Paul A. Griffin
Professor of Management
Research Expertise: Accounting, accounting and financial theory, evaluation of accounting methods, financial information and disclosures
Professor Paul Griffin is a leading international authority in accounting and financial information and disclosures. He has published over 50 articles in leading accounting and finance journals, five research monographs for the Financial Accounting Standards Board, and two case books on U.S. corporate financial reporting. His research has had a substantial impact on the profession. According to a study of influential articles, he is one of a small group whose articles are now “classics” in the field.
His recent publications in accounting and auditing focus on audit fee behavior, corporate governance under Sarbanes-Oxley, stock option compensation, and SEC reporting under Regulation FD. His current research projects examine relations between stock prices and greenhouse gas emissions and the informational role of short interest for corporate bond prices. In 2012, Professor Griffin will begin a three-year term as co-editor of Accounting Horizons.
Prior to Davis, he served as assistant professor at the Graduate School of Business, Stanford University.
Room 3410
The Relevance to Investors of Greenhouse Gas Emission Disclosures
This study by Professor Paul Griffin and co-authors David H. Lont from the University of Otago and Yuan Sun from the University of California, Berkeley Haas School of Business documents that investors care about companies’ greenhouse gas (GHG) emission disclosures.
Greenhouse Gas Reports Send Stock Prices Higher?
This article cites Professor Paul Griffin’s recent research that showed how stock prices jumped when the companies he studied voluntarily disclosed their greenhouse gas emissions.
Price Discovery in the Corporate Bond Market: The Informational Role of Short Interest
This paper identifies a precursory role of short sellers in conveying adverse information to the corporate bond market. Professor Paul Griffin and co-author Hyun A. Hong from the University of Memphis study this in two ways: by examining subsequent calendar month excess (risk-adjusted) bond returns for portfolios formed on the basis of high short interest in a prior month, and by analyzing abnormal short interest and daily bond returns around earnings announcements.
Professor Paul Griffin, Accounting
"Business is not about individual cultures and all that. It’s about economic growth and prosperity."
One of the longest serving faculty members, Professor Paul Griffin has been at the Graduate School of Management since 1981. He talks about teaching at the School, the student experience and how it translates to the business world. “Business is not about individual cultures and all that. It’s about economic growth and prosperity. That’s what we’re here for: to learn about that and understand how to make the world a better place.”
It Pays to Be Green: The Market Talks Back
Recently, I worked with Yuan Sun of UC Berkeley to release a study showing that companies that released information about their greenhouse gas emissions and carbon reduction strategies saw their stock values rise. We tracked stock prices of firms around the time these companies voluntarily issued press releases disclosing carbon emission information. In the days following the press releases, these companies experienced a significant increase in their stock price.
It Pays to Be Green: The Market Talks Back
Professor Griffin explains why investors are attracted to companies who disclose their greenhouse gas emissions & carbon reduction strategies.
Recently, I worked with Yuan Sun of UC Berkeley to release a study showing that companies that released information about their greenhouse gas emissions and carbon reduction strategies saw their stock values rise. We tracked stock prices of firms around the time these companies voluntarily issued press releases disclosing carbon emission information. In the days following the press releases, these companies experienced a significant increase in their stock price.
Insightful Insiders? Insider Trading and Stock Return around Debt Covenant Violation Disclosures
This paper documents significant trading by insiders around a first-time debt covenant
violation disclosure in an SEC filing. This is interesting from a research and regulatory
standpoint because of three considerations: the delay and infrequency of a new covenant
violation disclosure, a lack of attention to covenant disclosures by regulators, and a dearth of
research.
‘Green’ Disclosures Bump Up Stock Prices
This article reports on Paul Griffin’s recent study “Going Green: Market Reaction to CSR Newswire Releases” in which he found that share prices went up for companies that reported their greenhouse emissions reduction strategies.
“Companies should not be as reluctant as they have been to provide this information because we show that it can be shareholder-positive,” said Griffin. “Our message is that it pays to be green.”
New Research: Voluntary Disclosure Produces Positive Returns For Shareholders
This article explains the recent study “Going Green: Market Reaction to CSR Newswire Releases” by Professor Paul Griffin. “A lot of people were saying we need to engage in a climate change strategy,” said Griffin, “but there was little or no evidence that this was improving shareholder value. We wanted to look at whether there was an association between voluntary disclosure and shareholder price.”
Companies Get a Boost in Stock from Reporting Greenhouse Gas Info
This article puts Professor Paul Griffin’s study “Going Green: Market Reaction to CSR Newswire Releases” into a larger context of other research about how the market reacts to companies’ sustainability. “It’s a transparency issue,” said Griffin. “(On average), it’s ok to go ahead and do these and not be fearful the market will misinterpret them or take them the wrong way.”
