Accounting Commons^™

The Effects Of Eps Level And Presentation Format Of Analysts’ Forecast Deviation On Non-Professional Investors’ Investment Judgments, Clarence Goh, Prasart Jongjaroenkamol, Poh-Sun Seow

Research Collection School Of Accountancy

We experimentally investigate how the presentation format of the extent to which a firm's earnings per share (EPS) diverges from analysts' EPS forecasts (i.e. deviation information) and a firm's EPS level affect the investment judgments of non-professional investors (referred to hereafter as “investors”). Our results suggest that investors' investment judgments are more positive when firms with low (high) EPS levels disclose deviation information in percentage (absolute) terms. Furthermore, when the percentage of forecast deviation is held constant, investment judgments are more positive when EPS levels are high versus low if the deviation information is expressed in absolute terms. By contrast, …

Human Capital Disclosure And Labor Market Outcomes: Evidence From Regulation S-K, Jung Ho Choi, Dan Li, Daniele Macciocchi

Research Collection School Of Accountancy

We examine the labor market consequences of the 2020 Regulation S-K requiring human capital disclosure in 10K filings. Using large-sample job-level data and a Generative Large Language Model (GLLM), we observe that public firms subject to the regulation increase their disclosure of diversity, equity, and inclusion (DEI) information in job postings relative to a matched sample of large private firms. The increase in job-posting disclosure is more pronounced among firms facing greater external pressure to increase their workforce diversity. These findings suggest a shift in demand for diverse candidates by public firms following the regulation. Yet, consistent with short-term inelastic …

Income Tax Over-Withholding And Household Investment Decisions, Xi Novia Chen, Jungbae Kim, Ben Lourie, Chenqi Zhu

Research Collection School Of Accountancy

Over three-quarters of U.S. taxpayers over-withhold taxes, leading to tax refunds. This study explores how over-withholding impacts stock investments by comparing individuals' investment patterns from wages and tax refunds. We find that while some portion of tax refunds are promptly invested, the investment rate is lower than that of wages. This suggests that over-withholding, which alters the label and timing of wages into refunds, influences investment behavior. Our cross-sectional analysis indicates that the differential propensity to invest wages versus tax refunds are more pronounced for individuals with automatic investment setups and lower financial sophistication. These findings underscore the importance of …

Beyond Earnings Quality: Evaluating The Quality Of Corporate Disclosure Practices, Patricia M. Dechow, Weili Ge, Wei Ting Loh

Research Collection School Of Accountancy

We propose a framework to assess the decision-usefulness of heterogeneous disclosure practices that managers use to convey information to market participants. We illustrate an application of our framework to non-GAAP earnings, management earnings guidance, and earnings conference calls. We first identify key quality attributes for each disclosure practice and then develop a list of quality metrics that we apply to a small pilot sample. We focus on metrics that are easily measured in real time and discuss the practical challenges of conducting assessments of disclosure quality at the firm-quarter-disclosure level. Our descriptive analysis provides preliminary insights into whether and how …

Using Individual Vs. Group Evaluation To Incentivize Effort For Heterogeneous Groups, Prasart Jongjaroenkamol

Research Collection School Of Accountancy

This study uses an analytical model to examine how individual and group performance evaluations affect motivation among agents with different abilities. While group evaluations encourage collaboration, they also introduce uncertainty. The results reveal a non-monotonic relationship between the weight assigned to group evaluations and motivation: motivation increases at moderate weights but decreases when the weight is too low or high. The study also identifies the optimal weighting between evaluation types to maximize motivation and examines factors influencing these allocations. These insights demonstrate how evaluation design shapes effort incentives and inform performance measurement and assessment practices in organizational and educational contexts.

