UTSA Electronic Theses and Dissertations
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This collection contains electronic UTSA theses and dissertations (ETDs), primarily from 2005 to present. The collection is not comprehensive; search the UTSA Library Catalog for a complete list of UTSA theses and dissertations.
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Browsing UTSA Electronic Theses and Dissertations by Department "Accounting"
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Item Accounting comparability and the cost of capital(2016) Park, Sung-JinThis dissertation consists of two essays that investigate the effects of accounting comparability on a firm's cost of equity capital. The first essay draws upon the analytical models of Wang (2014b) and Lambert, Leuz and Verrecchia (2007) [LLV] to question the prevailing conventional wisdom that comparability is a desirable characteristic of accounting information. Specifically, I perform new comparative static analysis of the LLV model and predict that higher financial statement comparability can be detrimental in the sense that it increases investors' perception of systematic risk, which leads to higher cost of equity capital. Consistent with the prediction, I find that a firm's cost of capital is positively associated with financial statement comparability. Further, I find that the effects of financial statement comparability does not operate indirectly through its influence over the information environment, which supports that financial statement comparability may directly affect investors' assessments of the sensitivity of a firm's cash flows to that of other firms and to the overall market. In the second essay, I re-examine the cost of capital reduction following the EU's mandatory adoption of IFRS documented by Li (2010). Although the cost of capital reduction following IFRS adoption is claimed as a consequence of accounting standard harmonization enhancing cross-country accounting comparability, other streams of research suggest that growing economic integration among EU countries around IFRS adoption may also affect the post-2005 decline in the cost of capital in the EU. Therefore, I test whether a complementary effect between European economic integration and IFRS adoption contributes to the decline in the cost of capital following IFRS adoption in the EU. By using two EU Single Market indices as empirical proxies for economic integration, I find that the pricing of economic integration is incrementally negative following IFRS adoption, suggesting that the complementary effect exists between economic integration and accounting standard harmonization in the EU. This is consistent with the notion of "institutional complementarity" arguing that the impact of accounting standard changes would be interdependent to its smoother meshing with a society's institutional arrangements.Item CEO Overconfidence, Accounting Conservatism, and Their Combined Effects on Analysts' Recommendations(2023) Jiang, KetingThis study explores the impact of CEO overconfidence, accounting conservatism, and their joint effect on analyst stock recommendations in response to informational events. Empirical tests show that CEO overconfidence is negatively associated with analysts' recommendations following the good news, while it is positively associated with analysts' recommendations following the bad news. Next, both conditional conservatism and unconditional conservatism are negatively associated with analysts' recommendations following information events, regardless of whether the event is good or bad. Lastly, the interaction between CEO overconfidence and accounting conservatism is generally positively associated with analysts' recommendations, regardless of whether the event is good or bad. In addition, the joint effect of CEO overconfidence and conservatism differs between the bull and bear markets but does not differentiate between firms with high and low R&D intensity or across different life stages of firms. In conclusion, this study provides evidence that analysts incorporate information on CEO overconfidence, accounting conservatism, and their combined effects in their decision-making process of issuing stock recommendations.Item CEO Risk-taking Incentives and Financial Reporting(2018) McWilliams, Jerome AlexanderThis dissertation consists of two essays that analyze the role of CEO equity risk-taking incentives in financial reporting. The first essay examines the relationship between executive risk-taking incentives and four temporal properties of earnings, including: volatility, persistence, predictability, and accruals quality. The second essay analyzes executive equity risk-taking incentives as a moderator for the relationship between earnings manipulation and stock market-based transactions. I measure CEO equity risk-taking incentives as the sensitivity of CEO wealth to changes in stock volatility. The second essay explores accruals earnings management and real activities manipulation surrounding CEO option exercises and option grants. In both essays I deploy fixed-effect models, instrumental variables, and simultaneous equation models to control for possible endogeneity. I find that CEO vega is positively associated with earnings volatility. Predicted values of vega, estimated using determinants of vega from prior research, appear to be positively associated with earnings predictability. However, actual values of vega that exceed the predicted values of vega appear to lead to decreases in earnings predictability. I find that vega is negatively associated with short-term earnings persistence, and this