Prajakta Desai Studies How Accounting Is Linked to Financial Markets' Outcomes

Prajakta Desai Studies How Accounting Is Linked to Financial Markets' Outcomes


Prajakta Desai has joined the Department of Accounting at Bocconi as an assistant professor at the beginning of the 2017–2018 academic year. She arrives from the London School of Economics and Political Science. Prof. Desai’s research examines credit markets, accounting-based valuation, earnings management and accounting fraud, and political connections and lobbying by firms.
Prof. Desai holds masters’ and doctoral degrees in Accounting and Finance from Manchester Business School. During her doctoral studies, she researched both sovereign credit risk and asset pricing. She later turned her attention to the performance of firms that sell stock to the public in the United States. In a paper titled A real consequence of real activities earnings management, she and co-authors Susanne Espenlaub and Arif Khurshed study how firms engage in real earnings management at the time of their initial public offerings (IPOs). They find that firms managing earnings through real activities are more likely to delist post-IPO, as they cannot meet the performance criteria of the U.S. stock exchanges.
In another recent paper, Prof. Desai studies the association between information risk and the U.S. credit default swap (CDS) markets around compliance with a well-known securities law called the Sarbanes-Oxley Act (SOX). She finds that earnings attributes, which are proxies for information risk, matter to the CDS markets – and they matter more for the foreign firms listing in the U.S. than for the country’s domestic firms. “After the passage of SOX, foreign firms were forced to meet the higher disclosure requirements, thus making their accounting-based information more relevant to investors”.
Starting in 2014, Prof. Desai was a research fellow at the London School of Economics and Political Science. There, she became interested in research in accounting-based valuation and the politics of financial markets, such as the consequences of lobbying by firms and their political connections. She taught Financial Accounting, Analysis, and Valuation and Elements of Financial Accounting to undergraduate students. She also taught Business Analysis and Valuation, Applied Valuation and Securities Analysis, and Managerial Accounting and Financial Control. While in graduate school at Manchester, she taught numerous accounting and finance courses. Prof. Desai has completed the chartered qualification from the Chartered Institute of Management Accountants in the United Kingdom. And she obtained a postgraduate certificate in higher education at the associate level from the Higher Education Academy in the United Kingdom.
At Bocconi, she is researching and teaching Accounting and Financial Statement Analysis to undergraduate students. “It is important for students not just to know the theoretical contents but to relate them to the real world”, she says. “I hope my students take away an understanding of financial reporting and of how to use accounting information in managerial decision-making”. In her spare time, Prof. Desai loves to read, go to the gym, and travel. She is a fan of the opera and has recently taken in performances of Le Nozze di Figaro and Madama Butterfly in London. “As you may imagine, I cannot wait to go to La Scala”, she says.

by Claudio Todesco


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