12 accounting papers (every economist should read)

1. Earnings management in an overlapping generations model, by R. Dye (JAR 1988)
because it provides the first modern theory of manipulation in a rational expectations setting

2. Marking to market: panacea or Pandora's box, by G. Plantin, H. Sapra and H. Shin (JAR 2008)
because it develops a model of accounting-driven illiquidity, and predicted the 2007-2008 financial crisis.

3. Optimal impairment rules, by R. Goex and A. Wagenhofer (JAE 2009)
because it offers a parsimonious theory of collateral measurement.

4. Reporting bias, by P. Fischer and R.  Verecchia (TAR 2000)
because it explains how manipulation increases uncertainty.

5. Disclosure when the market is unsure of information endowment, by W. Jung and Y. Kwon (JAR 1988)
because it offers the framework for most models of truthful reporting with constrained message space.

because it offers an elegant solution to a vast class of multi-signal multi-task principal/agent problems.

7. Earnings management and earnings quality: theory and evidence, by A. Beyer, I. Guttman and I. Marinovic (WP 2014)
because it is the first structurally estimated model of earnings management.

8. The demand for accounting conservatism for management control, by Y. Kwon, P. Newman and Y. Suh (RASt 2001)
because it clarifies the value of accounting conservatism in classic principal/agent models.

because it is the first model that links endogenous information quality to economic cycles.

because it furthers our understanding of the complementarities between voluntary and mandatory disclosure. 

11. Imprecision in Accounting Measurement: Can It Be Value Enhancing?, by C. Kanodia, R. Singh and A. Spero (JAR 2001)
because it shows that, when investment is viewed as a signal about firm value, a noisy measurement of investment is usually desirable to the firm.

12. Earnings management and the revelation principle, by A. Arya, J. Glover and S. Sunder (RASt  1998)
because it gives the frictions that prevent the use of stewardship mechanisms enforcing truthful earning reports.