Publication: Contemporary Accounting Research (2025)
Title: Determinants of and Future Violations Following Deferred Prosecution and Non-Prosecution Agreements in Corporate Criminal Cases
Insights: The Department of Justice increasingly uses deferred and non-prosecution agreements as alternatives to traditional prosecution in corporate criminal cases. Professor Small’s research finds that prosecutors are more likely to use these agreements when a criminal conviction could impose significant economic harm on a firm’s stakeholders. However, firms receiving these agreements are more likely to commit subsequent violations than firms entering traditional plea deals. The findings highlight a trade-off between limiting the collateral consequences of corporate prosecution and deterring future misconduct.
Publication: The Accounting Review (2026)
Title: Analyst Rational Inattention: Evidence from CEO Turnover Events
Insights: Financial analysts face resource constraints that require them to allocate limited attention across the firms they cover. Professor Small’s research finds that when one firm in an analyst’s portfolio experiences CEO turnover, the analyst reallocates attention toward that firm, resulting in less attention and less accurate forecasts for other firms in the portfolio. This reallocation varies with the costs and benefits of allocating attention, providing evidence that analysts strategically adjust their information processing in a manner consistent with rational inattention.
Publication: Journal of Business Finance & Accounting Forthcoming (2026)
Title: Do Accruals Convey Information About Future Cash Flows? A Re-Examination of Inferences Drawn
Insights: Prior research has reached conflicting conclusions about whether accrual accounting provides information about future cash flows. Professor Small’s research shows that commonly used tests comparing the predictive abilities of earnings and cash flows can produce misleading inferences precisely because accruals covary with future cash flows. After accounting for this statistical phenomenon, the evidence provides a consistent conclusion: accrual accounting conveys information about future cash flows and contributes to the purposes prescribed by the FASB’s Conceptual Framework.
Publication: Contemporary Accounting Research Forthcoming (2026)
Title: Users’ Solicitation of Disclosure When Accounting Standards Restrict Managers’ Discretion Over Financial Reporting: Evidence from Conference Calls
Insights: Accounting standards can restrict managers’ discretion over financial reporting and reduce the information conveyed by financial statements. Professor Small’s research finds that when GAAP is more restrictive, analysts ask more questions about specific financial statement accounts during conference calls. Managers respond by providing corresponding account-specific information both during the current call and in the prepared remarks of the next quarter’s call. These disclosures are also associated with higher analyst forecast quality, highlighting the important role analysts play in eliciting useful information from managers.
