bluuebunny/crossref_metadata_2025 huggingface dataset:
Accounting: A Source of Market Imperfection: A Comment
Authors: AMERNIC J. H.
Published: December 2006

This comment on an article by Rirkett and Walker in the Summer 1974 JBFA1 does not attack their conclusions‐but it does seek to point out that, because of at least four developments that have already commenced, their description of accounting as it is practised today is probably inadequate as a description of accounting in the future.

Ces remarques sur l'article de Birkett et Walker qui a paru dans 1′édition d'été 1974 du J.B.F.A. n'attaquent pas les conclusions qu'ils ont tirées. Elles tendent à souligner que, en raison d'au moins quatre développements déjà entrepris, la description que Birkett et Walker font de la comptabilité d'aujourd‐'hui n'exprime pas vraisemblablement l'idée de la comptabilitb telle qu'on se la reprtsente dans l'avenir.

Diese Anmerkung über einen Artikel von Birkett und Walker in der 1974 JBFA‐Sommausgabe, stellt ihre Schlussfolgerungen nicht in Frage. Sie versucht aber zu zeigen, dass aufgrund von wenigstens vier Entwicklungen, die schon im Gange sind, ihre Darstellung von Rechnungswesen, wie es heutzutage in der Praxis ausgeübt wird, wahrscheinlich unzureichend als Beschreibung des zukünftigen Rechnungswesens ist.
The Valuation of Stock Warrants: A Comment on the Bird Model
Authors: SKERRATT L. C. L.
Published: December 2006

The paper examines, by simulation, some characteristics of the Bird model, and finds that they are not consistent with the behavioural features which Bird ascribes to the model. A probable cause of this is argued to be specification error.

Ce papier sonde, par simulation, certains points du modèle Bird, et révèle que ceux‐ci ne sont pas compatibles avec l'ensemble du comportement que Bird attribue au modèle. On suppose qu'une erreur de spécification en soit une cause éventuelle.

Mit Hilfe eines Simultationsverfahrens untersucht diese Abhandlung einige Eigenschaften des Bird‐Modells. Es wird festgestellt, dass sie mit den Verhaltensaspekten, die Bird dem Modell zuschreibt, nicht übereinstimmen. Es wird behauptet, dass ein möglicher Anlass dafür auf einen Spezifikationsfehler zurückzuführen ist.
HUMAN RESOURCE ACCOUNTING: A CRITIQUE OF RESEARCH OBJECTIVES FOR THE DEVELOPMENT OF HUMAN RESOURCE ACCOUNTING MODELS
Authors: GLAUTIER M.W.E.
Published: December 2006

This paper attempts to place a broad perspective on the problems of HRA by arguing that its objectives are wider than appear to have been admitted. Such is the importance of HRA for problems as disparate as economic efficiency, organisational effectiveness, and social effectiveness that it must become a subject in its own right with its own methodology and measurements. Many conceptual and measurement problems have not yet been adequately treated. The imediate objective of research should be a rigorous testing of the validity of the assumptions that have hitherto been relied on.

Ce papier cherche à donner une vision globale des difficultés que rencontre la ‘Comptabilités des Ressources Humaines’, tout en désmontrant que les objectifs de celle‐ci sont plus éstendus qu'on a voulu le reconnaftre. Face à des problèmes aussi divers que le rendement économique, l'harmonie des structures et le bien‐être social, la ‘Comptabilités des Ressources Humaines’ prend une telle ampleur qu'elle ne peut que devenir une branche spéscifique revendiquant alors sa propre mésthodologie et ses unités de mesure. De nombreux problèmes concernant concepts et ésvaluations n'ont pas encore été traités de manière appropriée. Le premier objectif des recherches devrait consister en un examen profond de la validité des hypothèses sur lesquelles on s'est appuyées jusqu'ici.

Dieser Beitrag versucht eine breite Perspektive auf die Probleme von Human Resource Accounting (HRA) zu werfen, indem behauptet wird, dass ihre Ziele weitreichender sind als scheinbar anerkannt worden ist. Die Wichtigkeit der HRA bezüglich Problemen, die so verschiedenartig wie ökonomische, organisatorische und soziale Leistungsfähigkeiten sind, spricht für die Entwicklung einer neuen, ganz selbstständigen Disziplin mit ihrer eigenen Methodik, Masse und Messungen. Viele begriffliche und Messungsprobleme sind noch nicht ausreichend behandelt worden. Das nächstliegende Forschungsziel solte eine strenge Prüfung der Gültigkeit der Annahmen sein, auf die man sich bisher verlassen hat.
ON DERIVING THE INTERNAL RATE OF RETURN FROM THE ACCOUNTANT'S RATE OF RETURN
Authors: STEPHEN FRANK H.
Published: December 2006

L.A. Gordon (J.B.F.A. Vol. 1 No, 3) claims to have derived a method for approximating the IRR using the ARR. This paper demonstrates that the key relationship in Gordon's paper is only valid if the IRR is already known and used to calculate economic depreciation. It is suggested that Gordon has merely derived a means for refining ARR, but not for deriving IRR.