association is primarily driven by a decrease in the persistence of accruals. Finally, using the Dechow and Dichev (2002) accrual quality metric, I find a negative relationship between CEO and accrual quality. In the second essay, I find that CEO's with high levels of vega exercise fewer options during and following periods of high income increasing earnings management and engage in less downwards earnings management in periods preceding fixed-date option grants.Item Changes in the role of earnings in compensation over the past three decades(2012) Liu, LinxiaoThis dissertation investigates the general time-series trend in the role of accounting earnings in the executive compensation setting over the past three decades and the factors contributing to this trend. Using a sample of 16,618 firm-year observations during the period from 1976 to 2006, I present evidence that the incentive weight on accounting earnings has decreased over the past thirty years. I investigate potential explanations for the downward trend in the relation between accounting earnings and executive compensation from two perspectives: the change in earnings quality and the change in economic environment. Using four earnings attributes -- earnings variance, earnings persistence, earnings value relevance, and accounting accruals to capture earnings quality -- I find that earnings variance and the level of accounting accruals were increasing between 1976 and 2006, whereas earnings persistence and earnings value relevance were decreasing during this time period, implying a decline in earnings quality over time. However, I find that the decline in earnings quality is not associated with the shrinking role of earnings in compensation contracts. I use two measures for economic environment: technology innovation and global diversification. I find that technology innovation has been progressing and that the degree of global diversification has increased over the last three decades. Systematic changes in technology innovation and global diversification contribute to the declining use of accounting earnings in compensation contracts. In summary, the results suggest that the role of accounting earnings in compensation has declined steadily over the past three decades, and that this decline is attributed to fundamental changes in the economic environment rather than the decline in earnings quality.Item Characteristics of internal audits and fraud detection(2010) Martin, KaseyThe Sarbanes-Oxley Act of 2002 (SOX) has changed the internal audit environment. Changes include introducing a new type of audit task and an overall increase in the structure of the internal audit environment. Many companies have created structured SOX audit programs in coordination with their external auditor in order to meet SOX requirements efficiently and effectively (Martin and Sanders 2009). Internal audit professionals have expressed concern that internal auditors trained only in the post-SOX environment have a different skill set than internal auditors trained in the pre-SOX period (Pryal 2008). The focus of this research is on the effects of internal audit structure, audit type, external auditor approval of audit work programs, and internal auditor experience on the likelihood of internal auditors suspecting and investigating fraud in a fraud situation.Item Client Demand and its Effect on Audit Quality: Is it More Than Just Auditor Choice?(2017) Behrend, Matthew J.This study investigates the role of the client and client demand and its effect on audit quality. By exploring client demand contexts, I investigate the first research question: does client demand for audit quality effect audit quality beyond the choice of auditor. Since the audited financial statements are the joint product of negotiations between the client and its external auditor (Antle and Nalebluff 1991, Francis 2011), it is important to consider the role of the client and a client's demand for audit quality. Based on previous research, I identify three contexts in which companies demand more or less audit quality. In particular, I express the demand for audit quality as a function of the level of the client's (1) operational complexity, (2) managerial influence, and/or (3) future external financing needs. For my second research question, I expand the analysis to consider the potential asymmetry in the effect of client demand on audit quality. I posit that the effect of high quality auditors is dependent on the demand of the client for audit quality. When client demand is high, the client will work with the high quality auditor to produce the audited financials. However, the efforts and contribution required from the client will be reduced, given that the higher quality auditor will act, in part, as a substitute for the client's effort. When client demand is low, the client will be less cooperative or will actively work against the auditor and the audit process. In conclusion, this study extends the audit quality literature by examining the effects of client demand on audit quality and examining whether these effects are asymmetric in nature. By examining the effects of client demand for audit quality beyond the choice of auditor, I provide empirical evidence as to the importance of client demand and its inclusion in audit quality research.Item Compensating Controls and Agency Conflicts in the Absence of Owners: The Case of Nonprofit Charter Schools(2017) Bradley, Jean RybergThis dissertation consists of three essays using publicly reported internal control deficiencies to examine agency conflicts in the unique organizational setting provided by nonprofit charter