Hi, I am Atif Ellahie, PhD, CFA. I am an Associate Professor at the David Eccles School of Business at The University of Utah. I teach graduate-level courses on business valuation and analysis, and mergers and acquisitions, as well as executive-level courses in accounting and finance. My teaching has received the Kenneth J. Hanni Teaching Award and the Brady Faculty Superior Teaching Award. My research focuses on two primary areas at the intersection of financial economics and accounting:

1. Examining ‘risk’ by incorporating the interaction of firm-level and macroeconomic information (e.g., earnings beta, volatility forecasting, growth risk).
2. Examining how firms and individuals respond to their institutional environment (e.g., disclosure, institutional quality, culture, policy intervention).

My research has been published in several leading academic business journals, including Journal of Accounting Research, Journal of Accounting and Economics, Journal of Finance, Review of Accounting Studies, The Accounting Review, Management Science and Journal of Monetary Economics. I am an editorial board member at The Accounting Review and Review of Accounting Studies, and a frequent reviewer for other top journals in my field.

I earned a PhD from London Business School, an MSc in International Accounting and Finance (with distinction) from London School of Economics, and an MBA from Lahore University of Management Sciences. I have also held the professional designation of Chartered Financial Analyst since 2003.

Prior to academia, I worked for ten years (1999-2009) in investment banking in New York and London. Most recently, I was an Executive Director at UBS Investment Bank advising technology, software, and services companies on corporate finance strategy, capital raisings, and mergers and acquisitions. My clients included IBM, Xerox, Motorola, Infosys and BAE Systems, among others.

In my free time, I enjoy traveling with family, cooking, cricket, cars, and long walks.

1. Are CEOs Rewarded for Luck? Evidence from Corporate Tax Windfalls (with Martina Andreani & Lakshmanan Shivakumar). Journal of Finance, forthcoming. Abstract

   Focusing on the one-off tax gains and losses (i.e., windfalls) associated with the 2017 Tax Cuts and Jobs Act, we re-examine whether CEOs are rewarded for luck. We find that weakly-monitored CEOs are compensated for the windfall tax gains but not penalized for the corresponding tax losses. No such pattern is observed for CEOs facing greater pay scrutiny. The pay for windfalls cannot be explained as rewards for CEOs’ efforts, talents, political activities, or as firms sharing their tax gains with all executives. The results are more consistent with rent extraction by CEOs facing weak pay scrutiny.

2. Measuring the Quality of Mergers and Acquisitions (with Shenje Hshieh & Feng Zhang). Management Science, in press. Abstract

   We develop a measure of merger and acquisition (M&A) quality using accounting theory. This measure, implied return-on-equity improvement (IRI), quantifies the minimum improvement in the target’s post-acquisition return on equity (ROE) the acquirer must attain to break even on the acquisition price. Employing a large sample of M&As from 1980 to 2018, we find that a high IRI is, on average, less attainable ex post and predicts worse acquirer financial performance. The acquirer’s ROE growth over the first three years after the M&A is 11 percentage points lower for high-IRI M&As compared to low-IRI M&As. Worse high-IRI acquirer performance is observable through higher operating costs, tighter financial constraints, lower investments, and larger and more frequent goodwill impairments. We also find that IRI increases with acquiring CEOs’ overconfidence, incentive misalignment, and difficulty in estimating synergies; IRI decreases with acquirers’ financial discipline and due diligence effort. As such, overestimating synergies and managerial incentives that drive overpayment are potential mechanisms underlying IRI’s negative association with acquirers’ post-M&A performance.

   • Supplemental Materials: Online Appendix. Replication Package. Excel Model for IRI Calculation.

3. Accounting for Bubbles: A Discussion of Arif and Sul (2024). Journal of Accounting and Economics, 2024, 78 (2–3), 101717. Abstract

   A signal that identifies asset pricing bubbles would be valuable so investors could reposition their portfolios to weather the bubble, yet ex ante bubble identification has proven illusory. Arif and Sul (2024) study whether industry-level investment in net operating asset (NOA) accruals is an ex ante accounting-based signal that predicts bubbles. Using industry-level price run-ups across 49 countries, they find that NOA accruals predict a higher likelihood of a future crash, lower future returns, and larger analyst forecast errors, especially following run-up periods. The authors attribute these patterns to sentiment-driven overinvestment. My discussion summarizes the contributions of Arif and Sul’s findings to the asset pricing bubbles, behavioral finance, and aggregate accruals literatures. I also outline empirical challenges faced by studies investigating bubbles and recommend approaches to further strengthen inferences. Finally, I propose opportunities for future research to integrate deeper accounting knowledge into bubble research.

4. Growth Matters: Disclosure and Risk Premium (with Rachel Hayes & Marlene Plumlee). The Accounting Review, 2022, 97 (4), 259–286. Abstract

   Theoretical work generally predicts a negative association between disclosure and risk premium, where additional disclosure reduces estimation risk or information asymmetry. However, empirical studies frequently report mixed results. Recent theoretical studies suggest that the association between disclosure and risk premium is not necessarily always negative, and could be positive (or less negative). For example, Dutta and Nezlobin (2017) show that disclosure can be associated with higher risk premium when conditioned on firms’ growth rates. Similarly, Johnstone (2016) shows that higher signal quality can lead to higher risk premium. Motivated by these studies, we re-examine the association between disclosure and risk premium, conditional on growth. Using various proxies for risk premium, disclosure, and growth, we provide robust evidence that while the unconditional association between disclosure and risk premium is ambiguous, the conditional association is negative for lower growth firms but is less negative (or positive) for higher growth firms.

