1. By : Ridwan Islam Amanda Lafave Fion Li Greg Milosek Norek Paprocki Micky Petit Frere Magie Soliman

2. French Accounting Academic MBA, PhD and DESCF Professor Auditor for KPMG and E&Y

3. Findings  Higher financial reporting quality (FRQ) improves investment efficiency by reducing information asymmetries  High FRQ facilitates investment for constrained firms and curbs investment for firms likely to over-invest  Firms with higher FRQ are less likely to deviate from their predicted level of investment

4. Research Design  Estimates whether FRQ is negatively (positively) associated with investment when firms are more likely to over-invest (under- invest)  FRQ Index (AQ, AQWi, and FOG Index)  Sample size = 34,791 firm-year observations from 1993 to 2001  Examines capital expenditures, acquisitions, and asset sales

5. Relevance  Dechow and Skinner (2000) Earnings Management article  Information asymmetries give rise to adverse selection and moral hazard  Opportunistic earnings management extracted from accruals quality  Dechow cited three times in papers related to earnings, cash flows, and quality of accruals

6.  Findings  Companies with larger auditors are more likely to issue equity as apposed to debt.  Companies audited by Big 6 firms are less likely to be affected by market conditions in the amount of equity issues and in their debt ratios.

7.  Research Design  20 years of data for main sample  Exclusion of unique business models  Focus on large companies  Analyzing companies switching between differently sized audit firms

8.  Relevance  Daniel Thornton and the “Rats”  Revsine’s Selective Financial Misrepresentation Hypothesis  Skinner’s mention of manager bias’  Signaling theory

9.  Findings

10.  Research Design  Relevance

11.  Findings

12.  Research Design  Relevance

13. As accounting quality, auditor quality, financial reporting quality increases, information asymmetry, earnings management, adverse selection, and moral hazard decreases. “If managers could commit to revealing their private information, investors would not fear buying securities at an inflated price."

14.  Does Religion Matter in Corporate Decision Making in America?  Organized Labor and Information Asymmetry in the Financial Markets  Does Past Success Lead Analysts to Become Overconfident?  Analyst Coverage and Financing Decisions