schools. In my first essay, I find evidence that increased agency conflicts in nonprofit charter schools are not associated with increased internal control weaknesses, as charter schools are less likely to disclose internal control weaknesses in federal single audits than are (1) nonprofits in general and (2) traditional public schools in California and Texas serving students in the same communities. My second essay finds evidence that charter school Boards of Directors consider both current and prior year internal control weaknesses when setting executive compensation, rewarding managers who show improvements in controls. My third essay examines the relationship between reported internal control weaknesses and subsequent behavior of external stakeholders, including donors and customers. I find that, contrary to prior research, contributions to nonprofit charter schools are positively associated with prior year reports of internal control deficiencies. This outcome may reflect donors' responding to control weaknesses by increasing support for schools without resources sufficient to implement adequate internal controls, or it may indicate that donors are committed to the mission of the school and are not dissuaded by the presence of internal control issues. In contrast, I find no relationship between customer demand as measured by student enrollment, indicating that customers (i.e., students and their parents) are either unaware of or unconcerned by reports of internal control deficiencies. This dissertation will help inform the debate over internal control reporting and its efficacy as a governance mechanism for nonprofits, thereby providing information useful to donors, taxpayers, and other constituents in making resource allocation decisions, including requirements for federal single audits.Item Compensation and Firm Misconduct in Family Firms(2020) Chen, LeleThe dissertation consists of two essays on family ownership and its implications in the U.S. public firms. Family firms constitute a significant part of the capital market. For example, one third of Standard and Poor's 500 firms are family firms. Compared to non-family firms, family firms have different agency problems. Specifically, they face fewer conflicts between managers and shareholders (Type I Agency Problem), but more conflicts between large and small shareholders (Type II Agency Problem). This dissertation investigates the compensation design and firm misconduct issues in family firms that face these unique agency problems. In the first essay, I explore and compare the use of different performance measures of CEO compensation in family vs. non-family firms. Performance measures are widely used in compensation contracts to provide benchmarks for outcomes of managers' efforts. They are designed to mitigate the agency conflicts between managers and shareholders. Because of the unique agency problems that family firms face, I expect the use of performance measures to be different in family firms. Consistent with this argument, I find that family firms place higher weight on the accounting measures since they are perceived to be more reliable. Also, such results are driven by family firms with outside hired CEOs, where the reduced Type I agency problem is more likely to dominate the increased Type II problem. When separating earnings into three components (operating cash flows, discretionary accruals, and non-discretionary accruals), I document that CEOs in family firms receive higher weight on the cash flow component in their total compensation, especially for outside hired CEOs in family firms. My investigation also shed light on the use of non-GAAP performance measures in family firms. Specifically, when the CEOs in family firms are not founding family members (outside hired CEOs), compensation committees place higher weight on the GAAP earnings but doesn't price non-GAAP earnings differently in the compensation contracts. However, when family firms hire family member CEOs, the GAAP earnings receive similar weight in CEO compensation as in non-family firms, and the non-GAAP earnings receive lower weight. The second essay examines the impact of family ownership on corporate misconduct and its consequences. Firm misconduct could occur in all business activities and cause significant economic losses. Although prior literature addresses various causes and consequences of firm misconduct, few consider the impacts of family ownership. I argue that the reduced Type I agency problem could provide alignment effects that constrain managerial misbehavior, while the more severe Type II agency issues could cause entrenchment effects and motivate misconduct in family firms. It's an empirical question whether and how family ownership impacts firm misconduct. By examining the S&P 500 firms in U.S., the empirical analyses show that family ownership could constrain firm misconduct, especially when there is an outside hired CEO in the family firm. Further analyses find that family firms face less severe consequences when they are penalized for their misconduct, in term of less credit rating change and less negative market reactions.Item Corporate Governance and Executive Compensation in Firms with Clawback Provisions(2020) Ross, StephanieClawbacks are provisions that allow firms to recover executive compensation based on prior earnings that are found to be materially misstated due to misconduct or negligence of fiduciary duty (Babenko et al. 2017). The inclusion of these provisions in compensation contracts increase the risk imposed on executives. Standard agency theory predicts that the executives will demand