Eliza (Xia) Zhang - College of Business

Eliza (Xia) Zhang
University of Missouri-Columbia
School of Accountancy
Trulaske College of Business
Columbia, MO 65211
Office: (573) 884-1678
Cell: (573) 823-5607
E-mail: xz98f@mail.missouri.edu
EDUCATION
University of Missouri-Columbia, Columbia, MO
Ph.D. in Accounting
Xi’an Jiaotong University, Xi’an, P.R. China
Master of Management, accounting concentration
Bachelor of Management, accounting concentration
May 2015 (expected)
June 2007
June 2004
RESEARCH INTERESTS
Financial reporting, voluntary disclosures, credit rating agencies, capital markets, auditing
TEACHING INTERESTS
Financial Accounting, Managerial Accounting
DISSERTATION

Does CEO tenure influence corporate bond rating properties?
Abstract: This study examines whether and how corporate bond rating quality varies with
CEO tenure. Due to the expansive roles of credit ratings in capital market, managers have
incentives to maintain or improve their ratings. Accumulated firm experience enables
longer-tenured CEOs to use strategic communications with rating agencies more
extensively and more effectively to achieve desired rating outcomes, leading to lower
rating quality. Consistent with this prediction, I find that ratings are less accurate, less
timely, and more volatile for issuers with longer-tenured CEOs. All these results hold after
controlling for CEO tenure’s impact through public information sharing, suggesting that
longer-tenured CEOs manage credit ratings through private information sharing with rating
agencies. My results also indicate that investors do not understand such rating management
by longer-tenured CEOs.
WORKING PAPERS

Is there a dark side to earnings smoothing? Evidence of stock price crash risk (with
Inder Khurana and Raynolde Pereira), revised for 2nd round resubmission at Contemporary
Accounting Research
1
Abstract: Using a large sample of U.S. public firms for the years 1993 through 2011, we
find a robust positive association between earnings smoothing and firm-specific stock price
crash risk after controlling for discretionary accruals that may lead to earnings smoothing.
Further, we find managers’ discretionary choices leading to earnings smoothing affect the
likelihood of crash risk. Specifically, when we measure earnings smoothing achieved
through managerial discretion over expenses and production (i.e., real earnings
smoothing), we find real earnings smoothing increases firm-specific stock price crash risk.
We also find the positive earnings smoothing–stock price crash risk relation is decreased
for firms with stringent external monitoring due to higher analyst coverage and long-term
institutional ownership. Overall, our study highlights the darker side of earnings
smoothing, in that it enables managers to conceal bad news and facilitate asset diversion,
which points to the role of real earnings smoothing in inducing crash risk.

Cash flow opacity and stock price crash risk (with C.S. Agnes Cheng and Inder
Khurana), revised for 2nd round resubmission at The Accounting Review
Abstract: We examine the relation between cash flow from operations (CFO) opacity and
firm-specific stock price crash risk. We find that CFO opacity predicts future stock price
crash risk incremental to accrual-based earnings opacity. We also find that the adverse
effect of CFO opacity is more severe than that of accrual-based earnings opacity, and it
becomes more pronounced after passage of the 2002 Sarbanes-Oxley (SOX) Act. Further,
the adverse effect of CFO opacity on future crash risk is mitigated when the market imposes
more scrutiny for (1) firms with analyst cash flow forecasts, (2) firms near financial
distress, and (3) firms with long-term issuer credit ratings near the
investment/noninvestment-grade cutoff. Overall, our results are consistent with the notion
that managers use CFO management to hide bad news from investors, which, in turn,
increases stock price crash risk; however, the effect is mitigated when the market pays
more attention to CFO.

Audit firm tenure and corporate bond rating properties (with Sam B. Bonsall IV and
Inder Khurana), revised for 2nd round resubmission at Auditing: A Journal of Practice and
Theory
Abstract: This study examines the relation between audit firm tenure and credit rating
quality. One view is that longer tenured auditors are more likely to impose a particular
auditor style, improving temporal comparability of financial statements and leading to
higher rating quality (expertise effect). An alternative view is that longer tenured auditors’
objectivity is impaired and they are less likely to impose a particular auditor style, reducing
the temporal comparability of financial statements and leading to lower rating quality
(independence effect). Consistent with the expertise effect, we find evidence that rating
accuracy improves with auditor tenure, particularly when audit firm tenure is in the 11 to
25 years range. We also find that the ratings of issuers with longer tenured auditors are
more informative to bond market investors at the time of bond issuance.

Cash flow management and firm credit ratings (with Inder Khurana and Raynolde
Pereira), under 1st round review at Journal of Accounting and Economics
Abstract: This paper examines the relation between the management of firm cash flow
from operations (CFO) and firm credit rating. We find a positive association between CFO
2
management and firm credit rating levels. We also find CFO management lowers the
likelihood of rating downgrades and increases the likelihood of rating upgrades. In
addition, these relations are more pronounced when firms rely less on both external
financing and debt financing and more on implicit claims with stakeholders. Our evidence
supports the view that firms manage CFO to obtain more favorable firm credit ratings, and
when firms are subject to more stringent rating-agency monitoring, CFO management
proves less effective.

