Yaniv Konchitchki

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“Inflation and Nominal Financial Reporting: Implications for Performance and Stock Prices.” 2011 (solo-authored. Vol. 86, Issue 3, pp. 1045-1085. DOI)

THE ACCOUNTING REVIEW

• Takeaway: Inflation effects that are not recognized in financial statements under the current nominal reporting regime have substantial implications for stock valuation and forecasting future firms’ fundamental performance.
• Abstract: The monetary unit assumption of financial accounting assumes a stable currency (i.e., constant purchasing power over time). Yet, even during periods of low inflation or deflation, nominal financial statements violate this assumption. I posit that, while the effects of inflation are not recognized in nominal statements, such effects may have economic consequences. I find that unrecognized inflation gains and losses help predict future cash flows as these gains and losses turn into cash flows over time. I also find significant abnormal returns to inflation-based trading strategies, suggesting that stock prices do not fully reflect the implications of the inflation effects for future cash flows. Additional analysis reveals that stock prices act as if investors do not fully distinguish monetary and nonmonetary assets, which is fundamental to determining the effects of inflation. Overall, this study is the first to show that, although inflation effects are not recognized in nominal financial statements, they have significant economic consequences, even during a period in which inflation is relatively low.

 

 

“Event Study Methodologies in Information Systems Research.” 2011 (with O’Leary. Vol. 12, Issue 2, pp. 99-115. DOI)

INTERNATIONAL JOURNAL OF ACCOUNTING INFORMATION SYSTEMS

• Takeaway: The paper mainly provides methodologies and modeling insights for interdisciplinary capital markets research in the interface of finance, technology/information systems, and financial reporting.
• Abstract: Event studies are based on the theoretical framework of efficient capital markets and the notion that security prices include all information available to the market. As a result, announcements made by firms provide to market participants information that can be impounded into the market price. This paper investigates the use of event studies in information systems and accounting information systems research using a three-pronged approach. First, this paper provides a comprehensive survey of research that uses event study methodologies, where the events are announcements made by firms about issues related to information systems, e.g., announcements of the adoption of enterprise resource planning systems and of the effect of security breaches in firms’ information systems. Second, this paper summarizes event study methodologies used in prior research, along with some of the key parameters and concerns associated with their implementation. Third, this paper provides remarks on key event study modeling issues, and it offers recommendations to researchers.

 

 

“Cost of Capital and Earnings Transparency.” 2013 (with Barth, Landsman. Vol. 55, Issue 2-3, pp. 206-224. DOI)

JOURNAL OF ACCOUNTING AND ECONOMICS

[Awarded the BEST PAPER AWARD of the American Accounting Association (More   More)]

• Takeaway: U.S. corporations that are more transparent in their accounting earnings information enjoy higher stock valuations (through lower discount rates).
• Abstract: We provide evidence that firms with more transparent earnings enjoy a lower cost of capital. We base our earnings transparency measure on the extent to which earnings and change in earnings covary contemporaneously with returns. We find a significant negative relation between our transparency measure and subsequent excess and portfolio mean returns, and expected cost of capital, even after controlling for previously documented determinants of cost of capital.

 

 

“Capital Markets Valuation and Accounting Performance of Most Admired Knowledge Enterprise (MAKE) Award Winners.” 2013 (with DeFond, McMullin, O’Leary. Vol. 56, pp. 348-360. DOI)

DECISION SUPPORT SYSTEMS

• Takeaway: Using a Wisdom-of-Crowd technique (Delphi) for aggregating multiple signals across economic agents provides important information about firms’ stock valuation and operating performance.
• Abstract: Researchers have used the stock price reaction to firms’ disclosures of investment in information technology to investigate the value of those investments. This paper extends that research to include knowledge management (KM). In particular, we test whether and how KM is valued by market participants by examining the stock market reaction and future performance of companies receiving the “Most Admired Knowledge Enterprise” (MAKE) award, which recognizes companies that excel at KM. MAKE awards are generated based on opinions gathered from experts using the Delphi method, a well-known group decision support tool. We find that MAKE winners: (1) experience positive abnormal returns around the award announcement, (2) report superior operating performance relative to their peers subsequent to the receipt of the award, (3) receive upward analyst forecast revisions following the award, (4) experience a positive upward stock price drift following the award, and (5) that the market has taken time to learn how to process and interpret information useful in valuing KM. Thus, our findings contribute to the literature by finding that market participants value KM and KM apparently positively influences accounting performance indicators. In addition, a unique feature of our study is that we investigate the market’s response to information gathered using the Delphi method, an information source not previously investigated in stock price reaction literature.