higher compensation when clawback provisions are implemented to balance out the effect of the additional risks imposed on their wealth (Prendergast 1999; deHaan et al. 2013). In my dissertation, I examine the following: 1) the internal and external dimensions of corporate governance that can impact the decision to adopt a clawback provision, 2) the effect of clawback provisions on CEO/CFO compensation components, including incentive-based variables (i.e., delta and vega), 3) the changes in CEO and CFO compensation conditional on corporate governance and CEO and CFO power as a result of the presence of a clawback provision and 4) the vesting terms embedded in CEO and CFO equity-based compensation (options and shares) as a result of the presence of a clawback provision. This dissertation extends the literature by examining governance mechanisms, CEO/CFO compensation, CEO/CFO power and vesting elements in clawback adopted firms. To my knowledge, a thorough examination of these four elements have not been conducted in relation to clawback provisions.Item Differential effects of market concentration on oligopolistic and atomistic segments: evidence of audit fees, audit quality, and auditor switch and the effect of real activities management on audit report lags, accrual management, and audit fees(2016) Xu, HongkangIn the first essay, I divide the local audit market into the oligopolistic segment and atomistic segment and examine whether the differential effect of audit market concentration on audit fees, audit quality, and auditor switch in these two segments. I find that the market concentration raises the audit fees, but lowers the audit quality in the oligopolistic segment. In contrast, the market concentration lowers audit fees, but raises the audit quality in the atomistic segment. Moreover, I find that market concentration reduces the probability of auditor switch in both oligopolistic and atomistic segments. My findings reveal that audit market concentration only reduces the competition among oligopolistic segment. In contrast, the atomistic segment becomes more compressed and more competitive in a highly concentrated market. I also examine the nonlinear association between the auditor's market share and audit quality. I find that the relation between the market share and audit quality is an inverted U-curve. The second essay examines (1) the effect of real activities manipulation (RAM) on the audit report lags, (2) the impact of RAM on the audit fee and audit quality of industry experts, and (3) the linkages between accrual-based earnings management (AM), RAM, and audit fees. I find that RAM is associated with longer audit report lags. I also find that industry specialist auditor charge higher audit fees and make a more constraining influence on AM when their clients engage in aggressive RAM. However, I do not find that RAM affects the association between AM and audit fees.Item Directors and Officers liability insurance: Analysis of disclosure effects and other implications(2012) Kalelkar, RachanaDirectors and Officers liability (D&O) insurance is used extensively in top management compensation. This insurance reduces the financial liability of top management arising from lawsuits, especially shareholder lawsuits. According to a survey by Towers Perrin, 99% of their surveyed U.S. firms buy D&O insurance for their officers and directors. Surprisingly, only a handful of firms listed in the US disclose their D&O insurance practices (based on my extensive search of publicly available databases on corporate disclosure). In addition, there is ample evidence that a large number of firms provide coverage beyond the level justified by the economic theory on normal corporate insurance (Kim, 2005). Such corporate practices raise at least two important questions. First, what factors determine the disclosure of D&O insurance? Second, why do some firms insure their officers and directors for amounts that exceed the level justified by the economic theory on corporate insurance? This study provides insights into both questions. Using a sample of firms from 2004 to 2008, I focus on level of competition, threat of increase in lawsuit costs, firm's ability to pay damages, internal governance, and level of external monitoring to examine the discrepancies in disclosure. Consistent with the hypothesis, the results show that firms in competitive industries, firms with a high probability of lawsuits, big firms, firms with weak internal governance, and firms with high institutional holdings are less likely to disclose D&O insurance. In addition, I examine the implications of the purchase of abnormal D&O insurance on firm performance. For this aspect of the analysis, I draw from the literature on optimal contracting and examine the relation between abnormal D&O insurance and aggressive firm reporting, aggressive project selection, and firm's profitability. The results show that abnormal D&O insurance is positively associated with aggressive reporting, aggressive investment activity, and abnormal profit performance.Item Disclosure management through off-balance sheet activities, its association with performance and contributions in the nonprofit hospital setting(2013) Quosigk, Benedikt MarkusThis research consists of three essays that examine disclosures of off-balance sheet activities among non-profit (NP) hospitals. Essay I documents the existence of unconsolidated off-balance sheet activities among NP hospitals. Essay II analyzes the association and importance of off-balance sheet activities with NP hospital contributions. Essay III seeks to determine the incentives for and association