Cash flow management and bond rating quality (with Inder Khurana and Raynolde
Pereira)
Abstract: Based on a sample of bonds issued by U.S. firms, we find management of
operating cash flow from operations (CFO) is associated with lower bond rating quality.
Specifically, we find CFO management (1) reduces credit rating debt-default predictability,
(2) increases the likelihood of missed defaults (i.e., more Type I errors), (3) reduces the
likelihood of assigning harsh ratings to future non-defaulting issues (i.e., fewer Type II
errors), and (4) weakens rating informativeness, seen in the association between bond
ratings and bond yield spread. We do not find these bond rating qualities are consistently
associated with accrual-based earnings management. We find the CFO management–bond
rating quality relation is stronger for large debt issuers and weaker for financially
constrained firms. Overall, our evidence of heterogeneity in the CFO management-bond
rating quality relation across firm attributes is consistent with credit rating agencies facing
a trade-off between reputational considerations and conflicts of interest.
WORK IN PROGRESS



Accounting conservatism and earnings smoothing (with Raynolde Pereira), data analysis
complete
Tax avoidance and bond price volatility (with David Maslar), in data analysis phase
Shaping bond market: on the causal effect of voluntary disclosure, proposal complete
CONFERENCE PRESENTATIONS
2015 AAA FARS Midyear Meeting
 Cash flow opacity and stock price crash risk
Nashville, Tennessee
2014 AAA Annual Meeting
Atlanta, GA
 Auditor firm tenure and corporate bond rating properties
 Is there a dark side to earnings smoothing? Evidence of stock price crash risk
2014 AAA FARS Midyear Meeting
 Cash flow management and bond rating quality
2013 AAA Annual Meeting
 Cash flow quality, earnings quality, and stock price crash risk
 Cash flow management and firm credit ratings
Houston, Texas
Anaheim, CA
3
CONFERENCE PARTICIPATION
2013 AAA FARS Doctoral Consortium
San Diego, CA
2012 AAA Annual Meeting
Washington University Annual Accounting Research Conference
Washington D.C.
St. Louis
2011 Journal of Contemporary Accounting and Economics Symposium and Doctoral
Consortium
Hong Kong
2011 The International Conference on Corporate Finance and Financial Market
Hong Kong
ACADEMIC HONORS AND AWARDS









Chen Scholarship, 2013-2014
Ponder Scholarship in Business, 2012-2015
Business Administration Scholarship, 2012-2015
College of Business Scholarship, 2012-2015
Postgraduate Studentship, 2010-2011
Peng Kang Scholarship, Excellent Graduate Student, 2004-2005
National Second-class Scholarship (1/10000), 2003
First-class Scholarship, Excellent Student, 2000-2001, 2002-2003
Second-class Scholarship, Excellent Student, 2001-2002
TEACHING EXPERIENCE
University of Missouri-Columbia
Instructor, Introduction to Financial Accounting
Lab Instructor, Introduction to Financial Accounting
Spring 2014 and Summer 2013
Fall 2012
Louisiana State University
Lab Instructor, Introduction to Financial Accounting
Fall 2011 and Spring 2012
Macau University of Science and Technology
Lecturer, Introduction to Financial Accounting, Introduction to Management Accounting, and
Intermediate Accounting
Sep 2007—Jan 2010
PROFESSIONAL EXPERIENCE
China Merchants Securities
Accountant of Financial Instruments
May 2007 - Jun 2007
Beijing Zhongxi Accounting Firm
Assistant Auditor
Dec 2005 - Mar 2006
4
Xi’an Jiaotong University Siyuan Co., Ltd.
Market Promoter
Jul 2002 - Aug 2002
PROFESSIONAL MEMBERSHIPS
American Accounting Association (AAA)
AAA, Financial Accounting and Reporting Section
PROFESSIONAL SERVICE
Reviewer, 2014 AAA Annual Meeting
Reviewer, 2015 AAA Annual Meeting
Professor C. S. Agnes Cheng
Head and PhD director, Chair Professor of Accounting
The Hong Kong Polytechnic University
M729, 7/F Li Ka Shing Tower
Hung Hom, Kowloon, Hong Kong
(852) 2766-7771
cs-agnes.cheng@polyu.edu.hk
Professor Jere R. Francis
Curators’ Professor, Robert J. Trulaske, Sr. Chair & Director of Accountancy PhD program
University of Missouri-Columbia, Trulaske College of Business
444 Cornell Hall
Columbia, MO 65211
(573) 882-5156
francis@missouri.edu
Professor Inder K. Khurana (Chair, Dissertation Committee)
KPMG/Joseph A. Silvoso Distinguished Professor
University of Missouri-Columbia, Trulaske College of Business
426 Cornell Hall
Columbia, MO 65211
(573) 882-3474
khuranai@missouri.edu
Professor Raynolde Pereira
Associate Professor and Andersen/Joseph A. Silvoso Distinguished Professor
University of Missouri-Columbia, Trulaske College of Business
337 Cornell Hall
Columbia, MO 65211
(573) 882-6253
pereirar@missouri.edu
5