Three essays in accounting

This dissertation consists three essays. In the first essay, we consider the consequences of inflation and foreign exchange accounting policies including those contained in accounting standards on the value relevance of bottom-line accounting numbers. Policies are identified that achieve "efficient accounting" in the sense that aggregate (comprehensive) earnings and book values are sufficient for an accounting representation of equity value. The linear relations that emerge provide predictions on capitalization coefficients that help explain results of empirical inquiries. As well, our analysis provides a theoretical foundation for policies contained in accounting standards that contributes to the resolution of controversies such as that concerning foreign exchange accounting.; In the second essay, we study the role that institutions play in the cost of capital effect of information asymmetry. First, employing a classification scheme by Bushee (1998) based on turnover and diversification, our findings in terms of abnormal returns suggest that the so-called "transient" institutions (high turnover, high diversification) appear to trade on both the idiosyncratic and systematic components of private information similar to insiders. The evidence is mixed on dedicated institutions (low turnover, low diversification) and quasi-indexers (low turnover, high diversification) do not appear to trade on private information. Second, extending the analysis to a setting where R&D is used to proxy for information asymmetry rather than earnings quality corroborates the above findings on the presence of information-based trading by three institutional classes. However, in contrast to the evidence on the systematic component of earnings quality, asymmetric information risk associated with R&D appears to be diversifiable.; The purpose of my third essay is trying to test whether open-market stock repurchase announcements are still a signaling event. Using tender-offers as a bench mark, the study look at open-market repurchases from several perspectives. Evidence includes short-term and long-term market reactions, accounting fundamentals, insider trading behavior, and analysts' forecast revisions. The consensus of the evidence is that: although tender-offer repurchase announcements are still a signaling device, open-market repurchases have little if any signaling content. Open-market repurchase announcements appear to provide an incentive for managers to conduct earnings management.