Capital markets research


This part of the book focuses on capital markets research, which is arguably the area in which academic research has most contributed to our understanding of real-world accounting phenomena. One goal of this part is to provide a solid introduction to classical ideas and papers related to capital markets research in accounting.

  • 10  FFJR introduces the idea of efficient capital markets and focuses on Fama et al. (1969), one of the earliest event studies in capital markets research.
  • 11  Ball and Brown (1968) and 12  Beaver (1968) cover two seminar papers, Ball and Brown (1968) and Beaver (1968), respectively. While the first three chapters of this part study papers from more than 50 years ago, we believe that they provide an excellent introduction to foundations of research design that remain relevant to this day.
  • 13  Event studies builds on prior chapters in providing more depth on event studies, including coverage of how event studies have evolved since Fama et al. (1969).
  • 14  Post-earnings announcement drift examines post-earnings announcement drift, a much-studied anomaly in the pricing of accounting information in capital markets.
  • 15  Accruals goes deeper into the measurement of accruals, a critical element of financial accounting. This chapter also provides an opportunity to explore simulation analysis in more detail.
  • 16  Earnings management explores earnings management, which has been the focus of significant body of accounting research over several decades. This chapter also provides an opportunity to understand issues related to measurement in research and the power of statistical tests.