comprehensive income items, and(More)
This paper examines whether accounting systems identify all the costs of environmental regulation. We estimate the relation between the “visible” cost of regulatory compliance, i.e., costs that are correctly classified in firms’ accounting systems, and “hidden” costs i.e., costs that are embedded in other accounts. We use plant-level data from 55 steel(More)
This study empirically shows that the use of equity-based compensation encourages CEOs to manage earnings to report longer strings of consecutive earnings increases so that they can cash out their equity holdings at a higher price in the future. I find that CEOs who hold more stock options and stocks are more likely to report longer strings of consecutive(More)
In this paper we review the academic evidence on earnings management and its implications for accounting standard setters and regulators. We structure our review around a rich set of questions likely to be of interest to standard setters. Specifically, we review the empirical evidence on which specific accruals are used to manage earnings, the magnitude and(More)
Close corporations account for 51 percent of the private sector output and 52 percent of all private employment in the US. Understanding governance issues facing these firms is therefore of considerable importance. Legal scholars extensively recommend that the main shareholder in close firms surrender some control to minority shareholders at the outset in(More)