Jenny Zha Giedt
Assistant Professor of Accountancy
George Washington University
School of Business
Washington, DC


Research Interests
  • The preliminary sales process in mergers & acquisitions
  • Companies seeking a major change in strategic direction ("strategic alternatives")
  • The implications of financial reports, including accruals quality and disclosure choice, on capital markets

Working Papers
[8] Rim, H. J. and J. Zha Giedt. (2023) "Mistaking Bad News for Good News? Mispricing of a Voluntary Disclosure" Presentation slides (old version) | Link 
We challenge the conventional belief among investors that a corporate disclosure about seeking strategic alternatives is good news. We propose that investors are susceptible to the "availability heuristic" (Tversky and Kahneman, 1973), causing them to overweight the probability of an M&A transaction and underweight the negative fundamental signal upon seeing such disclosures. Our archival and experimental evidence corroborates this overpricing story. We show that: (i) investors are overly optimistic when M&A availability is heightened, thus exacerbating future underperformance; (ii) future returns cluster around future earnings announcements, suggesting mispriced fundamentals; and (iii) institutional investors and short sellers appear aware of the mispricing. We also address risk and market frictions.
[7] Zha Giedt, J. (2022) "Why Are Firms Sold? Disentangling Target Motives and Bidders' Selection of Targets in M&A" Link
Academics and practitioners have long been interested in predicting takeover targets and understanding target firm motives. The usual approach of extant M&A studies is to compare ex-post target firms to non-target firms. However, this study aims to disentangle two selection processes: (1) firms self-select to become potential target firms and (2) the bidders choose their targets from the sample of available targets. I find that low performing firms volitionally seek their own sale or merger whereas bidders appear to select the relatively better performing and more efficient firms. In addition, this study compares and contrasts firms that voluntarily disclose their strategic alternatives evaluation with firms that experience a media leak of the process.
Published Papers
[6] Zha Giedt, J. (2023) "Economic Consequences of Announcing Strategic Alternatives: A Voluntary Disclosure's Benefits and Costs" Contemporary Accounting Research, forthcoming. Link
When a company seeks to sell itself in the M&A market, managers and directors must decide whether to publicly disclose the evaluation of strategic alternatives. Yet, little is known about the costs and benefits to the firm of publicly revealing this news. The benefits: The announcement leads to greater investor attention and a more robust M&A sales process, and ultimately, a valuation premium if a transaction is consumated. The costs: A public process consumes more resources, and the public news alienates stakeholders such as customers and employees, who withdraw their support from the company, leading to worse operating performance and lower employee growth. The disclosure's valuation benefit to shareholders is conditional on a subsequent takeover while the valuation penalty is unconditional, i.e., it impacts all disclosing firms.
[5] Nezlobin, A., R. G. Sloan, and J. Zha Giedt. (2022) "Construct Validity in Accruals Quality Research" The Accounting ReviewLink
This study provides a analytical and numerical assessment of the most commonly-used measures of accruals quality. An ideal empirical measure of AQ would not be associated with underlying economic parameters of a firm's earnings; moreover, it would also be monotonically increasing or decreasing in the presence of various types of accruals errors and have significant test power to detect lower AQ in the treatment versus control firms. While none of the 5 extant or 2 new measures we analyze provide a panacea, they vary in how close they come to achieving the ideal characteristics. Our results should be useful to researchers in choosing which combination of accrual quality proxies to use and in interpreting research findings.
[4] Larson, C. R., R. Sloan, and J. Zha Giedt. (2018) "Defining, Measuring and Modeling Accruals: A Guide for Researchers" Review of Accounting StudiesLink
Measures of accruals and models of discretionary accruals are widely used in financial accounting research. Yet, empirical researchers are faced with many measures and models to choose from, where some of popular choices are incomplete and fragmented. To guide researchers, this paper provides a comprehensive definition and measure of accruals, and shows how some of the extant measures of accruals fit in as a component of "comprehensive accruals." For researchers interested in modeling non-discretionary accruals, this paper provides a more comprehensive model specification that takes into account the normal properties of accruals. Overall, we urge researchers to carefully consider which measure of accruals to use and how to model normal variation in accruals.
[3] Zha Giedt, J. (2018) "Modelling Receivables and Deferred Revenues to Detect Revenue Management" Abacus (Special Issue on Earnings Management). Link
Researchers and regulators interested in detecting managerial discretion in revenue recognition should examine specific revenue-related accruals, specifically accounts receivables and deferred revenues. The proposed revenue accruals model combines and extends Caylor's (2010) and Stubben's (2010) models. This new model exhibits greater goodness-of-fit, greater power, and less misspecification than extant models. The intuition is as follows: First, the origination of an accounts receivable accrual is explained by contemporaneous revenue, and the reversal is explained by future cash collections from customers. Second, the origination of a deferred revenue accrual is explained by contemporaneous cash collections from customers, and the reversal is explained by future recognized revenue.
ΔAccounts receivablet = α0 + α1*1/Avg assetst + α2*ΔRevenueQ123t + α3*ΔRevenueQ4t + α4*ΔCash flow from salest+1 + et
ΔDeferred revenuet = α0 + α1*1/Avg assetst + α2*ΔCash flow from salest + α3*ΔRevenuet+1 + et 
[2] Patatoukas, P. N., R. G. Sloan, and J. Zha. (2015) "On the Pricing of Mandatory DCF Disclosures: Evidence from Oil and Gas Royalty Trusts" The Accounting ReviewLink
In the value-relevance literature, tests of the relation between an asset's value on the financial statements and the asset's market value are typically plagued by measurement issues, from imputing the asset's market value, and model misspecification issues, from imperfectly controlling for the company's other assets and liabilities. Oil and gas royalty trusts, however, provide a cleaner setting to conduct a value-relevance test because the primary assets of these trusts are mature oil and gas reserves, their other assets and liabilities are negligible, and the asset's estimated value is clearly disclosed in 10-Ks. We find that managerial DCF estimates of oil and gas reserves are priced by investors, yet investors may buoyantly overlook the finite nature of these reserves until media converage prompts the stock price to coverge with the DCF estimate.
[1] Dechow, P. M., R. G. Sloan, and J. Zha. (2014) "Stock Prices and Earnings: A History of Research" Annual Review of Financial EconomicsLink | PDF
The financial accounting and capital markets literature is storied and vast. This paper summarizes the main properties of earnings and its components, and how they are useful to investors and relate to stock prices. Select empirical findings in this area are extended to the present period, including price and volume reactions to accounting information, the value-relevance of various earnings measures, and portfolio returns to accounting-based trading strategies.