of off-balance sheet activities with NP hospital financial performance. Overall, these research essays are the first to analyze the association of unconsolidated off-balance sheet activities among NP hospitals and seek to increase understanding of this phenomenon as well as provide regulatory guidance.Item Do industry specialist auditors enhance financial reporting quality?: a comparative study of the mandatory adoption of IFRS in the European Union(2014) Vega, Jose G., IIIThis study investigates whether industry specialist auditors add quality to their clients' audited financial statements under the principles-based International Financial Reporting Standards (IFRS) when compared to non-specialists. It is likely that auditor experience and knowledge plays a more important role in evaluating the overall quality when principles-based IFRS standards are in effect. This study examines the effect of adopting a principles-based standard on the accounting quality of both industry specialist and non-specialist clients and whether joint EU and country industry specialist auditors add additional value relative to auditors that are deemed either EU or country industry specialists only. I also examine if the gap between local gap and IFRS affects accounting quality. The results suggest that the mandatory adoption of IFRS positively affected accounting quality among firms in the European Union countries. This positive effect is equal to between 7 to 9 percent of pre-tax earnings of non-specialist clients. The results show that Country industry specialist clients still provides high accounting quality relative to non-specialists clients in post-adoption period. The gap difference in accounting quality between the country industry specials and non-specialist is decreased from the pre-and post-adoption period. However, the EU industry specialist clients experience a positive effect with the adoption of IFRS. The results suggest that countries with different level of GAAP difference experience different effect on accounting quality with the mandatory adoption of IFRS. While countries with small gap differences benefit from the adoption of IFRS, the EU industry specialist model suggests that countries with large GAAP difference experience the greatest benefit. The results further find that different classification of industry specialist provides different levels of accounting quality. Country only industry specialist clients provide the highest level of accounting quality. EU and country and EU only clients experience positive effects with the mandatory adoption of IFRS and provide similar accounting quality as non-specialist clients. The results of this study are highly relevant, not only in light of the recent waves of IFRS adoption, but also in light of the recent audit reforms in Europe, which include rules that address mandatory audit rotation, dual audits, and market concentration.Item Does the SEC's Oversight Affect the Accounting Quality of Newly-Public Companies?(2013) Schuldt, MichaelThis dissertation examines whether the U.S. Security and Exchange Commission's (SEC) oversight of public companies financial reporting affects accounting quality. I investigate whether the SEC's regulatory oversight during the initial public offering (IPO) process subsequently affects accounting quality. I examine various attributes of the SEC's IPO comment letter process, and expect that increasing severity of the process is associated with higher post-IPO accounting quality. I find that only certain attributes of the IPO comment letter process are associated with post-IPO accounting quality, and find limited evidence that increasing severity of the process is associated with post-IPO accounting quality. I further examine whether the SEC's oversight of public companies' periodic financial reporting affects accounting quality. I investigate various attributes of the SEC's Form 10-K comment letter process for firms receiving their first SEC comment letter review of their Form 10-K, and I expect that increasing severity in the comment letter process is associated with higher post-review accounting quality. I find only limited associations between attributes of the 10-K comment letter process and post-review accounting quality, and cannot conclude that increasing severity in the process is associated with higher post-review accounting quality.Item Economic incentives, debt utilization and charitable contributions in the hospice care setting(2011) Noe, Kelly Gail ChudejThis dissertation consists of three essays that examine relevant activities within the portion of the US hospice care system that is funded by Medicare. Essay I examines the economic incentives between for-profit (FP) and non-profit (NP) hospice providers and developed patient quality of care proxies within hospice care and finds association between quality of care and the form of hospice provider ownership. Essay II examines the possibility of earnings management among FP hospice providers and finds support that FP providers may be engaging in negative earnings management. Essay III analyzes the association between private charitable donations and the developed patient quality of care proxies from essay I and finds mixed results. The nurse and social worker quality of care proxy was positively associated with private charitable donations but, there is no significant finding for the home-health aide quality of care proxy. Overall this research seeks to add to our understanding of the effects of economic factors in the under-researched area of hospice care within the accounting literature.Item Essays examining the association