Annual Conference

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Accounting

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May 2016

Harnessing the Wisdom of Crowds

Zhi DA, Xing HUANG
When will a large group provide an accurate answer to a question involving quantity estimation? We empirically examine this question on a crowd-based corporate earnings forecast platform (Estimize.com). By tracking user activities, we monitor the amount of public information a user views before maki...
Keywords: Wisdom of Crowds, Herding, Naive Learning, Social Learning, Group Decision Making, Earnings Forecast
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Annual Conference

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Accounting

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May 2016

Does fiduciary duty to creditors reduce debt covenant violation avoidance behavior?

Shai LEVI, Benjamin SEGAL, Dan SEGAL
Financial reports should provide useful information to shareholders and creditors. Directors, however, normally owe fiduciary duties to equity holders and not creditors. We examine whether this slant in fiduciary duties affects the extent to which firms use financial engineering to circumvent debt c...
Keywords: Debt Structuring, Director Fiduciary Duties, Board Independence
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Annual Conference

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Accounting

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May 2016

Capital-Market Consequences of Asymmetric Output-Price Rigidities

Jin XIE
Firms adjust output prices to cost decreases with a delay relative to cost increases. I document firms’ operating income becomes less persistent when their input costs decrease than when their costs increase. The stocks of firms slowly cutting output prices due to asymmetric output-price rigiditie...
Keywords: New Keynesian economics, Downward nominal price rigidities, Trend inflation, Earnings persistence, stock market
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Annual Conference

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Accounting

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May 2016

Corporate Hedging and the Design of Incentive-Compensation Contracts

Christopher S. ARMSTRONG, Sterling HUANG, Stephen GLAESER
We use the introduction of exchange-traded weather derivative contracts as a natural experiment to examine the relation between risk and incentives. Specifically, we examine how executives’ ability to hedge weather-related risk that was previously difficult and costly to manage influences the desi...
Keywords: executive compensation, contract design, equity incentives, risk-taking incentives;
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Annual Conference

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Accounting

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May 2016

Can Twitter Help Predict Firm-Level Earnings and Stock Returns?

Eli BARTOV, Lucile FAUREL, Partha MOHANRAM
Prior research has examined how companies exploit Twitter in communicating with investors, and whether Twitter activity predicts the stock market as a whole. We test whether opinions of individuals tweeted just prior to a firm’s earnings announcement predict its earnings and announcement returns. ...
Keywords: Twitter, Social media, Wisdom of Crowds, earnings, analyst earnings forecast, abnormal stock returns
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