Research

Selected Publications

Controlling the Narrative: Managerial Topic Shifting in Earnings Conference Calls

with Lili Dai, Ping Gong and Andrew Jackson

Review of Accounting Studies, 2026, Volume 31, pp. 1165–1206.

This study implements topical analyses to identify the extent to which managers shift their responses from analysts’ questions in earnings conference calls and refers to this phenomenon as managerial topic-shifting behavior, a new information content construct arising from analyst-manager interactions. Using a sample of conference calls from 2002 to 2017, we find that managers in firms with better performance, more powerful CEOs, and fewer quality analysts tend to shift more from the topics of analysts’ inquiries. We further find that a greater extent of shifting relates to larger earnings response coefficients, suggesting that shifting topics provide relevant information to investors and facilitate the incorporation of earnings news into stock prices. Cross-sectional analyses indicate that this positive information effect is concentrated in firms with more credible and capable managers and with weaker information environments. Our study provides novel evidence of a proactive disclosure strategy leveraging managerial topic-shifting behavior.

Private Loan Issuance and Risk Factor Disclosure

with Lili Dai and Wayne Landsman

The Accounting Review, 2024, Volume 99, Issue 4.

This study provides evidence that private loan issuance offers opportunities for borrowers to learn new information about their own risks and subsequently disclose such information in their risk factor disclosures (RFDs) to satisfy lenders’ demand for transparency about borrowers’ risks. This loan issuance effect on risk disclosures is more pronounced when greater learning opportunities are present and when lenders have a stronger demand for borrowers’ risk information transparency. Further analyses suggest that the enhanced risk disclosures following loan issuance not only benefit lenders by reducing the costs of accessing the secondary credit markets, but also create spillover benefits for equity investors by increasing risk information about the borrower and reducing uncertainty about the borrower’s risk. Taken together, these findings suggest that borrowers’ private interactions with lenders provide new opportunities for managers to generate and reflect fresh information in corporate risk disclosures, ultimately benefiting a wide range of capital market participants.

Bridging the Gap between Stock Price and Bottom-Line Accounting Numbers

with Pengguo Wang and Demetris Christodoulou
Review of Accounting Studies, 2024, Volume 29, Issue 1.

We extract “other information” from stock prices and accounting numbers to capture expected earnings growth and valuable investment opportunities. The measure is associated with future earnings growth and firm risk. Incorporating it into an expected-return model predicts stock returns out of sample and generates sizeable long–short return spreads.

Figure 2: Higher analyst growth-forecast quartiles shift right in the distribution of “other information” scaled by price. Peng, Wang & Christodoulou (2024). CC BY 4.0.

Published Figure 2: distributions of implied other information divided by stock price for four quartiles of analyst long-term growth forecasts. Higher forecast-growth quartiles are shifted to the right.

Global Outsourcing and Voluntary Disclosure

with Lili Dai, Rui Dai and Lilian Ng

Journal of Business Finance & Accounting, 2024, Volume 51: Issue 3-4.

Reliance on global outsourcing has become an economic imperative for many major corporations worldwide, but at the same time, it has brought substantial risks and complexities to these firms. This study employs novel international supply chain data to examine whether global outsourcing of goods or services shapes US corporate disclosure policies. Our main results suggest a negative impact of global outsourcing exposure on voluntary disclosure, and several identification tests further support this baseline evidence. We find that the adverse effect on disclosure is more pronounced when institutional differences are more significant between the United States and foreign suppliers' countries and when US firms face higher litigation risks. However, the effect weakens when investors and stakeholders demand more information. Collectively, our study provides new insights into the economic implications of outsourcing globally from an information disclosure perspective.

Asymmetric Impact of Earnings News on Investor Uncertainty

with David Johnstone and Demetris Christodoulou

Journal of Business Finance & Accounting (2020), Volume 47, Issue 1-2 p. 3-26

We describe a model that predicts an asymmetric impact of disclosure on investor uncertainty. We show that good news tends to resolve more uncertainty than bad news, and that uncertainty can be revised upwards if the investors' prior belief is sufficiently strong and the signal is sufficiently bad. This result is in contrast to classical disclosure models, where new information always resolves uncertainty and the change in uncertainty depends only on the relative precision of the news. Using option-implied volatility as a proxy for uncertainty, we find strong support for our predictions. We also show that our results are robust to competing explanations, notably to the leverage effect and volatility feedback, as well as to the jump risk induced in anticipation of the earnings announcements.

