The spillover effect of fraudulent financial reporting on peer firms' investments

Highlights • Material weaknesses in ICFR are associated with investment inefficiency. • After the disclosure of ICFR weaknesses, the investment ineff

Highlights • Ceteris paribus, information asymmetry leads to shorter duration supply contracts. • Ceteris paribus, the exchange of RSIs leads to long

Highlights • The study shows that, on average, individuals invest more in firms with clear and concise financial disclosures. • Relation is less pron

Highlights • We propose a stochastic model of reported earnings that links misreporting to performance shocks. • We estimate misreporting intensity a

Highlights • Firm managers opportunistically define non-GAAP earnings to meet or beat analyst expectations. • Managers exclude expenses from non-GAAP

Highlights • Estimate an “expected” credit rating for a given firm in a given year. • Measure the firms' deviations from their expected ratings. •

Highlights • Prior studies document that trade specification using the Lee and Ready (1991) algorithm is far from accurate. • Using a unique datas

Highlights • Firms are typically viewed as reluctant to disclose when doing so invites entry. • Suppliers now can reach customers directly and throu

Highlights • We study how industry leaders' falsified financial reports affect peers' investments. • Peer firms' investments increase with leaders'

Highlights • Our study is the first to establish a significant negative relation between earnings transparency and cost of capital. • Our transpar