Faculty
Terrence Blackburne
Shirley E. Droschkey Associate Professor
Accounting

Terrence Blackburne

terrence.blackburne@oregonstate.edu

Faculty
Terrence Blackburne
Overview
Overview
Publications

Publications

Academic Journal
Accounting

“The Regulatory Observer Effect: Large Sample Evidence from SEC Investigations”

Drawing on financial reporting, institutional, and social psychology theories, we consider whether awareness of SEC scrutiny affects the extent to which managers exercise financial reporting discretion. Because there is a higher probability that the SEC will detect misconduct and impose penalties on firms under investigation, we predict that managers will change their behavior during periods of increased scrutiny. We test our predictions using novel data on all Division of Enforcement (DoE) investigations completed during the 2000-2016 period. The evidence we present offers three insights. First, our results suggest that managers perceive the SEC will be more concerned, and potentially more punitive, with firms that employ discretion through accruals rather than real activities. Second, the actions taken by managers appear to reflect improvements in accounting misstatement risk, reductions in accounting irregularities, and increases in conservatism. Third, firms investigated by the SEC, but not ultimately subject to an enforcement action, exhibit decreased R&D and capital expenditures and increased likelihoods of CEO turnover, comment letter receipt, earnings restatements, and class-action lawsuits. The implications of our study should be of interest to academics, investors, and regulators in understanding how heightened regulatory monitoring over financial reporting can affect both accounting practices and operating decisions.
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Terrence Blackburne "The Regulatory Observer Effect: Large Sample Evidence from SEC Investigations" Review of Accounting Studies 2026 View on: Google Scholar

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Academic Journal
Accounting

“Information flows among rivals and corporate investment”

Using a novel pairwise measure of firms’ acquisition of rivals’ disclosures, we show that investment opportunities drive interfirm information flows. We find that these flows predict subsequent mergers and acquisitions as well as how and how much firms invest, relative to rivals. Moreover, firms’ use of rivals’ information often hinges on the similarities of their products. Our results suggest that rivals’ public information, far from being unusable, helps facilitate investment and product decisions, including acquisitions and product differentiation strategies. The findings also support a learning mechanism that could partly underlie the emerging literature on peer investment effects.
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Terrence Blackburne, Darren Bernard and Jake Thornock "Information flows among rivals and corporate investment" Journal of Financial Economics Elsevier 760-779 pages 2020 View on: Google Scholar

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