My areas of research are archival capital markets: institutional investors trading, corporate disclosures, auditing, insider trading, trading volume, behavioral finance, international taxation, and investment.
My areas of teaching are advanced financial accounting and managerial accounting.
Published & Accepted Papers
1. Anticipation and Reaction to Going Concern Modified Audit Opinions by Sophisticated Investors, with Marshall Geiger, International Journal of Auditing, Forthcoming ,
Abstract: The purpose of this paper is to examine whether institutional investors: 1) anticipate a distressed firm’s receipt of a first-time going concern modified audit opinion,
and 2) react to a first-time going concern modified opinion by engaging in abnormal net selling of firm shares. Using a proprietary database of U.S. institutional investor trades, we find
that institutional investors are net sellers of first-time going concern opinion firms beginning six months before the release of the report and remain net sellers through the subsequent
three months. We also find that the severity of the reasons auditors modify their opinions is associated with increased trading activity, but only after the opinion is publicly available.
Our results support the position that an auditor’s going concern modified opinion is influential in the marketplace by documenting that institutional investors anticipate this price-relevant
information and react through increased selling. The finding of increased net selling of firms with more severe reasons for report modifications provides evidence of the incremental informational
value of the wording in the modified opinion.
2. Market Ambiguity and Individual Investor Information Demand, with Joyce van der Laan Smith and and Rajib Hasan, Journal of Contemporary Accounting and Economics, 2018 (14) pp.126-141.
Abstract: We examine whether ambiguity in the market leads to an increase in information demand by individual investors. Drawing on the asset-pricing model proposed by Mele and Sangiorgi (2015),
which incorporates market ambiguity, we measure individual information demand using daily Google searches and measure market ambiguity using a metric based on the market trades of institutional investors.
We find that individual investors increase their information demand during periods of greater market ambiguity. We also provide evidence that information demand from individual investors spikes around
earnings announcement days primarily when market uncertainty is driven by net-selling activity. Overall, these results suggest that the disagreement among institutional investors either represents
uncertainty or contributes to the uncertainty related to a stock, leading to increased demand for information from individual investors.
3. Reassessing the Effects of Bilateral Tax Treaties on US FDI Activity, with Daniel L. MillimetJournal of Economics and Finance, 2018 (42) 451-470.
Abstract: Despite substantial evidence that foreign direct investment (FDI) is influenced by taxation, the impact of bilateral tax
treaties on FDI is surprisingly unclear. We provide a simple theoretical framework illustrating why the impact of tax treaties may be heterogeneous
across the distribution of FDI, and thus why focusing on the average effect of tax treaties may be misleading. We then assess the empirical relevance of such
heterogeneity by estimating the quantile treatment effects of tax treaties on US inbound and outbound FDI using panel data from 1980–1999. Our results are striking, and
consistent with our expectations. We obtain positive effects of tax treaties at lower quantiles of the distribution of FDI, but negative effects in the upper quantiles.
Moreover, while the negative effects are substantially larger in absolute terms relative to the positive effects, the two effects are roughly equivalent in percentage terms.
4. Are Trade Size-Based Inferences About Traders Reliable? Evidence from Institutional Earnings-Related Trading, with William M. Cready and Musa Subasi, Journal of Accounting Research, 2014, pp.877-909.
Abstract: The use of observed transaction sizes to differentiate between “small” and “large” investor trading patterns is widespread.
A significant concern in such studies is spurious effects attributable to misclassification of transactions, particularly those originating from large investors.
Such effects can arise unintentionally, strategically, or endogenously. We examine comprehensive records of a sample of institutional investors (i.e., “large” traders),
including their order sizes and overall position changes, to assess the degree to which such misclassifications give rise to spurious inferences about “small” and “large”
investor trading activities. Our analysis shows that these institutions are heavily involved in small transaction activity. It also shows that they increase their order
sizes substantially in announcement periods relative to nonannouncement periods, presumably as an endogenous response to earnings news. In the immediate earnings announcement
period, transaction size-based inferences about directional trading are quite misleading—producing spurious “small trader” effects and, more surprisingly, erroneous inferences
about “large trader” activity.
5. It’s All in the Timing: Assessing the Impact of Bilateral Tax Treaties on US FDI Activity, with Daniel L. Millimet in L. Sachs and K.P. Sauvant (eds.), The Effect of BITs and DTTs on FDI Flows, Oxford University Press , 2009, pp.635-657.
Abstract: Despite substantial evidence that foreign direct investment (FDI) is influenced by taxation, the impact of bilateral tax treaties on FDI is surprisingly unclear.
We investigate one possible reason: previous empirical research restricts treaties to have a one-time, discrete effect on FDI. We find this assumption to be rejected in the data on US inbound FDI.
