Unrecognized tax benefits (UTBs) reflect management’s estimate of the future income tax cash outflows from audits of the entity’s tax positions. Extant studies document that this contingent liability is surprisingly priced positively. The factors that drive the market effects are not well-known. Recently, the SEC required financial statements to be filed in eXtensible Business Reporting Language (XBRL) as well as in ordinary language to facilitate access to, and analysis of firms’ financial statements. Views are, however, mixed on whether and how investors utilize the XBRL-rendered financial reports. In one respect, XBRL tags are viewed as conveying the complexity of a firm’s financial statements; in another respect, they are viewed as improving a firm’s information environment. Based on these alternative views, we test whether and in what direction the XBRL tax tags affect the valuation of UTBs. We find that the market value of UTBs is positively associated with the tax tags. Notably, the positive market effect is driven by the standard tax tags, whereas the custom tax tags attenuate the market effect. Additionally, the effects of the tax tags are more pronounced for large firms.

Herding and contrarian behaviours in financial markets have drawn significant attention due to their potential to distort prices. In the Real Estate Investment Trusts (REITs) market, both behaviours have been observed, though explanations often remain anecdotal. This paper provides further insights into herding and contrarianism in US equity REITs by analysing their inherent characteristics and the impact of exogenous informational signals. Our findings reveal frequent and prolonged contrarian behaviour, contrasted with sporadic and brief herding episodes at both the market and sub-sector levels. Our results highlight the dual nature of REITs, where return dispersions differ inherently between their stock and fixed-income characteristics. Moreover, information spillovers from the stock and debt markets, as well as signals from larger REITs, drive distinct investor behaviours. We also observe that herding tendencies increase when investors shift capital from the stock market and that excess return dispersion intensifies during recessions, reflecting a heightened reliance on private information in times of crisis.

The present study examines the contribution of the analysts to the Idiosyncratic Volatility (IVOL) effect. It finds that the negative IVOL effect is more prominent in the stocks covered by the analysts than in the non-covered stocks, as the high IVOL stocks attract favorable recommendations. The simultaneous impact of consensus recommendations and IVOL on the subsequent returns is negative. Furthermore, the favorable recommendations for high IVOL stocks are prominently visible when the firm size is small. Institutional ownership and market sentiment do not significantly impact the analysts' recommendations for high IVOL stocks. The analyst recommendations continue to be optimistically biased towards IVOL stocks over a period of time. Thus, it can be inferred that the favorable analyst recommendations contribute toward negative IVOL spread. The findings draw attention to the inefficient information dissemination by the analysts. The favorable recommendations can be explained by a mix of behavioral biases and incentive structures.