C.R. Harvey). AbstractWe survey and interview more than 400 executives to determine the factors that drive reported earnings and disclosure decisions. We find that managers would rather take economic actions that could have negative long-term consequences than make within-GAAP accounting choices to manage earnings. A surprising 78% of our sample admits to sacrificing long-term value to smooth earnings. Managers also work to maintain predictability in earnings and financial disclosures. We also find that managers make voluntary disclosures to reduce information risk and boost stock price but at the same time, try to avoid setting disclosure precedents that will be difficult to maintain. r 2005 Elsevier B.V. All rights reserved. JEL classification: G35; G32; G34

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Forum on Corporate Finance and the University of Washington for comments. Finally, we thank the financial executives who generously allowed us to interview them or who took time to fill out the survey. We acknowledge financial support from the John W. Hartman Center at

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We propose a conditional measure of capital market integration that allows us to characterize both the cross-section and time-series of expected returns in developed and emerging markets. Our measure, which arises from a conditional regime-switching model, allows us to describe expected returns in countries that are segmented from world capital markets in one part of the sample and become integrated later in the sample. Our results suggest that a number of emerging markets exhibit time-varying integration. Interestingly, some markets appear to be more integrated than one might expect based on prior knowledge of investment restrictions.Other markets appear segmented even though foreigners have relatively free access to their capital markets.

We survey 1,050 Chief Financial O¢ cers (CFOs) in the U.S., Europe, and Asia to directly assess whether their …rms are credit constrained during the global …nancial crisis of 2008. We study whether corporate spending plans di¤er conditional on this survey-based measure of …nancial constraint. Our evidence indicates that constrained …rms planned deeper cuts in tech spending, employment, and capital spending. Constrained …rms also burned through more cash, drew more heavily on lines of credit for fear banks would restrict access in the future, and sold more assets to fund their operations. We also …nd that the inability to borrow externally caused many …rms to bypass attractive investment opportunities, with 86% of constrained U.S. CFOs saying their investment in attractive projects was restricted during the credit crisis of 2008. More than half of the respondents said they canceled or postponed their planned investments. Our results also hold in Europe and Asia, and in many cases are stronger in those economies. Our analysis adds to the portfolio of approaches and knowledge about the impact of credit constraints on real …rm behavior.Key words: Financial crisis, …nancing constraints, investment spending, liquidity management, matching estimators JEL classi…cation: G31. *We thank Steve Kaplan, Jeremy Stein, and Luigi Zingales for suggesting questions that we included in the survey instrument. The paper bene…ted from suggestions by Bill Schwert, Steve Kaplan, and Anil Kashyap during the editorial process. Comments from seminar participants at the 2010 American Economic Association, the 2010 American Finance Association, the 2009 Chicago/London Conference on Financial Markets, the 2009 Brazilian Finance Society Conference, Duke University, BG Investments, Northwestern University, and the University of Amsterdam are also appreciated. Special thanks go to our conference discussants Peter Tufano (AEA), Vikrant Vig (AFA), and Walter Novaes (SBFin). We thank CFO magazine for helping us conduct the survey, though we note that our analysis and conclusions do not necessarily re ‡ect those of CFO. We thank Andrew Frankel for his helpful comments on the …rst draft of the paper, and Rafael da Matta and Fabrício D'Almeida for their research assistance.