Research

Working Papers

Beyond Financial Statement: the Value of External Assurance of Nonfinancial Job Market Paper                        

Presented at: EAA Junior Virtual Workshop (scheduled), University of Warwick (scheduled), EAA Talent Workshop 2025, University of Oxford (scheduled)

As traditional financial statements provide an increasingly incomplete picture of firm performance, investors face gaps in interpreting financial information. This study investigates whether external assurance of nonfinancial information—particularly ESG metrics—helps bridge this gap by enhancing the informativeness of financial reporting. Using sustainability reports from S&P 500 firms between 2013 and 2022, the analysis shows that external assurance significantly increases investors’ responsiveness to earnings news, particularly among firms with elevated ESG risk and high intangible asset intensity. The study further finds that assurance benefits not only external stakeholders but also internal decision-makers, as assured firms exhibit greater investment efficiency. Taken together, the findings suggest that third-party verification of nonfinancial information enhances the interpretation of financial performance and promotes more efficient capital allocation, underscoring the value of ESG assurance in addressing gaps left by traditional financial reporting.

Market-Based Incentives for Optimal Audit Quality Paper
With Andrew Acito, Amir Amel-Zadeh, James Anderson,William L. Anderson, Daniel Aobdia, Francois Brochet, Huaizhi Chen, Jonathan Fluharty-Jaidee, Martin C. Schmalz, Scott J. Wang, Joshua T. White, Thomas Bourveau, and William R. Zame
2nd Round R&R, Management Science

We examine how equity markets respond to the public release of audit-firm inspection reports by the U.S. regulator. Investors react differently based on the identifiability of the public issuers whose audits are covered in the inspection report. Auditors with identifiable issuer clients show positive abnormal returns for non-deficient reports and negative reactions for deficient ones. In contrast, issuers less easily linked to specific auditor inspections experience muted responses. More timely publication of inspection reports intensifies market reactions, while delays reduce their informativeness. The findings highlight how regulatory transparency can enable investors to better in- corporate audit quality information into equity prices. We discuss implications for market-based incentives for issuers and auditors.

Peer Disclosure Paper
With Amir Amel-Zadeh and Kazbi Soonawalla
Presented at:  Swiss Winter Accounting Conference 2026 (scheduled), Huddersfield Business School*, Southampton Business School*, 2025 AAA, The Mediterranean Accounting Conference 2025, Fourteenth Accounting Research Workshop 2025, 2025 EAA

This paper examines whether and how firms adjust their voluntary disclosure in response to changes in peer disclosure behavior. Using the 2007 elimination of the IFRS–U.S. GAAP reconciliation requirement for Foreign Private Issuers (FPIs) as a shock to the peer information environment of U.S. firms, we document a positive peer effect. We first show that FPIs significantly increase their voluntary disclosures to compensate for the lost mandatory information, resulting in improved information environments. We then use this variation in peer firm voluntary disclosures to assess changes in the disclosure behavior among U.S. firms. We find that U.S. firms with affected FPI peers increase their own disclosure. These peer effects are stronger among U.S. firms in competitive industries, but weaker when peer firms share analysts consistent with a substitution effect. U.S. peer firm disclosures attract significant higher investor attention, yet these disclosures are less informative—more vague, more complex, and less quantitative—and are associated with increased information asymmetry. These findings suggest that peer effects in disclosure are economically meaningful but can reflect strategic signaling rather than a commitment to transparency.

(* presented by coauthor)

Universal Owners and Corporate Externalities          Paper
With Amir Amel-Zadeh and Martin C. Schmalz
Presented at:  University of Oxford

This study examines how diversified institutional investors influence firms to internalize environmental and social (E&S) externalities. These universal owners, focused on maximizing portfolio-wide value, aim to reduce harms that one firm may impose on others they hold. Using a measure that captures how much influence the investors in other firms have over focal firms, we find that greater universal ownership is associated with lower emissions, fewer labor and human rights controversies, and more extensive ESG disclosures, especially in high-emitting, resource-intensive sectors. These findings highlight the role of universal owners in driving responsible corporate conduct.

PCAOB Inspection Reports and Information Dissemination

With Andrew Acito, Amir Amel-Zadeh, James Anderson, William L. Anderson, Daniel Aobdia, Francois Brochet, Huaizhi Chen, Jonathan Fluharty-Jaidee, Martin C. Schmalz, Scott J. Wang

Not publicly shareable at this stage due to PCAOB confidentiality rule