Accounting is not only about Debits and Credits

The main thread running through my PhD research is information uncertainty (measurement, communication, effects) in financial reporting. The events of recent years served as a strong reminder of how uncertainty can affect global business operations, and challenged us to update our perceptions about risk. As a result, my research aims to inform not only academics but also policymakers, regulators, and business professionals.

Context matters: The role of fair value footnote narratives

With Argyro Panaretou and Catherine Shakespeare


To increase the transparency of their fair value estimates, firms provide additional information in the notes to the financial statements, the quality of which has been challenged by financial statement users. We examine whether the narrative components of fair value footnotes, which should help users contextualise quantitative fair value information, affect investor uncertainty. Our results suggest that, incrementally to the volume of tabulated fair value footnote disclosures, fair value narratives can help investors to understand the measurement process of opaque fair value estimates, and assess their reliability. However, they can also increase investor uncertainty when boilerplate. Our findings shed new light on the communicative role of narrative information in the fair value footnotes, and inform accounting standard setters and financial statement preparers on how fair value measurement can become more understandable to investors.

Keywords: Fair value accounting; Fair value footnotes; Narrative disclosures; Information uncertainty; ASC 820; SFAS 157; Level 3; Boilerplate.

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disclosures With Argyro Panaretou and Grzegorz Pawlina


Research findings show that credit rating agencies appear to tighten their rating standards over time by assigning ratings that are worse than what firms’ fundamentals can justify. We examine whether a previously unexplored factor, narrative disclosure information, mediates this phenomenon. Our findings suggest that risk-related narrative disclosures in Form 10-K reports partially mediate the tightening of rating standards over time. Further tests reveal that this effect is more pronounced when narrative disclosures possess textual attributes that facilitate the reader’s understanding of firm risk. The paper’s findings add new evidence to the limited research on the reasons behind the tightening of rating standards, and suggest that academics and practitioners should also consider soft information (e.g., narrative disclosures) when evaluating corporate credit ratings.

Keywords: Credit ratings; Rating stringency, Narrative disclosures; Risk; Uncertainty.

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Do firms manage their disclosure behaviour to demonstrate their potential? Evidence from credit watch placements


Credit watch placements signal uncertainty about a firm’s future creditworthiness and are accompanied by increased demand for information. I examine how credit watch placements affect the disclosure behaviour, and reporting complexity of rated firms. Results suggest that firms alter their disclosure behaviour, and reduce their reporting complexity when placed under a negative credit watch. However, I document no such finding for positive credit watch placements. This result is consistent with firms being more concerned about the risks associated with a potential credit rating downgrade. The paper’s findings add new insights into the disciplining role of credit rating agencies, and financial communication under uncertainty.

Keywords: Credit rating agencies; Credit watches, Reporting complexity; Uncertainty.

Draft coming soon