Journal of Accounting, Auditing &Finance, Ahead of Print. The professional literature has provided evidence of discrimination against ethnic minority professionals in a number of research contexts, including law, architecture, construction, and health care. However, research on ethnicity-based discrimination in the accounting profession has been sparser and has generally relied on ethnic minorities’perceptions of discrimination rather than actual discrimination. In this study, we complement and extend this research by investigating whether ethnic minority audit partners are associated with ..read more

Journal of Accounting, Auditing &Finance, Ahead of Print. This paper examines the role of supply chain common institutional investors (i.e., who own stocks of both upstream suppliers and their downstream customers in a supply chain) in the valuation of upstream supplier firms’ order backlog information. Based on the theory and evidence that backlog orders’ predictive power is diminished further in a supply chain due to the bullwhip effect, we hypothesize and find that the overpricing of order backlog is mainly driven by upstream rather than downstream firms. More importantly, we use both h ..read more

Journal of Accounting, Auditing &Finance, Ahead of Print. In this study, we explore the expanded role of chief financial officers (CFOs) in facilitating corporate disclosure by examining how their accounting expertise influences the resolution process of Securities and Exchange Commission (SEC) comment letters issued on 10-K reports. Using CFO professional profile data collected extensively through EDGAR, Lexis-Nexis, and several online searches, we find that CFO accounting expertise improves the resolution of SEC comment letters by reducing the remediation costs and the likelihood of unfa ..read more

Journal of Accounting, Auditing &Finance, Ahead of Print. Recent research provides evidence consistent with tax-motivated income shifting taking place in Big 4 networks. Non-Big 4 networks have global footprints and audit a significant proportion of private-firm clients. Thus, we cannot make sense of audit-firm networks’ tax avoidance proclivities and the impacts their tax advice may have on aggregate client-firm income-shifting figures without examining non-Big 4 affiliates’ tax planning strategies. This study uses a private-firm dataset of Big 4 and non-Big 4 associated firms from 26 Eur ..read more

Journal of Accounting, Auditing &Finance, Ahead of Print. This study investigates the relationship between analysts’ facial width-to-height ratio (fWHR) and their selected forecast boldness under different conditions (e.g., tournament condition and skill levels). The aim is to determine if fWHR captures innate or calculated risk-taking preferences. Supplementary tests reveal that high-fWHR analysts issuing bold forecasts achieve more favorable outcomes in terms of job promotion and forecast accuracy compared with their low-fWHR peers, providing supporting evidence that fWHR is associated w ..read more

Journal of Accounting, Auditing &Finance, Ahead of Print. Using a comprehensive measure, the Macroeconomic News Index (MNI), we examine how analysts use macroeconomic news in their earnings forecasts. We find that analysts incorporate but underreact to quarterly macroeconomic news. Cross-sectionally, analysts’ reaction to macroeconomic news varies in a predictable way. Analysts incorporate macroeconomic news more efficiently when firms have lower exposure to the macro economy, when macroeconomic uncertainty is low, and when analysts have more industry-specific experience. Finally, we exami ..read more

Journal of Accounting, Auditing &Finance, Ahead of Print. We examine the effect of audit committee interlocks on the dissemination and contagion of accrual-based earnings management (AEM) and real earnings management (REM) for the pre- and post-SOX periods. We use “dissemination” to denote information association and “contagion” to designate causal information transmission. We first document that interlocked firms exhibit AEM dissemination (but not REM dissemination) for the pre-SOX period and REM dissemination (but not AEM dissemination) for the post-SOX period. To alleviate the concern t ..read more

Journal of Accounting, Auditing &Finance, Ahead of Print. This study investigates whether CEO political contribution, as a measure of CEO political ideology, is associated with a firm’s financial reporting policies in accounting conservatism. Using a sample of federal-level political contributions by CEOs in S&P 500 firms, we find that firms with Republican-leaning CEOs, who tend to have conservative ideology, are associated with a higher degree of accounting conservatism than firms with Democratic-leaning CEOs. We further show that changes in political ideology around CEO turnovers ar ..read more

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