Wenfeng Wang. EDUCATION UNIVERSITY OF MARYLAND, COLLEGE PARK Ph.D. Accounting (Expected May 2016)

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1 Wenfeng Wang Robert H. Smith School of Business, University of Maryland 3330E Van Munching Hall College Park, Maryland Personal Webpage: EDUCATION UNIVERSITY OF MARYLAND, COLLEGE PARK Ph.D. Accounting (Expected May 2016) UNIVERSITY OF MASSACHUSETTS, AMHERST Master of Applied Mathematics (2011) UNIVERSITY OF FLORIDA Master of Accounting (2009) CENTRAL UNIVERSITY OF FINANCE AND ECONOMICS Bachelor of Arts, Accounting (2007) College Park, MD Amherst, MA Gainesville, FL Beijing, CHINA RESEARCH INTERESTS Audit market structure; Real effects of financial reporting; Capital market; Applied econometrics WORKING PAPER Industry Linkages and Audit Firms Industry Portfolio Choice: Evidence from Product Language (Dissertation) Committee: Rebecca Hann (Chair), Michael Kimbrough, Oliver Kim, Richmond Mathew, and Andrew Sweeting Financial Reporting Quality and Productivity Dispersion With Rebecca Hann and Yue Zheng, 2015 Measuring Information Overlap Across Sequential Forecasts With Oliver Kim and Donal Byard, 2015 Do Managers Timely Loss Recognition Choices Reflect Private Information? With Yi Cao, Ruyun Feng, and Michael D. Kimbrough, 2015 CONFERENCE PARTICIPATION AAA Annual Meeting, Chicago IL, August 2015 (Presenter, Ad-hoc Reviewer) AAA FARS Meeting, Nashville TN, January 2015 (Presenter, Ad-hoc Reviewer) AAA Annual Meeting, Atlanta GA, August 2014 (Presenter, Ad-hoc reviewer, Discussant) CONFERENCES ATTENDED FARS Midyear Meeting 2014, 2015 AAA Annual Meeting 2011, 2012, 2013, 2014, 2015 AAA/Deloitte/J. Michael Cook Doctoral Consortium 2015 Journal of Accounting and Public Policy Conference 2014 DC Area Accounting Symposium 2012, 2013, 2014, 2015

2 TEACHING INTERESTS Principles of Accounting, Intermediate Accounting, Financial Statement Analysis, Auditing TEACHING EXPERIENCE November 2015 Wenfeng Wang University of Maryland, College Park Instructor, Intermediate Financial Accounting I, (BMGT 310, Spring 2015), Evaluation (3.83/4.0) Instructor, Intermediate Financial Accounting I, (BMGT 310, Summer 2014), Evaluation (3.19/4.0) University of Massachusetts, Amherst Recitation Section Leader, Linear Methods and Probability for Business, (MATH 121, Fall Spring 2011), Department Interval Evaluation (No Rating) PROFESSIONAL AFFILIATION American Accounting Association HONORS AND AWARDS AAA/Deloitte/J. Michael Cook Doctoral Consortium Fellowship, 2015 Robert H. Smith School of Business Doctoral Fellowship, University of Massachusetts, Amherst Teaching Assistantship, First Classification Honor by ESC Rennes School of Business, 2007 Top Level Bachelor Thesis by ESC Rennes School of Business, 2007 First Prize of National Chemistry Competition, 1999 First Prize of Wood Plane Model Competition, 1999 Outstanding Member of Student Government, 1998 PROFESSIONAL QUALIFICATIONS CPA Exam, IL, US, Aug PROGRAMMING SKILLS Software: STATA, SAS, R REFERENCES Professor Rebecca Hann Associate Professor & KPMG Faculty Fellow rhann@rhsmith.umd.edu (301) Professor Michael Kimbrough Associate Professor & Cohn-Reznick Fellow mkimbrough@rhsmith.umd.edu (301) Professor Oliver Kim Professor okim@rhsmith.umd.edu (301)

