Accounting at Leeds
Research Themes
Corporate Governance
Disclosure: Firms Communicating with Capital Market ParticipantsÌý
ESG Measurement, Reporting and Accountability for Sustainable BusinessesÌýÌý
12
Tenure/Tenure Track-Faculty
Accounting Faculty Feature
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Myrtle and Tony Tisone Estate Memorial Business FellowÌý
Associate ProfessorÌý
Accounting PhD Program Co-Director
Leeds Associate Professor Nathan Marshall breaks down new research using FOIA data thatÌý
reveals how signals of noncompliance, private‑sector scrutiny, and public trigger events shape early-stage regulatory decisions. The work shows how resource constraints influence which leads are pursued, why some investigations are far more likely than others to result in enforcementÌý
actions, and how internal career incentives within the SEC affect case selection.Ìý
Accounting Review
Andrew Stephan
November 2024
Abstract: I investigate whether algorithmic trading (AT) affects the provision of management guidance. Existing research finds that AT decreases fundamental information acquisition before earnings announcements and consequently reduces the informativeness of prices. To compensate for reduced information acquisition, I predict and find that managers at firms with more AT activity increase the quantity and quality of guidance issued at earnings announcements. Evidence is consistent with managers responding to reduced information acquisition, as opposed to changes in liquidity, and results suggest guidance in response to AT is effective at reducing information asymmetry. These findings identify a new channel through which AT affects stock price informativeness by documenting a link to managers’ disclosure decisions.
Journal of Accounting and Economics
Nathan T Marshall
Additional Authors: Eric R Holzman and Brent A Schmidt
February 2024
Abstract: Little is known about how the SEC selects its targets for investigation. We study this subject using a new database of formal SEC investigations. We predict and find that case selection is associated with a firm's (i) likelihood of regulatory noncompliance, (ii) exposure to scrutiny, and (iii) conspicuous public trigger events. The relationship between investigations and regulatory noncompliance and private sector scrutiny preferences is sensitive to SEC constraints, whereas the relationship with triggers is not. We also examine the association between investigation motives and enforcement actions, an important SEC outcome reported to Congress. While regulatory noncompliance-motivated and public trigger-motivated investigations are more likely to result in public charges, specifically when the SEC is constrained, private sector scrutiny-motivated investigations are less likely to result in public charges. Finally, investigation rates of potential targets are associated with the career trajectories of SEC personnel, while investigation outcomes are not.
Review of Accounting Studies
Bryce Schonberger
Additional Authors: Michael Dambra, ÌýCharles Wasley
September 2024
Abstract: We draw on (Merton, The Journal of Finance 42:483-510, 1987) to develop predictions for the benefits of voluntary disclosures by firms pursuing an initial public offering (IPO) prior to when they begin providing regulated financial information via their IPO prospectus. We find that voluntarily issuing press releases and attending investor and industry conferences are common disclosure activities prior to filing the IPO prospectus. Consistent with these disclosures enhancing investor awareness, we find positive associations with subsequent information acquisition by prospective investors and the financial press during the IPO filing period. These relations remain significant in tests exploiting the passage of the 2005 Securities Offering Reform as a source of variation in issuers’ ability to provide disclosures designed to attract attention from prospective investors. Consistent with pre-prospectus disclosures enhancing the visibility of the firm, we find that, while direct associations between pre-prospectus voluntary disclosures and IPO pricing are limited, there are significant indirect effects operating through filing-period information acquisition by prospective investors and media coverage. We find no evidence that issuers’ disclosure activities serve as hype, as the IPO price impact does not reverse post-offering. Overall our evidence is consistent with pre-prospectus voluntary disclosures benefiting issuers by enhancing awareness, which leads to improvements in firm valuations.
Accounting Review
Bryce Schonberger
Additional Authors: Kim, Jaewoo; Wasley, Charles; Yang, Yucheng
July 2024, Volume 99 Issue 4, p251-279
This study examines whether information revealed by firms' earnings announcements (EAs) forecasts short-run market-wide volatility in equity index prices. Using an exponential generalized autoregressive conditional heteroskedasticity model that includes controls for the information in an array of macroeconomic announcements, we find that EA information aggregated across firms forecasts market volatility at daily and weekly intervals. EA information's forecasting power is greatest when more firms announce earnings on a given day, when EAs convey negative news, and for EA information about core earnings. Out-of-sample tests confirm that forecasts incorporating EA information better predict short-run market volatility than forecasts omitting EA information. We conclude that firm-level EAs are a significant source of systematic, market-wide information relevant for predicting near-term market volatility.ÌýÌýÌýÌý
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Management Science
Austin Moss
Additional Authors: Naughton, James P.; Wang, Clare
Apr2024, Vol. 70 Issue 4, p2626-2644
Abstract: Using an hourly data set on retail investor individual security positions from Robinhood Markets, we find no evidence that environmental, social, and governance (ESG) disclosures inform retail investors' buy and sell decisions. The response on ESG press release days by retail investors is indistinguishable from nonevent days. In contrast, these same investors make economically meaningful changes to their portfolios in response to non-ESG press releases, especially those that pertain to earnings announcements. We use stock return tests to show that there is economic content in ESG press releases, and we conduct subsample analyses showing that retail investors do not respond to the most salient and economically transparent ESG disclosures. Collectively, these tests suggest that a lack of economic content, a lack of visibility, and difficulty with investment integration are unlikely to explain our findings.ÌýÌýÌý ÌýÌýÌý
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