Brian Bushee

• Brian Bushee, Daniel Taylor, Christina Zhu (2023), The Dark Side of Investor Conferences: Evidence of Managerial Opportunism, The Accounting Review, 98 (4), pp. 1-22. 10.2308/TAR-2020-0624 Abstract

  Although the shareholder benefits of investor conferences are well-documented, evidence on whether these conferences facilitate managerial opportunism is scarce. We examine whether managers opportunistically exploit heightened attention around the conference to “hype” the stock. We find that (1) managers increase the quantity of voluntary disclosure leading up to the conference, (2) these disclosures are more positive in tone and increase prices to a greater extent than post-conference disclosures, and (3) these disclosures are more pronounced when insiders sell their shares immediately prior to the conference. In circumstances where pre-conference disclosures coincide with pre-conference insider net selling, we find evidence of a significant return reversal––large positive returns before the conference and large negative returns after the conference––and that the firm is more likely to be named in a securities class action lawsuit. Collectively, our findings are consistent with some managers hyping the stock prior to the conference.

• Brian Bushee, Matthew Cedergren, Jeremy Michels (2020), Does the Media Help or Hurt Retail Investors during the IPO Quiet Period?, Journal of Accounting and Economics, 69 (1). 10.1016/j.jacceco.2019.101261 Abstract

  We examine how the media influences retail trade and market returns during the “quiet period” that follows a firm’s IPO. We find that more media coverage during this period is associated with more purchases by retail investors and that such purchases are attention-driven, rather than information-based. Further, these retail trades are negatively associated with stock returns at the firm’s first earnings announcement post-IPO. Our results suggest that media coverage, combined with market frictions that limit price efficiency in the post-IPO period, leads to worse investing outcomes for retail investors.

• Brian Bushee, Ian Gow, Daniel Taylor (2018), Linguistic Complexity in Firm Disclosures: Obfuscation or Information?, Journal of Accounting Research.
• Jennifer Blouin, Brian Bushee, Stephanie Sikes (Forthcoming), Measuring Tax-Sensitive Institutional Ownership. Abstract

  We classify all institutional investors that file Form 13F over the period 1995–2013 as either “tax-sensitive” or “tax-insensitive” based on their trading behavior and portfolio characteristics. We examine tests of the effects of investor tax-sensitivity on portfolio rebalancing, price pressure, and fund performance, and compare our measure of tax-sensitive institutional investor ownership to three measures used in prior studies. We show that our measure of tax-sensitive investors dominates other measures in the portfolio rebalancing and price pressure tests. In the fund performance test, our measure of tax-sensitivity is the only one that finds that tax-sensitive investors have significantly lower returns on their portfolio stocks, which is a new result in the literature.

• Brian Bushee and Henry Friedman (2016), Disclosure Standards and the Sensitivity of Returns to Mood, The Review of Financial Studies, 29 (3), pp. 787-822. Abstract

  We provide evidence that higher-quality disclosure standards are associated with stock returns that are less sensitive to noise driven by investors’ moods. We identify return-mood sensitivity (RMS) based on the association between index returns and urban cloudiness, a source of short-term variation in mood. Based on a stylized model, we predict and find evidence consistent with higher-quality disclosure standards reducing RMS by tilting susceptible investors’ trades toward information and by facilitating sophisticated investors’ arbitrage. Our findings suggest that disclosure standards play an important role in enhancing price efficiency by reducing noise in returns, particularly noise related to investors’ short-term moods. 

