In this dissertation, I examine the source of some of the anomalous capital market outcomes that have been documented for firms with high accruals. Chapter 2 develops and implements a methodology that decomposes a firm's discretionary accruals into a firm-specific and an industry-specific component. I use this decomposition to investigate…
In this dissertation, I examine the source of some of the anomalous capital market outcomes that have been documented for firms with high accruals. Chapter 2 develops and implements a methodology that decomposes a firm's discretionary accruals into a firm-specific and an industry-specific component. I use this decomposition to investigate which component drives the subsequent negative returns associated with firms with high discretionary accruals. My results suggest that these abnormal returns are driven by the firm-specific component of discretionary accruals. Moreover, although industry-specific discretionary accruals do not directly contribute towards this anomaly, I find that it is precisely when industry-specific discretionary accruals are high that firms with high firm-specific discretionary accruals subsequently earn these negative returns. While consistent with irrational mispricing or a rational risk premium associated with high discretionary accruals, these findings also support a transactions-cost based explanation for the accruals anomaly whereby search costs associated with distinguishing between value-relevant and manipulative discretionary accruals can induce investors to overlook potential earnings manipulation. Chapter 3 extends the decomposition to examine the role of firm-specific and industry-specific discretionary accruals in explaining the subsequent market underperformance and negative analysts' forecast errors documented for firms issuing equity. I examine the post-issue market returns and analysts' forecast errors for a sample of seasoned equity issues between 1975 and 2004 and find that offering-year firm-specific discretionary accruals can partially explain these anomalous capital market outcomes. Nonetheless, I find this predictive power of firm-specific accruals to be more pronounced for issues that occur during 1975 - 1989 compared to issues taking place between 1990 and 2004. Additionally, I find no evidence that investors and analysts are more overoptimistic about the prospects of issuers that have both high firm-specific and industry-specific discretionary accruals (compared to firms with high discretionary accruals in general). The results indicate no role for industry-specific discretionary accruals in explaining overoptimistic expectations from seasoned equity issues and suggest the importance of firm-specific factors in inducing earnings manipulation surrounding equity issues.
Leonard Hayflick studied the processes by which cells age during the twentieth and twenty-first centuries in the United States. In 1961 at the Wistar Institute in the US, Hayflick researched a phenomenon later called the Hayflick Limit, or the claim that normal human cells can only divide forty to sixty…
Leonard Hayflick studied the processes by which cells age during the twentieth and twenty-first centuries in the United States. In 1961 at the Wistar Institute in the US, Hayflick researched a phenomenon later called the Hayflick Limit, or the claim that normal human cells can only divide forty to sixty times before they cannot divide any further. Researchers later found that the cause of the Hayflick Limit is the shortening of telomeres, or portions of DNA at the ends of chromosomes that slowly degrade as cells replicate. Hayflick used his research on normal embryonic cells to develop a vaccine for polio, and from HayflickÕs published directions, scientists developed vaccines for rubella, rabies, adenovirus, measles, chickenpox and shingles.
Although best known for his work with the fruit fly, for which he earned a Nobel Prize and the title "The Father of Genetics," Thomas Hunt Morgan's contributions to biology reach far beyond genetics. His research explored questions in embryology, regeneration, evolution, and heredity, using a variety of approaches.
