Supporting the Next Generation: Double Smith Terp Pays It Forward

Debo Ayeni ’00, MBA ’07, leads Research and Analytics at ABR Capital Partners. A longtime Smith School supporter, he established a Maryland Promise Program Scholarship in 2024 and serves on the Accounting and Information Assurance Advisory Council. He believes in "paying it forward" to help future Smith students succeed.

The Options Market Could Play a Role in How Credit Rating Agencies Deliver Ratings

Smith professor Musa Subasi’s research, published in Management Science, examines whether credit rating agencies use options market data to improve rating accuracy. His study finds that higher options trading volume correlates with more accurate ratings, offering insights for regulatory discussions on credit ratings.

TerpTax: Understanding Education Tax Credits

Education tax credits can significantly lower tax bills, says Smith professor Samuel Handwerger. The American Opportunity and Lifetime Learning credits offer key savings, but eligibility rules matter. Students may claim credits if parents opt out. TerpTax offers free tax prep through April 14.

Blockchain Technology Could Bring Benefits to the Auditing Industry

Sean Cao, director of the Smith AI Initiative, has researched blockchain’s role in financial auditing for six years. His study, published in Management Science (2024), explores how permissioned blockchains enhance reporting integrity, reduce costs by 70%, and improve data privacy.

AI-powered Analysts

We explore how brokerage firms’ investments in artificial intelligence (AI) affect their analysts’ information production. We find that analysts employed at brokerage firms with greater AI integration issue more accurate earnings forecasts. Cross-sectional analyses reveal that AI’s benefits are more pronounced for analysts with less firm-specific experience and when the firm’s disclosures are more readable.

Do Credit Rating Agencies Learn from the Options Market?

Do credit rating agencies (CRAs) learn from the options market? We examine this question by exploring the relation between options trading activity and credit rating accuracy. We find that as options trading volume increases, credit ratings become more responsive to expected credit risk and exhibit greater ability to predict future defaults. We also find that CRAs rely more on the options market as a source of ratings-related information when firm default risk is higher, options trading is more informative, manager-provided information is of lower quality, and firm uncertainty is higher.

How to Talk When a Machine Is Listening: Corporate Disclosure in the Age of AI

Growing AI readership (proxied for by machine downloads and ownership by AI-equipped investors) motivates firms to prepare filings friendlier to machine processing and to mitigate linguistic tones that are unfavorably perceived by algorithms. Loughran and McDonald (2011) and BERT available since 2018 serve as event studies supporting attribution of the decrease in the measured negative sentiment to increased machine readership. This relationship is stronger among firms with higher benefits to (e.g., external financing needs) or lower cost (e.g., litigation risk) of sentiment management.

Risk Matters: Cyber Risk and AI – The Changing Landscape

Cyber risk is a top concern for organizations worldwide, intensified by AI's dual role in bolstering defenses and enhancing attacks. The Gordon-Loeb Model offers a cost-benefit framework to optimize cybersecurity investments, emphasizing AI's evolving, game-theoretic complexities.

TerpTax Alert: Unexpected $1,400 IRS Payments, Some in Error, to F-1 Students

Some F-1 visa students at UMD are receiving $1,400 IRS payments due to errors in stimulus eligibility. TerpTax, led by accounting lecturer Samuel Handwerger, advises returning these payments to avoid future tax and immigration complications. Assistance is available through TerpTax.

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