Jeremy Michels

Jeremy Michels’ research focuses on how disclosures are used by market participants. Specifically, his work examines how characteristics of a disclosure, such as verifiability, affect how market participants use the disclosure. Jeremy Michels performed his doctoral studies at the University of Colorado Boulder. He holds his CPA license (inactive) in Minnesota and worked as a senior consultant at Protiviti prior to returning to academia to pursue his Ph.D.

Christopher D. Ittner and Jeremy Michels (2017), RiskBased Forecasting and Planning and Management Earnings Forecasts, Review of Accounting Studies, conditionally accepted.

Abstract: This study examines the association between a firm’s internal information environment and the accuracy of its externallydisclosed management earnings forecasts. Internally, firms use forecasts to plan for uncertain futures. The risk management literature argues that integrating riskrelated information into forecasts and plans can improve a firm’s ability to forecast future financial outcomes. We investigate whether this internal information manifests itself in the accuracy of external earnings guidance. Using detailed survey data and publiclydisclosed management earnings forecasts from a sample of publiclytraded U.S. companies, we find that more sophisticated riskbased forecasting and planning processes are associated with smaller earnings forecast errors and narrower forecast widths. These associations hold across a variety of different planning horizons (ranging from annual budgeting to longterm strategic planning), providing empirical support for the theoretical link between internal information quality and the quality of external disclosures.

Jeremy Michels (2016), Disclosure versus Recognition: Inferences from Subsequent Events, Journal of Accounting Research, forthcoming.

Abstract: Standard setters explicitly state that disclosure should not substitute for recognition in financial reports. Consistent with this directive, prior research shows that investors find recognized values more pertinent than disclosed values. However, it remains unclear whether reporting items are recognized because they are more relevant for investing decisions, or whether requiring recognition itself prompts differing behavior on the part of firms and investors. Using the setting of subsequent events, I identify the differential effect of requiring disclosure versus recognition in a setting where the accounting treatment of an item is exogenously determined. For comparable events, I find a stronger initial market response for firms required to recognize relative to firms that must disclose, although the large magnitude of the identified effect calls into question whether this difference can be attributed to accounting treatments alone. In examining various reasons for the stronger market response to recognized values, I fail to find support for the hypothesis that this difference is due to differential reliability of disclosed and recognized values. I do find some evidence that investors underreact to disclosed events, consistent with investors incurring higher processing costs when using disclosed information.

Jeremy Michels and Robert E. Verrecchia (Working), Is Disclosure Priced Ex Ante?.

Jeremy Michels (2012), Do Unverifiable Disclosures Matter? Evidence from PeertoPeer Lending, The Accounting Review, 87 (4), pp. 13851413.

Abstract: The role of disclosure in attenuating market inefficiencies has been the subject of extensive research. While costless, voluntary, and unverifiable disclosures are unlikely to be credible sources of information, prior research demonstrates that individuals' decisions can be influenced by uninformative content. I use a unique dataset from a peertopeer lending website, Prosper.com, to demonstrate an economically large effect of voluntary, unverifiable disclosures in reducing the cost of debt. My results show an additional unverifiable disclosure is associated with a 1.27 percentage point reduction in interest rate and an 8 percent increase in bidding activity.

Jeremy Michels, Stephen Glaeser, Robert E. Verrecchia (Working), Discretionary Disclosure and Management Horizon.

Past Courses

ACCT101 PRINCIPLES OF ACCOUNTING

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, longlived 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.

Best Paper Award: Review of Accounting Studies Conference, 2016 Financial Accounting and Reporting Section Best Dissertation Award, 2014 Deloitte Foundation Doctoral Fellowship, 2012 AAA/Grant Thornton Doctoral Dissertation Award for Innovation in Accounting Education, 2011 AAA/Deloitte/J. Michael Cook Doctoral Consortium Fellow, 2011 Gerald Hart Doctoral Research Fellowship, 2011 Gerald Hart Doctoral Research Fellowship, 2010 Best Doctoral Student Paper – AAA Western Region Meeting, 2010