Research Seminar: Craig Lewis
Speaker: Craig Lewis, Madison S. Wigginton Professor of Finance, Owen Graduate School of Management, Vanderbilt University
Title: Do Fraudulent Firms Produce Abnormal Disclosure? (co-authored with Gerard Hoberg)
Abstract: Using text-based analysis of 10-K MD&A disclosures, the authors find that fraudulent firms produce verbal disclosure that is abnormal relative to strong counterfactuals. This abnormal text predicts fraud out of sample, has a verbal factor structure, and can be interpreted to reveal likely mechanisms that surround fraudulent behavior. Using a conservative difference-based approach, they find evidence that fraudulent managers discuss fewer details explaining the sources of the firm's performance, while disclosing more information about positive aspects of firm performance.
Download the full paper (pdf)
Craig M. Lewis is the former Chief Economist and Director of the Division of Economic and Risk Analysis at the U.S. Securities and Exchange Commission (SEC). In May, he returned to his position at Vanderbilt University where he is the Madison S. Wigginton Professor of Finance at the Owen Graduate School of Management.
He has conducted research on volatility in stock and futures markets, margin adequacy, corporate earnings management, corporate financial policy, executive compensation, convertible debt, and herd behavior by equity research analysts. While at the SEC, he spearheaded the Agency’s efforts to improve the economic analysis supporting its rule makings and began a data analytic program designed to identify outlier behavior among registrants. One example is the Accounting Quality Model or “Robocop” which is designed to identify firms that make unusual accounting choices. His research has been published in the Journal of Financial Economics, Review of Financial Studies, Journal of Econometrics, Journal of Financial and Quantitative Analysis, among other places.
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