Auditor Fees Around Dismissals and Resignations: Additional Evidence
This paper offers new findings on the relation between auditor dismissals and resignations and audit fees. Unlike the prior research, which studies the fees of auditors after an auditor change, UC Davis Professor Paul Griffin and co-author David H. Lont from the University of Otago, Dunedin focus on audit fees before an auditor change. Their evidence shows that incumbent auditors charge unusually higher fees at least one year prior to an auditor change event. The existence of unusual fee adjustments by incumbents may serve as a precursor of such events.
Auditors’ Fees Give Clues to Bearish News
Investors and stock analysts should keep an eye on unexplainable increases in companies’ auditors’ fees to avoid losing money in a future drop in stock prices at those companies.
“A rise in audit fees acts to deliver a precursory message about trouble within the company,” said Professor Paul Griffin. “Auditors’ fees, which are reported to the Securities and Exchange Commission and are public, will go up if the auditors are worried about irregularities that can cause them to have legal exposure.”
Disclosing Greenhouse Gas Emissions Boosts Business, Study Finds
A pair of California business school researchers has found that companies that disclose greenhouse gas emissions enjoy an immediate rise in stock value and positive returns to shareholders.
“When a company makes a voluntary disclosure of this kind, it signals to the investment community that this is a firm that is environmentally responsible,” Paul Griffin of UC Davis told The Daily Climate, an environmental news source. “Investors are saying they would prefer to invest in an environmentally responsible firm.”
Could Facebook be Worth More Than $100 Billion?
By Professor Paul Griffin
While many have commented on Facebook’s market capitalization following its IPO later this year, the media has reported mostly back-of-the-envelope calculations, such as a multiple of current earnings and other estimates. A more conceptually-grounded approach would value Facebook based on projected free cash flows and also, perhaps, residual earnings.
Such an approach would also likely be similar to that followed by the institutions that may commit substantial sums for investment. Using this well-supported method, a reasonable case can be made for a value that exceeds $100 billion.
Study: Companies That Volunteer Emissions Strategies See Stock Prices Rise
This article reports on Professor Paul Griffin’s study,”Going Green: Market Reaction to CSR Newswire Releases,” which examined stock prices of companies that publicized their strategies to reduce greenhouse gas emissions. The study found that after the announcements, companies had higher stock prices.
Energy Disclosure Can Aid Stock, UC Davis Study Finds
This article reports on Professor Paul Griffin’s recent study, “Going Green: Market Reaction to CSR Newswire releases,” which found that in the days after firms voluntarily released emission information, their stock prices increased significantly.
Going Green: Brilliant for Business
This article discusses Professor Paul Griffin’s recent study, “Going Green: Market Reaction to CSR Newswire Releases” in which he shows that stock values rise when companies disclose their sustainable practices.
Going Green: Market Reaction to CSR Newswire Releases
Voluntary disclosure theory predicts that an optimal disclosure decision should produce an overall net benefit for shareholders, and that such net benefit should decrease in public information availability.
This study supports the predictions of disclosure theory in the context of climate change. Using voluntary disclosures made through the CSR newswire service, we find that managers’ disclosure decisions involving greenhouse gas emissions produce positive returns to shareholders. This response varies negatively with company size and public information availability.
Shareholders Boost Carbon Disclosure – UC Davis Study
Daily Climate
This article cites Professor Paul Griffin’s recent study, “Going Green: Market Reaction to CSR Newswire Releases” and compares the study’s findings with efforts to put pressure on companies to disclose greenhouse emissions and to develop strategies to reduce them.
Stock values rise when companies disclose “green” information
See the News Release on Paul Griffin's latest study
A UC Davis study finds that it pays to be green, as companies that are open about their greenhouse gas emissions and carbon reduction strategies see stock values rise.
Graduate School of Management Professor Paul Griffin and his co-author, Yuan Sun of UC Berkeley, tracked stock prices of firms around the time these companies voluntarily issued press releases disclosing carbon emission information. In the days after the press releases were issued, the companies saw their stock prices increase significantly, Griffin and Sun found.
Stock values rise when companies disclose “green” information, UC Davis study finds
(Davis, CA) — A UC Davis study finds that it pays to be green, as companies that are open about their greenhouse gas emissions and carbon reduction strategies see stock values rise.
Graduate School of Management Professor Paul Griffin and his co-author, Yuan Sun of UC Berkeley, tracked stock prices of firms around the time these companies voluntarily issued press releases disclosing carbon emission information. In the days after the press releases were issued, the companies saw their stock prices increase significantly, Griffin and Sun found.
Auditors’ Fees Give Clues to Bearish News for Investors
(Davis, CA) — Unexplained increases in a company’s auditor fees may foreshadow a future drop in stock prices, according to a new University of California, Davis, study.