 

 

“Accounting Earnings and Gross Domestic Product.” 2014 (with Patatoukas. Vol. 57, Issue 1, pp. 76-88. DOI)

JOURNAL OF ACCOUNTING AND ECONOMICS

[Awarded the NOTABLE CONTRIBUTIONS TO ACCOUNTING LITERATURE AWARD of the American Accounting Association and the American Institute of Certified Public Accountants]

• Takeaway: Accounting earnings aggregated across firms are a leading indicator of future GDP growth; however, professional macro forecasters do not use this information when predicting economic activity.
• Abstract: We document that aggregate accounting earnings growth is an incrementally significant leading indicator of growth in nominal Gross Domestic Product (GDP). Professional macro forecasters, however, do not fully incorporate the predictive content embedded in publicly available accounting earnings data. As a result, future nominal GDP growth forecast errors are predictable based on accounting earnings data that are available to professional macro forecasters in real time.

 

 

“Accounting and the Macroeconomy: The Case of Aggregate Price-Level Effects on Individual Stocks.” 2013 (solo-authored. Vol. 69, Issue 6, pp. 40-54. DOI)

FINANCIAL ANALYSTS JOURNAL

[Journal’s Invited Author Interview:   Listen    Read]

• Takeaway: Real-time information about inflation effects on individual firms can be extracted using different investment strategies, with several new implications for stock valuation including stronger effects stemming from firms’ nonmonetary financial statement amounts.
• Abstract: This study sheds new light on the cross-sectional effects of inflation, which have substantial implications for stock valuation. I use financial statement analysis to examine systematic stock-valuation effects of aggregate price-level changes on individual companies, focusing on the implications for both researchers and investment practitioners. I develop inflation-adjustment procedures that are straightforward for investors to implement in real time for extracting the inflation effect on individual companies. I find that inflation-based investment strategies conditioned on information available to investors as of the initial investment and rebalancing dates result in significant risk-adjusted returns. I also investigate the sources of abnormal returns to inflation-based investment strategies. Specifically, I estimate two separate components of the inflation effect on individual companies, one based on only monetary holdings (using the net position of monetary holdings) and the other based on only nonmonetary holdings. Investigating the stock-valuation implications of extracting the components-based inflation effect reveals striking evidence. In particular, investing based on the inflation effect on companies’ net monetary holdings results in insignificant abnormal hedge returns. In contrast, investing based on the inflation effect on companies’ nonmonetary holdings consistently yields economically and statistically significant abnormal hedge returns. These findings indicate that inflation-based abnormal hedge returns are driven not by the exposure of companies’ net monetary holdings to inflation but, rather, by the exposure of their nonmonetary holdings to inflation. These results are consistent with the fact that companies’ nonmonetary holdings are usually held for several years and thus accumulate inflationary effects over time whereas their monetary holdings are, on average, naturally hedged because the exposure of monetary assets cancels the exposure of monetary liabilities for the average company. In addition, I examine the direction of the stock returns to real-time investment strategies.

 

 

“Taking the Pulse of the Real Economy Using Financial Statement Analysis: Implications for Macro Forecasting and Stock Valuation.” 2014 (with Patatoukas. Vol. 89, Issue 2, pp. 669-694. DOI)

THE ACCOUNTING REVIEW

[Awarded the NOTABLE CONTRIBUTIONS TO ACCOUNTING LITERATURE AWARD of the American Accounting Association and the American Institute of Certified Public Accountants]

