Prior literature shows that financial disclosures and corporate governance both impact firm performance. This paper documents an important topic that has been overlooked in the prior literature, their joint effect, because the two mechanisms could be independent, substitutive, or complementary in their impact on firm performance. We find a substitutive relation based on data from 2005-2013 for a sample of US biotech firms, but only for firms with products in advanced stages of development, because their disclosures are trustworthy about the firms' future performance. We do not find such effect for firms with early-stage products, that would take years to convert to profits, and whose product-related disclosures are speculative at best. This paper shows that informative and reliable voluntary disclosures have similar value-increasing effect as corporate governance and that the marginal effect of trustworthy disclosures is decreasing in governance. To the extent that the two mechanisms are costly, firms can partly substitute one for the other.
We propose a new method to estimate intangible investment outlays, other than expenditures on advertising and research and development, that are reported on a commingled basis with operating expenses in the selling, general, and administrative category of expenses. These outlays, aimed at improving organizational knowledge and capabilities, are the largest category of intangible investments and the fastest-growing category of operating investments. They affect future firm performance and risk. Predictability of future earnings and stock returns improves when these outlays are distinguished from operating expenses. Thus, benefits could accrue from reporting them separately. The SAS program to divide MainSG&A into investment and consumption portions is available at https://doi.org/10.1287/mnsc.2017.2769 . This paper was accepted by Suraj Srinivasan, accounting.
In this study, we examine the relationship between accounting conservatism and board composition. We categorise outside directors according to their skills, abilities, connections and knowledge in three different categories: business experts, support specialists and community influentials. We address three main questions: Is the financial and accounting expertise of directors relevant to improving accounting conservatism? Does specialised expertise in the board affect the speed at which news is reflected in earnings? And how do the political ties of directors affect the sensitivity of earnings to bad news? Our sample consists of active US biotech firms publicly traded on the NYSE, AMEX and NASDAQ stock exchanges during the 2005–2013 period. Our study confirms that not all outside directors are equally effective in monitoring and contracting and that certain kinds of outside directors, such as politicians, can even lower the sensitivity of earnings to bad news. Our robustness analysis confirms that these results are not conditional on the accounting measure, and suggest that distinguishing directors according to their skills and abilities is crucial to understanding the way in which firm boards affect conservatism.
Ultrasonography (US) is widely used in the diagnosis of rheumatic conditions, and its value for the classification criteria of rheumatic diseases has been recently suggested. According to the EULAR/ACR provisional criteria for polymyalgia rheumatica, adding US to the clinical and serological features will significantly improve the sensitivity of proposed criteria. The ability of high resolution US to detect crystalline deposits of monosodium urate in joints and soft tissues is well recognized. For the first time, the new 2014 ACR/EULAR set of proposed criteria for gout includes advanced imaging techniques for the detection of disease: US and dual-energy computed tomography. Due to low costs and affordability, use of US evaluation for patients with suspected gout will increase both specificity and sensibility of classification criteria. The recent inclusion of US in the classification criteria of various rheumatic diseases, such as PMR and gout, implies that this imaging technique is not only useful as a valued diagnostic tool for individual cases, but also on a larger scale, it will improve doctors' ability to classify diseases. Its use is thus changing our understanding of rheumatic diseases allowing further advances in research and clinical practice.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.