The Due Diligence That Investors In Family Businesses Must Not Skip, Yuanto Kusnadi, Kenneth T. Goh

Research Collection School Of Accountancy

In a commentary, SMU Associate Professor of Accounting (Education) Yuanto Kusnadi and Kenneth Goh, Director of Private Wealth Management at UOB Kay Hian, opined that minority shareholders should understand the specific risks highlighted in company filings. They noted that the greatest risk of investing in a family-controlled company lies not only in its business performance, but also in how controlling families exercise their influence. While Singapore's regulatory framework provides safeguards for minority shareholders, these protections are not foolproof. However, they require significant transactions to be disclosed and give minority shareholders a voice, provided they review the circulars and exercise their …

Conference Calls And Information Spillover: The Role Of Analyst Participation, Amanda Awyong, Young Jun Cho, Holly I. Yang

Research Collection School Of Accountancy

We examine the role of conference calls in creating information spillover within firms. We find that analyst participation in conference calls is positively associated with subsequent revisions in management forecasts, consistent with analysts' questions prompting managers to collect additional information. We find that this effect strengthens when analysts pose more questions on new topics and when they ask questions with abnormally positive or negative tones. We also find that analyst participation has greater effects when analysts have more experience and higher forecasting ability. Further analyses demonstrate that analyst participation is associated with higher accuracy in subsequently revised forecasts. Overall, our …

“Megadeal” Subsidies, Local Spillovers And Corporate Innovation, Yoojin Lee, Shaphan Ng, Aruhn Venkat

Research Collection School Of Accountancy

We examine whether the largest place-based, firm-specific corporate subsidies (“Megadeals”) awarded by state and local governments affect local firms’ innovation. First, we document that 1) subsidy firms innovate in the subsidized county and 2) subsidy firms bring inventors from other counties into the subsidized county, consistent with subsidy firms generating new knowledge locally. In our main test, we use a stacked cohort design with stringent fixed effects to document that local firms increase patenting following a Megadeal. Cross-sectionally, effects are increasing 1) in subsidy firm innovativeness, 2) in the technological closeness of subsidy firms and local firms, 3) when subsidy …

Attention To Detail: How Do Information Users Process Exhibits In Form 10-K?, Stephanie F. Cheng, Yimeng Li, Pengkai Lin

Research Collection School Of Accountancy

Form 10-K offers a setting for studying how users process complex, multi-layered disclosures: managerial narratives in the main file alongside separate exhibits, such as contracts and certifications, that provide unfiltered detail. Drawing on rational inattention theory, we investigate how users allocate limited attention across these components. Users typically begin with the main file and selectively access exhibits when the main file appears shorter, less readable, or less confident, indicating higher perceived information loss. This pattern strengthens for exhibits that offer more detail on topics discussed in the main file and among institutional investors and time-constrained users. Exhibit access persists beyond …

Political Costs And Strategic Corporate Communication, Christine Cuny, Jungbae Kim, Mihir N. Mehta

Research Collection School Of Accountancy

When subject to public scrutiny, do firms strategically use advertising to reduce expected political costs? Advertising can ease public concerns, thereby reducing the pressure on politicians to act harshly against scrutinized firms and their industries. We use repeated congressional testimony by industry members as a novel way to identify political scrutiny. Our central finding is that scrutinized industries increase their advertising spending 132 percent more in the electorates of politicians overseeing the hearings than in the electorates of other politicians. Further, strategic advertising is complementary to income-decreasing accounting choices and a substitute for lobbying. Overall, our study sheds light on …

Can Financial Literacy Enhance Esg Disclosures?, Xiaoran Jia, Kiridaran Kanagaretnam, Kiat Bee Jimmy Lee, Chee Yeow Lim

Research Collection School Of Accountancy

Using an international sample of firms and two country-level measures of financial literacy, we find robust evidence of a positive relation between financial literacy and firms' Environmental, Social and Governance (ESG) disclosures. In cross-sectional analyses, we find that the effect of financial literacy in enhancing ESG disclosures is more prominent in poorer information environments, weaker legal institutions and weaker ESG reporting environments. Lastly, we find that financial literacy also enhances ESG performance. Our study contributes to and extends the literature by providing strong evidence that citizens' financial literacy enhances firms' ESG disclosure and the associated ESG performance.

