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Evidence presented here is consistent with a failure of stock prices to reflect fully the implications of current earnings for future earnings. Specifically, the three-day price reactions to announcements of earnings for quarters t + 1 through I + 4 are predictable, based on earnings of quarter r. Even more surprisingly, the signs and magnitudes of the(More)
Managers, security analysts, investors, and the press rely increasingly on modified definitions of GAAP net income, known by such names as “operating” and “pro forma” earnings. We document this phenomenon and discuss competing explanations for the recent rise in the use of such modified earnings numbers and implications for the interpretation of related(More)
Effective October 23, 2000, the Securities and Exchange Commission adopted a set of fair disclosure rules (“Reg FD”) that prohibit companies from disclosing earnings or other material business information to some analysts or large investors before announcing it publicly. This paper empirically analyzes the implications of these new rules on several aspects(More)
Rendleman, Jones and Latané (1987) and Bernard and Thomas (1990) report evidence supporting their hypothesis that investors use a "naive" seasonal random walk model, at least in part, to form expectations of quarterly earnings. Unfortunately, they do not report (or imply) evidence of the extent to which the market does seem aware of the deficiencies of such(More)
Using a unique and comprehensive data set of monthly information on advertising spending in media outlets, we examine whether managers engage in real earnings management to meet quarterly financial reporting benchmarks. We extend prior literature by: (1) examining quarterly as opposed to annual earnings benchmarks and separating advertising from other(More)
This study examines the conditions under which the Securities and Exchange Commission (SEC) exercises enforcement leniency following a restatement. I explore whether cooperation with SEC staff and forthright disclosure of a restatement (e.g., disclosures reported in a timely and visible manner) reduce the likelihood of an SEC sanction or SEC monetary(More)
Many e-Business applications today are being developed and deployed on multi-tier environments involving browser-based clients, web application servers and backend databases. The dynamic nature of these applications necessitates generating web pages on-demand, making middle-tier database caching an effective approach to achieve high scalability and(More)
We test whether the coefficient on earnings (the earnings multiplier) in a regression of price on earnings varies as a function of the volatility of cash flows, volatility of nondiscretionary earnings and volatility of reported earnings. The purpose of the test is to examine whether discretionary earnings smoothing (a particular form of earnings management)(More)
International differences in accounting rules pose a significant challenge to investors interested in making cross-border comparisons of firm value. While current efforts to harmonize international standards are laudable, they are unlikely to completely eliminate cross-border accounting diversity. In this study, we suggest an alternative, and complementary,(More)