Simon Business School
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Faculty Profile

Charlie E Wasley
Clinical Professor Joseph and Janice Willett Distinguished Scholar; Area Coordinator, Accounting
Phone: 585.275.3362
Office: 3-160E Carol Simon Hall

Bio

Associate editor of the Journal of Accounting and Economics. Previously on the faculty of Washington University in St. Louis

Teaching Interests

Corporate financial reporting.

Research Interests

The role of accounting information in capital markets encompassing the rational pricing of earnings, cash flows, and accruals; measuring real activity management; the role of management earnings forecasts in the bond market; information externalities in capital markets; the role of materiality in firms’ disclosure decisions; and econometric and methodological issues in accounting research.

Professional History

Clinical Professor Joseph and Janice Willett Distinguished Scholar; Area Coordinator, Accounting
University of Rochester Simon School of Business, Rochester NY
July 2009 -
Associate Professor of Accounting, Joseph and Janice Willett Distinguished Scholar; Area Coordinator
University of Rochester Simon School of Business, Rochester NY
July 2007 - June 2009
Associate Professor of Accounting, Area Coordinator
University of Rochester Simon School of Business, Rochester NY
2001 - 2007
Visiting Research Associate Professor of Accounting
University of Rochester Simon School of Business, Rochester NY
1999 - 2001
Associate Professor of Accounting
University of Iowa, Iowa City, Iowa
1997 - 2001
Visiting Associate Professor of Accounting
University of Iowa, Iowa City, Iowa
1996 - 1997
Assistant Professor of Accounting
Washington University In St. Louis, St. Louis MO
1987 - 1996

Education

University of Iowa - 1987
Ph D
Accounting
SUNY at Binghamton - 1982
MS
Accounting
SUNY at Binghamton - 1981
BS
Business Administration

Publications

2011
Information Externalities along the Supply Chain: The Economic Determinants of Suppliers' Stock Price Reaction to Their Major Customers' Earnings Announcements
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Contemporary Accounting Research
Issue: Winter 2011
2011
The Effect of R&D Inputs and Outputs on the Relation between Uncertainty of Future Operating Performance and R&D Expenditures
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting, Auditing and Finance
Issue: Winter 2011
2010
The Joint Effects of Materiality Thresholds and Voluntary Disclosure Incentives on Firms' Disclosure Decisions
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting and Economics
Issue: 2010
2010
The Joint Effects of Materiality Thresholds and Voluntary Disclosure Incentives on Firms’ Disclosure Decisions
Journal/Publisher/Proceedings Publisher: Journal of Accounting and Economics
2007
Regression Based Tests of the Market Pricing of Accounting Numbers: The Mishkin Test and Ordinary Least Squares
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting Research
Issue: December 2007
2006
The Role of Self-Regulation in Corporate Governance: Evidence from the Netherlands
Journal/Publisher/Proceedings Publisher: Advances in Corporate Finance and Asset Pricing
Issue: 2006
2006
An Analysis of the Theories and Explanations Offered for the Mis-Pricing of Accruals and Accrual Components
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting Research
Issue: May 2006
2006
Why do Managers Voluntarily Issue Management Cash Flow Forecasts
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting Research
Issue: May 2006

