Publications

Reporting changes can reshape where investors look for information and how prices incorporate it, even across country borders.
After the 2007 SEC elimination of the US GAAP reconciliation requirement for foreign firms filing Form 20-Fs using IFRS, investors change their information acquisition behavior: they rely less on Form 20-Fs in favor of more timely and more similar disclosures produced in the home countries.
This effect is greatest when there is a large reporting gap between the home country earnings announcement and the Form 20-F filing dates.
American Depositary Receipt (ADR) market reactions to home country earnings announcement increase for these firms after the SEC deregulation.
There is increased return co-movement between the US ADR market and the home country stock market for IFRS filers' shares after the deregulation.
Keywords: Disclosure, International Accounting, Regulation, Information Processing, Investor Attention, Cross-Listed Firms

[5] Chongho Kim, Jihwon Park, and Edward Sul. “The Effects of MiFID II on Voluntary Disclosure.” Management Science, 71(10): 8565–8585, 2025

Managers issue greater quantity and quality of voluntary disclosure to fill the information gap left behind by declining analyst coverage.
After MiFID II implementation, which forced asset managers in Europe to pay separately for sell-side research instead of bundling it into trading commissions and thereby reduced the amount of traditional analyst coverage, firms respond by improving voluntary disclosure.
European firms issue more (and more detailed) management guidance, especially those that lost analyst coverage post-MiFID II.
Market reactions to guidance increase for European firms in the post-MiFID II world.
European firms that issue more guidance following MiFID II fully offset any decrease in liquidity as a result of the loss in sell-side analyst research.
Keywords: Voluntary Disclosure, Regulation, MiFID II, International Accounting, Information Production, Management Guidance

[4] Salman Arif and Edward Sul. “Does accounting information identify bubbles for Fama? Evidence from accruals.” Journal of Accounting and Economics, 78(2–3): 101711, 2024

Presentation at the 2023 Journal of Accounting and Economics Conference
Accounting information can warn that valuations are unsustainably inflated after rapid stock price run-ups.
Following periods of rapid stock price run-ups, high levels of country-industry level net operating asset (NOA) accruals predict future negative returns, crashes, weaker fundamentals, and earnings disappointments.
The mechanism is positive investor sentiment alongside aggressive investment and overexpansion associated with high levels of NOA accruals.
NOA accruals are stronger predictors of returns, crashes, and earnings misses following run-ups compared to other periods.
Keywords: International Accounting, Information Production, Information Processing, Behavioral Biases, Bubbles, Accruals

[3] Edward Sul. “Takeover Threats, Job Security Concerns, and Earnings Management.” The Accounting Review, 99(3): 451–477, 2024

Takeover pressure and career concerns affect managers' reporting choices, especially when external governance mechanisms are weaker.
Following adoption of country-level takeover laws that make it easier to complete takeovers and replace managers after poor performance, managers feel less secure about their job security and respond by managing earnings.
Managers engage in higher abnormal accruals, greater instances of just meeting or beating performance benchmarks, and have worse accrual quality.
Effects are more pronounced when managers are underperforming, face greater turnover pressures, in countries that have weaker investor protection, where governance mechanisms are weaker and earnings management more prevalent, and where regulation provisions most directly increase takeover threats.
This can result in greater instances of accounting restatements and fraud.
Keywords: Corporate Governance, Regulation, International Accounting, Information Production, Earnings Management, Takeovers, Career Concerns

[2] Mark Lang, Jedson Pinto, and Edward Sul. “MiFID II unbundling and sell-side analyst research.” Journal of Accounting and Economics, 77(1): 101617, 2024

Recent regulation that unbundle sell-side research payments from trading commissions lead to a shrinking supply of analyst research.
Following adoption of MiFID II, which forced buy-side investors to explicitly pay for analyst research rather than getting it bundled with trading commissions, sell-side analyst coverage of European firms is reduced as demand for sell-side research decreases.
Effects are more pronounced for firms where the marginal analyst is less valuable (larger, older, less volatile firms).
High quality analysts (more accurate and experienced) are more likely to leave to sell-side and move to the buy-side.
Remaining sell-side analysts increase efforts to make their forecasts more informative (more accurate and detailed with larger stock price responses).
Keywords: Regulation, MiFID II, International Accounting, Information Production, Analysts

[1] Mark Lang and Edward Sul. “Linking industry concentration to proprietary costs and disclosure: Challenges and opportunities.” Journal of Accounting and Economics, 58(2–3): 265–274, 2014

Discussion at the 2013 Journal of Accounting and Economics Conference
Linking industry concentration to voluntary disclosure is challenging.
Theory does not strongly predict a single direction.
There is a lack of a clear pattern between industry concentration and variables that seem likely to be correlated with proprietary costs.
Standard voluntary disclosure measures, such as management forecasts, are noisy proxies for proprietary information that firms choose not to disclose.
Keywords: Voluntary Disclosure, Proprietary Costs, Industry Concentration, Competition

Page updated

Google Sites

Report abuse