“A rise in audit fees acts to deliver a precursory message about trouble within the company,” said one of the study’s authors, Paul Griffin, a professor at the UC Davis Graduate School of Management. “Auditors’ fees, which are reported to the Securities and Exchange Commission and are public, will go up if the auditors are worried about irregularities that can cause them to have legal exposure.”
Keep an Eye on Stock Short Sellers to Avoid Losing in Bond Investments Too, UC Davis Study Says
Savvy investors who follow short sellers to predict bearish news about a company’s stock — and sell their stocks in that company to avoid losses – should keep an eye on the company’s bonds as well, a new UC Davis study suggests.
Paul A. Griffin Recent Awards
Help for Disabled Vets
Community Consulting Group Provides Road Map for The Pathway Home
by Professor Paul Griffin
Nestled among the world-renowned vineyards of the Napa Valley is The Pathway Home, an innovative therapeutic community for U.S. soldiers returning from the frontlines of Afghanistan and Iraq who suffer from post-traumatic stress disorder (PTSD) and traumatic brain injury (TBI).
Suspicious Insider Trading around Company Debt Renegotiation
Insiders have reaped substantial profits from increased trading of a faltering company’s stock when the firm is renegotiating its debt, according to a recent study by Professor Paul Griffin and colleagues David Lont and Kate McClune of the University of Otago, New Zealand. The aggregate return to insider traders—the sum of their losses avoided from selling and their gains from buying stock—approached nearly $2 billion over an eight-year period. The study tracked insider stock transactions during or near 1,718 first-time disclosures of debt covenant violations by U.S.
272 Evaluation of Financial Information
Evaluates the information in financial reports of business enterprises, with an emphasis on the uses of financial statements by business managers and persons outside the firm, such as investors, creditors and financial analysts. Studies U.S. and U.K. enterprises. Covers techniques of financial analysis, evaluation of the quality of financial data, prediction of financial variables, cash flow and accounting valuation models, analysis of significant transactions, stock market effects of accounting information. 270 recommended.
270 Corporate Financial Reporting
Critically analyzes and evaluates contemporary issues in corporate accounting and financial reporting, and develops implications of those issues for managers, investors, independent accountants, and policy makers. Focuses on the underlying accounting concepts and the motivations for and consequences of accounting and disclosure alternatives. Discusses research findings and legal implications where relevant. Covers generally accepted accounting principles for industrials, banks, and other organizations.
Who Benefits from Stock Buybacks?
In 2007 U.S. companies spent $1 trillion on stock buybacks that exceeded dividends paid and accounted for two-thirds of net income. Since 2000 those same companies distributed $3 trillion to shareholders through buybacks.
Professor Paul Griffin Named Co-Editor of American Accounting Association’s Accounting Horizons
(Davis, CA) — The American Accounting Association has named Professor Paul Griffin as co‐editor of Accounting Horizons, one of the association’s two flagship academic journals.
Joint University Study on Insider Trading Wins Prize
Professor Paul Griffin’s ground-breaking research on insider trading suggest that U.S. companies gleaned almost $2 Billion in profits from buying and selling of stock in faltering companies. The joint-study was conducted with the University of Otago’s School of Business in New Zealand.
Critics say Companies Waste Cash on Buybacks
Professor Paul Griffin is cited in a discussion on the efficiency of company stock buybacks. Corporate executives and boards of directors can easily make their stock options more valuable without making any improvement to the business by executing buybacks, says Griffin.
UC Davis Study Finds Insiders Earned $2 Billion Trading Faltering Companies’ Stock
Inside traders at public U.S. companies made nearly $2 billion from 2000 to 2007, according to the study led by Paul Griffin, a professor in UCD’s Graduate School of Management. The study tracked insider stock transactions that occurred during or near 1,718 first-time disclosures of debt covenant violations by companies. Statistical analysis showed that insiders sold stock one to two months ahead of market declines preceding a disclosure, and bought shares one to two months ahead of market recovery.
UC Davis Study Finds Suspicious and Highly Profitable Insider Stock Trading around Company Debt Renegotiation
(Davis, CA) — Insiders have reaped substantial profits from increased trading of a faltering company’s stock when the firm is renegotiating its debt, according to a new study by GSM Professor Paul Griffin and David Lont of the University of Otago in New Zealand.
UC Davis Study Finds Greenhouse Gas Emissions Can Hurt Companies’ Stock Value
How much greenhouse gas a company produces has a significant effect on the value of the company’s stock, according to a new study by Professor Paul Griffin and colleagues from the Univeristy of Otago and UC Berkeley.
UC Davis Experts on Wall Street Reform Law
Dean Steven Currall and Professor Paul Griffin are experts available to comment to media about the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law on July 21.
