Justin Chircop

Accounting Comparability and Corporate Innovative Efficiency

We predict that a firm’s greater accounting comparability with its industry peers facilitates its learning from those peer firms’ research and development (R&D) investments, allowing that firm to have greater innovative efficiency. We estimate accounting comparability using pro-forma capitalized R&D earnings that link lagged R&D expenditures to future profitability employing the Almon (1965) distributed lag model. We find that greater accounting comparability leads to enhanced ability to predict future cash flows generated by R&D investments of peer firms. In the cross-section, we observe the relation between accounting comparability and innovative efficiency is stronger if peer firms exhibit higher accounting (accrual) quality and are themselves successful innovators. In sum, this study shows that a shared qualitative characteristic of accounting, namely accounting comparability, is positively associated with innovative efficiency. JEL classifications: G12, G14, O32

10-K Filing Length and M&A Efficiency

This article explores the relationship between 10-K filing length and M&A efficiency. We posit two effects: 1) an “information” effect, where lengthier 10-K filings contain more information about the target, and thus the acquirer can more accurately assess the benefits of the transaction, and, conversely, 2) a “complexity” effect, where lengthier 10-K filings are overly complex, and thus the acquirer faces greater difficulty in extracting meaningful information about the target. On average, we find that the former dominates the latter. This result is robust to controlling for different measures of textual complexity, and for the length of time the acquirer had access to private information about the target. In subsequent analyses, we find stronger results when less private information about the target is available to the acquirer, and that the relationship between 10-K filing length and M&A efficiency takes the form of an inverted “J-shape,” suggesting a non-linear relationship between 10-K filing length and M&A efficiency.

Why did preparers lobby to the IASB's pension accounting proposals?

Abstract We examine the characteristics of firms that lobbied on the 2010 Exposure Draft (ED) on pensions and find that signalling influences the decision to lobby. Further, we examine preparers position to two important proposals in the ED. We find that preparers are less likely to agree with the abolition of the corridor when they report unrecognized actuarial losses and that firms are more likely to oppose the replacement of the expected rate of return with the discount rate when the spread between these two rates is large. These results suggest that while signalling drives firm decisions to lobby, self-interest influences how firms lobby.