Michal Matejka

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I test the stock market efficiency with respect to the information in the texts of annual reports. More specifically, I examine the implications of corporate annual reports' risk sentiment for future earnings and stock returns. I measure the risk sentiment of annual reports by counting the frequency of words related to risk or uncertainty in the 10-K(More)
W e examine the extent to which employment horizon concerns affect the relative emphasis on financial versus nonfinancial performance measures in annual bonus plans. We argue that managers of loss-making firms are likely to voluntarily or forcibly depart in the near future and, consequently, have a shorter employment horizon. Loss-making firms then need to(More)
This study extends research on earnings conservatism – the degree to which the accounting system recognizes bad news regarding future cash flows in a more timely manner than good news – by arguing that heterogeneous executives' risk attitudes will influence the degree of conservatism. Prior research has demonstrated that differences in earnings conservatism(More)
This paper investigates whether mandatory changes in Generally Accepted Accounting Principles (GAAP) affect managerial investments in physical capital and research and development. Using a sample containing forty–nine changes in GAAP, I find evidence that changes in accounting rules affect investment decisions. I then examine two mechanisms through which(More)
We are very grateful to Robert Walters and the Controllers Instituut for making the data available obtained from their annual salary survey. Part of this research was undertaken when Laurence van Lent was a visiting fellow at the Initiative on Global Markets of the University of Chicago. We acknowledge the helpful comments from workshop participants at the(More)
We examine how firms balance the relative importance of multiple performance measures in their annual bonus plans. We present an analytical model showing that managerial allocation of effort is a function of both relative incentive weights and the difficulty of performance targets. We find that relative incentive weight and target difficulty can be either(More)
We estimate the firm-level rate at which working capital accruals convert into future cash flows. These conversion rates determine the expected cash value of a dollar of working capital accruals and can therefore be used to improve the comparability of accruals across firms. For firms whose accrual innovations reverse within one year, we find that, on(More)
Dyreng et al. (2008) find considerable variation in cash ETRs both across and within industries. One possible explanation for this phenomenon is that firms (and/or industries) have varying degrees of success via the political process (Zimmerman 1983). Corporations develop political strategies that allow them to compete in the public policy arena. We test(More)
In this paper, we analyze a lobby game, modelled as an all-pay auction in which interest groups submit bids in order to obtain a political prize. The bids are restricted to be below a cap imposed by the government. For both an incomplete and a complete information setting we show the following results. While ex post a lower cap may lead to higher lobbying(More)
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