Simon Business School

Faculty Profile

Charlie E Wasley
Full Professor
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 which encompasses: the rational pricing of firm-level earnings, components; the information content of aggregate earnings for macroeconomic measures such as aggregate market returns and GDP; measuring real activity management; management guidance and earnings asymmetric timeliness; demand for management guidance in the bond market; consequences of earnings guidance cessation; information externalities in capital markets; and econometric and methodological issues in accounting research.

Professional History

Full Professor
University of Rochester Simon Business School
September 2016 -
Clinical Professor Joseph and Janice Willett Distinguished Scholar; Area Coordinator, Accounting
University of Rochester Simon School of Business, Rochester NY
July 2009 - September 2016
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

A Unified Framework of Management Earnings Forecasts: Disclose or Abstain, Voluntary, and Opportunistic Incentives
Contribution Type: Journal Article, Academic Journal
2014
Macroeconomic uncertainty and management earnings forecasts
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Accounting Horizons
2014
The disclose or abstain incentive to issue management guidance
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Law, Finance, and Accounting, Forthcoming
2013
Aggregate uncertainty and the issuance of management earnings forecasts
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Working paper, Rochester University
2013
Soft-Talk Management Cash Flow Forecasts: Bias, Quality, and Stock Price Effects*
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Contemporary Accounting Research
Volume: 30
Issue: 2
2012
Should management earnings guidance be pooled? Classifying management earnings guidance into capital market, opportunistic, and disclose or abstain rationales: Implications for research
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Simon School Working Paper No. FR 12-03
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
Information Externalities along the Supply Chain: The Economic Determinants of Suppliers’ Stock Price Reaction to Their Customers’ Earnings Announcements*
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Contemporary Accounting Research
Volume: 28
Issue: 4
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
2011
The effect of research and development (R&D) inputs and outputs on the relation between the uncertainty of future operating performance and R&D expenditures
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting, Auditing & Finance
Volume: 26
Issue: 1
2010
A unified framework of management earnings forecasts: voluntary, disclose or abstain, and opportunistic incentives
Journal/Publisher/Proceedings Publisher: Working paper, University of Rochester
2010
Aggregate uncertainty and management earnings forecasts
Contribution Type: Book, Chapter in Scholarly Book-New
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
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting and Economics
Volume: 49
Issue: 1
2010
The Joint Effects of Materiality Thresholds and Voluntary Disclosure Incentives on Firms’ Disclosure Decisions
Journal/Publisher/Proceedings Publisher: Journal of Accounting and Economics
2009
The effect of R&D inputs and outputs on the relation between the uncertainty of future operating performance and R&D expenditures
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Simon School Working Paper No. FR 09-05
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
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
Volume: 45
Issue: 5
2007
Soft-talk management cash flow forecasts: Verifiability, credibility and stock price effects
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Simon School Working Paper No. FR 06-01
2006
An analysis of the theories and explanations offered for the mispricing of accruals and accrual components
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting Research
Volume: 44
Issue: 2
2006
Forecast verifiability and credibility: Evidence from management cash flow forecasts
Journal/Publisher/Proceedings Publisher: Working paper from the University of Rochester
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
Why do managers voluntarily issue cash flow forecasts?
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting Research
Volume: 44
Issue: 2
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
2005
Performance matched discretionary accrual measures
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of accounting and economics
Volume: 39
Issue: 1
2005
The role of self-regulation in corporate governance: Evidence and implications from the Netherlands
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of corporate finance
Volume: 11
Issue: 3
2004
Income Conservatism in the US Technology Sector
Contribution Type: Journal Article, Academic Journal
2004
Research design issues and related inference problems underlying tests of the market pricing of accounting information
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Simon School Working Paper No. FR 04-15
2004
The role of self-regulation in corporate governance: evidence and implications from The Netherlands
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: SSRN Working Paper Series
2001
Corporate governance in Nederland: Governance en financiele prestaties
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Maandblad voor Accountancy en Bedrijfseconomie
Volume: 75
2001
Information externalities associated with earnings pre-announcements
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Unpublished working paper, Simon School of Business, Rochester, NY
1999
Share price responses to technology firms’ negative quarterly earnings surprises
Journal/Publisher/Proceedings Publisher: Working Paper, University of Rochester, Rochester
1999
Stock-based incentive contracts and managerial performance: the case of Ralston Purina Company
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of financial economics
Volume: 51
Issue: 2
1997
Regression-Based Tests of the Market Pricing of Accounting Numbers
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting Research
Volume: 45
Issue: 5
1996
Estimating earnings response coefficients: Pooled versus firm-specific models
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting and Economics
Volume: 21
Issue: 3
1996
Measuring abnormal daily trading volume for samples of NYSE/ASE and NASDAQ securities using parametric and nonparametric test statistics
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Review of Quantitative Finance and Accounting
Volume: 6
Issue: 3
1996
Stock Price Behavior Associated with Post-1974–75 LIFO Adoptions Announced at Alternative Disclosure Times
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting, Auditing & Finance
Volume: 11
Issue: 4
1996
Estimating Response Coefficients: Pooled Versus Firm-Specific Models
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting and Economics
Volume: 21
Issue: 3
1995
Can we implement research on stock trading rules?
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: The Journal of Portfolio Management
Volume: 21
Issue: 2
1995
Is research on trading rules implementable? The case of short-term contrarian strategies
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: The Case Of Short-Term Contrarian Strategies. Simon School of Business Working Paper FR
1994
The incidence of accounting changes and characteristics of firms making accounting changes
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Accounting Horizons
Volume: 8
Issue: 2
1993
Cynthia J. Campbell Universi/y of Massachuse//s, Amhers/, MA 01003. USA
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Financial Economics
Volume: 33
1993
EXECUTIVE-COMPENSATION-THE CASE OF RALSTON-PURINA-COMPANY
Contribution Type: Conference Proceeding
Volume: 48
Issue: 3
1993
j [; race Pownall Emory University Charles Wasley Washington University Gregory Waymire
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: THE ACCOUNTING REVIEW
Volume: 66
Issue: 4
1993
Measuring security price performance using daily NASDAQ returns
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Financial Economics
Volume: 33
Issue: 1
1993
Sensitivity of Multivariate Tests of the Capital Asset-Pricing Model to the Return Measurement Interval
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: The Journal of Finance
Volume: 48
Issue: 4
1993
The stock price effects of alternative types of management earnings forecasts
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Accounting Review
1992
A further examination of the economic consequences of SFAS No. 2
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting Research
1990
The association between environmental performance and environmental disclosure in annual reports and 10Ks
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Advances in public interest accounting
Volume: 3
Issue: 2
1989
Measuring security price performance in size-clustered samples
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Accounting Review
1989
The relation between the return interval and betas: Implications for the size effect
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Financial Economics
Volume: 23
Issue: 1
1989
The relation between the return interval and betas: Implications for the size effect
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Financial Economics
Volume: 23
Issue: 1
1987
Bias in Estimation of Systematic Risk and its Implications for Tests of the CAPM
Contribution Type: Book, Scholarly-New
Journal/Publisher/Proceedings Publisher: Salomon Brothers Center for the Study of Financial Institutions, Graduate School of Business Administration, New York University
Issue: 404
1987
Bias in Estimation of Systematic Risk and its Implications for Tests of the CAPM
Contribution Type: Book, Scholarly-New
Journal/Publisher/Proceedings Publisher: Salomon Bros. Center for the Study of Financial Institutions, Graduate School of Business Administration, New York University
1987
Differential information content of earnings announcements: theoretical and empirical analysis of the role of information transfers
Journal/Publisher/Proceedings Publisher: University of Iowa

