Earnings announcement promotions: A Yahoo Finance field experiment

Lawrence, Alastair; Ryans, James P.; Sun, Estelle; Laptev, Nikolay

doi:10.1016/j.jacceco.2018.08.004

Cited by 70 publications

(17 citation statements)

References 48 publications

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“…We first examine the real effects of tax audits using the NRP sample of random audits. Our research design follows Lawrence et al ( 2018 ), where treatment firms are randomly selected from a population and then closely-matched firms are selected as control firms. The IRS selected firms for NRP audits in tax year 2010 randomly across five strata based on total receipts, with firms divided into two groups based on the month of tax year-end and sampled at different rates.…”

Section: Methodsmentioning

confidence: 99%

mentioning

confidence: 99%

“… 2 Our research design follows the approach in Lawrence et al ( 2018 ) where firms are randomly selected from a population for treatment and then closely-matched untreated firms are chosen as control firms. Lawrence et al ( 2018 ) calls this design a field experiment. However, because the IRS’s objective in random audit programs is primarily to estimate the tax gap and not to draw causal inferences, the IRS considers this design to be a stratified random sample of audits.…”

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confidence: 99%

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Real effects of tax audits

et al. 2022

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Tax audits are a necessary component of the tax system, but policymakers and others have expressed concerns about their potentially adverse real effects. Understanding the causal effects of tax audits has been hampered by lack of data and because typically tax audits are not randomly assigned. We use administrative data from random tax audits of small businesses to examine the real effects of being subject to a tax audit. We find that audited firms are more likely to go out of business following the audit. The effect is concentrated in firms that underreport their taxes, although we find some evidence that the administrative costs of an audit also negatively affect firm survival. Among firms that continue as going concerns, we find evidence that audits have adverse effects on future revenues but no effect on future wages, employment, or investment. Finally, we find that tax audits have side benefits, causing firms to make changes to improve their tax efficiency. Supplementary Information The online version contains supplementary material available at 10.1007/s11142-022-09717-w.

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Section: Methodsmentioning

confidence: 99%

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Real effects of tax audits

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“…Other studies find that media coverage by general interest outlets spurs capital market responses but does not help impound accounting information into price (BDZ [2018], Lawrence et al. []). Our study helps reconcile these results by finding that mainstream media coverage of earnings announcements motivates trading on nonaccounting signals, increasing volume and liquidity without speeding the pricing of accounting news.…”

Section: Introductionmentioning

confidence: 99%

Why Do Individual Investors Disregard Accounting Information? The Roles of Information Awareness and Acquisition Costs

Blankespoor

deHaan

Wertz

et al. 2018

J of Accounting Research

189

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We investigate the frictions that impede individual investors’ use of accounting information and, in particular, their costs of monitoring and acquiring accounting disclosures. We do so using an archival setting in which individuals are presented with automated media articles that report both current earnings news and past stock returns. Although these investors have earnings information readily available, we find no evidence that their trades incorporate it. Instead we find that their trading responds to the trailing stock returns presented in the articles. Our study raises questions about the efficacy of regulations that aim to aid less sophisticated investors by increasing their awareness of and access to accounting information.

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“…Regarding (b), we focus on a 1-day window because we have well-identified release dates from primary sources for the FASB actions that define our events. Specifically, we follow prior research supporting use of a shorter window when the information release is well-defined (e.g., Hendricks et al, 2020; Jiang et al, 2015; Lawrence et al, 2018). Beatty et al (1996) and Cornett et al (1996) use a longer 3-day window due to their use of secondary sources (such as newspapers) to identify their event dates.…”

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confidence: 99%

Market Perceptions of Fair Value Reporting for Tangible Assets

Conaway

Liang

Riedl

2021

Journal of Accounting, Auditing & Finance

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This article examines equity market perceptions of fair value reporting for tangible assets. We identify six events—four designated as increasing, two as decreasing—affecting the likelihood of U.S. adoption of fair value reporting for investment property (i.e., real estate) assets, one of the largest asset classes in the world. Fair value adoption in the United States would facilitate convergence of one of the widest remaining disparities between U.S. reporting and International Financial Reporting Standards (IFRS): accounting for tangible investment property assets, where the United States (IFRS) requires depreciated historical cost (recognized or disclosed fair values). Using a sample of U.S. investment property firms, we document an average positive market reaction for movement toward fair value reporting. We further find predictable cross-sectional variation, with the market reaction increasing for firms with greater commitment to high-quality reporting, greater investor demand for fair values, higher financial risk, and staler asset values. Overall, the results are consistent with U.S. equity markets perceiving net benefits to movement toward a fair value reporting approach for this asset class.

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Earnings announcement promotions: A Yahoo Finance field experiment

Cited by 70 publications

References 48 publications

Real effects of tax audits

Real effects of tax audits

Why Do Individual Investors Disregard Accounting Information? The Roles of Information Awareness and Acquisition Costs

Market Perceptions of Fair Value Reporting for Tangible Assets

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