Other Publications

Chen, J.W. , Khoo, E.S. & Peng, Z. (2023) Climate Change Disclosure and the Information Environment in the Initial Public Offering Market. Accounting & Finance, 63(Suppl. 1), 907–952.
Peng, Z. (2023) Do Risk Exposures Explain Accounting Anomalies? A New Testing Method. Accounting & Finance, 63, 2965–2983.
Khoo, E., Lu, L. & Peng, Z. The effect of CEO adverse professional experience on management forecast pessimism. Accounting & Finance, 65, pp. 219 - 250.
Hossain S., & Peng, Z. Impact of Corporate Risk Factor Disclosures on Auditor Judgements and Client Reporting: A Textual Analysis From 10-K Filings. Accounting & Finance, Forthcoming.

Selected Working Papers

Event-study estimates for pollution at non-targeted borrowers of lenders exposed to EPA enforcement against another borrower. Estimates fall after year 0. Differences in log RSEI are relative to year minus 4; bars are 95 percent confidence intervals.

How Do Environmental Enforcement Actions Shape Private Lenders’ Interactions with Borrowers?

with Lili Dai and Wayne Landsman
R&R at The Accounting Review

Lenders exposed to EPA enforcement appear to stabilize relationships with targeted borrowers while increasing environmental monitoring. Their other existing borrowers also reduce pollution, particularly when lenders have stronger monitoring incentives and influence. Exposed lenders impose stricter terms on future borrowers, whose pollution subsequently declines. These findings suggest that lending networks extend the effects of public enforcement.

Figure 2: Differences in log RSEI pollution scores for non-targeted borrowers of exposed versus non-exposed lenders, relative to year −4. Bars show 95% confidence intervals; year 0 marks EPA enforcement. Source: Dai, Landsman & Peng.

Critical Audit Matters and Design of Financial Covenants in Corporate Loan Contracts

R&R at Journal of Accounting & Economics

with Daniela De La Parra, Wayne Landsman, and Donny Zhao

This study examines whether critical audit matters (CAMs) disclosed in expanded audit reports signal heightened uncertainty about borrowers’ creditworthiness and shape lenders’ demand for financial covenants in private debt contracts. Using U.S. loans issued between 2019 and 2023, we find that performance- (capital-) related CAMs are positively associated with performance- (capital-) based covenants, consistent with lenders tailoring covenant structure to the sources of uncertainty highlighted by auditors. We show that CAMs are associated with increased downside uncertainty in distance to default, which helps explain their link to covenant design. We also find that financial statement items identified in CAMs are more reflective of creditworthiness, suggesting that CAM disclosures help lenders assess the debt contracting value of accounting information, thereby improving contracting efficiency through optimized financial covenant design.

Voluntary Adoption of Sustainability Reporting Frameworks and Environmental Rating Quality

R&R at Journal of Accounting & Economics

with Ling Lisic, Cecilia Sun, and Liang Tan

This study examines whether voluntary adoption of sustainability reporting frameworks improves the quality of environmental ratings (E-ratings) issued by ESG rating agencies. We find that adoption of the Task Force on Climate-related Financial Disclosures (TCFD) and Sustainability Accounting Standards Board (SASB) frameworks is associated with E-ratings that better predict firms’ future environmental incidents. This association is stronger when adopting firms’ ESG reports more closely align with the architectural features of the respective frameworks. These findings are consistent with voluntary reporting frameworks improving E-rating quality by reducing rating agencies’ information processing costs.

Patent Disclosure Quality and the Secondary Market for Corporate Innovation

R&R at Management Science

with Leye Li

This paper examines whether the quality of patent disclosure facilitates the functioning of the secondary market for corporate innovation. Using 201,145 U.S. patents and detailed measures of disclosure quality developed by Dyer et al. (2024), we document that patents with fuller, clearer, and more exact written descriptions have higher liquidity. To address endogeneity in disclosure choices, we exploit quasi-random variation in examiner leniency regarding disclosure requirements and find consistent causal evidence that higher disclosure quality increases patent liquidity. Cross-sectional tests show that this effect is stronger when information frictions are higher—such as in technology classes with greater uncertainty or for inventors with limited patenting reputations. We further find that higher disclosure quality is associated with lower future litigation risk and that its liquidity effect is attenuated after the Patent Pilot Program improved judicial predictability. Overall, the findings highlight disclosure quality as an important mechanism supporting efficient technology transfer.

Other Working Papers

Peng, Z., Penman, S., & You, H. Risk Resolution and Revelation: A Unified Asset Pricing Model Based on Accounting Fundamentals and Risk Disclosures
Dai, L., Dai, R., Lisic, L., & Peng, Z. CEOs' Diversity Footprints and Corporate Gender Diversity.
Ma, L. & Peng, Z. Innovation Ambidexterity, Asymmetric Performance Risks, and Equity Valuation.
Peng, Z. Topical Dispersion of Risk Factor Disclosures and Variance Risk Premia.
Li, L & Peng, Z. Topical Dispersion of Risk Factor Disclosures and Divergence of Opinions.

Google Sites

Report abuse