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This paper reports the results of the effects of the release, in the United Kingdom, annual reports and accounts (ARA), on security prices and trading volume of the U.K. firms. If the information reported in the annual reports and accounts (ARA) is relevant, the U.S. security market will respond to the release news through return and volume variances. Both signals are indicators of the relevance of the annual reports and accounts. The results of the analysis suggest the existence of unexpected returns to the annual reports and accounts and no corresponding U.S. trading volume response. The price results are in marked contrast to the findings of previous research that examined the information content of U.S. domestic annual reports, but do not detect a stock price response (e.g., Foster et al. 1986; Bernard and Stober 1989; Cready and Mynatt 1991). Our stock price analyses indicate that non‐U.S. GAAP accounting measures do not impede U.S investors' ability to use U.K. firms' ARA in valuing the sample firms. Indeed, U.S. investors use information from the ARA in their valuation of U.K. firms. Since trading responses to a disclosure are generally more easily detected than price responses (Cready and Hurtt 1999), these findings jointly suggest the provincial nature of the ARA release.

This study uses a simultaneous equations approach to examine the price‐earnings relationship of non‐U.S. firms that directly list their securities in U.S. capital markets or trade as American Depository Receipts (ADRs). The Hausman test shows that price changes and earnings changes are endogenously determined, thus the simultaneous equations approach is used to estimate the earnings response coefficient (ERC) and the returns response coefficient (RRC). Under the ordinary least squares (OLS) estimation, the parameter estimates are biased downward because the OLS fails to correct for endogeneity. In general, our results show that the joint estimation procedure mitigates some of the single‐equation bias. The estimated ERC and the RRC are higher under the three stage least regression (3SLS) than under the OLS regression. In addition, the product of the ERC and the RRC coefficients approaches its theoretical value of one when using the 3SLS estimation. The evidence also shows that institutional factors affect the way the market value information for these firms. We find that the ERC and RRC are insignificant for the common law non‐ADR firms and significantly positive for common law ADR firms.

Extending prior studies which suggest that the disclosure practice of developed economy entities tends to be more transparent than that of emerging economy entities, this study investigates whether such differences in the degree of disclosure transparency translate into different levels of value‐relevance of their accounting summary measures (i.e., book values and earnings). Consistent with theories that link disclosure quality with the impact of disclosure on investors' decisions, the evidence indicates that the accounting summary measures of developed economy entities are more value‐relevant than those of emerging economy entities in the U.S. stock market. This finding has some implications for the current policy debate in IASB regarding accounting for emerging economy entities.

The fundamental change in accounting rules for equity-based compensation (EBC) instituted by SFAS 123, SFAS 123r, and IFRS 2 has allowed for new insights related to a variety of research questions. This paper discusses the empirical evidence generated in the wake of the new regulation and categorizes it into two broad streams. The first stream encompasses research on the changed use of EBC and the incentives provided. The second stream addresses how firms account for EBC, including the underreporting phenomenon and how it was affected by the mandatory recognition of EBC expenses. I discuss where research delivers unanimous findings versus contradictory results. Using these insights, I make recommendations for further research opportunities in the area of EBC.

For the past 10 years, the Public Company Accounting Oversight Board (PCAOB) has operated as an independent overseer of public company audits. Over 70 percent of PCAOB studies have been published since 2010, evidencing the increasing relevance of PCAOB-related research in recent years. Our paper reviews the existing literature on the PCAOB’s four primary functions – registration, standard-setting, inspections, and enforcement. In particular, we examine PCAOB registration trends and evaluate the effects of PCAOB registration requirements on the issuer audit market, as well as discuss the relative costs and benefits (e.g., auditor behavior changes, improvements in audit quality, auditor perceptions) of the 16 auditing standards the PCAOB passed in its first 10 years of operation. Further, we summarize the literature’s findings on the effects of the PCAOB inspection process on various facets of audit quality. Finally, we analyze the research concerning the PCAOB’s enforcement actions to determine how markets have responded to sanctions against auditors and audit firms. We contend that understanding and reviewing the effects of the PCAOB’s activities are important to future audit research because of the PCAOB’s authority over and oversight of the issuer audit profession. We also identify PCAOB-related research areas that have not been fully explored and propose several research questions intended to address these research areas.

We examine the stock market reaction to the Tax Cuts and Jobs Act (TCJA) of 2017 during its enactment process, focusing on its international provisions. Consistent with extant evidence, we find lower returns for high-foreign-activity firms, indicating a negative market reaction to the international provisions overall. Considering specific international provisions, we find that the market reaction was more positive (negative) for firms likely most affected by the shift to a quasi-territorial system for taxing foreign earnings (the transition tax on existing unrepatriated earnings, the tax on global intangible low-taxed income, and/or the base erosion and antiabuse tax) than for other firms. Our findings imply that investors are able to disentangle the economic implications of complex and interactive tax law changes.

This paper examines empirically Chinese stock price reactions to financial announcements for 2002. We find that B share prices react more strongly to negative financial announcements than A shares. The announcements can lead to excess returns. One explanation is that the markets are segmented by the inconvertibility of China’s currency, as well as by the structural change of investors. Meanwhile China listed companies need to improve their transparency and disclosure.

This study examines short‐term stock price reactions to announcements of equity rights offerings in Singapore between 1983 and 2003 and investigates whether economic factors lead to different price reactions. The results show that the cumulative abnormal returns (CARs) associated with rights issues differ significantly across economic conditions at the time of issuance. Rights issues typically result in significantly large positive CARs during periods of economic growth but small positive but insignificant CARs during economic downturns. The CARs vary positively with Tobin’s q‐ratios, which indicate the availability of positive net present value investment opportunities of the firms issuing the rights. Our major finding is that the price reaction of Singapore firms to equity rights offerings is sensitive to economic conditions at the time of the rights issues.

We review research on corporate social responsibility (CSR) published in 13 top accounting journals over the last decade. We begin with a brief discussion of the data that archival researchers have used to measure CSR. Next, we conduct our review in four parts: (1) determinants of CSR; (2) the relation between CSR and financial performance; (3) consequences of CSR; and (4) the roles of CSR disclosure and assurance. We summarize the accounting literature in these areas and comment on how accounting researchers can use their skill sets with regard to specific issues. Within each area, we present some suggestions for future CSR research in accounting.