between going concern audit opinions, subsequent earnings management and engagement office audit and reporting quality(2014) Brooks, Marcus R.This dissertation consists of two essays that examine the association between going concern audit opinions, subsequent earnings management and engagement office audit and reporting quality. Essay I (Chapter 1) examines the earnings management behavior of financially distressed firms following the receipt of a going concern opinion. The results indicate that financially distressed firms, unable to improve their financial condition through the manipulation of accounting accruals, report large magnitudes of negative discretionary and working capital accruals. As a result, these firms turn their attention to the manipulation of real operational activities. By engaging in various forms of real activity manipulation, financially distressed firms are able to reduce reported expenses, conserve cash, and most importantly, avoid bankruptcy and/or the receipt of a subsequent going concern opinion, despite being in financial distress. Essay II (Chapter 2) investigates whether audit quality and reporting accuracy is associated with engagement office propensity to issue going concern opinions. The findings from this study show clients of engagement offices with a high propensity to issue going concern audit opinions are associated with large magnitudes of income decreasing discretionary accruals, suggesting that these engagement offices require their clients to report more conservatively. The findings also show that these engagement offices' financial statement conservatism carries over to their financial reporting decision-making. The conservative reporting posture of these engagement offices leads them to issue going concern audit opinions to subsequently viable clients, leading to higher type I error rates. Overall, this dissertation contributes to the accounting literature addressing going concern audit reporting by creating two new variables that help to explain the association between the receipt of a prior going concern audit opinion and subsequent earnings management, and the association between engagement office propensity to issue going concern audit opinions and audit and reporting quality. The variables created could open a new stream of literature aimed at addressing earnings management behavior and choices following the receipt of a going concern opinion and also demonstrate that more attention should be directed to the characteristics of individual engagement offices because they are the ultimate determining factor of an audit firm's overall audit and reporting quality. Together, the studies show how important it is to analyze the effects of going concern audit reports and how they are associated with seemingly unrelated topics in accounting literature.Item Essays examining the impact of government clientele on firm behavior(2016) Xu, QiaoMy dissertation consists of two essays that explore the impact of U.S. government's contracting arrangements and their associated monitoring mechanisms on government contractors' behavior. While executive compensation and systems of internal control of firms continue to receive attention and oversight from the public and regulators, U.S. government imposes additional layer of monitoring and audit over government contractors. In Essay I, I investigate whether the role of U.S. government as a consumer of products and services motivates the firms to adjust their CEO compensation practices. I find that CEO compensation tied to government contract is significantly lower than CEO compensation tied to non-government operations. The rationale is that government contractors are faced with strict constraints and monitoring over the amount of executive compensation they can reimburse; meanwhile the contractors must compensate their executives with competitive level of compensation to retain or attract talents. In addition, compensation elements that change with the price of corporate securities (e.g., stock options) receive particular restrictions and scrutiny from the government. As expected, I find the portion of such compensation elements is negatively associated with government contractors. Essay II focuses on the presence and frequency of internal control problems among government contractors and the extent to which having U.S. government as a customer is associated with the effectiveness of their internal controls over financial reporting. Consistent with my prediction, the main results indicate that having the U.S. government as a customer will be negatively associated with the presence and frequency of internal control issues, on the premise that active government oversight or audit of the contractors' operations will create stronger incentives for the contractors to establish and maintain more effective accounting controls. Altogether, both essays will provide insight into the effects of government contracting and its additional oversight on executive compensation and systems of internal control.Item Impression Management Strategy: The Relationship between Accounting Narrative Obfuscation and Financial Graph Distortion(2020) Hao, JiePrior literature has treated the manipulation of accounting narratives and financial graphs as a separate issue. No prior study has discussed how management coordinates the quality of accounting narratives and financial graphs in the same report. I fill this knowledge gap by examining the relationship between narrative obfuscation and graph distortion in the S&P 500 firms' 10-K filings over the 2014-2018 time period. I address the potential endogeneity by jointly