Current Research Programs

Bond/Debt Market Demands for Management Guidance
This paper explores how managers alter the nature of their voluntary management guidance as they become more reliance on debt versus equity financing.
Economic Determinants of Changes in the Aggregate Earnings-Returns Relation over Time
Prior research documents a negative contemporaneous relation between earnings changes and stock returns at the aggregate level. We find that the aggregate earnings-return relation turns significantly positive in recent years (1992-2013). As explanations for that shift we test over-time shifts in the properties of firm-level earnings and the magnitude of inflation rates. To do so we use the Bureau of Economic Analysis’ (BEA) corporate profits series as an alternative measure of aggregate earnings because it is unaffected by changes in GAAP measurement rules and is adjusted for changes in price levels. While changes in both aggregate GAAP earnings and the BEA’s corporate profits series exhibit a significant negative (positive) relation with aggregate returns in the 1970-1991 (1992-2013) period, changes in aggregate GAAP earnings have incremental explanatory power for aggregate returns beyond the BEA’s corporate profit measure in the 1992-2013 period. Additional analysis reveals that such incremental explanatory power stems from GAAP earnings’ inclusion of non-operating items. We also find that a shift over time in inflation, as well as in the proportion of loss-making firms, contribute to inter-temporal variation in the aggregate earnings-returns relation. The effect of changes in the properties of GAAP earnings and inflation rates over time on the aggregate earnings-return relation is new to the literature.
Evidence on the Role of Management Earnings Guidance in the Bond Market
This paper analyzes how earnings guidance effects bond prices.
Firm and Investor Response to Earnings Guidance Stoppage
This paper studies the actions taken by managers, analysts, and investors in response to the information void created when firms cease proving earnings guidance.
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.
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.
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.
The Effect of Using Non-GAAP Earnings Measures in Executive Compensation Contracts on Income Statement Reporting Decisions
We investigate how use of Non-GAAP earnings measures in executive compensation plans effects managers’ income statement reporting/classification decisions. We predict and find that use of such measures (often called pro-forma earnings) leads managers to shift losses from core earnings to non-core earnings and that such firms are more likely to report special items. We also find that restatements of special items are more highly associated with use of non-GAAP executive compensation measures. The findings are robust to a variety of sensitivity/robustness tests including use of a propensity score-matched sample.
The Mix of Management Guidance
This study examines the economic factors that determine the mix of the different types of voluntary management guidance issued across firms and through time.
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?
Voluntary Disclosure and Measured Asymmetric Timeliness
We document how voluntary disclosure of management earnings forecasts (MFs) affects the asymmetric timeliness of earnings measured using the Basu (1997) model. The rationale is that MFs affect the extent to which prices lead earnings, which in turn affects the asymmetric timeliness coefficient of the Basu (1997) model. We document the magnitude of the effect by examining MF subsamples formed based on the basis of horizon and news content. We find that for firms issuing MFs of future year earnings (forward-looking MFs), measured asymmetric timeliness is insignificant. In contrast, firms issuing MFs for periods that overlap with the Basu model’s return estimation interval display no evidence of reduced asymmetric timeliness. Further analysis reveals that the weaker asymmetric timeliness of firms issuing forward-looking MFs is concentrated in those that convey more negative news. Asymmetric timeliness is also absent for book-based (i.e., financial statement) measures of asymmetric timeliness, which is consistent with measurement concerns related to the effect of forward-looking MFs on stock returns. Additional tests reveal that the effect of forward-looking MFs on asymmetric timeliness is correlated with the fundamental determinants of conservatism. Our results document how managers’ MF disclosure decisions affect measured asymmetric timeliness separately and distinctly from managerial actions that influence the recognition of news in earnings via the effects of the conservatism imbedded in accounting rules.
Go to the top of the page
Get more information about Simon
Apply to Simon