Investors, Take Heart When You See the Number 4 in Quarterly Earnings Figures

Details

Publish Date:

March 3, 2023

Author(s):

Maxey, Daisy

Source:

The Wall Street Journal

Related Person(s):

Related Organization(s):

Stanford Program in Law, Science & Technology,
Securities Class Action Clearinghouse (SCAC),
John M. Olin Program in Law and Economics,
Arthur and Toni Rembe Rock Center for Corporate Governance

Summary

Managers have incentives to round up per-share earnings and doing so consistently “can signal an overall aggressive approach to financial reporting that could manifest itself in more-serious violations,” says Nadya Malenko, associate professor of finance at the University of Michigan. She conducted the research with Joseph Grundfest, professor of law and business at Stanford University and a former commissioner at the Securities and Exchange Commission, and Yao Shen, assistant professor of finance at Baruch College.