Improving Public Transport Through Machine Learning Influence Flow Analysis (Mifa): Southern England Bus Case Study, Benjamin Lee, Wolfgang Garn, Masoud Fakhimi, Nick F. Ryman-Tubb

Research Collection School Of Accountancy

Public transport (PT) is crucial for enhancing the quality of life and enabling sustainable urban development. As part of the UK Transport Investment Strategy, increasing PT usage is critical to achieving efficient and sustainable mobility. This paper introduces Machine Learning Influence Flow Analysis (MIFA), a novel framework for identifying the key influencers of PT usage. Using survey data from bus passengers in Southern England, we evaluate machine learning models. Subsequently, MIFA uncovers that easy payments, e-ticketing, and mobile applications can substantially improve the PT service. MIFA’s implementation demonstrates that strength and importance lead to specific insights into how service characteristics …

Institutional Cross-Ownership Of Peer Firms And Revelatory Price Efficiency, Young Jun Cho, Holly I. Yang, Yue Zhao

Research Collection School Of Accountancy

We argue that cross-ownership increases the amount of private information in stock price, enhancing the ability of stock price to provide feedback to managers. Consistent with this argument, we find greater cross-ownership heightens a firm’s investment-q sensitivity. This effect is stronger for firms with a lower propensity for voluntary disclosure and for firms whose managers hold less private information. Furthermore, we find that cross-ownership is negatively associated with the sensitivity of a firm’s investment to its peers’ stock prices. Additionally, cross-ownership has a stronger impact on the investment-q sensitivity when measured among investors who trade more actively the firm’s shares. …

Xbrl-Formatted Financial Reporting And The Feedback Effect Of Price, Young Jun Cho, Ying-Chi Huang, Holly I. Yang

Research Collection School Of Accountancy

We examine whether the SEC’s XBRL-formatted financial reporting mandate allows investors to better process public financial information, reducing the extent to which managers learn private information from stock price. We find a significant decrease in the investment-price sensitivity for firms that started to file their 10-Ks in an XBRL format, consistent with a reduction in the cost of information processing crowding out private information in stock price. We also find that the decrease in the investment-price sensitivity associated with XBRL adoption is more pronounced for firms with higher business and information complexity and for firms with higher incentives for managers …

Non-Audit Services And Knowledge Spillover: Evidence From Audit Hours And Billing Rates, Jaeyoon Yu, Yongsuk Yun, Yoonseok Zang

Research Collection School Of Accountancy

Using audit hours from firms listed on the Korea Exchange as a direct proxy for audit effort, this study examines whether non-audit services (NAS) purchased from audit firms improve audit efficiency. Our results reveal that the ratio of NAS fees to total fees paid to audit firms is associated with lower audit hours and audit fees, but it is not significantly related to audit billing rates. The reduction in audit effort associated with NAS is more pronounced when NAS provided are audit-related, and for clients who hire Big 4 auditors, have short-tenured auditors, and report a profit. Further, using path …

Information Sharing Within Institutional Investor Networks, Wei Ting Loh

Research Collection School Of Accountancy

This study examines whether information sharing occurs within institutional investor networks. I identify networks of institutional investors who share common investments and find that in-network investors earn significantly higher returns than other investors of the same firm, suggesting that valuable private information is shared within these networks. I also find that ownership by investor networks is associated with speedier price discovery and incorporation of more firm-specific news in prices, consistent with information sharing facilitating efficient price formation. In addition, ownership by network investors is associated with higher information risk as reflected in the probability of informed trading and market liquidity. …

Prosocial Ceos And Accounting Manipulation, Mei Feng, Weili Ge, Zhejia Ling, Wei Ting Loh

Research Collection School Of Accountancy

This paper examines the association between chief executive officers’ (CEOs’) prosocial tendency and their firms’ likelihood of accounting manipulation. We measure CEOs’ prosocial tendency based on their involvement with charitable organizations. We find that prosocial CEOs are less likely to engage in accounting manipulation, as proxied by material non-reliance restatements and SEC or DOJ enforcement actions. The effect is more pronounced when CEOs are involved with charities that directly aim to improve the welfare of others and when they face stronger incentives to misreport. These results continue to hold in analyses of changes in CEOs’ prosocial tendency around turnover events. …

The Effect Of Cybersecurity Breaches On Analysts’ Earnings Forecasts, Chih-Ying Chen, Beng Wee Goh, Kiat Bee Jimmy Lee, Na Li

Research Collection School Of Accountancy

We investigate the implications of cybersecurity breaches for financial analysts because they play an important role as information intermediaries in capital markets, and it is unknown whether analysts’ earnings forecasts are affected by cybersecurity breaches. Based on a sample of cybersecurity breaches from 2005 to 2018, we find that analysts’ earnings forecasts for firms with cybersecurity breaches are less accurate and more dispersed after a breach than for firms without such breaches. In cross-sectional analyses, we find that the adverse effects of cybersecurity breaches on analysts’ earnings forecasts are more pronounced for firms operating in more volatile business environments, for …

