Quarterly financial reports are an important way for companies to communicate with the capital market, and they clearly affect firms’ access to debt and equity capital. However, the most scarce and sought after resource for many modern, cash-rich companies is not financing but people: human capital. For example, 27 percent of U.S. employees voluntarily changed jobs in 2019, costing firms an estimated $475 billion. For perspective, the total interest expense reported by public companies was $467 billion, indicating that the cost of voluntary employee turnover is comparable to firms’ external cost of debt. Total turnover-related costs are even larger when … Read more
Prior research finds that individual (retail) investors often fail to use accounting information when making stock trading decisions. Instead, many individuals underperform by trading on attention-grabbing technical trends such as high past stock returns.
A number of Securities and Exchange Commission (SEC) regulations are designed to help individual investors make better trading decisions by reducing their costs of using accounting information. For example, part of the SEC’s motivation for recent regulations on hyperlinking and XBRL was to aid individuals by reducing their costs of monitoring and accessing firms’ accounting reports. In a recent study, we investigate why many individual investors … Read more