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Alternative Estimation Methods - Documenting that the reported relationship between accounting conservatism and bankruptcy risk is robust to alternative methods for estimating bankruptcy risk and bankruptcy risk components. By increasing bankruptcy risk and decreasing monitoring and accounting conservatism simultaneously, CDS contracts may weaken or eliminate negative relations between conservatism and bankruptcy risk. The potential of SOX enactment to thereby enhance accounting conservatism's effects on bankruptcy risk must take into account SOX related and contemporaneous effects on bankruptcy risk. Alternative Measures for Accounting Conservatism and Bankruptcy Risk B - b Documenting that the reported relationship between accounting conservatism and bankruptcy risk is robust to using alternate measures of accounting conservatism and alternative measures of bankruptcy risk including actual bankruptcy. [Extracted from the article]

Do language skills affect investment decisions? This article addresses this question by identifying the effect of English proficiency on the stock market participation of immigrants in the United States and Australia. To establish causality, we construct an instrumental variable for English proficiency by exploiting the phenomenon that younger children acquire languages more easily than older children. We find that English proficiency has a significant positive effect on stock ownership among immigrants in both countries. Moreover, we provide evidence that a reduction in information costs and an increase in trust may serve as the mechanisms underlying the language ability effect. [ABSTRACT FROM AUTHOR]

For a large sample of U.S. listed firms, we find that unconditional and conditional accounting conservatism help lower bankruptcy risk. We further find that the mitigating effect of accounting conservatism on bankruptcy risk functions via cash enhancement and earnings management mitigation channels. This evidence is relevant to accounting standards setting, financial regulation, financial risk management, and helps explain conservatism's long-standing presence as a pervasive feature of financial accounting. [ABSTRACT FROM AUTHOR]

The response of a macroeconomy can be measured by two methods; the article compares the two methods.

The natural rate of unemployment hypothesis is one of the central ideas in macroeconomics. The natural rate of unemployment is determined by labor market equilibrium. While fluctuations in demand or/and [...]

Studies using standard unit-root tests generally cannot reject the hypothesis of a unit root in unemployment rates. These findings have been interpreted as supporting the hysteresis hypothesis. We demonstrate that the failure to reject the null may be due to the low power of the tests. We analyze unemployment rates of 48 U.S. contiguous states using a more powerful panel-based test which exploits cross-section restrictions on the constituent series. The critical values are simulated tailored to our sample size. We reject the null decisively, casting some doubt on the hysteresis hypothesis for the United States., I. INTRODUCTION One central idea in macroeconomics is the equilibrium unemployment rate hypothesis.(1) In many macroeconomic models which allow for some degree of price stickiness, fluctuations in demand and supply [...]

We examine the impact of corporate fraud committed by one firm (the "fraudulent firm") on other firms with interlocking directors (the "interlocked firms"), focusing on the debtholder side. We argue that the revelation of a fraudulent firm's fraud can damage the reputation of the interlocked firms because corporate governance can propagate via director interlocks. Empirically, we find that the interlocked firms' cost of debt is higher and the loan covenants become stricter after the fraud cases of the fraudulent firms are revealed. Consistent with the corporate governance propagation explanation, our results are weaker (stronger) for interlocked firms that have better (worse) pre‐event corporate governance standards. Our findings suggest that corporate fraud of fraudulent firms can affect other firms through director‐interlocks beyond shareholder value. [ABSTRACT FROM AUTHOR]