In this dissertation, I examine the impact of earnings management and expectations management on the usefulness of earnings and analyst forecasts in firm valuation. Earnings and analyst forecasts are important inputs into accounting valuation models. Their ability to reflect current and predict future firm performance can help valuation models predict intrinsic value. However, increasing earnings management and expectations management activities in recent years may have adversely affected the usefulness of these information items in firm valuation. This study shows that intrinsic value metrics estimated using manipulated earnings or forecasts have less ability to track stock prices and predict future returns through V/P ratios, providing evidence for the joint hypothesis of (i) long-term market efficiency and (ii) the negative impact of earnings management and expectations management on the usefulness of earnings and analyst forecasts in firm valuation. It contributes to the accounting literature in several ways. First, it challenges the conventional view that more accurate and less biased forecasts are necessarily of better quality and proposes to assess the quality of analyst forecasts directly by examining their usefulness. It also introduces an improved measure for expectations management and presents new evidence on (i) the usefulness of earnings and analyst forecasts in firm valuation; (ii) the negative impacts of earnings management and expectations management on this usefulness; and (iii) the overall performance of accounting valuation models in firm valuation.

In this dissertation, I examine the impact of earnings management and expectations management on the usefulness of earnings and analyst forecasts in firm valuation. Earnings and analyst forecasts are important inputs into accounting valuation models. Their ability to reflect current and predict future firm performance can help valuation models predict intrinsic value. However, increasing earnings management and expectations management activities in recent years may have adversely affected the usefulness of these information items in firm valuation. This study shows that intrinsic value metrics estimated using manipulated earnings or forecasts have less ability to track stock prices and predict future returns through V/P ratios, providing evidence for the joint hypothesis of (i) long-term market efficiency and (ii) the negative impact of earnings management and expectations management on the usefulness of earnings and analyst forecasts in firm valuation. It contributes to the accounting literature in several ways. First, it challenges the conventional view that more accurate and less biased forecasts are necessarily of better quality and proposes to assess the quality of analyst forecasts directly by examining their usefulness. It also introduces an improved measure for expectations management and presents new evidence on (i) the usefulness of earnings and analyst forecasts in firm valuation; (ii) the negative impacts of earnings management and expectations management on this usefulness; and (iii) the overall performance of accounting valuation models in firm valuation.

A new generation of recent graduates and young workers, the Millennials, have started entering the workforce within the last ten years and work alongside older generations, such as Generation Xers and Baby Boomers. The limited research on Millennials suggests that Millennials are significantly different from their predecessors. The lack of robust or academic findings on the subject of Millennials and their impact in the workplace form the motivation for this research. To give clarity and cohesion on the topic of Millennials and to guide the analysis, it was necessary to develop a comprehensive taxonomy, or model, of Millennials’ traits. Two aspects of the model were investigated through the use of interviews. The results of the study do not support the existence of all of the numerous and distinct traits that Millennial have, as suggested by the literature; however, the results do support a subset of the traits. Compared to other current generations and to other recent generations of youths, the results suggest that Millennials have a greater sense of entitlement, have more unrealistic expectations, and need a greater amount of management involvement, such as supervision, structure, and feedback. Some factors outside of the model were found during the course of conducting the study. These factors may have impacted the results and possibly resulted in a false rejection of the propositions of this study. This exploratory research takes a step towards getting a better understanding of Millennials by providing a comprehensive taxonomy of Millennials’ traits and some academic findings for future research to build upon. A more rigorous study with a strengthened field methodology may better explore the impact of various factors on the results of intergenerational and Millennial investigations.

In this thesis, I explore the topic of chief executive officer (CEO) compensation in UK publicly traded firms. My objective is threefold. First of all, I investigate debt-holders‟ reaction to CEO compensation in terms of the cost of debt financing. Secondly, I examine the possible link between CEO compensation and expectation management. Thirdly, I examine whether and how the interactive relation between CEO career horizon and compensation package affects a firm‟s research and development spending. Multiple regression is employed in this thesis to investigate the causal relationship between these above mentioned aspects I‟m interested (the cost of debt, expectation management and research and development spending) and CEO compensation. I consider all major compensation components for a typical CEO in UK publicly traded firms: defined benefit pension, bonus, restricted shares, traditional stock options and performance-vested stock options. The accumulated equity incentives, such as ownership, are also examined. My major findings are as follows. First of all, I find that an increase in defined benefit pension and bonus in CEO compensation are associated with a lower bond yield spread, while an increase in stock options and ownership intensifies it. Secondly, I document that CEO equity incentives that will be vested in the following year are positively associated with the probability of employing expectation management to meet or beat financial analysts‟ forecasts about a firm‟s reporting earnings. Thirdly, I demonstrate that older CEOs will not spend less in research and development expenditures in general. However, older CEOs with more defined benefit pensions and ownership are reluctant to engage in such an investment. iii My results generate several implications for CEO compensation research. First of all, I show that debt-holders rationally incorporate the information of CEO compensation about risk-taking and risk-avoiding incentives when pricing a firm‟s publicly traded debts. Secondly, I provide the evidence that CEO compensation motivates top managers to manipulate information disclosure by employing expectation management for personal gains. Thirdly, the joint influence of CEO career horizon and compensation package on a firm‟s research and development spending is highlighted. CEO compensation motivates a short-sighed and risk-averse investment policy when top managers have a short career horizon. The first novel contribution in this thesis is the coverage of CEO pension, which is overlooked by the most of previous literature on compensation studies. Secondly, I provide the evidence that the popularity of expectation management in the UK, which is well documented in the literature, can be partly explained by CEO compensation. Finally, the interactive relation between CEO compensation and career horizon on a firm‟s investment policy is re-examined. It provides further material in the debate of career horizon problem, which has no consensus in the previous literature. Overall, this thesis generates some empirical evidence about the influence of CEO compensation on managerial behaviour. Some adverse effects of CEO compensation highlighted in this thesis may help remuneration committee to design a better pay package for top managers in the future.

A new generation of recent graduates and young workers, the Millennials, have started entering the workforce within the last ten years and work alongside older generations, such as Generation Xers and Baby Boomers. The limited research on Millennials suggests that Millennials are significantly different from their predecessors. The lack of robust or academic findings on the subject of Millennials and their impact in the workplace form the motivation for this research. To give clarity and cohesion on the topic of Millennials and to guide the analysis, it was necessary to develop a comprehensive taxonomy, or model, of Millennials’ traits. Two aspects of the model were investigated through the use of interviews. The results of the study do not support the existence of all of the numerous and distinct traits that Millennial have, as suggested by the literature; however, the results do support a subset of the traits. Compared to other current generations and to other recent generations of youths, the results suggest that Millennials have a greater sense of entitlement, have more unrealistic expectations, and need a greater amount of management involvement, such as supervision, structure, and feedback. Some factors outside of the model were found during the course of conducting the study. These factors may have impacted the results and possibly resulted in a false rejection of the propositions of this study. This exploratory research takes a step towards getting a better understanding of Millennials by providing a comprehensive taxonomy of Millennials’ traits and some academic findings for future research to build upon. A more rigorous study with a strengthened field methodology may better explore the impact of various factors on the results of intergenerational and Millennial investigations.