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Full-Text Articles in Business
What Are You Saying? Using Topic To Detect Financial Misreporting, Nerissa C. Brown, Richard M. Crowley, W. Brooke Elliott
What Are You Saying? Using Topic To Detect Financial Misreporting, Nerissa C. Brown, Richard M. Crowley, W. Brooke Elliott
Research Collection School Of Accountancy
We use a machine learning technique to assess whether the thematic content of financial statement disclosures (labeled topic) is incrementally informative in predicting intentional misreporting. Using a Bayesian topic modeling algorithm, we determine and empirically quantify the topic content of a large collection of 10‐K narratives spanning 1994 to 2012. We find that the algorithm produces a valid set of semantically meaningful topics that predict financial misreporting, based on samples of Securities and Exchange Commission (SEC) enforcement actions (Accounting and Auditing Enforcement Releases [AAERs]) and irregularities identified from financial restatements and 10‐K filing amendments. Our out‐of‐sample tests indicate that topic …
Consequences Of Disclosing Clinical Trial Results: Evidence From The Food And Drug Administration Amendments Act, Thomas Borveau, Vedran Capkun, Yin Wang
Consequences Of Disclosing Clinical Trial Results: Evidence From The Food And Drug Administration Amendments Act, Thomas Borveau, Vedran Capkun, Yin Wang
Research Collection School Of Accountancy
We examine how the U.S. Food and Drug Administration Amendments Act (FDAAA) of 2007, which requires additional disclosures regarding clinical trial results, impacts information asymmetry between the disclosing pharmaceutical firm and capital market participants, the general public, academics, and practitioners. We document a reduction in information asymmetry in capital markets. We also document an increase in adverse event and product problem complaint reports filed against the pharmaceutical firms to the FDA and a higher number of drug and medical device recalls for affected firms after the FDAAA enactment. Finally, cross-sectional analyses suggest that the increase in FDA complaint reports and …
(When) Does Transparency Hurt Liquidity?, Karthik Balakrishnan, Aytekin Ertan, Yun Je Lee
(When) Does Transparency Hurt Liquidity?, Karthik Balakrishnan, Aytekin Ertan, Yun Je Lee
Research Collection School Of Accountancy
Conventional wisdom suggests that increases in public information improve market liquidity. However, if greater public information incentivizes only sophisticated investors to produce private information, it could exacerbate information asymmetry among investors and thus reduce liquidity. We explore this argument on a sample of mortgage-backed securities (MBSs) by using a recent European regulation that mandates complex disclosures about the individual loans underlying MBSs. We find that the liquidity of the debt tranches of disclosed MBSs declines by 23% post-regulation. Our inferences are stronger when the securities are harder to value and when the disparity in investor sophistication is higher. In contrast …