• Takeaway: Financial statement analysis at the macro level provides information about future real economic activity, macro forecasters’ revisions, and stock valuation.
• Abstract: In this study, we hypothesize and find that financial statement analysis of firm profitability drivers applied at the aggregate level yields timely insights that are relevant for forecasting real economic activity. We first show that focusing on the 100 largest firms offers a cost-effective way to extract information embedded in accounting profitability data of the entire stock market portfolio. We then show that accounting profitability data aggregated across the 100 largest firms have predictive content for subsequent real Gross Domestic Product (GDP) growth. We also show that stock market returns have predictive content for future real GDP growth, while their predictive power varies with the length of the measurement window with annual stock market returns being the most powerful. Importantly, we find that the predictive content of our indices of aggregate accounting profitability drivers is incremental to that of annual stock market returns. An in-depth investigation of consensus survey forecasts shows that professional macro forecasters revise their expectations of real economic activity in the direction of the predictive content of aggregate accounting profitability drivers and stock market returns. Although macro forecasters are fully attuned to stock market return data, their forecasts of real GDP growth can be improved in a statistically and economically significant way using our indices of aggregate accounting profitability drivers. Our findings suggest that professional macro forecasters and stock market investors do not fully impound the predictive content of aggregate accounting profitability drivers when forecasting real economic activity. In additional analysis, we examine the association between stock market returns and the portion of subsequent real GDP growth that is predictable based on our indices of aggregate accounting profitability drivers but that is not anticipated by stock market investors. We find that this portion is positively related to stock market returns, suggesting that the macro predictive content of aggregate accounting profitability drivers is relevant for stock valuation. Overall, our study brings financial statement analysis to the forefront as an incrementally useful tool for gauging the prospects of the real economy that should be of interest to academics and practitioners.

 

 

“Accounting-Based Downside Risk, Cost of Capital, and the Macroeconomy.” 2016 (with Luo, Ma, Wu. Vol. 21, Issue 1, pp. 1-36. DOI)

REVIEW OF ACCOUNTING STUDIES

• Takeaway: Firm-specific earnings sensitivity to downward macro conditions manifests in stock valuation/discount rate implications, providing an accounting-based “answer” to vast downside risk studies that overwhelmingly focus on stock returns (e.g., stock price crash risk; return disaster/tail risk) and showing that earnings downside risk is an incrementally important metric for valuation.
• Abstract: We hypothesize that earnings downside risk, capturing the expectation for future downward operating performance, contains distinct information about firm risk and varies with cost of capital in the cross section of firms. Consistent with the validity of the earnings downside risk measure, we find that, relative to low earnings downside risk firms, high earnings downside risk firms experience more negative operating performance over the subsequent period, are more sensitive to downward macroeconomic states, and are more strongly linked to earnings attributes and other risk-related measures from prior research. In line with our prediction, we also find that earnings downside risk explains variation in firms’ cost of capital, and that this link between earnings downside risk and cost of capital is incremental to several earnings attributes, accounting and risk factor betas, return downside risk, default risk, earnings volatility, and firm fundamentals. Overall, this study contributes to accounting research by demonstrating the key valuation and risk assessment roles of earnings downside risk derived from firms’ financial statements, also shedding new light on the link between accounting and the macroeconomy.

 

 

“SEC Filings, Regulatory Deadlines, and Capital Market Consequences” 2017 (with Bartov. Vol. 31, Issue 4, pp. 109-131. DOI)

ACCOUNTING HORIZONS

• Takeaway: Firms filing financial statements late are severely and negatively affected, with major legal and capital market insights about how late filing is processed in capital markets.
• Abstract: Timely disclosure of financial statement information is a critical requirement for firms and well-functioning capital markets. Yet, every quarter or year, a non-trivial number of firms are late in filing their financial statements. This paper identifies and probes various capital market consequences for late filings of quarterly and annual financial statements. It examines the short- and long-window reaction to late filings, as well as how equity investors process statements accompanying late filing announcements, such as managers declaring intentions to file within/outside the SEC’s allowed grace periods. This paper documents that delayed quarterly filings have distinctly different valuation implications than delayed annual filings over the short and long run, and that accounting problems play a unique role in signaling the seriousness of the delay. It also shows that investors do not accept management’s delay-related assertions at face value, and that delayed filing announcements signal continued poor performance that is not fully reflected in stock prices at the time the announcements are made. Overall, this paper sheds new light on important capital market consequences of filing financial statements late.