Does Auditor Quality Enhance Csr Disclosure?, Jimmy Lee, Chee Yeow Lim, Gerald J. Lobo, Yanping Xu

Research Collection School Of Accountancy

We investigate the relation between auditor quality and client firms’ corporate social responsibility (CSR) disclosure. Using an international sample of firms from 36 countries over the period 2009–2018 and a measure of the extent of CSR disclosure from Bloomberg, we find strong evidence that client firms with higher quality auditors provide more CSR disclosure. In cross-sectional analyses, we show that the relation between auditor quality and CSR disclosure is accentuated when the information environment is poorer and when the financial reporting environment and the legal institutions are weaker. Lastly, we document that firms with higher quality auditors also exhibit better …

Freedom Of Expression Protection And Corporate Concealment Of Bad News: Evidence From State Anti-Slapp Laws, Jimmy Lee, Shaphan Ng, Il Sun Yoo, Liandong Zhang

Research Collection School Of Accountancy

The protection of free speech enhances the ability of various public stakeholders to disseminate privately observed adverse information about public firms, making it difficult for corporate managers to conceal negative information about their companies. Using the staggered enactment of anti strategic lawsuit against public participation (anti-SLAPP) laws across U.S. states as a shock that strengthens free speech protection, we show that stronger protection is associated with less concealment of bad news. This is evidenced by a lower likelihood of stock price crashes, a decreased probability of accounting fraud, and an increased frequency of firm-initiated negative press releases. These results are …

Peer Effects Of Corporate Disclosures: Evidence From The Registration-Based Ipo System In China, Ruilin Liu, Beng Wee Goh, Dan Li, Zheyuan Zhang

Research Collection School Of Accountancy

China launched the registration-based IPO system in 2019 whereby all firms listed on the newly established STAR board (“peer firms”) are required to disclose specific innovation and industry-related information in their prospectus. Using this event as a quasi-experiment, our study investigates the causal effects of peer firms’ disclosures on individual firms’ disclosure strategy. We find that individual firms’ management earnings forecast (MEF) precision, both its form and width, significantly decreases when peer firms disclose more information during the IPO period. In cross-sectional analyses, we find this effect to be more pronounced for individual firms that are likely to experience greater …

Riding Attention Spikes: How Analysts Respond To Advertising, Minjae Koo, Annika Yu Wang, Yin Wang, Liandong Zhang

Research Collection School Of Accountancy

Product market advertising, while containing little new information, triggers spikes in investor attention. Using weekly advertising data, we find that sell-side analysts issue optimistic earnings forecasts in response to heavier advertising in the prior week. This effect is not driven by confounding earnings or product news. It is more pronounced for experienced analysts and analysts affiliated with brokerages relying solely on trading revenues. The optimistic forecast bias intensifies the impact of advertising on investor trades, especially on retail buying, of the underlying stock during the following week. Overall, analysts appear to issue optimistic forecasts to exploit retail investor attention spikes …

Discussion Of "Csr And Negative Corporate Events: The Moderating Role Of Managerial Overconfidence", Hye Sun Chang

Research Collection School Of Accountancy

Corporate social responsibility (CSR) refers to the notion that firms are accountable not only to shareholders but also to a broader set of stakeholders including customers, employees, creditors, and the communities in which they operate. Although CSR has long been part of corporate discourse, its prominence has grown with the rise of environmental, social, and governance (ESG) concerns. Today’s consumers and stakeholders are increasingly attentive to issues such as climate change, economic inequality, labor rights, and social justice, prompting firms to align their strategies with evolving societal expectations. Building on this increasingly salient backdrop, Chu et al. (2026), hereafter CCT, …

Does Generative Ai Facilitate Investor Trading? Early Evidence From Chatgpt Outages, Qiang Cheng, Pengkai Lin, Yue Zhao