• Brian Bushee, Joseph Gerakos, Lian Fen Lee (Working), Corporate Jets and Private Meetings with Investors.
• Brian Bushee, Ted Goodman, Shyam V. Sunder (Working), Financial Reporting Quality, Investment Horizon, and Institutional Investor Strategies.
• Brian Bushee, Mary Ellen Carter, Joseph Gerakos (2014), Institutional Investor Preferences for Corporate Governance Mechanisms, Journal of Management Accounting Research, 26 (2), pp. 123-149. Abstract

  We examine institutional investors’ preferences for corporate governance mechanisms. We find little evidence of an association between total institutional ownership and governance mechanisms. However, using revealed preferences, we identify a small group of "governance-sensitive" institutions that exhibit persistent associations between their ownership levels and firms’ governance mechanisms. We also find that firms with a high level of ownership by institutions sensitive to shareholder rights have significant future improvements in shareholder rights, consistent with shareholder activism. Further, we find that factors describing the characteristics of institutions’ portfolios are correlated with governance preferences. Large institutions, those holding a large number of portfolio stocks, and those with preferences for growth firms are more likely to be sensitive to corporate governance mechanisms, suggesting those mechanisms may be a means for decreasing monitoring costs and may be more essential for firms with a high level of growth opportunities. Finally, our results suggest that common proxies for governance sensitivity by investors (e.g., legal type, blockholding) do not cleanly measure governance preferences.

• Brian Bushee, Michael Jung, Greg Miller (Working), Do Investors Benefit from Selective Access to Management?.
• Brian Bushee (2012), Discussion of “Financial reporting opacity and informed trading by international institutional investors”, Journal of Accounting and Economics, 54 (2-3), pp. 221-228. Abstract

  Maffett (this issue) finds that the opacity of a firm’s information environment affects the degree of informed trade by institutional investors. In this discussion, I address the key research design choices involved in studies of opacity and informed trading and I relate the results to the literature on institutional investor performance and stock selection. I suggest that future work investigate the role of discretionary opacity in facilitating informed trade as part of the cost–benefit trade-off of the opacity decision maker (e.g., managers, analysts); test the relative effects of opacity on private information, liquidity, and price correction speed; and examine how institutional investors select which opaque firms to hold.

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Past Courses

• ACCT7470 - Fin Disclosure Analytics

  This course focuses on the analysis of financial communications between corporate managers and outsiders, including the required financial statements, voluntary disclosures, and interactions with investors, analysts, and the media. The course draws on the findings of recent academic research to discuss a number of techniques that outsiders can use to detect potential bias or aggressiveness in financial reporting. FORMAT: Case discussions and lectures. Comprehensive final exam, group project, case write-ups, and class participation.

• ACCT7471 - Fin Disclosure Analytics

  This course focuses on the analysis of financial communications between corporate managers and outsiders, including the required financial statements, voluntary disclosures, and interactions with investors, analysts, and the media. The course draws on the findings of recent academic research to discuss a number of techniques that outsiders can use to detect potential bias or aggressiveness in financial reporting. FORMAT: Case discussions and lectures. Comprehensive final exam, group project, case write-ups, and class participation. This course is for Wharton Executive MBA students only.

• ACCT9400 - Research in Acct I

  This is Part I of a theoretical and empirical literature survey course covering topics that include corporate disclosure, cost of capital, incentives, compensation, governance, financial intermediation, financial reporting, tax, agency theory, cost accounting, capital structure, international financial reporting, analysts, and market efficiency.

• Christian R. and Mary F. Lindback Award for Distinguished Teaching at the University of Pennsylvania, 2015
• Faculty Marshall at MBA Graduation, 2015
• Excellence in Teaching Award (Top 10 MBA course evals), 2014
• Teaching Commitment and Curricular Innovation Award, 2014
• Faculty Marshall at MBA Graduation, 2011
• University of Michigan Ross School of Business Ph.D. Distinguished Alumni Award, 2011
• Excellence in Teaching Award: Elective Curriculum (Top 10 MBA course evals), 2010
• Excellence in Teaching Award (Top 8 MBA course evals), 2009
• Helen Kardon Moss Anvil Teaching Award, 2009
• Finalist – Helen Kardon Moss Anvil Teaching Award, 2008
• Faculty Marshall at MBA Graduation, 2008
• Excellence in Teaching Award (Top 8 MBA course evals), 2007
• Finalist – Helen Kardon Moss Anvil Teaching Award, 2004
• Tough, But I’ll Thank You in 5 Years MBA Teaching Award, 2001
• AAA Competitive Manuscript Award, 1998
• Dykstra Teaching Award, 1995
• Coopers and Lybrand Fellowship, 1993
• National Doctoral Fellowship Program Fellowship, 1992
• Phi Beta Kappa, 1989

