Professor Bushee’s research focuses on the impact of information intermediaries—such as institutional investors, sell-side analysts, and the business press—on corporate disclosure decisions and on the stock market pricing of information. His articles have appeared in top-tier academic journals such as Journal of Accounting Research, Journal of Accounting and Economics, and Accounting Review, as well as in practitioner journals such as Journal of Applied Corporate Finance and Investor Relations Quarterly. His dissertation won the American Accounting Association’s Competitive Manuscript Award. He has served on the editorial boards of the Journal of Accounting Research, Journal of Accounting and Economics, Accounting Review, and Review of Accounting Studies.
Professor Bushee teaches an MBA elective titled Problems in Financial Reporting and has taught the MBA introductory financial accounting course at Wharton, Harvard, and Chicago. He also teaches in the Wharton Seminar for Business Journalists and in a number of Wharton Executive Education Programs. He has won the MBA Excellence in Teaching Award and the Helen Kardon Moss Anvil Award, which is awarded to the one faculty member “who has exemplified outstanding teaching quality during the last year.” He has also won the Christian R. and Mary F. Lindback Award for Distinguished Teaching at the University of Pennsylvania.
Before joining Wharton in 2000, Professor Bushee was an Assistant Professor at the Harvard Business School and a Visiting Assistant Professor at the University of Chicago. He has also worked as a Senior Credit Analyst for CoreStates Financial Corp. and as a National Office Researcher for Coopers and Lybrand L.L.P. He received his Ph.D. from the University of Michigan and A.B. from Duke University.
Professor Bushee’s Institutional Investor Classification Data is available here.
Abstract: While the shareholder benefits of investor conferences are well-documented, evidence on whether these conferences facilitate managerial opportunism is scarce. In this paper, we examine whether managers opportunistically exploit heightened attention around the conference to "hype" the stock. Consistent with hype, we find that managers increase the quantity of voluntary disclosure over the ten days prior to the conference, and that these disclosures increase prices to a greater extent than post-conference disclosures. Investigating managers’ incentives for pre-conference disclosure, we find that the increase in pre-conference disclosure is more pronounced when insiders sell their shares immediately prior to the conference. In those circumstances where pre-conference disclosures coincide with pre-conference insider selling, we find evidence of a significant return reversal: large positive returns before the conference, and large negative returns after the conference. Collectively, our findings are consistent with some managers hyping the stock prior to the conference and selling their shares at inflated prices.
Brian Bushee, Matthew Cedergren, Jeremy Michels (2020), Does the Media Help or Hurt Retail Investors during the IPO Quiet Period?, Journal of Accounting and Economics, 69 (1). 10.1016/j.jacceco.2019.101261
Abstract: We examine how the media influences retail trade and market returns during the “quiet period” that follows a firm’s IPO. We find that more media coverage during this period is associated with more purchases by retail investors and that such purchases are attention-driven, rather than information-based. Further, these retail trades are negatively associated with stock returns at the firm’s first earnings announcement post-IPO. Our results suggest that media coverage, combined with market frictions that limit price efficiency in the post-IPO period, leads to worse investing outcomes for retail investors.
Brian Bushee, Ian Gow, Daniel Taylor (2018), Linguistic Complexity in Firm Disclosures: Obfuscation or Information?, Journal of Accounting Research.
Abstract: We classify all institutional investors that file Form 13F over the period 1995–2013 as either “tax-sensitive” or “tax-insensitive” based on their trading behavior and portfolio characteristics. We examine tests of the effects of investor tax-sensitivity on portfolio rebalancing, price pressure, and fund performance, and compare our measure of tax-sensitive institutional investor ownership to three measures used in prior studies. We show that our measure of tax-sensitive investors dominates other measures in the portfolio rebalancing and price pressure tests. In the fund performance test, our measure of tax-sensitivity is the only one that finds that tax-sensitive investors have significantly lower returns on their portfolio stocks, which is a new result in the literature.
Brian Bushee and Henry Friedman (2016), Disclosure Standards and the Sensitivity of Returns to Mood, The Review of Financial Studies, 29 (3), pp. 787-822.
Abstract: We provide evidence that higher-quality disclosure standards are associated with stock returns that are less sensitive to noise driven by investors’ moods. We identify return-mood sensitivity (RMS) based on the association between index returns and urban cloudiness, a source of short-term variation in mood. Based on a stylized model, we predict and find evidence consistent with higher-quality disclosure standards reducing RMS by tilting susceptible investors’ trades toward information and by facilitating sophisticated investors’ arbitrage. Our findings suggest that disclosure standards play an important role in enhancing price efficiency by reducing noise in returns, particularly noise related to investors’ short-term moods.