 

 

“Interest Rate Volatility, the Yield Curve, and the Macroeconomy.” 2018 (with Joslin. Vol. 128, Issue 2, pp. 344-362. DOI)

JOURNAL OF FINANCIAL ECONOMICS

• Takeaway: Interest rate volatility is modeled and shown to price bonds and bond options, and it is identified as significantly driven by aggregating firm-level uncertainty about accounting results.
• Abstract: This paper provides theory and evidence that a low-dimensional term structure model can simultaneously price bonds and related options. It shows that a component of volatility risk largely unrelated to the shape of the yield curve is a determinant of expected excess returns for holding long maturity bonds. It also finds evidence for this return relationship both in the model and directly in the data through regression analysis. The paper also identifies a link between corporate earnings performance and interest rate volatility, providing a channel driving interest rate volatility. The structure of risk in the model that gives rise to these features of volatility is distinct from that inherent in recent models with unspanned stochastic volatility.

 

 

“Undisclosed Material Inflation Risk.” 2023 (with Xie. Vol. 140, pp. 82-100. DOI)

JOURNAL OF MONETARY ECONOMICS

• Takeaway: Even though inflation risk is material and pervasive, it is largely undisclosed by executives of many major U.S. public corporations. Also, securities class action lawsuits are likely to trigger inflation risk disclosures by inflation-exposed firms as well as that inflation shocks cause trillions in security price damages for shareholders of inflation-exposed-nondisclosing firms.
• Abstract: We identify many major U.S. corporations that are highly exposed to inflation risk. Yet, although the SEC legally requires disclosing possible risk factors, more than 61% of the inflation-exposed corporations do not disclose inflation risk. However, after being sued in a securities class action lawsuit, while all firms increase the length of their reported risk factor texts, only inflation-exposed firms are more likely to begin disclosing inflation risk. Simulations using calibrated parameters from our models reveal that 2%–6% inflation shocks over the subsequent three years result in market cap damages of $0.9 to $2.8 trillion for shareholders of inflation-exposed firms that never disclosed this risk. The inadequate inflation risk disclosure holds after allowing risk to be time varying, controlling for firm/industry characteristics, and/or exploiting a quasi-natural experiment that identifies causal effects and controls for possible unobservable factors. The evidence is consistent with corporate managers paying inadequate attention to inflation risk. Our framework enables identification and evaluation of stock price drop damages, especially for firms with inadequate risk disclosures, possibly improving disclosure practices, inflation expectations, and monetary policy transmission.

 

 

“Pharmaceutical Mergers: Do We Have the Right Cure?” 2025 (with Feldman, Schor, Sakib)

COLUMBIA SCIENCE AND TECHNOLOGY LAW REVIEW, Forthcoming

[a top-tier academic journal in the interface of law, science, and technology]

• Takeaway: Our research finds that the FTC’s current pipeline drug divestiture approach in pharmaceutical mergers largely fails to preserve competition, with 81% of divested drugs never reaching meaningful market share. Stronger measures—like requiring “crown jewel” or “skin in the game” divestitures—are recommended to make the process more effective.
• Abstract: Few federal agencies wield tools more powerful than the Federal Trade Commission’s authority to review—and deny—proposed mergers between companies. This authority is powerful for a reason: large mergers can be uniquely harmful to the United States economy and American consumers, by reducing competition, undercutting consumer choice, and inflating prices. The pharmaceutical industry is particularly sensitive to merger harms, given the importance of prescription drugs and the limited number of competitors. When pharmaceutical companies seek to merge, the FTC often requires that one of the companies divest ownership of certain drugs not yet on the market—so-called “pipeline” drugs. FTC evaluations deem the pipeline divestiture program a complete success. But does it work? As a client once said to a lawyer when asked this question, “It depends on what you mean by ‘it’ and “work.’” In this case, the FTC has defined success by whether the divestitures happened—rather than whether the divestitures successfully preserved competition. Our first-of-its-kind study reveals that pipeline divestitures have, in fact, not worked. For example, using conservative measures, our analysis shows that 81% of divested pipeline products fail to attain even a 1% share of their relevant markets. But all is not lost: with a few key changes, drug divestiture can indeed achieve its intended effects. We recommend the FTC requires either a “crown jewel divestiture” (selling the on-market product, not the pipeline product) or a “skin in the game divestiture,” (if pipeline product fails, company divests on-market product).