Other Articles
[10] Zha Giedt, J. and H. J. Rim (2023) "Does the Market Misprice Companies’ “Strategic Alternatives” Announcements?" Columbia Law School Blue Sky BlogLink
The news that a company is evaluating strategic alternatives seems to trigger an irrational response marked by inefficient stock price movement. We propose that a cognitive bias known as the “availability heuristic" explains why investors are systematically overly optimistic upon seeing these types of corporate announcements.

[9] Zha Giedt, J. (2021) "Should A Company Reveal That It Is Evaluating 'Strategic Alternatives'?" Duke University School of Law FinReg BlogLink
Before publicly revealing that the company is evaluating strategic alternatives, the corporate leaders should consider the potential benefits and drawbacks of the news affecting share prices, the M&A sales process, employees and customers. There is no correct 'one size fits all' approach, but the decision should weigh the individual company's circumstances. This article describes some key considerations. 

About Me
I am an assistant professor at the George Washington University School of Business. My research examines corporate financial accounting quality and disclosure choices and their effects on the stock market and the market for corporate control. My research has been published in academic journals including The Accounting Review, Review of Accounting Studies, Contemporary Accounting Research (in press), Abacus, and Annual Review of Financial Economics and featured on corporate law websites such as Columbia Law School's Blue Sky Blog and Duke University School of Law's FinReg BlogAt GWU, I teach the financial accounting core class for undergraduates and previously taught a research seminar for doctoral students. I am involved in academic and professional service activities, having served as a reviewer for journals and conferences, as a moderator for industry panel events hosted by Bloomberg and the School of Business, and as member of the program committee for the School of Business' annual accounting research conference and the American Accounting Association.
I graduated with a PhD in Business Administration with an Accounting emphasis from the Haas School of Business at UC Berkeley in 2016 and was a Deloitte Foundation Doctoral Fellow. My UC Berkeley dissertation explores why certain companies voluntarily announce that they are seeking strategic alternatives and documents the costs and benefits associated with the announcement: "Voluntary Disclosure of Strategic Alternatives: A Cost-Benefit Analysis" (2016) Link. One of my continued research interests is understanding companies' evaluations of strategic alternatives, which is when a firm calls into question its existing standalone strategy in search of shareholder value maximization.
Prior to Berkeley, I worked as an auditor and forensic accountant at KPMG in Los Angeles, CA, and obtained my CPA license. I also worked in the mutual fund and hedge fund industries, with US Bank and Dorchester Capital. I graduated with my Bachelor's degrees in Accounting and Business Administration (Finance emphasis) and minored in Mathematics at the University of Southern California.
In my spare time, I enjoy figure skating, skiing, classical ballet, theatre, and spending time with my young family.