Brian Bushee, Joseph Gerakos, Lian Fen Lee (Working), Corporate Jets and Private Meetings with Investors.
Brian Bushee, Ted Goodman, Shyam V. Sunder (Working), Financial Reporting Quality, Investment Horizon, and Institutional Investor Strategies.
Brian Bushee, Mary Ellen Carter, Joseph Gerakos (2014), Institutional Investor Preferences for Corporate Governance Mechanisms, Journal of Management Accounting Research, 26 (2), pp. 123-149.
Abstract: We examine institutional investors' preferences for corporate governance mechanisms. We find little evidence of an association between total institutional ownership and governance mechanisms. However, using revealed preferences, we identify a small group of "governance-sensitive" institutions that exhibit persistent associations between their ownership levels and firms' governance mechanisms. We also find that firms with a high level of ownership by institutions sensitive to shareholder rights have significant future improvements in shareholder rights, consistent with shareholder activism. Further, we find that factors describing the characteristics of institutions' portfolios are correlated with governance preferences. Large institutions, those holding a large number of portfolio stocks, and those with preferences for growth firms are more likely to be sensitive to corporate governance mechanisms, suggesting those mechanisms may be a means for decreasing monitoring costs and may be more essential for firms with a high level of growth opportunities. Finally, our results suggest that common proxies for governance sensitivity by investors (e.g., legal type, blockholding) do not cleanly measure governance preferences.
Brian Bushee, Michael Jung, Greg Miller (Working), Do Investors Benefit from Selective Access to Management?.
Brian Bushee (2012), Discussion of “Financial reporting opacity and informed trading by international institutional investors”, Journal of Accounting and Economics, 54 (2-3), pp. 221-228.
Abstract: Maffett (this issue) finds that the opacity of a firm's information environment affects the degree of informed trade by institutional investors. In this discussion, I address the key research design choices involved in studies of opacity and informed trading and I relate the results to the literature on institutional investor performance and stock selection. I suggest that future work investigate the role of discretionary opacity in facilitating informed trade as part of the cost–benefit trade-off of the opacity decision maker (e.g., managers, analysts); test the relative effects of opacity on private information, liquidity, and price correction speed; and examine how institutional investors select which opaque firms to hold.
This course provides an introduction to both financial and managerial accounting, and emphasizes the analysis and evaluation of accounting information as part of the managerial processes of planning, decision-making, and control. A large aspect of the course covers the fundamentals of financial accounting. The objective is to provide a basic overview of financial accounting, including basic accounting concepts and principles, as well as the structure of the income statement, balance sheet, and statement of cash flows. The course also introduces elements of managerial accounting and emphasizes the development and use of accounting information for internal decisions. Topics include cost behavior and analysis, product and service costing, and relevant costs for internal decision-making. This course is recommended for students who will be using accounting information for managing manufacturing and service operations, controlling costs, and making strategic decisions, as well as those going into general consulting or thinking of starting their own businesses.
This intensive one-semester course focuses on how to extract and interpret information in financial statements. The course adopts a user perspective of accounting by illustrating several specific accounting issues in a decision context.
This course focuses on the analysis of financial communications between corporate managers and outsiders, including the required financial statements, voluntary disclosures, and interactions with investors, analysts, and the media. The course draws on the findings of recent academic research to discuss a number of techniques that outsiders can use to detect potential bias or aggressiveness in financial reporting. FORMAT: Case discussions and lectures. Comprehensive final exam, group project, case write-ups, and class participation.
This is Part I of a theoretical and empirical literature survey course coveringtopics that include corporate disclosure, cost of capital, incentives, compensation, governance, financial intermediation, financial reporting, tax, agency theory, cost accounting, capital structure, international financial reporting, analysts, and market efficiency.
Independent Study Projects require extensive independent work and a considerable amount of writing. ISP in Finance are intended to give students the opportunity to study a particular topic in Finance in greater depth than is covered in the curriculum. The application for ISP's should outline a plan of study that requires at least as much work as a typical course in the Finance Department that meets twice a week. Applications for FNCE 899 ISP's will not be accepted after the THIRD WEEK OF THE SEMESTER. ISP's must be supervised by a Standing Faculty member of the Finance Department.
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