Kevin Smith

Kevin Smith

Contact Information

  • office Address:

    1360 SHDH
    Philadelphia, PA 19104

Research Interests: Disclosure Theory


See my personal webpage here.

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  • Mirko S. Heinle, Kevin Smith, Robert E. Verrecchia (2017), Risk-Factor Disclosure and Asset Prices, The Accounting Review, forthcoming.

    Abstract: While researchers and practitioners alike estimate firms' exposures to systematic risk factors, the disclosure literature typically assumes that exposures are common knowledge. We develop a model where the firm's exposure to a factor is unknown, and analyze the effect of factor-exposure uncertainty on share price and disclosure about the exposure. We find that: (i) factor-exposure uncertainty introduces skewness and excess kurtosis in the cash-flow distribution relative to the commonly used normal distribution; (ii) risk--factor disclosure affects all moments of that distribution; and (iii) the pricing of higher moments affects the price response of disclosure and the incentives to disclose. For example, factor-exposure uncertainty may actually increase price when the uncertainty implies positive skewness in the cash flow distribution. Hence, a reduction in uncertainty through disclosure may increase cost of capital. We also extend our model to multiple firms and show that factor-exposure uncertainty manifests as uncertainty about a firm's CAPM beta.

  • Mirko S. Heinle and Kevin Smith (2017), A Theory of Risk Disclosure, Review of Accounting Studies, forthcoming.

    Abstract: In this paper, we consider the price effects of risk disclosure. We develop a model in which investors are uncertain about the variance of a firm’s cash flows and the firm releases an imperfect signal regarding this variance. In our model, uncertainty over the riskiness of a firm’s cash flows leads to a variance uncertainty premium in its price. We demonstrate that risk disclosure decreases the firm’s cost of capital by reducing this premium and that the market response to risk disclosure is small when the expected level of risk is high. Moreover, we find that firms acquire and disclose more risk information when their cash flow risk is greater than expected. Finally, we demonstrate that in a multi-asset setting, only risk disclosure concerning systematic risks will impact the cost of capital.

  • Paul Fischer, Mirko S. Heinle, Kevin Smith (Work In Progress), Strategic Listening.


Past Courses


    This course is an introduction to the basic concepts and standards underlying financial accounting systems. Several important concepts will be studied in detail, including: revenue recognition, inventory, long-lived assets, present value, and long term liabilities. The course emphasizes the construction of the basic financial accounting statements - the income statement, balance sheet, and cash flow statement - as well as their interpretation.

Awards and Honors

  • Robert R Nathan Fellowship, 2017
  • Deloitte Foundation PhD Fellowship, 2017


Latest Research

Mirko S. Heinle, Kevin Smith, Robert E. Verrecchia (2017), Risk-Factor Disclosure and Asset Prices, The Accounting Review, forthcoming.
All Research

Awards and Honors

Robert R Nathan Fellowship 2017
All Awards