Current Research Programs

Economic Determinants of the Decision to Use Fair Value Accounting Numbers in Pension Plan Accounting
This paper examines the economic determinants of firms' voluntary adoption of mark-to-market pension accounting.
Evidence on the Role of Management Earnings Guidance in the Bond Market
This paper analyzes how earnings guidance effects bond prices.
How do Debt/Credit Analysts use the Information Contained in Management Earnings Forecasts?
This paper analyses how debt and credit analysts use earnings forecast information.
How Do Firms’ Disclosure Practices Evolve in Response to the Bankruptcy Announcement of an Industry Competitor Firms?
This paper examines how a firm's voluntary disclosure process responds to a bankruptcy of a firm in its industry (i.e., a competitor's bankruptcy).
Influential Observations in Accounting Research
This paper examines alternative approaches to handle influential observations in accounting research and how inferences are affected by that choice.
Macroeconomic Uncertainty and Management Earnings Forecasts
This study develops and tests hypotheses about how macroeconomic uncertainty affects the issuance and characteristics of management earnings forecasts (MFs). Our findings provide insight into the role macroeconomic uncertainty plays in influencing managers’ decision to issue MFs as well as the characteristics of the MFs that they issue. We measure macroeconomic uncertainty using the CBOE Volatility Index (VIX) and find that during periods of high market uncertainty there is a significant decrease in the likelihood of MF issuance. This finding is consistent with managers associating higher costs with providing forward-looking information to investors and analysts as market-wide uncertainty increases. We also find that during periods of high market-level uncertainty managers tend to issue fewer good and bad news MFs, but more neutral news MFs. The level of market-wide uncertainty also affects the characteristics of the MFs that are issued based on the finding that managers shift to earnings preannouncements and to shorter-horizon, but more precise, MFs. Further tests show that regulatory changes in the early 2000s (REG FD and Sarbanes-Oxley) increased the costs managers associate with providing MFs, thereby increasing the sensitivity of MF issuance to macroeconomic uncertainty.
Measuring Real Activity Management
Much recent research focuses on earnings management via the manipulation of real activities (hereafter real earnings management or REM). While tests of REM hinge critically on the underlying model of abnormal real activities there is no systematic evidence on the properties of commonly used REM measures or of the specification of tests based on them. This study provides such evidence by documenting which REM measures lead to well-specified tests, and which do not, across a wide variety of settings encountered in accounting research. The results indicate that the traditional REM measures used (to-date) in the literature are severely mis-specified in that their Type I error rates differ significantly from nominal significance levels (e.g., 1% or 5%). To address such mis-specification we analyze alternative REM measures based on performance-matching. While performance-matched REM measures are not well-specified in each and every setting (no REM measure) the weight of the evidence suggests they will provide better-specified tests, compared to traditional REM measures, across a wide variety of settings. To further document the importance of our analysis we replicate recent research examining whether managers manipulate real activities to avoid reporting losses. This replication illustrates the importance and benefits of performance matching and shows that inferences change when performance-matched REM measures are used. Our evidence facilitates a keener interpretation of the inferences drawn in prior REM studies as well as informing future researchers on the trade-offs involved in measuring REM. Overall, the findings indicate that performance-matched REM measures provide a more reliable basis from which to draw inferences about REM than traditional measures. In some settings, however, performance-matched REM measures (as well as traditional REM measures) may provide conservative tests of REM-related hypotheses.
Should Management Earnings Guidance be Pooled? Classifying Management Earnings Guidance into Capital Market, Opportunistic, and Disclose or Abstain Rationales: Implications for Research
Prior research generally argues that managers issue management earnings forecasts (MFs) to secure capital market benefits (i.e., reduce information asymmetry between managers and investors to lower a firm’s cost of capital), to reduce the firm’s litigation costs, or to allow managers to trade opportunistically in their firm’s stock. We discuss and test whether some MFs are issued because managers have an affirmative duty under Rule 10b-5 of the Securities Acts to disclose all material information or to abstain from trading in their firm’s securities. Four sets of tests support our conjecture that managers issue some MFs to comply with their duty under Rule 10b-5. Since prior MF studies have typically ignored the alternative explanation that managers issue some MFs to comply with disclose or abstain obligations the inferences drawn from such studies about managerial incentives to issue MFs likely overstate the economic significance of the variables used to capture capital market or opportunistic incentives for MF disclosure.
The Persistence of the Accrual Anomaly
This study examines the economic determinants of the time-series and cross-sectional behavior of the accounting accrual anomaly.
The Uniqueness of Returns to Accrual-Related Anomalies
This study examines how the abnormal returns associated with various accounting related accrual anomalies overlap with one another and thus the extent to which the returns to various anomalies are over-stated/mismeasured.
The Use of Non-GAAP Measures in Executive Compensation Plans
This papers develops and tests hypotheses about the use of non-GAAP measures in executive compensation plans including: 1) What are the economic determinants of firms' adoption of non-GAAP measures in comp plans? 2) Do non-GAAP measures or plans heavily tilted toward non-GAAP measures lead to higher levels of future performance and/or improved/more efficient investment decisions? 3) Is there better pay for performance sensitivity after adoption of non-GAAP measures?
 
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