• How Some Investors Get Special Access to Companies, The Wall Street Journal - 09/27/2015
• Shooting the messenger: Quarterly earnings and short-term pressure to perform, Economist Intelligence Unit - 08/25/2010
• Lehman's Demise and Repo 105: No accounting for deception, Economist Intelligence Unit - 03/01/2010
• FDIC to Set Fate of Securitized Assets, American Banker - 11/12/2009
• Revenge of the Accounting Authorities?, Mergers & Acquisitions Report - 08/17/2009
• Is It U.S. GAAP or IFRS At U.S. Universities?, Financial Executive - 06/01/2009
• Mark-to-market changes seen reassuring auditors, Reuters News - 04/02/2009
• Paying the Price: Satyam's Auditors Face Plenty of Questions, Hyderabad News Network - 01/23/2009
• The earnings maze: One-time charges good investor information or quarterly performance spin?, The Atlanta Journal - Constitution - 09/08/2008
• New rules can turn a loss into a gain, The Philadelphia Inquirer - 05/18/2008
• How to talk to investors through the media, The Star (Malaysia) - 02/11/2008
• The HBR List: Breakthrough Ideas for 2006, Harvard Buisness Review - 02/01/2006
• Struggling To Get Attention, Financial Executive - 01/01/2006
• Hey! Look at Me!, CFO Magazine - 10/06/2005
• How to make $4.7 million one penny at a time - iVoice is turning its stock into currency to pay vendors, others for services, The Star-Ledger - 08/05/2005
• Analysis: Time Warner to pay $300 million in penalties to the SEC to settle charges that it inflated AOL's revenues, NPR: All Things Considered - 03/21/2005
• Ernst & Young faces accounting fraud lawsuit, Baltimore Business Journal - 03/11/2005
• Small is Beautiful, The National Interest - 10/01/2004
• Small companies going private after law, The Birmingham News - 09/09/2004
• Small has its place in fund management, International Herald Tribune - 11/08/2003
• In a Land of Giants, Little Funds Find an Audience, The New York Times - 11/02/2003
• Forensic Investing: An Accountant's Proven Formula For Dodging Loser Stocks -- And Finding Winners, SmartMoney - 08/01/2003
• DISCLOSURE HELPS SMALL STOCK TRADE RULE INCREASES DEALS UNDER $10,000 BY 10 PERCENT, Seattle Post-Intelligencer - 07/12/2001
• Keeping an Ear on Wall St.; Corporate Webcasts Earn a Growing Audience of Investors, The Washington Post - 06/14/2001
• Dangerous Best Practice: Is More Transparency Always Better?, The World Bank Group: Interest Bearing Notes Newsletter - 04/01/1999

Knowledge @ Wharton

• How Dynamic Electricity Pricing Can Improve Market Efficiency, Knowledge @ Wharton - 11/12/2024
• Is Algorithmic Management Too Controlling?, Knowledge @ Wharton - 11/12/2024
• The Hidden Cost of AI Energy Consumption, Knowledge @ Wharton - 11/12/2024
• Charitable and Political Giving | Pinar Yildirim, Knowledge @ Wharton - 11/12/2024
• The Future of Banking, Knowledge @ Wharton - 11/11/2024
• Election Statistics, Knowledge @ Wharton - 11/06/2024
• Robots Are Taking Over Low-skilled Jobs — and Changing Votes, Knowledge @ Wharton - 11/05/2024
• Crypto Politics: Liberals’ and Conservatives’ Confidence in Cryptocurrencies, Knowledge @ Wharton - 11/05/2024
• Leadership and Elections | Mike Useem, Knowledge @ Wharton - 11/05/2024
• Automation Is Harming Low-skilled Workers and Possibly Their Voting Preferences, Knowledge @ Wharton - 11/01/2024