In this paper, Lisa and her coauthors draw on research indicating that optimism is the natural state of mind for most people (i.e., it is hard wired) and therefore firm managers involved in preparing financial statements are likely to exhibit naturally occurring optimism.

Natural Optimism in Financial Reporting: A State of Mind
Gregory Paul Capps (Independent), Lisa Koonce (UT) and Kathy R. Petroni (Michigan)
Accounting Horizons (forthcoming)

 

Using a unique dataset, we find that directors’ and officers’ (D&O) insurance coverage is a less significant determinant of settlement amounts than estimated damages and proxies for case merits. D&O limits are related to settlements in only the weakest cases (those without accounting allegations or institutional lead plaintiffs) where proxies for case merits play a minimal role.

The Role of D&O Insurance in Securities Fraud Class Action Settlement
Dain Donelson (UT)
, Justin Hopkins (Virginia) and Christopher Yust (A&M-former UT PhD)

Journal of Law and Economics (forthcoming)

 

Financial reporting and disclosure quality is at the center of accounting research, yet until now there was no good measure for this core concept. Our research fills this void in the academic literature by constructing the first measure of disclosure quality based on the level of disaggregation of accounting data items in firms’ annual reports. This invention is an important contribution to the academic literature.

A New Measure of Disclosure Quality: The Level of Disaggregation of Accounting Data in Annual Reports
Shuping Chen (UT)
, Bin Miao (Singapore) and Terry J. Shevlin (California-Irvine)

Journal of Accounting Research (forthcoming)

 

We find that the volume of trades immediately after a quarterly earnings announcement is higher when individual investors learn more differentially about firm value from the announcement, because investors are more likely to trade when there are differences in how confident they are in their knowledge.

The Informedness Effect and Volume of Trade
Rowland Atiase (UT) and Mike Gift (Macau)
Journal of Accounting Auditing & Finance, October 2015, 30(4), pp. 407-430

 

We study the role of accounting conservatism when boards rely on earnings reports to approve new investments and the manager can take actions to manipulate this information. The paper offers a novel explanation for the empirical evidence that the strength of board governance is positively associated with accounting conservatism.

Corporate Governance, Accounting Conservatism, and Manipulation
Judson Caskey (California) and Volker Laux (UT)
Management Science (forthcoming)