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We investigate the relationship between climate risk and corporate investment in physical and organizational capital using an international sample of firms from 39 countries. Our main findings show that climate risk is positively associated with physical capital but is negatively related to organizational capital. We also explore the effects of climate vulnerability on these relationships and find that the positive relationship between climate risk and physical capital is mainly driven by climate-nonvulnerable industries, while the negative relationship between climate risk and organizational capital is principally driven by climate-vulnerable industries. Overall, our findings have significant implications for both domestic and multinational enterprises that engage in long-term investments against the background of climate change. Keywords Climate risk * Corporate investment * Physical capital * Organizational capital JEL Classification E22 * G39 Q54 * M21 * M16, 'Once again, climate change has gained a prominent position in the risk ranking... That means that climate-related risks make up the majority of the top-rated risks...' --World Economic Forum's (WEF) [...]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jbankfin.2010.02.020 Byline: Kiridaran Kanagaretnam (a), Chee Yeow Lim (b), Gerald J. Lobo (c) Keywords: Auditor reputation; Auditor expertise; Earnings management; Earnings benchmarks; Loan loss provisions Abstract: We examine the relation between auditor reputation and earnings management in banks using a sample of banks from 29 countries. In particular, we examine the implications of two aspects of auditor reputation, auditor type and auditor industry specialization, for earnings management in banks. We find that both auditor type and auditor industry specialization moderate benchmark-beating (loss-avoidance and just-meeting-or-beating prior year's earnings) behavior in banks. In addition, we find that once auditor type and auditor industry specialization are included in the same tests, only auditor industry specialization has a significant impact on constraining benchmark-beating behavior. In separate tests related to income-increasing abnormal loan loss provisions, we find that both auditor type and auditor expertise constrain income-increasing earnings management. Again, in joint tests, only auditor industry expertise has a significant impact on constraining income-increasing earnings management. Author Affiliation: (a) DeGroote School of Business, McMaster University, Hamilton, Ontario, Canada L8S 4M4 (b) School of Accountancy, Singapore Management University, Singapore 178900, Singapore (c) C.T. Bauer College of Business, University of Houston, Houston, TX 77204-6021, United States Article History: Received 18 September 2009; Accepted 19 February 2010

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jbankfin.2008.10.013 Byline: Kiridaran Kanagaretnam (a), Gopal V. Krishnan (b), Gerald J. Lobo (c) Keywords: Auditor reputation; Auditor expertise; Audit quality; Loan loss provision; Market valuation; Signaling Abstract: We examine how auditor reputation conditions the market valuation of banks' loan loss provision (LLP). The inherent uncertainty associated with and discretion permitted in estimating the LLP contributes to information asymmetry. The auditor's certification and monitoring roles influence firm value by mitigating this information asymmetry. We examine two aspects of auditor reputation, auditor type (Big 5 vs. non-Big 5) and auditor expertise, in the banking industry. We find a significant, positive association between the discretionary component of LLP and stock return for banks audited by the Big 5 auditors. Further analysis indicates that auditor expertise within banking and not auditor type drives this significant, positive association. Overall, our results are consistent with auditor expertise in the banking industry mitigating information asymmetry between bank managers and investors and enhancing the information conveyed by discretionary loan loss provision. Author Affiliation: (a) DeGroote School of Business, McMaster University, Hamilton, Ontario, Canada L8S 4M4 (b) College of Business and Economics, Lehigh University, Bethlehem, PA 18015, United States (c) C.T. Bauer College of Business, University of Houston, 334 Melcher Hall, Houston, TX 77204-6021, United States Article History: Received 5 February 2008; Accepted 30 October 2008 Article Note: (footnote) [star] This paper was originally submitted to Professor Giorgio Szego on August 30, 2007 and was revised once prior to submission through EES.

A study showing that larger firms, firms with higher earnings, and firms with higher levels of institutional participation tended to file their regulatory reports before the others.

In Brief An Opportunity to Fix Past Mistakes The current political and economic environment has reopened the question of accounting for stock options. Unlike in 1995, when FASB last tackled [...]

A negative relationship exists between the level of disagreement in analysts' earnings forecasts and earnings coefficients. A sample of 6,681 firm-year observations covering an eight-year period revealed that an increase in the level of disagreement among analysts' earnings forecasts lowers the coefficient relating stock returns and earnings. Validation of Imhoff and Lobo's empirical findings was also obtained.