Columbia Law School
Sky Blog
Thank you for the kind introduction Kevin [Gould]. It’s a pleasure to be here today at the annual PepsiCo-PwC CPE conference, which I understand is a tradition going back 18 years now. I appreciate the opportunity to speak, and I
accounting
How Quarterly Financial Reports Affect Employee Job Search
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 …
The Importance of Context for Numbers in Earnings Conference Calls
Numbers generally convey a sense of certainty – especially in accounting and finance. However, this perceived precision also makes it easier to use them in misleading ways. An extensive literature in political science and mass communications discusses how numbers, taken …
Does Firm-Specific Knowledge Matter for New Audit Committee Chairs and Financial Reporting Quality?
Overcoming the learning curve for a new situation or role at work can be difficult, especially when the situation or role requires specialized knowledge. Newly appointed audit committee chairs face a particularly steep learning curve, given that audit committees of …
SEC Commissioner Lee Speaks on Myths and Misconceptions about “Materiality”
Thank you, Neil [Stewart] for the introduction and for having me today as you discuss the important and timely topic of climate and ESG disclosures. I very much look forward to hearing from Janine [Guillot] and Julie [Bell Lindsay]. You
The Efficacy of PCAOB Operational Decision Making
The operating budget of the Public Company Accounting Oversight Board (PCAOB) has grown significantly since the regulator’s inception, with the total annual resources consumed by the PCAOB almost doubling—from $127 million to $252 million—between 2006 and 2018 (PCAOB 2007, 2019). …
SEC Speaks on Accounting and Reporting Considerations for SPAC Warrants
SEC’s Acting Chief Accountant Discusses Reporting and Auditing Issues for Companies Merging with SPACs
In recent years, we have seen significant market developments and innovation in our capital markets, with a variety of structures being utilized to raise capital and facilitate taking private companies public.[1]
The U.S. capital markets are often described as
How Scrutinizing Honest Managers Encourages Earnings Management
Research in finance and accounting consistently documents that a significant number of managers overstate reported earnings when true earnings miss a benchmark [1]. Managers face strong incentives to meet and beat important earnings thresholds, such as the analyst consensus forecast …
Financial Regulators Offer Update on Audit Quality in Emerging Markets
Over the past several years, the exposure of U.S. investors and our capital markets to companies with significant operations in emerging markets, including China, has increased.[1] This increased exposure carries with it a number of significant risks and challenges,
How Managers’ Ability to Gather Information Can Affect the Value of Conservative Accounting
Academics and practitioners, including lawyers, emphasize the importance of conservative accounting to lenders and corporate boards, allowing them to intervene and take corrective actions at an early stage. However, conservative accounting may also increase the risk of false alarms and …
Accounting and Convergence in Corporate Governance
Convergence in corporate governance – the adoption by various countries of similar governance laws and practices – and whether it is even occurring have been a hot topic of debate over the past 20 years, particularly in the legal and …
SEC Chief Accountant on Importance of High-Quality Financial Reporting in Light of Covid-19
Introducing Machine Learning to Corporate Fraud Detection
Accounting fraud is a worldwide problem with potentially serious consequences, but it is often detected after the damage has been done. Hence, efficient and effective methods of detecting corporate accounting fraud would offer significant value to regulators, auditors, and investors.…
Does State Sponsor of Terrorism Disclosure Limit SEC Financial Reporting Oversight?
The Securities and Exchange Commission (SEC) regularly reviews financial filings to ensure compliance with accounting standards and other disclosure requirements. The SEC review team analyzes firm’s financial filings and asks questions (in a comment letter) about perceived deficiencies. A comment …
Financial Regulators Warn Over Chinese Audit Quality Amid Coronavirus Outbreak
In November 2019, we met with senior representatives of the four largest U.S. audit firms, including certain of their network representatives, to discuss audit quality across their global networks and certain of the challenges faced in auditing public companies with
Do Firms Conceal Material Misstatements by Reporting Revisions Rather than Restatements?
Disclosure of financial reporting errors is vital to maintaining investors’ trust in the capital markets. Yet, in recent years the number of misstatements corrected in restatements of financial reports has declined dramatically, and misstatements are now more likely to be …
Do Managers Bias Earnings Forecasts in Response to Current Earnings Surprises?
Each quarter, managers provide a summary of their firm’s accounting performance – a disclosure known as a quarterly earnings announcement. Earnings announcements attract significant attention from investors and media outlets because, if earnings are different than market expectations, stock price …
The Imperative for Blockchain Accounting
For hundreds of years, the basic flowchart of accounting information has been the same. A firm records its own transactions, maintains a record of those transactions, and reports those transactions (Soll, 2014, xiv). Trends in technology make it inevitable that …
SEC Chief Accountant Talks the Future of Financial Reporting
I’m grateful for the opportunity to visit Baruch College’s Zicklin School of Business and speak at the annual financial reporting conference for the fourth time. Many students who were starting their collegiate work here when I first spoke at this