Small Investors See Red Over Cap and Trade
Small investors could be big losers if a federal climate change plan known as cap and trade becomes law and accounting standards for carbon credits are not yet established, suggests a new study by Professor Paul Griffin.
Small Investors Could Be Big Losers Under Federal Climate Change Legislation
Small investors could be big losers if a greenhouse gas reduction plan known as cap and trade becomes law and accounting standards for carbon credits have not been established, according to a new study released today by University of California, Davis Professor Paul Griffin.
Agency Problems and Audit Fees: Further Tests of the Free Cash Flow Hypothesis
Accounting & Finance, 2010
This study, by Professor Paul Griffin and co-authors David H. Lont from the University of Otago and Yuan Sun from UC Berkeley, finds that the agency problems of companies with high free cash flow (FCF) and low growth opportunities induce auditors of companies in the United States to raise audit fees to compensate for the additional effort. They also find that high FCF companies with high growth prospects have higher audit fees.
High Free Cash Flow Means Auditors Must Delve Deeper
Companies that generate high levels of cash flow might appear to be a solid market investment. However, finance researchers have shown that when companies build up more cash flow than they need, errant managers tend to spend the excess unwisely, which can actually drain shareholder value.
MBA Students in Financial Analysis Course Issue Mostly “Buy” Recommendations
Students in Professor Paul Griffin’s MBA elective on financial analysis and valuation recently presented their detailed reports on company value, issuing “buy” recommendations on a few gems whose potential Wall Street may not yet fully appreciate, perhaps because they has been unfairly trampled by negative sentiment.
Stealth Compensation: Scrutinizing Stock Buybacks
In the midst of the financial crisis and taxpayer-funded bailouts of the likes of AIG, public outrage and government scrutiny over the pay packages of executives at companies receiving federal aid has reached new heights. Largely missing from the debate over executive compensation is the unintended consequence that accounting rules have on rewards in the form of stock buybacks.
Governance Regulatory Changes, International Financial Reporting Standards Adoption, and New Zealand Audit and Non-Audit Fees: Empirical Evidence
Accounting and Finance, 2009
This study, by Professor Paul Griffin and co-authors David H. Lont from the University of Otago and Yuan Sun from UC Berkeley, examines the association between overseas and New Zealand governance regulatory reforms and New Zealand companies’ audit and non-audit fees.
New Tax Law a Windfall for Buyers of Struggling Banks
With all eyes on the $700 billion in bailout funds, some of the nation’s largest banks have received additional financial help thanks to a new tax policy quietly issued by the Treasury Department in September. Professor Paul Griffin an internationally recognized specialist in the areas of accounting, financial valuation and business taxation, has been called on to unravel the complex implications of the sweeping change, which gives substantial tax breaks to companies that acquire struggling banks hit hard by the sub-prime mortgage crisis.
New Zealand Auditing Firms Increase Rates: Sarbanes-Oxley Not to Blame
While audit fees have gone up substantially in the U.S. since 2002 in response to the Sarbanes-Oxley Act (SOX) and related regulations, it is unclear whether such reforms should have a major impact on audit markets in other countries. How have New Zealand audit firms fared in light of such regulatory initiatives? According to Professor Paul Griffin and his co-authors Yuan Sun and David Lont of the University of Otago, New Zealand, auditing firms reacted differently to the change by not raising their fees following the passage of SOX.
UC Davis MBAs Uncover Possible Stock Mispricing in Turbulant Market
Professor Paul Griffin’s recent class on company valuation analysis posed a special challenge this year: how to value a company in tough economic times, including the impact of the subprime debt crisis. Despite the challenging market conditions, students spotlighted several companies believed to be significantly mispriced by equity investors.
Improved Corporate Governance Reduces Auditing Fees
Professor Paul Griffin and his coauthors David Lont and Yuan Sun of the School of Business, University Otago, Dunedin, recently presented their article “Corporate Governance and Audit Fees: Evidence of Countervailing Relations” at a joint symposium hosted by the Journal of Contemporary Accounting and Economics and Auditing: A Journal of Practice & Theory at The Hong Kong Polytechnic University on January 4-5, 2008.
Auditor Quits, Stock Sinks
Stock prices dip about three percentage points immediately following the announcement of an auditor’s resignation, a study by Professor Paul Griffin shows. “A resignation seems to foreshadow an underlying message about changes in fundamentals, particularly future profitability and growth, Griffin says.” Read the study online.
Auditor Quits: Warning Sign of Stock Risk
Public companies that have had auditors recently resign may not be a good stock investment. The stock prices of these companies dip by about three percentage points following the announcement of an auditor’s resignation, according to a study by Professor Paul Griffin and co-author David Lont of the University of Otago, New Zealand.