modeling narrative obfuscation and graph distortion in a simultaneous equation system. My finding suggests that thematic biased narrative is positively associated with financial graph distortion. At the same time, financial graph distortion is positively associated with both narrative complexity and thematic bias. These findings support Paivio's dual coding theory (1986) that managers jointly obfuscate narratives and graphs to manage users' impression of the firm. Further, I find there are systematic patterns of utilizing different narrative obfuscation methods in concert with different graphical distortion tactics. Specifically, positively biased narratives are often used in conjunction with misleading graphical designs and constructions, whereas low readable texts are often combined with inaccurate graph data. I further conduct cross-sectional analyses based on executive, board, and external monitoring characteristics. I find the positive association between narrative obfuscation and graph distortion is more pronounced for firms with CEOs who are chairmen of the boards or have low equity incentives. This positive relationship only exists for firms with small boards, busy directors, a low percentage of financial experts, or low female presence on the audit committees. Also, this positive relationship becomes more pronounced in firms with low blockholder ownership or low analyst following. This paper contributes to a better understanding of impression management executed via narrative and graphical channels. It also suggests regulators and auditors should pay more attention to the soft information quality (i.e., graphs and narratives) in the financial reports.Item Improved Clinical Trial Disclosures, Market Reaction and Economic Consequence(2013) Hao, JunThis dissertation consists of three essays that will examine nonfinancial disclosures of clinical trial status within the pharmaceutical industry. Essay I tests whether financial analysts use the information contained in the clinical trial disclosures to improve their forecast accuracy. Findings indicate that the improved clinical trial disclosures significantly decrease analysts' long-term earnings forecast error. Essay II seeks to determine whether the improved clinical trial disclosures affect pharmaceutical companies' cost of equity capital. The results suggest that a voluntary disclosure of drug portfolio per se is associated with a higher cost of equity capital, however, once the disclosure process is quasi-regulated, the magnitude of such positive association is significantly weakened. Essay III examines the market reaction to proposed or enacted regulatory changes associated with the improvement of clinical trial disclosures. Findings indicate that the market, in general, responses negatively to proposed or enacted regulatory changes that require both registration and result disclosure for clinical trials. Overall, this dissertation contributes to the accounting literature regarding non-financial disclosures by evaluating the consequences of improved clinical trial disclosures for analysts' forecast accuracy and cost of equity capital, and assessing the market reaction to regulation changes aiming to improve such disclosures.Item Is the Adaptability Dimension of Corporate Culture Associated with Earnings Quality and Tax Strategies?(2017) Greenwald, S. MarkEmploying a novel approach, I use a unique data set from GlassDoor to examine the association between the Adaptability dimension of corporate culture and earnings quality and tax strategies by public corporations. I define corporate culture as an intangible asset that is a mechanism for social control throughout an organization consistent with O'Reilly et al. (2014). Prior research suggested correlations between corporate culture and firm outcomes (Hartnell et al., 2011), but has not investigated specific reporting behaviors using social media responses to derive an empiric value for corporate culture. Because 91% of surveyed executives (Graham et al., 2016b) believed corporate culture was important since it can affect reporting outcomes, it is important to examine the interactions between corporate culture and earnings quality and tax strategies. I find mixed results that suggests some aspects of lower earnings quality and some more aggressive tax strategies are significantly associated with a firm culture of Adaptability. Firms with a corporate culture of Adaptability are more likely to engage in accruals earnings management, have material internal control deficiencies, lower GAAP effective tax rates, higher UTB balances, more use of Tax Havens, and less real earnings management. Additionally, I test two other dimensions: Integrity and Results. First, firms with a corporate culture of Integrity are not associated with higher quality earnings and weakly associated with less tax avoidance. Secondly, firms with a corporate culture of Results are more likely to engage in accruals earnings management, but unlike Adaptability firms, are not associated with tax strategies. I also test all six dimensions of corporate culture and find my three test ( Adaptability, Integrity, Results) dimensions generally exhibit the same associations when examined separately. This does suggest that some dimensions may act as controls for others, so I examine and find that the corporate culture of Collaboration moderates risky behaviors by Adaptability firms. In sum, my examination suggest that the latent aspects of firms have an influence on firm behaviors beyond performance and should be scrutinized further to find other moderators, constraints, or ameliorate inefficiencies.