Brian Bushee

Brian Bushee
  • The Geoffrey T. Boisi Professor
  • Professor of Accounting

Contact Information

  • office Address:

    1317 Steinberg Hall-Dietrich Hall
    3620 Locust Walk
    Philadelphia, PA 19104-6365

Research Interests: corporate disclosure, fundamental analysis, institutional investors, stock market anomalies

Links: CV, Personal Website

Overview

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.

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Research

  • Brian Bushee, Ian Gow, Daniel Taylor (2018), Linguistic Complexity in Firm Disclosures: Obfuscation or Information?, Journal of Accounting Research.

  • Brian Bushee, Matthew Cedergren, Jeremy Michels (Working), Does the Media Help or Hurt Retail Investors during the IPO Quiet Period?.

  • Jennifer Blouin, Brian Bushee, Stephanie Sikes (Forthcoming), Measuring Tax-Sensitive Institutional Ownership.

    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.

  • Brian Bushee and Gregory Miller (2012), Investor Relations, Firm Visibility, and Investor Following, The Accounting Review, 87 (3), pp. 867-897. 10.2308/accr-10211

    Abstract: We examine the actions and outcomes of investor relations (IR) programs in smaller, less-visible firms. Through interviews with IR professionals, we learn that IR strategies have a common goal of attracting institutional investors and that direct access to management, rather than increased disclosure, is viewed as the key driver of the strategy’s success. We test for the effects of IR programs by examining small-cap companies that hired IR firms in a differences-in-differences research design with controls for changes in disclosure and determinants of the decision to initiate IR. Relative to a matched sample of control firms, we find that companies initiating IR programs exhibit greater increases in institutional investor ownership and a shift toward investors that normally would not follow the companies. We also find greater improvements in analyst following, media coverage, and the book-to-price ratio. Our results indicate that IR activities successfully improve visibility, investor following, and market value.

Teaching

Past Courses

  • ACCT613 - FIN AND MNGL ACCT

    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.

  • ACCT742 - FIN REPORT & BUS ANALYS

    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.

  • ACCT747 - FIN DISCLOSURE ANALYTICS

    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.

  • ACCT921 - EMPIRICAL RES IN ACCT I

    This is an empirical literature survey course covering topics 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.

  • ACCT922 - EMPIRICAL RES IN ACCT II

    This is an empirical literature survey course covering topics 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.

Awards and Honors

  • Christian R. and Mary F. Lindback Award for Distinguished Teaching at the University of Pennsylvania, 2015
  • Faculty Marshall at MBA Graduation, 2015
  • Excellence in Teaching Award (Top 10 MBA course evals), 2014
  • Teaching Commitment and Curricular Innovation Award, 2014
  • University of Michigan Ross School of Business Ph.D. Distinguished Alumni Award, 2011
  • Faculty Marshall at MBA Graduation, 2011
  • Excellence in Teaching Award: Elective Curriculum (Top 10 MBA course evals), 2010
  • Excellence in Teaching Award (Top 8 MBA course evals), 2009
  • Helen Kardon Moss Anvil Teaching Award, 2009
  • Faculty Marshall at MBA Graduation, 2008-2009
  • Finalist – Helen Kardon Moss Anvil Teaching Award, 2008
  • Excellence in Teaching Award (Top 8 MBA course evals), 2007
  • Finalist – Helen Kardon Moss Anvil Teaching Award, 2004-2006
  • Tough, But I’ll Thank You in 5 Years MBA Teaching Award, 2001
  • AAA Competitive Manuscript Award, 1998
  • Dykstra Teaching Award, 1995
  • Coopers and Lybrand Fellowship, 1993-1995
  • National Doctoral Fellowship Program Fellowship, 1992
  • Phi Beta Kappa, 1989

In the News

  • How Some Investors Get Special Access to Companies, The Wall Street Journal - 09/27/2015
  • Shooting the messenger: Quarterly earnings and short-term pressure to perform, Economist Intelligence Unit - 08/25/2010
  • Lehman’s Demise and Repo 105: No accounting for deception, Economist Intelligence Unit - 03/01/2010
  • FDIC to Set Fate of Securitized Assets, American Banker - 11/12/2009
  • Revenge of the Accounting Authorities?, Mergers & Acquisitions Report - 08/17/2009
  • Is It U.S. GAAP or IFRS At U.S. Universities?, Financial Executive - 06/01/2009
  • Mark-to-market changes seen reassuring auditors, Reuters News - 04/02/2009
  • Paying the Price: Satyam’s Auditors Face Plenty of Questions, Hyderabad News Network - 01/23/2009
  • The earnings maze: One-time charges good investor information or quarterly performance spin?, The Atlanta Journal - Constitution - 09/08/2008
  • New rules can turn a loss into a gain, The Philadelphia Inquirer - 05/18/2008
  • How to talk to investors through the media, The Star (Malaysia) - 02/11/2008
  • The HBR List: Breakthrough Ideas for 2006, Harvard Buisness Review - 02/01/2006
  • Struggling To Get Attention, Financial Executive - 01/01/2006
  • Hey! Look at Me!, CFO Magazine - 10/06/2005
  • How to make $4.7 million one penny at a time – iVoice is turning its stock into currency to pay vendors, others for services, The Star-Ledger - 08/05/2005
  • Analysis: Time Warner to pay $300 million in penalties to the SEC to settle charges that it inflated AOL’s revenues, NPR: All Things Considered - 03/21/2005
  • Ernst & Young faces accounting fraud lawsuit, Baltimore Business Journal - 03/11/2005
  • Small is Beautiful, The National Interest - 10/01/2004
  • Small companies going private after law, The Birmingham News - 09/09/2004
  • Small has its place in fund management, International Herald Tribune - 11/08/2003
  • In a Land of Giants, Little Funds Find an Audience, The New York Times - 11/02/2003
  • Forensic Investing: An Accountant’s Proven Formula For Dodging Loser Stocks — And Finding Winners, SmartMoney - 08/01/2003
  • DISCLOSURE HELPS SMALL STOCK TRADE RULE INCREASES DEALS UNDER $10,000 BY 10 PERCENT, Seattle Post-Intelligencer - 07/12/2001
  • Keeping an Ear on Wall St.; Corporate Webcasts Earn a Growing Audience of Investors, The Washington Post - 06/14/2001
  • Dangerous Best Practice: Is More Transparency Always Better?, The World Bank Group: Interest Bearing Notes Newsletter - 04/01/1999

Knowledge @ Wharton

Activity

In the News

Should Companies Hedge Currency Risk?

Big increases in cross-border transactions and currency volatility have many companies taking a closer look at hedging the risks. But in making a decision, firms may overlook some key, but not obvious, considerations.

Knowledge @ Wharton - 2013/06/12
All News

Awards and Honors

Christian R. and Mary F. Lindback Award for Distinguished Teaching at the University of Pennsylvania 2015
All Awards