5. The Role of Disclosure and Information Intermediaries in an Unregulated Capital Market: Evidence from Initial Coin Offerings (with Thomas Bourveau, Emmanuel De George & Daniele Macciocchi). Journal of Accounting Research, 2022, 60 (1), 129–167. Abstract

   Using an international sample of 2,113 initial coin offerings (ICOs), we explore the role of disclosure and information intermediaries in the unregulated crypto-tokens market. First, we document substantial cross-sectional variation in the voluntary disclosure practices of ventures seeking to raise capital through ICOs, such as the extent of information released in a prospectus-type document called a white paper; releasing the technical source code; and communicating through social media platforms. Second, we find that, even with limited disclosure verifiability, ventures with higher levels of disclosure have a greater ability to raise capital. Finally, we find that this association is stronger in the presence of mechanisms that lend credibility to ventures’ voluntary disclosures, such as internal governance practices or external scrutiny from information intermediaries. Overall, our results suggest that voluntary disclosure and information intermediaries facilitate the functioning of ICOs as an alternative capital market.

   • Supplemental Materials: Online Appendix, Datasheet and Code.

6. Show Me the Money! Dividend Policy in Countries with Weak Institutions (with Zachary Kaplan). Journal of Accounting Research, 2021, 59 (2), 613–655. Abstract

   We hypothesize that, in weak-institution countries, firms adjust the ‘timing’ of dividend payments by committing to distribute a percentage of current earnings as dividends, revealing the extent of firm-level agency conflicts to future investors and facilitating the raising of external capital. Consistent with this hypothesis, we find that, on average, firms in weak-institution countries have a higher speed of adjustment (SOA) to their target payout ratio, pay dividends earlier in the lifecycle, and are more likely to disclose a dividend policy committing to pay a minimum percentage of earnings. Within-country tests show that, in weak-institution countries, the firms with the highest SOA dividend policies have fewer agency problems and an increased ability to raise external capital. Finally, returns tests around earnings announcements show that high-SOA dividend policies are associated with larger market reactions to earnings in weak-institution countries. Collectively, our findings suggest that dividend policy helps to alleviate agency conflicts in weak institution countries between firms and (future) investors.

   • Supplemental Materials: Online Appendix, Datasheet and Code.

7. Management Forecasts of Volatility (with Xiaoxia Peng). Review of Accounting Studies, 2021, 26 (2), 620–655. Abstract

   We examine the predictive information content of the management forecasts of stock return volatility (i.e., expected volatility) that are disclosed in annual reports. We find that expected volatility predicts near-term and longer-term stock return volatility and earnings volatility incremental to implied volatility, historical volatility, firm characteristics, and alternative measures of uncertainty. We also find that expected volatility reflects managers’ private information about their firms’ future investment activities, such as mergers and acquisitions and R&D intensity. Finally, we find that the predictive power of expected volatility is reduced when managers have stronger incentives to manage earnings. Overall, we provide novel evidence that management forecasts of volatility contain private information about future uncertainty that can be useful for forecasting volatility.

8. Earnings Beta. Review of Accounting Studies, 2021, 26 (1), 81–122. Abstract

   The literature on ‘cash flow’ or ‘earnings’ beta is theoretically well-motivated in its use of fundamentals, instead of returns, to measure systematic risk. However, empirical measures of earnings beta based on either log-linearizing the return equation or log-linearizing the clean-surplus accounting identity are often difficult to construct. I construct simple earnings betas based on various measures of realized and expected earnings, and find that an earnings beta based on price-scaled expectations shocks performs consistently well in explaining the cross-section of returns over 1981–2017. I also examine the relation between different measures of beta and several firm characteristics that are either theoretically connected to systematic risk or are empirically associated with returns, and find evidence in support of the construct validity of an earnings beta based on price-scaled expectations shocks. Overall, the findings suggest that this easy-to-construct earnings beta can be suitable for future researchers requiring a measure of systematic risk.

9. Do Common Inherited Beliefs and Values Influence CEO Pay? (with Ahmed Tahoun & Irem Tuna). Journal of Accounting and Economics, 2017, 64 (2–3), 346–367. Abstract

   We use the ethnicity of CEOs across 31 countries as a proxy for their common inherited beliefs and values and find an ethnicity effect in CEO variable pay. We find that the ethnicity effect in variable pay is not driven by the ethnicity effects in corporate policy decisions, and that changes in CEO compensation are significantly larger when CEOs are replaced with a person from a different ethnicity. Our estimated ethnicity effect captures the future time reference and religion of CEOs’ ancestors. Finally, we find an ethnicity effect in performance-firing sensitivities (i.e., the sensitivity to being fired due to poor performance).

10. Government Purchases Reloaded: Informational Insufficiency and Heterogeneity in Fiscal VARs (with Giovanni Ricco). Journal of Monetary Economics, 2017, 90 (October), 13–27. Abstract

    Using a large Bayesian VAR, we approximate the flow of information received by economic agents to investigate the effects of changes to government purchases. We document robust evidence that informational insufficiency in conventional models explains inconsistent results across samples and commonly employed identifications in recursive Structural VARs and Expectational VARs. Furthermore, we report heterogeneous effects of components of government purchases. While aggregate government purchases do not appear to produce strong stimulative effects with output multiplier around 0.7, government investment components have multipliers well above unity. State and local consumption, which captures investment in education and health, elicits a strong response.