Accounting & Management

- April 2021
- Case
Accounting for Bitcoin at Tesla

By: Charles CY Wang and Siyu Zhang
- April 2021
- Case
Accounting for Bitcoin at Tesla

By: Charles CY Wang and Siyu Zhang
- 2021
- Working Paper
Financial Flexibility and Corporate Employment

By: Rebecca Lester, Ethan Rouen and Braden Williams

We study the role of financial flexibility on COVID-19 employment actions. Using daily data from March through May 2020 for 354 of the largest U.S. employers, we find that firms facing a negative demand shock were 28.8 percentage points more likely to reduce their workforce and 17.3 percentage points less likely to provide pay increases to frontline workers, compared to other sample firms. Pre-pandemic financial flexibility attenuates these effects, reducing the likelihood of workforce reductions by almost half. The role of financial flexibility is greatest in firms with better governance, a more asymmetric cost structure, and better treatment of workers.
- 2021
- Working Paper
Financial Flexibility and Corporate Employment

By: Rebecca Lester, Ethan Rouen and Braden Williams

We study the role of financial flexibility on COVID-19 employment actions. Using daily data from March through May 2020 for 354 of the largest U.S. employers, we find that firms facing a negative demand shock were 28.8 percentage points more likely to reduce their workforce and 17.3 percentage points less likely to provide pay increases to...
- 2021
- Working Paper
Which Corporate ESG News Does the Market React To?

By: George Serafeim and Aaron Yoon

Using a dataset that classifies firm-level ESG news as positive and negative, we examine how stock prices react to different types of ESG news. We analyze 111,020 firm-day observations for 3,126 companies and find that prices react only to issues identified as financially material for a given industry by sustainability accounting standards, and the reaction is larger for news that is positive, receive more attention, and that is related to social capital issues. We conclude that investors differentiate in their reactions based on whether the news is likely to affect a company’s fundamentals, and therefore their reactions are motivated by a financial rather than a nonpecuniary motive.
- 2021
- Working Paper
Which Corporate ESG News Does the Market React To?

By: George Serafeim and Aaron Yoon

Using a dataset that classifies firm-level ESG news as positive and negative, we examine how stock prices react to different types of ESG news. We analyze 111,020 firm-day observations for 3,126 companies and find that prices react only to issues identified as financially material for a given industry by sustainability accounting standards, and...

About the Unit

The Accounting & Management unit at Harvard Business School strives to be the worldwide leader in research, course development, and teaching on top managements' use of performance measurement systems to:

Communicate with external investors to ensure that their firms' securities are fairly priced and that they are able to access capital,
Measure and evaluate their firms' economic performance,
Improve resource allocation and strategy implementation within their firms, and
Build accountability for performance through effective external and internal governance.

Unit research, course development, and teaching fall into two broad areas: Financial Reporting and Analysis and Management Accounting. Our research helps scholars and educators understand current best practices for the design and use of performance measurement systems that help managers to build more effective, value-creating organizations. Our teaching materials enable us to bring the results of this research into the classroom, and to practice.

Recent Publications

Accounting for Bitcoin at Tesla

By: Charles CY Wang and Siyu Zhang

April 2021 |
Case |
Faculty Research

Citation

Educators

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BlackRock: Linking Purpose to Profit

By: Rohit Deshpandé, Aiyesha Dey and George Serafeim

May 2021 |
Teaching Note |
Faculty Research

Teaching Note of HBS Case No. 120-042

Keywords: Blackrock; Investment Management; Stewardship Codes; Stewardship Role Of Institutions; Esg; Purpose; Corporate Purpose; Investment; Asset Management; Corporate Governance; Financial Services Industry; United States

Citation

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Financial Flexibility and Corporate Employment

By: Rebecca Lester, Ethan Rouen and Braden Williams

2021 |
Working Paper |
Faculty Research

We study the role of financial flexibility on COVID-19 employment actions. Using daily data from March through May 2020 for 354 of the largest U.S. employers, we find that firms facing a negative demand shock were 28.8 percentage points more likely to reduce their workforce and 17.3 percentage points less likely to provide pay increases to frontline workers, compared to other sample firms. Pre-pandemic financial flexibility attenuates these effects, reducing the likelihood of workforce reductions by almost half. The role of financial flexibility is greatest in firms with better governance, a more asymmetric cost structure, and better treatment of workers.

Keywords: Employment; Covid-19; Pandemic

Citation

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Muddy Waters vs. eHealth: The Debate of a 'Lifetime' Spreadsheet Supplement for Instructors

By: Jonas Heese

April 2021 |
Supplement |
Faculty Research

Citation

Purchase

Muddy Waters vs. eHealth: The Debate of a 'Lifetime' Spreadsheet Supplement for Students

By: Jonas Heese

April 2021 |
Supplement |
Faculty Research

Citation

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Is Accounting Useful for Forecasting GDP Growth? A Machine Learning Perspective

By: Srikant Datar, Apurv Jain, Charles C.Y. Wang and Siyu Zhang

2020 |
Working Paper |
Faculty Research

We provide a comprehensive examination of whether, to what extent, and which accounting variables are useful for improving the predictive accuracy of GDP growth forecasts. We leverage statistical models that accommodate a broad set of (341) variables—outnumbering the total time-series observations—and apply machine learning techniques to train, validate, and test the prediction models. For near-term (current and next-quarter) GDP growth, accounting does not improve the out-of-sample accuracy of predictions because the professional forecasters' predictions are relatively efficient. Accounting's predictive usefulness increases for more-distant-term (three- and four-quarters-ahead) GDP growth forecasts: they contribute more to the model's predictions; moreover, their inclusion increases the model's out-of-sample predictive accuracy by 13 to 46%. Overall, four categories of accounting variables—relating to profits, accrual estimates (e.g., loan loss provisions or write-offs), capital raises or distributions, and capital allocation decisions (e.g., investments) are most informative of the longer-term outlook of the economy.

Keywords: Accounting; Big Data; Gdp; Machine Learning

Citation

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Which Corporate ESG News Does the Market React To?

By: George Serafeim and Aaron Yoon

2021 |
Working Paper |
Faculty Research

Using a dataset that classifies firm-level ESG news as positive and negative, we examine how stock prices react to different types of ESG news. We analyze 111,020 firm-day observations for 3,126 companies and find that prices react only to issues identified as financially material for a given industry by sustainability accounting standards, and the reaction is larger for news that is positive, receive more attention, and that is related to social capital issues. We conclude that investors differentiate in their reactions based on whether the news is likely to affect a company’s fundamentals, and therefore their reactions are motivated by a financial rather than a nonpecuniary motive.