Research

Publication

• “New Accounting Standards and the Performance of Quantitative Investors” with Travis Dyer and Nicholas Guest
  • Journal of Accounting and Economics, 2025
  • Abstract: We examine quantitative investors’ ability to navigate a common and occasionally material change to the financial data generating process: new accounting standards. Returns of quantitative mutual funds temporarily decrease relative to funds that rely more heavily on human discretion following the implementation of a few standards that significantly change key financial statement variables; however, other standards do not appear to have a differential effect. Our result is stronger for quantitative funds using more accounting terminology in their prospectuses and using value strategies, which leverage accounting signals. Excess portfolio turnover following the implementation of accounting standards appears to be a driving factor of the quant underperformance. Additional evidence connects the fund-level results to the specific stocks that were affected by the accounting standards. Overall, our results suggest quant funds are generally proficient at adapting to accounting changes, although material changes occasionally put them at a temporary disadvantage relative to discretionary investors.
• “Audit Partners’ Cultural Heritage and Audit Outcomes” with Inder Khurana, Bing Li, and Kelvin Yeung
  • Journal of Accounting and Economics, Forthcoming
  • Abstract: Building on economic theories of cultural transmission, we examine how audit partners’ cultural trust influences audit outcomes. Based on the “presumptive doubt” perspective of professional skepticism, we propose that audit partners from trusting cultures are more likely to rely on management’s assertions, while still exercising a high degree of caution and not naively trusting management. Consistent with our prediction, we find that audit partners from trusting cultures commit fewer Type I errors when issuing going concern opinions, without significantly increasing Type II errors. The reduction in Type I errors is primarily found when audit partners normally tend to be more conservative, and it is attenuated when management is less trustworthy. At the same time, audit partners from trusting cultures are also associated with more within-GAAP earnings management, suggesting that increased trust entails a cost. Collectively, our findings offer new insights into how cultural trust affects the assurance of accounting information.

Working Papers

• “Real Earnings Management and Innovation Externalization: Evidence from Corporate Venture Capital”
  • Dissertation
• “Media Attention to ESG Controversies and Earnings Announcements” with Sanjeev Bhojraj and Emma Wang