Fall 2012

Warning: some links are dead

Wednesday 10/24/2012

Bushman and Smith, 2003. Transparency, Financial Accounting Information, and Corporate Governance. FRBNY Economic Policy Review / April 2003.

What Determines Corporate Transparency? Bushman, Piotroski and Smith. .Journal of Accounting Research 2004 , 42 (2).

Does Analyst Following Increase Upon the Restriction of Insider Trading? Bushman, Piotroski and Smith. Journal of Finance Volume 60 February 2005. (Nominated for the 2005 Smith Breeden Prize)

Wednesday 10/31/2012

Abel, A. B., A. Dixit, A.,  J. C. Eberly and R. Pindyck. (1996). Options, the Value of Capital, and Investment.  The Quarterly Journal of Economics, Vol. 111, No. 3, pp. 753-777 (I will only talk about the first 10 pages)

“Capital Allocation and Timely Accounting Recognition of Economic Losses,” with Abbie Smith and Joe Piotroski,   Journal of Business, Finance and Accounting 2011, Vol. 38, Issue 1/2

Bushman, Smith and Zhang, 2012.  Investment-Cash Flow Sensitivities Are Really Investment- Investment Sensitivities. Working paper.

Related Literature 

Huafeng (Jason) Chen and Shaojun (Jenny) Chen. 2012. Investment-cash flow sensitivity cannot be a good measure of financial constraints: Evidence from the time series.  Journal of Financial Economics 103: 393–410.

Hadlock and Pierce, 2010. New Evidence on Measuring Financial Constraints: Moving Beyond the KZ Index. Rev. Financ. Stud. (2010) 23 (5): 1909-1940.

Whited, T., and G. Wu. 2006. Financial Constraints Risk. Review of Financial Studies 19:531–59.

Biddle, Gary C., Hilary, Gilles and Verdi, Rodrigo S., 2009. How Does Financial Reporting Quality Relate to Investment Efficiency? (July 2009). Journal of Accounting and Economics 48 (2009) 112–131

Jeffrey Wurgler,  Financial markets and the allocation of capital. Journal of Financial Economics 58 (2000) 187-214

Stark, Andrew, 2000.  Real Options, (Dis) Investment, Decision Making, and Accounting Measures of Performance.  JBFA 27(3) & (4).

Wu, Ginger, Lu Zhang, and Frank Zhang. 2010. The q-Theory Approach to Understanding the Accrual Anomaly.  Journal of Accounting Research Vol. 48 No. 1 March 2010

Brown, James R. and Bruce C. Petersen. 2010. Why has the investment-cash flow sensitivity declined so sharply? Rising R&D and equity market developments. Journal of Banking & Finance 33 (2009) 971–984.

Hubbard, R. G., 1998. Capital-Market Imperfections and Investment.  Journal of Economic Literature, 36, 193-225.

Fazzari S., R. G. Hubbard, and B. Petersen, 1988, “Financing Constraints and Corporate Investment,” Brooking Papers on Economic Activity, 1, pp. 141-95.

Fazzari S., R. G. Hubbard, and B. Petersen, 2000, “Investment—Cash Flow Sensitivities Are Useful: A Comment on Kaplan and Zingales,” Quarterly Journal of Economics, 115, pp. 695-706.

Kaplan, S. and L. Zingales, 1997, “Do Financing Constraints Explain why Investment is Correlated with Cash Flow?” Quarterly Journal of Economics, 112, pp. 169-215.

Kaplan, S. and L. Zingales, 2000, “Investment—Cash Flow Sensitivities are not Useful Measures of Financial Constraints,” Quarterly Journal of Economics, 115, pp. 707-12.

Wednesday, November 7, 2012.  Banking

Bushman, Robert and Christopher Williams. 2012.  Accounting discretion, loan loss provisioning, and discipline of Banks' risk-taking. Journal of Accounting and Economics 54 (2012) 1–18.

Delayed Expected Loss Recognition and the Risk Profile of Banks. With Chris Williams. July 2012.

Bushman, Robert, Brad Hendricks  and Christopher Williams. September 2012. Bank Competition, Decision-Making, and Stability. Working paper.

Related Literature 

Ross Levine, 2004. The Corporate Governance of Banks: A Concise Discussion of Concepts and Evidence

Hamid Mehran, Alan Morrison, and Joel Shapiro. 2011. Corporate Governance and Banks: What Have We Learned from the Financial Crisis? Federal Reserve Bank of New York Staff Report no. 502 June 2011.

Lots of background reading

Wednesday, November 14, 2012

Ball, R.; R. Bushman; and F. Vasvari. “The Debt-Contracting Value of Accounting Information and Loan Syndicate Structure.” Journal of Accounting Research 46 (2008): 247–87.

Robert Bushman and Regina Wittenberg-Moerman 2012. “The Role of Bank Reputation in “Certifying” Future Performance Implications of Borrowers’ Accounting Numbers”, Forthcoming Journal of Accounting Research.  