Moreover, allowing for anticipatory and lagged effects of treaty formation indicates a more substantial, positive effect on FDI activity..
6. Trading Concentration and Industry-Specific Information:An Analysis of Auto Complaints , with Marshall Geiger and Sami Keskek, Revise & Resubmit at Journal of Business, Finance, and Accounting .
Abstract: We investigate whether sophisticated investors’ trading concentration in the auto industry is associated with their use of auto complaint data.
We find that the extent to which mutual funds incorporate the complaint information into their trading decisions is positively associated with their concentration of
trading in the auto industry. We provide direct evidence that information advantage can arise from superior information processing. We find that pension funds,
regardless of their level of trading concentration, do not use the customer complaint information to inform their trading decisions. Our findings suggest that pension
funds concentrate trading for reasons other than information advantage
7. Institutional Investor Trading Around Auditor’s Going Concern Modified Opinions: An Analysis of Mutual Funds and Pension Funds, with Marshall Geiger and Sami Keskek, Revise & Resubmit at International Journal of Auditing .
Abstract: Whether the auditor’s going concern modified opinion (GCMO) provides information to the market remains an important and unresolved empirical issue.
We contribute to this literature by examining trading behavior of mutual and pension funds around first-time GCMOs. We find that mutual funds increase their net selling
in the period just prior to the GCMO, but not at the GCMO announcement; however, they significantly increase trading volume at the announcement. In contrast, pension funds
appear to be less active in the pre-GCMO period and then significantly increase their net selling, but not trading volume, at the GCMO announcement. Both fund types engage
in higher net selling of subsequently bankrupt firms in the year preceding the GCMO and in the period after the GCMO announcement compared to subsequently viable firms.
Our results are robust to a battery of additional tests, including examining only GCMOs announced after earnings announcements, and controlling for the severity of GCMOs
as well as other news events during our announcement period. Our examination of trading behavior provides evidence on differences between these two groups in their pre-GCMO
trading and their response to the GCMO, and enables us to provide a robust assessment of any information content of GCMOs.
8. Aggregate Market Attention around Earnings Announcements, with William M. Cready , Revise & Resubmit at Asian Review of Accounting .
Abstract: This analysis is the first to explore the overall roles of the offsetting attraction and distraction influences of earnings news in shaping the level of
attention given to the equity market by market participants. In terms of overall attention we find that amount of earnings news arriving at the market is positively associated
with higher levels of market attention. Interestingly, however, after splitting the overall market as announcers and non-announcers, we document that news announcements in related
industries bring attention to the larger set of non-announcers while news in dissimilar industries distracts attention away from the non-announcers. We also find that the associated
earnings surprise brings attention to non-announcing firms (consistent with earnings news is relevant to overall market price movements). Moreover, we document that the distractive
aspects of earnings are, from an overall market perspective, less influential than the attention attracting aspects of earnings. Finally, we find that distraction effects are attenuated
in the financial crisis period. "
9. Insider Trading Around Auto Recalls: Does Investor Attention Matter? , with Sami Keskek and Omer Gokalp , Under Review .
Abstract: Using a comprehensive sample of customer complaints, we find that customer complaints predict future auto recalls and their financial consequences. Further, customer complaints are not
contemporaneously associated with stock returns but predict large negative abnormal stock returns during the period following the recall announcement date, suggesting that stock prices reflect the
information content of customer complaints with a delay. However, we find a positive relation between net insider selling and customer complaints prior to the
announcement of auto recalls. Our findings suggest that insiders’ informational advantage is at least in part due to investors’ limited attention to publicly
13. A New Perspective on the Earnings-Induced Volume: Participation Rate and Participation Magnitude Components of Trading Volume , with William M. Cready and Musa Subasi.
University of Richmond
Full List of Courses
ACCT 201: Introduction to Financial Accounting
ACCT 202: Introduction to Managerial Accounting
ACCT 431: Advanced Financial Accounting
Summer Business Institute 2017-2018
MBA Opening Residency 2015
University of Texas at Dallas
Independent (Full Responsibility)
ACC 2301: Introduction to Financial Accounting
ACC 2302: Introduction to Managerial Accounting
Southern Methodist University
Independent (Full Responsibility)
ECO 3301: Price Theory
Oklahoma State University
Independent (Full Responsibility)
MATH 2103: Business Calculus
Curriculum Vitae will open in a new tab. If it doesn't click here.
Department of Accounting
Robins School of Business
University of Richmond
1 Gateway Road
Office: Robins School of Business (BUS) 263
Office Hours: Tuesdays & Thursday 4:00-5:00pm or by appointment