Research Collection School Of Accountancy

In this paper, we use ChatGPT outages to provide early evidence on whether investors rely on generative artificial intelligence (GenAI) to perform professional tasks and the associated impact on stock price informativeness. We document a significant decline in stock trading volume during ChatGPT outages. The effect is stronger for firms with corporate news released immediately before or during the outages and for firms with higher ownership held by transient institutional investors. We then document declines in short-run price impact and return variance during the outage periods, consistent with reduced informed trading. Lastly, we document a positive effect of GenAI-assisted trading …

Local-Thinking Bias, Ed Dehaan, Charles M. C. Lee, Wei Ting Loh

Research Collection School Of Accountancy

Local-thinking bias, wherein agents overweight information that comes readily to mind, is a prominent finding in cognitive psychology. In this study, we investigate local-thinking bias in the context of sell-side analysts and measure each analyst’s “local” information as news stemming from their individual coverage portfolio. Tests examining multiple analysts forecasting on the same focal firm at the same time find that individual analysts overweight idiosyncratic local news and underweight news from economically linked firms that are not in their coverage portfolios. Market prices track the analyst bias from local news, leading to predictable and economically significant return reversal patterns in …

Commentary: Delayed Climate Reporting Requirements Threaten Singapore’S Sustainability Leadership, Jiwei Wang, Holly I. Yang, Liandong Zhang

Research Collection School Of Accountancy

In a commentary by SMU Professor of Accounting (Practice) and Director of Master of Professional Accounting (MPA) and Master of Science in Accounting (MSA) programmes Wang Jiwei, SMU Associate Professor of Accounting, Lee Kong Chian Fellow and Co-Director (Academic Research) of the School of Accountancy Research Centre (SOAR) Holly Yang, and SMU Dean of School of Accountancy and Lee Kong Chian Professor of Accounting Zhang Liandong, they suggested that delaying climate disclosure requirements for small and mid-sized enterprises (SMEs) from 2025 to 2030 could weaken Singapore’s sustainable finance leadership, despite regulators saying the extension would help smaller firms build environmental, …

Blue Bird: Building The Right Path, Yuanto Kusnadi, Wee Kiat Lim

Research Collection School Of Accountancy

How Indonesia's leading mobility provider pursued twin transformations involving sustainable growth and digitalisation.

How Do Analysts Affect Corporate Innovation? Evidence From Site Visits, Qiang Cheng, Brian Yutao Wang, Holly I. Yang, Zheyuan Zhang

Research Collection School Of Accountancy

While prior studies have examined whether financial analysts affect corporate innovation, there is little research on the mechanism through which this occurs. In this paper, we examine whether and how analysts' questions about innovation during site visits affect corporate innovation. Using a sample of corporate site visits in China, we find that when analysts ask questions about innovation during site visits, firms invest more in R&D in the future. Consistent with knowledge diffusion across firms, this association is stronger when analysts cover more firms in the same industry, when firms share similar technologies as industry peers, and when an innovation-expert …

Firm Digitalization And Accounting Jobs, Amanda Awyong, Qiang Cheng, Tian Deng, Rencheng Wang

Research Collection School Of Accountancy

This study examines how firm digitalization affects the demand for corporate accountants and their digital skills. Using more than 373,000 job posts for corporate accountants by U.S. non-technology firms between 2010 and 2019, we find that firm digitalization does not change the overall demand for financial specialists-accountants who are responsible for financial reporting, budgeting, and forecasting-but reduces the demand for financial clerks-accountants who primarily perform administrative financial tasks. We further show that firms digitalization increases the demand for digital skills among financial specialists, but not among financial clerks, and that such demand is greater than that for other employees within …

In Crypto We Trust: A Cross-National Comparison Of Factors Affecting Trust In Cryptocurrencies, Arif Perdana, W. Eric Lee, Chu Yeong Lim, Gary Pan, Poh Sun Seow

Research Collection School Of Accountancy

Background: Trust in cryptocurrencies is a complex and evolving construct influenced by technological, economic, and social factors. Unlike traditional information systems that rely on institutional trust, cryptocurrency users often depend on underlying technology and community insights. Despite growing interest, existing research has primarily focused on narrow aspects of trust, with limited cross-national perspectives and comprehensive models.

Method: This study investigates how geographic differences impact user trust in cryptocurrencies by surveying 644 respondents from China, Germany, and the USA. Drawing on established trust formation theories, it utilizes a comprehensive model encompassing technological, economic, and social factors.

Results: Our analysis reveals multiple …