 

 

“National Accounting, Inflation, and Rising Inequality.” 2025 (with Ahn, Joslin)

CONTEMPORARY ACCOUNTING RESEARCH, Forthcoming

• Takeaway: Low and high socioeconomic groups in the United States are exposed to different inflation rates, and this manifests in a systematic disadvantaging of low-income U.S. households. This widening inequality leads to hurting low-income households in terms of educational attainment, credit card debt, ability to own real estate properties for dwelling, crime rates, and health matters. The inflation gap is also linked to firms’ profitability where, consistent with inflation gap disadvantaging low-income households and mainly through basic goods, inflation gap fluctuations are especially strongly tied to firms’ profitability in the energy and consumer staples sectors.
• Abstract: We study how inflation heterogeneity is linked with individuals’ and firms’ outcomes from the lens of accounting research, applying accounting measurement frameworks to the national accounting measurement of inflation. We first examine the systematic exposure of individuals in low-income households to higher inflation relative to those in high-income households. We show that this “inflation gap” is linked with future rising inequality in the form of widening gaps in (a) health, (b) education, (c) home ownership, and (d) credit card debt, as well as in (e) a higher frequency of property crimes. We further provide an economic mechanism connecting inflation gap with rising inequality, empirically demonstrating the role of basic goods in reducing the ability of individuals in the low-income group to attain the social and economic outcomes that we study. In addition, we show a channel that connects the inflation gap to firms’ profitability. Indeed, consistent with inflation gap disadvantaging low-income households and mainly through basic goods, inflation gap fluctuations are especially strongly connected to the profitability of firms operating in the energy and consumer staples sectors. Finally, we find that market power plays a role in this connection, where this link is even stronger for firms with high market power.

 

 

“Digital Traffic, Financial Performance, and Stock Valuation.” 2025 (with Armstrong, Zhang. X, pp. 1-32. DOI)

THE ACCOUNTING REVIEW, Forthcoming

• Takeaway: Digital traffic has substantial economic consequences for, and information content about, corporate financial performance and equity valuation.
• Abstract: We examine the economic implications of digital traffic on firms’ financial performance, stock valuation, and financial surprises. Our analysis shows that timely flows of digital traffic are contemporaneous and leading indicators of firms’ revenue and profitability—both gross and operating. Moreover, we show that digital traffic contains novel information about firms’ future performance that is not entirely reflected in stock prices, analyst forecasts, or historical (i.e., time series) financial metrics. Notably, digital-traffic-based investment strategies are lucrative and generate substantial abnormal returns. Importantly, we also adduce evidence that corroborates our conjecture about the underlying economic mechanism that explains the valuation implications of digital traffic: these are driven by firms with consumer-oriented websites that facilitate sale transactions.

 

 

“Reframing Analyst Forecast Efficiency: An Empirical Bayes Perspective” 2025 (with Armstrong, Kim, Zhou)

JOURNAL OF ACCOUNTING AND ECONOMICS, Revise and Resubmit

 

“The Impact of U.S. Tariffs on U.S. Firms” 2025 (with Froymovich, Robinson)

CONTEMPORARY ACCOUNTING RESEARCH, Revise and Resubmit

 

“Geographic Financial Performance: Implications for Local Real Estate Prices and REIT Stock Returns.” 2025 (with Joslin)

In Preparation for Initial Submission

 

“Predictable Errors in Monetary Policy Communications and Decisions” 2025 (with Moore, Zhang)

In Preparation for Initial Submission

 

“The Audit Channel to Long-Term Growth and Stock Returns.” 2025 (with Joslin, Ma)

THE REVIEW OF FINANCIAL STUDIES, In Preparation for Resubmission

 

 

At Haas since 2011

• 2017 – Present, Tenured Associate Professor, Haas School of Business, University of California, Berkeley
• 2011 – 2017, Assistant Professor, Haas School of Business, University of California, Berkeley

NATIONAL: 2019 NOTABLE CONTRIBUTIONS TO ACCOUNTING LITERATURE AWARD (of the American Accounting Association and the American Institute of Certified Public Accountants)
“Award given…to published research work which has withstood a rigorous process of screening and scrutiny based on certain criteria, such as uniqueness and potential magnitude of contribution to accounting education, practice and/or future accounting research, breadth of potential interest, originality and innovative content, clarity and organization of exposition and soundness and appropriateness of methodology.”

