... choices as relevant signals of their commitment to integrity and ethics, such allegations could affect auditors’ assessment of tone at the top in a way that elicits a significant effort response consistent with audit risk theory (e.g., O’Keefe, Simunic, and Stein 1994 ; Simunic and Stein 1996 ). Further...

... for a related decrease in expected returns arising from a decrease in investor risk aversion. In contrast, when industry-level earnings growth is less predictable, we find that recommendation changes relate positively to future returns. However, this positive relation results from analysts and investors...

... returns: future realized stock returns, errors in forecasting fundamentals, errors in forecasting the expected return to risk, and biases relating to analysts' incentives. Our results suggest that all four sets help explain target price implied returns, with errors in forecasting the expected return...

.... The consequences for capital market outcomes, such as risk, risk premia, interest rates, firm prices, and the cost of capital, depend on investor preferences and whether improvements are to firm-specific or economy-wide information. We show that interest rates and risk premia tend to move in opposite directions...

...Tim Baldenius; Beatrice Michaeli ABSTRACT We consider the optimal allocation of decision rights over noncontractible specific investments. Risk-averse business unit managers each engage in general (stand-alone) operations and invest in joint projects that benefit their own and other divisions...

...Shane M. Heitzman; Maria Ogneva ABSTRACT We find evidence that equity returns increase with the propensity for tax planning in a firm's industry. This risk premium is imposed on all firms in the industry, even those that are less aggressive than their peers. The industry-based risk premium...

..., including the prediction of financial distress, the information content of earnings announcements, the information content of prices, accounting and market measures of risk, discretion in financial reporting, conservatism, and value relevance of financial statements. Included is a brief summary of some...

... risk ERC What is at work is … “Knightian Uncertainty.” When, as today, the unknown unknowns dominate, and the economic environment is so complex as to appear nearly incomprehensible, the result is extreme prudence … on the part of investors … “Better safe than sorry” is the motto...

...Francesco Bova; Kalin Kolev; Jacob K. Thomas; X. Frank Zhang ABSTRACT Prior research documents a negative link between risk and executive holding of stock, but a corresponding positive link for options. We find a similar negative relation for non-executive holding of stock. Our finding...

...Steven J. Kachelmeier; Tracie Majors; Michael G. Williamson ABSTRACT Risk-based auditing implies that auditors invest more (fewer) resources as reporting risks increase (decrease). We find from an interactive experiment that participants in an audit-like role reflect this reasoning to a lesser...