3 WORKING PAPER ABSTRACT Industry Linkages and Audit Firms Industry Portfolio Choice: Evidence from Product Language (Dissertation, 2015) Audit firms fiercely compete on industry expertise. How do Big 4 audit firms choose which industry portfolio to specialize in? How do small audit firms choose which industry combination to jointly operate in? Audit firms are organized along industry lines and industry specialization is a prominent feature in the audit market. Yet, we know little about how audit firms make their industry portfolio decisions, i.e., how audit firms decide which set of industries to specialize in. In this study, I examine how the linkages between industries in the product space affect audit firms industry portfolio choice. Using text-based product space measures to capture these industry linkages, I find that both Big 4 and small audit firms tend to specialize in industry-pairs that 1) are close to each other in the product space (i.e., have more similar product language) and 2) have a greater number of between industries in the product space (i.e., have a greater number of industries with product language that is similar to both industries). Consistent with the basic tradeoff between specialization and coordination, these results suggest that specializing in industries that have more similar product language and more linkages to other industries in the product space allow audit firms greater flexibility to transfer industry-specific expertise across industries as well as greater mobility in the industry-network. Additional analysis using the collapse of Arthur Andersen as an exogenous supply shock in the audit market finds consistent results. Taken together, the findings suggest that industry linkages in the product space play an important role in shaping the industry network in the audit market. Financial Reporting Quality and Productivity Dispersion (with Rebecca Hann and Yue Zheng, 2015) Information frictions could impede resource allocation efficiency among firms. Would better financial reporting mitigate information friction and hence facilitate resource allocation efficiency across firms? Prior research documents large, persistent differences in productivity across firms, suggesting the presence of market frictions that impede the efficiency with which resources are reallocated from low- to high-productivity firms. We posit that high-quality financial reporting can mitigate one such friction information frictions that prevent market participants from having perfect information about firms productivity and hence about their relative productivity within an industry. Using a large sample of firms in the manufacturing sector, we find that industries with higher reporting quality tend to have smaller within-industry productivity dispersion, with this relation stronger for industries with greater external capital needs. In addition, using the change in segment reporting standard (from SFAS 14 to SFAS 131) as an exogenous shock to the reporting environment, we find that industries with a larger increase in reporting disaggregation after SFAS 131 i.e., a larger improvement in reporting quality experience a greater reduction in productivity dispersion. Taken together, these findings suggest that financial reporting quality has real effects at the industry level, with higher reporting quality facilitating more efficient allocation of resources across firms and thereby reducing productivity dispersion, in part through the capital market channel. 3

4 Measuring Information Overlap Across Sequential Forecasts (with Oliver Kim and Donal Byard, 2015) Financial analysts typically make their forecasts in a sequential order. How are information contained in such sequentially made forecasts linked? It is natural to think analysts would have incentive to incorporate information contained in existing forecasts into their forecasts and at the same time would incorporate their own private information. To what extent are they successful in absorbing information contained in existing forecasts? To what extent do they contribute their private information to their forecasts? In the paper, we attempt to answer these questions. This study investigates the information structure among sequentially made analysts forecasts. We outline a new model that can be used to estimate the difference in information between two sequential earnings forecasts as new information that is present only in the second forecast, and missing information that is only in the first. We find that new (missing) information is 40% (31%) between consecutive daily mean forecasts, and the two are positively correlated (+0.66). We also find that missing information decreases as the lag between paired forecasts increases. Our results suggest a number of hitherto unexplored aspects of analysts' information environment, such as: analysts have difficulty extracting information from prior forecasts, information heterogeneity among analysts arises from missing as well as new information, and information discovery and interpretation are related. Finally, we show analytically and empirically that new and missing information are key determinants of the structure of the optimal (i.e., more accurate) aggregate earnings forecast. Do Managers' Timely Loss Recognition Choices Reflect their Private Information? (with Yi Cao, Ruyun Feng, and Michael D. Kimbrough, 2015) The central debate on principles-based versus rules-based accountings is whether more principles-based accounting standards would allow more effective private information communication from managers to investors or induce more self-serving opportunistic behavior. In a specific setting, we ask whether managers choice of firms timely loss recognition reflect their private information about firms fundamentals? Stock returns reflect the market s assessment of economic news affecting the firm for the period based on public information. In the case of negative returns, a manager may choose not to record the full extent of bad economic news reflected in stock returns (i.e. a manager may exercise low timely loss recognition) if he believes he has private information that justifies a more favorable outlook than the pessimistic outlook reflected in stock returns. If the managers' more favorable view is ultimately revealed to be correct in subsequent periods then the negative stock returns in the current period will reverse in the subsequent period. Therefore, we examine the association between managers' choice of timely loss recognition and subsequent stock return reversals. Using several alternative firm-year measures of timely loss recognition, we document that firm-years with lower (higher) timely loss recognition are associated with greater (less) subsequent reversals of negative returns. This finding is consistent with managers basing their choice of timely loss recognition on their private information. We further find that the relationship between timely loss recognition and subsequent return reversals varies systematically with factors that affect the likelihood and extent to which managers' private information dominates the public information in returns. In contrast to 4

5 prior empirical studies that highlight the potentially distorting effects of managerial discretion, our study provides empirical evidence of an instance where managers use their discretion to reflect their private information in reported earnings. 5