I examine how a firm's accounting methods can be influenced by the choices of other firms, which I label contagion. I model accounting method choice as a combination of intrinsic propensities to adopt a method and contagion effects. I predict contagion of accounting methods occurs for two reasons: (1) adoption decisions of other firms are informative for the adoption decision, and (2) prior adoptions change the net benefits of the decision. I test these predictions in the stock option expensing setting where firms had the choice to use the intrinsic or fair value method. Using a firm-level diffusion model, I document evidence consistent with my predictions.

The expectations management literature has so far focused on firms meeting the analyst consensus forecast—the expectations of analysts as a group—at earnings announcements. In this study we argue that investors may use individual analyst forecasts as additional benchmarks in evaluating reported earnings because the consensus forecast underutilizes private information contained in individual analyst forecasts. We predict that measures reflecting such private information have incremental explanatory power over the consensus forecast for the market's reaction to earnings news. We find results consistent with this prediction by examining two measures: (1) the percentage of individual forecasts met and (2) meeting the key analyst forecast. We extend the literature by documenting the role of individual analyst forecasts in investors' evaluations of reported earnings. JEL Classifications: G10; G11; G17; G14; G24. Data Availability: Data are publicly available from the sources identified in the paper.

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In this study, we examine GAAP-compliant and noncompliant revenue accruals among non-fraud, non-error restated firm-years. The restatement setting isolates and quantifies managerial discretion in the revenue recognition process and provides insight into the role of GAAP compliance in producing predictive information. We find consistent evidence that non-GAAP-compliant revenue accruals are predictive of future cash receipts and total sales. We find that this main result is strongest for accrued revenues rather than deferred revenues. We find additional evidence that non-GAAP-compliant revenue accruals are generally more or similarly predictive of future cash receipts or total sales when compared to GAAP-compliant revenue accruals for both restated and non-restated firm-years.Our findings suggest that managers' discretion provides predictive information in the restatement setting, where managers' judgment is likely most prevalent. We also find that ex-post compliance with US GAAP does not isolate and remove less predictive information. Last, we fail to find reliable evidence that managers in our sample use their discretion over revenue accruals to smooth revenues or to meet or beat revenue and earnings benchmarks.

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