NATIONAL: BEST PAPER AWARD (of the American Accounting Association)
“This annual award honors the paper that best reflects the tradition of academic scholarship in financial accounting and explores research that is relevant to problems facing the accounting profession and standard-setters.”
For his research titled “Cost of Capital and Earnings Transparency.”
E.g.: http://faculty.haas.berkeley.edu/yaniv/2014_AAA_BestPaperAward_AAAPressRelease.pdf

INTERNATIONAL: “Favorite MBA Professors Of The Class Of 2021”
Poets & Quants, see:

Favorite MBA Professors Of The Class Of 2021

INTERNATIONAL: “World’s 40 Under 40”
Featured in Fortune, Haas, P&Q. See:

Yaniv Konchitchki Makes “World’s Top 40 Under 40”

Best 40-Under-40 Professor Yaniv Konchitchki

http://fortune.com/2014/02/12/the-40-best-b-school-professors-under-40

UC BERKELEY: Hellman Fellow Fund Award for Distinguished Excellence in Research
Selected from across the university as a “Most Promising Assistant Professor.”

UC BERKELEY: Distinguished Teaching Fellow; Earl F. Cheit Award for Distinguished Excellence in Teaching (awarded more than once)
“Highest teaching award bestowed annually upon instructors at Berkeley Haas.” (Awarded for Core MBA Courses on Financial Reporting)

UC BERKELEY: Schwabacher Fellow
“The Berkeley Haas Executive Committee voted this honor on the basis of ‘outstanding research, exceptional departmental service, unusual scholarly growth, or some combination thereof.'”
E.g.: https://newsroom.haas.berkeley.edu/haas-names-new-schwabacher-fellows

UC BERKELEY: Barbara and Gerson Bakar Faculty Fellow
“A most positive signal for the years to come, the fellowship honors Haas faculty members with a record of accomplishment and a very bright future.”

UC BERKELEY: Club Six Member
Awarded for Teaching Excellence in Core MBA (several teaching years at Haas)

STANFORD GSB: Jaedicke Merit Award for Outstanding Academic Performance in the PhD Program
Stanford University, Graduate School of Business
Doctoral Fellowships

USC MARSHALL: Evan C. Thompson Teaching & Learning Innovation Award
For Core MBA Teaching Excellence

TEL AVIV UNIVERSITY: Annual Research Prize of the School of Economics (2000)
In addition:
– Several awards for excellence, including full tuition scholarships and stipends during each year of studies.
– Selected to University’s Special Program for Outstanding Students.
– Magna Cum Laude.

COLUMBIA UNIVERSITY: Research Grant
Center for International Business Education and Research

• AI told them which stocks to buy. The results are wild, The San Francisco Standard, 10/31/2025
• SMCI stock set to crash even further as delisting fears loom, Finbold, 11/13/2024
• Consumers continue to spend, KTVU News, 10/04/2023
• What the plastic surgery industry can tell us about the path of the economy, Insider, 10/01/2023
• Wharton Business Daily, Wharton Business Daily, 08/17/2023
• Professor Yaniv Konchitchki: Is a soft landing still possible?, Wharton Business Daily, 08/10/2023
• Executives ignore SEC legal requirements to warn investors about inflation risk, new research finds, , 04/18/2023
• Executives ignore SEC legal requirements to warn investors about inflation risk, new research finds, Phys.org, 04/17/2023
• Manila Jockey Club suspended for failure to submit financial statements, Philstar Global, 08/03/2021
• Favorite MBA professors of the class of 2021, Poets & Quants, 08/01/2021

• Berkeley Fintech: Frameworks, Applications, and Strategies (Faculty Director, Berkeley Executive Education)
• Financial Accounting, Full-Time MBA Program (Core Course)
• Financial Reporting and Decision Making for Real Life Success (Offered to students across campus, UGBA 127, MBA 296)
• Macro-Accounting/Interdisciplinary Capital Markets Research, PhD-Level
• Financial Reporting, Evening MBA Program (Core Course)
• Highlights from Financial Accounting Practice and Research, Berkeley Executive Programs in Management
• Doctoral Seminar in Accounting Research, PhD-Level
• Research Seminar in Financial Accounting, PhD-Level