<p>The study aims to examine whether and how board structure is associated with firm-level capital investment efficiency. Specifically, I investigate whether the size of a firm’s board is associated with the sensitivity of investments to the availability of internal funds. I hypothesize and find that board size is inversely related to investment-cash flow sensitivity. Larger boards seem to mitigate investment-cash flow sensitivity by reducing information asymmetry between managers and external capital providers. The study is important as it reveals that board structure influences the corporate investment policy, which is one of the most important firm economic decisions.</p>

Problem/ Relevance: Managerial myopia is an important issue of interests to academics, practitioners, and regulators as managers have been condemned for their obsession with short-term earnings and myopic investment decisions that sacrifice firms’ long term value for shareholders. This article contributes by examining whether the quality of firms’ internal controls over financial reporting (ICFR) is associated with managerial myopia. Research Objective/ Questions: The purpose of this study is to examine whether managers in firms reporting material internal control weaknesses (ICW) under Section 404 of the Sarbanes-Oxley Act (SOX) of 2002 engage in myopic behaviors more than those in firms without reporting ICW. Methodology: The study uses the logit regression model to investigate a sample obtained from Compustat for the period of 2005-2013. Major Findings: The study finds a positive association between internal control weaknesses reported by auditors under Section 404 of the SOX and managerial short-termism which is measured by the probability of cutting R&D expenses in the current year from the previous year. Implications: Whereas prior studies mostly examine the impact of internal controls on accounting quality, this study demonstrates the implication of internal controls beyond financial reporting quality by showing an association between internal control quality and managerial myopia. Future research may further investigate the association between firms’ financial reporting quality and managerial investment decisions.

SYNOPSIS This study investigates whether auditors' industry specializations are valued by the capital market. By using a quasi-experimental research design, we control for the confounding effects of auditor choices, which are often found in prior studies. Specifically, we examine whether an auditor's non-restating audit clients suffer collateral damage from restatements of the same auditor's other clients. If an auditor's industry specialization is valued by the market, the contagion effect should be greater for clients of industry specialist auditors. We find that the non-restating clients of city-level industry specialists whose other clients issue restatements experience −0.8 percent abnormal returns around restatement announcements. For national industry specialists, we find negative market reaction to the auditors' non-restating clients only when the restatements convey severe negative signals. Overall, the evidence is consistent with the notion that auditors' reputations as national- and city-level specialists are priced at a premium in the capital markets.

I examine whether the accelerated 10-K filing deadline affects earnings timeliness. The SEC's acceleration of the filing deadline of Form 10-K took effect in 2003. In proposing a new rule, the SEC asserted that the usefulness of the 10-K would increase because of the improved timeliness of the report. On the other hand, opponents claimed that the quality and accuracy of the report could be impaired. I compare timeliness of pre-acceleration period to that of post-acceleration period. Overall, my findings provide little support for the SEC's claim that the accelerated deadline would improve timeliness of periodic reports.