This dissertation investigates the effects of changes in the accounting environment on the capital markets. Included are three manuscripts, each of which, make an important contribution to the accounting literature. The first two manuscripts investigate the impact and importance of analysts' forecasts. The third manuscript documents the impact of eliminating an important accounting disclosure. This dissertation makes the following contributions to the accounting literature. The first manuscript documents that investor skepticism towards meet/beat firms appears to have been a temporary phenomenon and investors have resumed rewarding firms that meet/beat analysts' earnings expectations. Further, the study provides evidence that changes in the analyst forecasting environment also contributed to this temporary decline implying that the scandals did not have as strong of an effect on investors' confidence in earnings as previously believed. The second manuscript contributes to the accounting literature by documenting the importance of meeting/beating cash flow forecasts to participants in the debt markets. Finally, the third manuscript contributes to the existing literature regarding the value relevance of the IFRS -- U.S.GAAP reconciliation by documenting a significant decrease in publicly available information to equity investors at the first reporting period following the SEC's decision to eliminate the reconciliation. All of these manuscripts extend what is currently known about the importance of public disclosures to capital market participants. / Ph. D.

The extant academic literature considers enterprise risk management (ERM) to be the fundamental paradigm for managing the portfolio of risks confronting organizations. However, there is debate as to whether ERM actually enhances stakeholder value. This study investigates whether ERM is associated with increased earnings predictability and a lower risk of firm failure, two theoretical predications regarding ERM's impact on stakeholder value. My research utilizes the Security and Exchange Commission's (SEC) enhanced proxy statement disclosures as of February 28th, 2010 to measure ERM performance. Additionally, in order to quantify the operational construct, textual analysis is performed to develop a measure of ERM performance to be used in econometric analyses. The analyses presented in this paper investigate whether key predicted benefits of ERM are observable. Results support the proposition that ERM is associated with increased earnings predictability. Specifically, earnings and accruals are found to be more persistent for firms with better ERM performance. Additionally, analysts' earnings forecasts are more accurate in the presence of enhanced ERM performance. Results are inconclusive with regards to ERM's ability to influence the risk of firm failure during this study's sample period (i.e., 2007-2009). One explanation for this departure, the economic volatility during the financial crisis of 2008-2009, may make it difficult to empirically detect the relationship between ERM performance and the risk of firm failure. / Ph. D.

本研究探討分析師盈餘預測偏差程度是否受到景氣循環的影響。首先以美國股市大盤指數的漲跌趨勢判定景氣循環的高峰時點，並藉此區分景氣循環由上往下反轉與否之依據。其次，探討當景氣由上往下反轉時，分析師盈餘預測的偏差程度是否有明顯增加的現象。最後，探討預測該公司之分析師人數、公司盈餘變動程度、公司發生損失及分析師盈餘預測的分散程度與分析師盈餘預測偏差程度之相關性，於景氣由上往下反轉時期與景氣穩定成長時期是否會有顯著差異。 實證結果顯示：(1)分析師盈餘預測偏差程度的確會受到景氣循環的影響。當景氣由上往下反轉時，分析師未能掌握景氣循環的脈動，立即修正其盈餘預測，而是傾向發佈具樂觀性偏差的盈餘預測。(2)處於景氣由上往下反轉時期，預測該公司之分析師人數、公司發生損失及分析師預測盈餘分散程度對分析師盈餘預測的偏差程度之影響會產生強化效果。然而，本研究並無充足證據顯示，公司盈餘變動程度與分析師盈餘預測偏差程度之相關性會受到景氣由上往下反轉而有所不同。 / This study investigates whether business cycle affects bias in analysts’ earnings forecasts. Based on NASDAQ market index, an economic sudden slump is selected for examining whether the bias in analysts’ earnings forecasts is more obvious during the period of the economic slump. On top of this, the association between the bias in analysts’ earnings forecasts and some economic factors including number of analysts following, change in earnings, firm loss and forecast dispersion in the economic sudden slump is also explored. The empirical results show that business cycle in analysts’ earnings forecasts indeed influences bias. When the economic sudden slump happens, analysts are not aware of business cycle’s fluctuation in time to revise their earnings forecasts; instead they trend to issue optimistic bias in earnings forecasts. In the economic sudden slump, the number of analysts following, firm loss and forecast dispersion deeply affect bias in analysts’ earnings forecasts. However, this study does not find sufficient evidence that the association between change in earnings and bias in analysts’ earnings forecasts is more obvious during the period of economic sudden slump.

There has been an increasing interest in the finance literature regarding the impact of transactions costs on US equity markets. The US empirical evidence indicates that transactions costs influence both trading volume (Atkins and Dyl (1997)) and asset returns (Amihud and Mendelson (1986)). Additionally, the theoretical finance literature also indicates that transactions costs affect equilibrium asset returns (Fisher (1994)). In this thesis we assess the impact of transactions costs on the UK equity markets, from four aspects. Firstly, we provide empirical support to the hypothesis that transactions costs affect the "holding period" of an asset in the portfolio of an investor. Secondly, we provide robust results showing that transactions costs affect equilibrium asset returns. Thirdly, we explain the variability of transactions costs with the use of information asymmetry, proxied by the variance of analysts' forecasts, in the spirit of Kim and Verrecchia (1994, 2001). Finally, we find that stock price and trading volume reaction to changes in the FTSE 100 list can be explained by liquidity effects, as proxied by the bid-ask spread. We provide overwhelming evidence, suggesting that transactions costs are important in UK equity markets.

The thesis presents the results of a study on the impact of International Financial Reporting Standards on the analysts information environment. The analysis is concentrated on the role of specific IFRSs and corporate disclosure. The effect of IFRS adoption on the information asymmetry between firms and outsiders is examined through properties of analysts earnings forecasts. A contribution to the existing academic literature is made by examining the role of goodwill, intangible assets and acquisitions before and after IFRS adoption in Europe. The results show that the IFRSs for goodwill, acquisitions and intangible assets are related to improvements in the analysts information environment. Another contribution to knowledge is made by investigating the effect of corporate disclosure quantity on the analysts information environment before and after IFRS adoption. For this purpose, a new approach and text analysis technique to assess the impact of corporate disclosure quantity is developed. This involves the creation of a new custom dictionary and the collection of an extensive set of qualitative data. The results show that corporate disclosure quantity under IFRS, is related to improvements in the analysts information environment but that there are differences in this effect across European countries. The results also demonstrate that the improvements in the accuracy of analysts earnings forecasts are related particularly to disclosure concerning financial instruments and operating segments. Overall, the findings of the thesis suggest that the adoption of IFRS resulted in an increase in the quality of reported earnings, which is likely to derive from higher comparability of financial statements, enhanced transparency and an improved analysts information environment. It is also established that fundamental differences across countries remain after IFRS adoption and that the development and harmonisation of financial reporting standards alone are not sufficient to increase the quality of financial information and decrease information asymmetry between market participants.