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David Farber - Indiana University, Kelley School of Business. Indianapolis, IN, US

David Farber David Farber

Associate Professor of Accounting | Indiana University, Kelley School of Business

Indianapolis, IN, UNITED STATES

David Farber’s research interests include corporate governance, financial reporting and managerial characteristics.



Dave Farber is an associate professor in accounting. He joins the Kelley faculty from the University of Texas at El Paso, where he was a professor and the Paul L. Foster and Alejandra de la Vega Foster Distinguished Chair in International Business. Farber has also worked at McGill University, the University of Missouri and Michigan State University.

He received his PhD in management, with an accounting concentration, from the Johnson Graduate School of Management at Cornell University. He received his MBA from the City University of New York/Baruch College and his undergraduate degree in economics from State University of New York at Stony Brook. Before beginning his career in higher education, Farber worked as an auditor for Deloitte and as a corporate controller.

Farber’s research interests include corporate governance, financial reporting and managerial characteristics. He has been published in The Accounting Review, Contemporary Accounting Research, Journal of Accounting Research and Accounting Horizons. Farber says much of his research is motivated by financial matters happening in the world today.

Industry Expertise (3)




Areas of Expertise (3)

Managerial Characteristics

Corporate Governance

Financial Reporting

Accomplishments (1)

Best Paper Award, Financial Accounting and Reporting Section (professional)

2010 American Accounting Association

Education (4)

Johnson Graduate School of Management, Cornell University: Ph.D, Management (Accounting) 2002

Johnson Graduate School of Management, Cornell University: MS, Management 2002

City University of New York/Baruch College: MBA, Accounting 1990

State University of New York at Stony Brook: B.A., Economics 1983

Research Grants (3)

Jeffrey E. Smith Summer Scholar Award

Mizzou Alumni $30,000


International Travel Grant

Trulaske College of Business $1,000


Research Board Grant

University of Missouri $6,500

2006 - 2007

Articles (7)

Audit Committee Accounting Expertise, Analyst Following, and Market Liquidity

Journal of Accounting, Auditing & Finance

David B Farber, Shawn X Huang, Elaine Mauldin

2016 We study the relation between audit committee accounting expertise, analyst following, and market liquidity. Our main results indicate that analyst following increases subsequent to the appointment of an accounting expert to the audit committee. We also provide evidence that accrual quality, as opposed to audit quality or management earnings forecasts, is the channel through which accounting expertise increases analyst following and improves analyst forecast properties. We also show that audit committee accounting expertise is related to higher trading volume and lower liquidity risk, supporting incentives for greater analyst following. Our study extends prior literature by providing evidence that audit committee accounting expertise enhances firms’ information environment beyond the effects it has on financial reporting quality or analysts’ forecast properties. Our study also complements the literature on determinants of analyst following and market liquidity, both of which are related to cost of capital. Results from our study should be useful to firms seeking to enhance analyst following and market liquidity.

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Changes in operational efficiency and firm performance: a frontier analysis approach

Contemporary Accounting Research

Bok Baik, Joon Chae, Sunhwa Choi, David B Farber

2013 In this study, we examine the relation between operational efficiency and firm performance. In particular, we are interested in examining whether measures of operational efficiency derived from frontier analysis improve profitability forecasts and, if so, whether capital market participants impound the predictive information in the efficiency measures. This is important to understand because future profitability is linked to firm valuation (Ohlson 1995).

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CEO ability and management earnings forecasts

Contemporary Accounting Research

BOK Baik, David B Farber, Sam Sunghan Lee

2011 In this study, we examine the relation between chief executive officer (CEO) ability and management earnings forecasts. Trueman (1986) theorizes that, because a manager's ability to identify changes in his⁄ her firm's underlying economics is value relevant, a manager with equity-based incentives will voluntarily issue an earnings forecast as a signal to the market that the manager has identified such changes.

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Highlights of Corporate Governance Research

Journal of Accountancy

David Farber, Cindy Bolt and Steve Moehrle

2011 Several corporate governance developments have occurred in the wake of the high-profile scandals of the past decade. Some of these developments are motivated by legislation such as the Sarbanes-Oxley Act of 2002 (SOX). Others are best practices enhancements intended to shore up investor confidence. Academic research has monitored these developments. This article summarizes important academic findings and observations recently published in prominent accounting and finance journals

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Analysts' incentives and street earnings

Journal of Accounting Research

Bok Baik, David B Farber, Kathy Petroni

2009 We examine whether analysts' incentives are associated with street earnings. Because prior research argues that analysts' incentives to promote stocks increase in the extent to which the stock exhibits glamour characteristics, we predict that analysts are more likely to make income-increasing adjustments in determining street earnings for glamour stocks than for value stocks. We find that analysts are more likely to exclude expense items from street earnings for glamour stocks than for value stocks and that excluded expense items help predict future earnings for glamour stocks but not for value stocks. Overall, our results suggest that analysts' self-interest influences street earnings and this self-interest leads to street earnings that are less useful in predicting future earnings for glamour stocks.

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Earnings restatements, changes in CEO compensation, and firm performance

The Accounting Review

Qiang Cheng, David B Farber

2008 Prior research finds that earnings restatements are linked to CEOs’ excessive option-based compensation and equity holdings. In this paper, we investigate whether firms that experience earnings restatements recontract with their CEOs to reduce their option-based compensation and if so, whether this leads to improved firm performance. Based on 289 restatement firms over the period 1997–2001, we find that the proportion of CEOs’ compensation in the form of options declines significantly in the two years following the restatement. Furthermore, we document that this reduction is accompanied by a decrease in the riskiness of investments, as reflected in lower stock return volatility and subsequent improvements in operating performance. Our results suggest that a decrease in option-based compensation reduces CEOs’ incentives to take excessively risky investments, resulting in improved profitability. Overall, our findings provide insights into the design and efficacy of CEO compensation contracts.

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Response to the FASB’s preliminary views on financial instruments with the characteristics of equity

Accounting Horizons

Patrick E Hopkins, Christine A Botosan, Mark T Bradshaw, Carolyn M Callahan, Jack Ciesielski, David B Farber, Leslie D Hodder, Mark J Kohlbeck, Robert Laux, Thomas L Stober, Phillip C Stocken, Teri Lombardi Yohn, American Accounting Association’s Financial Accounting and Reporting Section of the Financial Reporting Policy Committee

2008 he Financial Reporting Policy Committee (the Committee) of the Financial Accounting and Reporting Section of the American Accounting Association is charged with responding to discussion memoranda and exposure drafts on financial accounting and reporting issues. 1 On July 13, 2007, the SEC released a proposal to accept financial statements prepared in accordance with International Financial Reporting Standards (IFRS) as published by the International Accounting Standards Board (IASB) from foreign-private issuers without reconciliation to U.S. generally.

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