Li, Kai and N. R. Prabhala, 2007. Self-Selection Models in Corporate Finance Handbook of Corporate Finance, Volume 1: Empirical Corporate Finance.

Related Reading

Chemmanur, T., and P. Fulghieri. “Investment Bank Reputation, Information Production, and Financial Intermediation.” Journal of Finance 49 (1994a): 57–79.

Ross, D. “The “Dominant Bank Effect:” How High Lender Reputation Affects the Information Content and Terms of Bank Loans.” The Review of Financial Studies 23 (2010): 2730–56.

Fang, L. “Investment Bank Reputation and the Price and Quality of Underwriting Services.” Journal of Finance 60 (2005): 2729–61.

Heckman, J., and S. Navarro-Lozano. “Using Matching, Instrumental Variables, and Control Functions to Estimate Economic Choice Models.” Review of Economics and Statistics 86 (2004): 30–57.

Lin, H., and D. Paravisini. “Delegated Monitoring of Fraud: The Role of Non-Contractual Incentives.”  Working paper, Columbia University

Campa, J.M., and S. Kedia, 2002, Explaining the diversification discount, Journal of Finance, 57, 1731-1762.

Hans Christensen and Valeri Nikolaev, 2012. Capital versus Performance Covenants in Debt Contracts. Journal of Accounting Research Vol. 50 No. 1: 75-116

Monday, November 19

“Price Discovery and Dissemination of Private Information by Loan Syndicate Participants.” Bushman, Smith and Wittenberg-Moerman,   Journal of Accounting Research Vol. 48 No. 5 December 2010.

Lim, J., B., Minton, and M. Weisbach, 2012, Syndicated loan spreads and the composition of the syndicate, Working Paper.

Wednesday, November 28

Dou, Yiwei, The Debt-Contracting Value of Accounting Numbers, Renegotiation, and Investment Efficiency (September 28, 2012).

Research Proposal: Borrower Transparency and Participation by Institutions in Syndicated Loans.  Robert M. Bushman and Regina Wittenberg-Moerman, September 2012

Related papers

Roberts, M., and A. Sufi. 2009. Renegotiation of financial contracts, evidence from private credit agreements. Journal of Financial Economics 93, 159-184.

Roberts, M. 2010. The role of dynamic renegotiation and asymmetric information in financial contracting. Working Paper. University of Pennsylvania.

Nikolaev, V. 2012. Scope for Renegotiation and Debt Contract Design. Working paper, Chicago Booth.

Vashishtha, R., 2012, Evidence on the role of bank financing in borrowers’ disclosure,Working Paper.

Wednesday, December 5

Bushman, Robert, Katie McDermott and Chris Williams. 2012. The Earnings Announcement Premium and Volume Concentration. 

Robicheck, A., Myers, S., 1966. Conceptual problems in the use of risk-adjusted discount rates. Journal of Finance 37, 727–730.

Sheng and Thevenot, 2011. A new measure of earnings forecast uncertainty.  JAE.

Related Reading

Barber, B. M., E. T. De George, R. Lehavy, and B. Trueman. 2012. “The Earnings Announcement Premium around the Globe.” Journal of Financial Economics, forthcoming.

Lamont, O., and A. Frazzini. 2007. The Earnings Announcement Premium and Trading Volume. Working paper, National Bureau of Economic Research.

Barth and So, 2012. Non-Diversifiable Volatility Risk and Risk Premiums at Earnings Announcements. Working paper.

So, Eric C., 2012. Disclosure and the Option Value of Equity. Working paper MIT.

Cohen, D. A., A. Dey, T. Z. Lys, and S. V. Sunder. 2007. “Earnings announcement premia and the limits to arbitrage.” Journal of Accounting and Economics 43: 153-180.

Barron, O.E., Kim, O., Lim, S.C., Stevens, D.E., 1998. Using analysts’ forecasts to measure properties of analysts’ information environment. The Accounting Review 73, 421–433.

Fu, Frank, 2009.  Idiosyncratic risk and the cross-section of expected stock returns.  JFE.

Barron, Sheng and Thevenot ,2012. The Information Environment and Cost of Capital. Working paper.

George J. Jiang, Danielle Xu, and Tong Yao, 2009. The Information Content of Idiosyncratic Volatility. Journal of Financial and Quantitative Analysis Vol. 44, No. 1, Feb. 2009, pp. 1–28.

Chen, Qi and Wei Jiang, 2005. Analysts’ Weighting of Private and Public Information.  RFS

Hann, Ogneva and Sapriza 2011. Forecasting the Macroeconomy: Analysts versus Economists.  Working paper.

Hutton, Lee and Shu. 2012.  Do Managers Always Know Better? The Relative Accuracy of Management and Analyst Forecasts.  JAR.