Jenny Zha Giedt
Assistant Professor of
George Washington University
School of Business
- Companies seeking a potential sale or merger; the preliminary
sales process in mergers & acquisitions
- The implications of financial reports, including
accruals quality and disclosure choice, on capital markets
H. J. and J. Zha Giedt. (2023) "Mistaking Bad News for Good News? Mispricing of a Voluntary Disclosure" Presentation slides | Link
Motivation: We challenge the prevailing belief among investors that a corporate disclosure
about strategic alternatives is good news. Why do stock prices rise 5% on the announcement, yet future returns are -9%? We
propose that investors' susceptibility to a behavioral bias known as the "availability heuristic" (Tversky and Kahneman,
1973) causes overly optimistic expectations. Investors overweight the probabilty of a M&A transaction and underweight
the negative fundamental signal. Our archival and experimental evidence corroborates this overpricing story where we show
that investors are over-optimistic, analysts are over-optimistic, and we can manipulate experiment subjects to be optimistic.
We also address alternative explanations of the returns including risk premia and transaction costs.
 Zha Giedt, J. (2023) "Economic Consequences of Announcing Strategic Alternatives: A Voluntary Disclosure's
Benefits and Costs" Link
Conditionally accepted, Contemporary Accounting Research. Motivation:
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. Although these negative consequences affect all anouncing firms,
we observe the associated negative valuation impact only if the announcing firm is not acquired.
 Zha Giedt, J. (2022) "Why Are Firms Sold? Disentangling Target Motives and Bidders' Selection of
Targets in M&A" Link
Motivation: 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.
Nezlobin, A., R. G. Sloan, and J. Zha Giedt. (2022) "Construct Validity in Accruals Quality Research" The Accounting
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.
Larson, C. R., R. Sloan, and J. Zha Giedt. (2018) "Defining, Measuring and Modeling Accruals: A Guide for Researchers"
Review of Accounting Studies. Link
Motivation: 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.
 Zha Giedt, J. (2018) "Modelling
Receivables and Deferred Revenues to Detect Revenue Management" Abacus (Special Issue on Earnings Management). Link | PDF
Motivation: 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.
receivablet = α0 + α1*1/Avg assetst + α2*ΔRevenueQ123t + α3*ΔRevenueQ4t + α4*ΔCash flow from salest+1 +
ΔDeferred revenuet =
α0 + α1*1/Avg assetst + α2*ΔCash flow from salest + α3*ΔRevenuet+1 + et
 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 Review. Link
Motivation: 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.
P. M., R. G. Sloan, and J. Zha. (2014) "Stock Prices and Earnings: A History
of Research" Annual Review of Financial Economics. Link | PDF
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.
 Zha Giedt, J. and H. J. Rim (2023) "Does the Market Misprice Companies’ “Strategic Alternatives” Announcements?" Columbia
Law School Blue Sky Blog. Link
Motivation: 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.
 Zha Giedt, J. (2021) "Should A Company Reveal That It Is
Evaluating 'Strategic Alternatives'?" Duke University School of Law FinReg Blog. Link
Motivation: 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.
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 such as The Accounting Review, Review of Accounting
Studies, Abacus, and Annual Review of Financial Economics and corporate law websites such as Columbia
Law School's Blue Sky Blog and Duke University School of Law's FinReg Blog. At 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.
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. To date, several of my research projects aim to uncover new knowledge about this significant corporate event and its disclosure.
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.