Cost Structure and the Usefulness of Earnings

The authors thank Ranjani Krishnan (department editor), an anonymous associate editor, two anonymous referees, Mirko Heinle, Bill Mayew, Beatrice Michaeli, and participants at the Brigham Young University Accounting Symposium, Corporate Governance and Executive Compensation Research Series, Frankfurt School of Finance and Management, Marquette University, Transatlantic Doctoral Conference at London Business School, and the University of Utah for their helpful comments. This paper was previously circulated with the title “Degree of Operating Leverage, Earnings Properties, Reporting Incentives, and the Usefulness of Earnings.”