SYNOPSIS This paper provides empirical evidence that the proportion of shareholder votes against the ratification of the auditor is informative to investors' perception of the auditor-client relationship. We find that lower shareholder approval of the auditor is associated with a negative market reaction to the 8-K announcement of the auditor ratification vote. Additionally, we find that the market reaction is more negative when a high level of auditor dissatisfaction is likely a surprise to investors, such as when audit and auditor characteristics suggest that the auditor provides high audit quality. We provide confirming evidence that withheld votes are associated with a higher likelihood of a future auditor dismissal and that the market reaction to the dismissal is more positive for firms with lower shareholder approval of the auditor. JEL Classifications: G34; G30; M40.

SYNOPSIS We contribute to the literature investigating the market reaction to firms' small positive earnings surprises following the large accounting scandals in the early 2000s. While prior studies provide evidence that the market no longer rewards firms for meeting-or-beating (MBE) in the post-scandal period, their efforts to address the rationality of the market response invite additional analysis. We demonstrate that the change in the market reaction to MBE is consistent with temporary over-skepticism. Specifically, we show that the market does not differentiate between MBE achieved operationally versus through earnings management, despite previously documented differences in future performance. We explore the relation between MBE, earnings management, and future performance in the post-scandal period and find evidence of mispricing consistent with the market underreacting to small positive earnings surprises earned by firms that do not appear to have manipulated earnings to MBE. Our study provides evidence of a potential market anomaly, which should be of interest to financial managers, researchers, and investors, and speaks to capital market regulation. Data Availability: Data are available from sources identified in the paper.

SYNOPSIS We contribute to the literature examining defined benefit pension plan asset allocation in the post-SFAS 132(R) reporting environment. SFAS 132(R) requires firms to disclose the expected annual pension benefit payments, thus providing a direct way to measure pension plan payout horizon. Controlling for previously documented determinants of pension asset allocation, we find evidence that a payout horizon measure constructed from SFAS 132(R) disclosures is associated with the firm's pension investment decisions. Specifically, we document that firms with a greater proportion of pension obligations due in the short horizon allocate a smaller portion of their plan assets to equity investments. Additionally, we provide evidence that our proposed measure explains asset allocation over and above previously used proxies representing plan horizon, confirming the usefulness of the 132(R) mandated disclosures.

We provide evidence that the prior quarter earnings number is an important and informative benchmark that is relatively unexplored in the accounting literature. Our analyses suggest that managers appear to avoid negative earnings changes relative to the prior quarter. Moreover, we find that even after controlling for the information contained in other frequently used benchmarks (i.e., analysts' forecasts and earnings from the same quarter of the prior year), changes over the prior quarter's earnings are associated with stock returns. We find that this result is stronger post-Regulation FD and XBRL, perhaps as a result of the improved information environment. We also find that the informativeness of prior quarter earnings is greater for firms with less volatile earnings and that meeting-or-beating prior quarter earnings are associated with future performance.

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