Brian Bushee

Professor Bushee’s research focuses on the impact of information intermediaries—such as institutional investors, sellside analysts, and the business press—on corporate disclosure decisions and on the stock market pricing of information. His articles have appeared in toptier 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.

Brian Bushee, Ian Gow, Daniel Taylor (Working), Linguistic Complexity in Firm Disclosures: Obfuscation or Information?.

Jennifer Blouin, Brian Bushee, Stephanie Sikes (Forthcoming), Measuring TaxSensitive Institutional Ownership.

Abstract: We classify all institutional investors that file Form 13F over the period 19952013 as either “taxsensitive” or “taxinsensitive” based on their trading behavior and portfolio characteristics. We examine tests of the effects of investor taxsensitivity on portfolio rebalancing, price pressure, and fund performance, and compare our measure of taxsensitive institutional investor ownership to three measures used in prior studies. We show that our measure of taxsensitive investors dominates other measures in the portfolio rebalancing and price pressure tests. In the fund performance test, our measure of taxsensitivity is the only one that finds that taxsensitive 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. 787822.

Abstract: We provide evidence that higherquality disclosure standards are associated with stock returns that are less sensitive to noise driven by investors’ moods. We identify returnmood sensitivity (RMS) based on the association between index returns and urban cloudiness, a source of shortterm variation in mood. Based on a stylized model, we predict and find evidence consistent with higherquality 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’ shortterm 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. 123149.

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 "governancesensitive" 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 (23), pp. 221228.

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 tradeoff 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. 867897. 10.2308/accr10211

Abstract: We examine the actions and outcomes of investor relations (IR) programs in smaller, lessvisible 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 smallcap companies that hired IR firms in a differencesindifferences 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 booktoprice ratio. Our results indicate that IR activities successfully improve visibility, investor following, and market value.

Brian Bushee, Michael J. Jung, Gregory Miller (2011), Conference Presentations and the Disclosure Milieu1475679X/), Journal of Accounting Research, 49: 11631192.

Abstract: Conference presentations differ from other voluntary disclosures in that the audience for the disclosure is colocated with managers in a welldefined physical and social setting, or “disclosure milieu.” The milieu affects the degree to which conference participants can update their prior beliefs about the firm with information signals obtained through interactions with management and other informed participants. While the average abnormal stock return and volume reactions to presentations are positive, there is a great deal of crosssectional variation as indicated by negative median reactions. We find that conference characteristics that determine the nature of the audience and its interactions, such as sponsor, location, size, and industryfocus, are significantly associated with the market reaction, consistent with the disclosure milieu explaining the crosssectional variation in the information content of the presentation. We also find that conference characteristics explain changes in subsequent analyst and institutional investor following, consistent with the disclosure milieu creating differences in access to management by potential new investors and analysts.

Current Courses

ACCT747 Fin Statement & Dis Ana

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 writeups, and class participation.

ACCT747751

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, decisionmaking, 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 decisionmaking. 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 PROBLEMS IN FIN REPORTIN

This intensive onesemester 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 STATEMENT & DIS ANA

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 writeups, and class participation.

ACCT921 EMPIRICAL RES IN ACCT I

The course covers empirical research design and provides students with a perspective on historically important accounting research. Topics covered such as research on the timeseries and crosssectional properties of financial accounting measures, capital markets behavior, financial intermediaries, and international accounting research.

ACCT922 EMPIRICAL RES IN ACCT II

The course covers empirical research design and provides students perspective on historically important accounting research. Topics covered such as research on the timeseries and crosssectional properties of financial accounting measures, capital markets behavior, financial intermediaries, and international accounting research. Topics covered may include corporate governance, executive compensation, debt contracting, accounting regulation, tax, and management accounting.

• 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
• 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
• 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
• National Doctoral Fellowship Program Fellowship, 1992
• Phi Beta Kappa, 1989

How Some Investors Get Special Access to Companies, The Wall Street Journal 09/27/2015

Shooting the messenger: Quarterly earnings and shortterm 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

Marktomarket 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: Onetime 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 StarLedger 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 PostIntelligencer 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

• Should Companies Hedge Currency Risk?, Knowledge @ Wharton 06/12/2013
• Not a Level Playing Field: How Big Investors Benefit from Selective Access to Top Management, Knowledge @ Wharton 11/16/2011
• Shooting the Messenger: Quarterly Earnings and Shortterm Pressure to Perform, Knowledge @ Wharton 07/21/2010
• Lehman’s Demise and Repo 105: No Accounting for Deception, Knowledge @ Wharton 03/31/2010
• Are ‘Marktomarket’ Accounting Rules on the Mark?, Knowledge @ Wharton 04/01/2009
• How Investor Relations (IR) Firms Can Boost the Market Prospects of Small Companies, Knowledge @ Wharton 04/06/2005
• Accounting Games Companies Play (Especially With Revenues and Costs), Knowledge @ Wharton 07/14/2004
• How Foreign Firms Can Attract U.S. Investors: Overcoming ‘Home Bias’, Knowledge @ Wharton 12/03/2003
• Do High Regulatory Costs Force Public Firms to Go Private?, Knowledge @ Wharton 09/10/2003
• Coke, Quarterly Estimates and ‘The Numbers Game’, Knowledge @ Wharton 01/29/2003
• Do Layoffs Mean You Actually Lose Your Job?, Knowledge @ Wharton 03/28/2001