Dans son article paru dam Vol. 1 No 3 de ce journal, L.A. Gordon prétend avoir introduit une méthode qui permet d'évaluer “Internal Rate of Return” au moyen de “Accountant's Rate of Return”. Ce papier démontre que le rapport‐clé dont Gordon nous fait part n'est vérifiable que si “Internal Rate of Return” est préablement connu et sert a calculer l'amortissement économique. On insinue ainsi que Gordon a simplement présenté un moyen de perfectionner “Accountant's Rate of Return” mais n'en a pas démontré pour autant l'évaluation de “Internal Rate of Return”.

L.A. Gordon (J.B.F.A. Band 1, Nr. 3) behauptet, er habe eine Annäherungsmethode abgeleitet, womit der interne Zinsfuss von dem RO1 Kriterium berechnet werden kann. Dieser Beitrag zeright, dass das Schlüsselverhältnis in Gordons Abhandlung nur dann gültig ist wenn der interne Zinsfull schon bekannt ist und als kalkulatorischer Zinssatz für ökonomische Abschreibungsbetrage verwendet wird. Es wird behauptet, dass Gordon keine Methode für die Ableitung des internen Zinsfusses entwickelt hat, sondern nur eine für die Verbesserung des R01 Kriteriums.
STRATEGIC PLANNING CONFERENCE
Authors: Foster M. J.
Published: December 2006

Book reviewed in this article:
METHODOLOGICAL IMPLICATIONS OF NON‐NORMALLY DISTRIBUTED FINANCIAL RATIOS
Authors: Barnes Paul
Published: December 2006

Empirical studies have shown distributions of financial ratios are skewed. An explanation for this is given and it is argued that in such circumstances comparison of a fmancial ratio with some norm (e.g. industry average) is likely to misinform. It is also shown that where financial ratios are used as inputs to statistical models normality is irrelevant but a method of transformation into a normal distribution is provided whereby original interrelationships are preserved. Finally, because of the inadequacies of financial ratios, it is shown how regression analysis may be used in financial statement analysis.
ESTIMATING THE INTERNAL RATE OF RETURN FROM PUBLISHED FINANCIAL STATEMENTS
Authors: Salmi Timo
Published: December 2006

This paper presents a new approach to estimating the longrun internal rate of return (IRR) for the firm from the accountant's rate of profit based on published financial statements. The model developed for estimating the IRR includes both capital and net working asset investments. Modelling and estimating the growth of the firm is an integral part of the approach. Furthermore, estimating the parameters describing the long‐run financing behavior of the firm is presented based on discounted average funds flow statements. Finally, the approach is applied on the financial data of a large Finnish business enterprise.
MONETARY AND FISCAL POLICIES AND STOCK PRICES
Authors: Singh Saraswati P. , Talwar Prem P.
Published: December 2006

Investigations into business cycles have found money supply to be a lead variable to stock prices. However, some would argue that the stock market, being efficient, anticipates money supply changes and therefore, stock prices are lead variables to money supply changes. Recent developments in time series methods have facilitated the testing of these relationships through identifying bivariate and multivariate autoregressive models. However, in many cases, the results using different procedures contradict themselves and are in conflict with theoretical reasonings. In this paper the causal relationship is tested between fiscal and monetary policies and stock prices using Canadian data and bivariate andmultivariate autoregressive models.
A STUDY OF POSSIBLE GAINS FROM INTERNATIONAL INVESTMENT AND THE STATIONARITY OF INTER‐COUNTRY CORRELATION COEFFICIENTS: A COMMENT
Authors: Yallup Peter J.
Published: December 2006

This comment discusses two previous papers in this journal by J. Watson. It is shown that a confusion between necessary and sufficient conditions for the stability of the inter‐country correlation structure, and inconclusive empirical results led Watson to some misleading conclusions. It is also demonstrated that even if inter‐country correlation coefficients are stationary, ex‐ante correlations cannot be estimated directly from ex‐post data unless the underlying stochastic process is known. Alternative methods of examining the stability of the correlation structure indirectly are suggested. Furthermore it is argued that the choice of the base currency further limits Watson's findings.
INTEREST ON EQUITY CAPITAL AS AN EX POST COST: A COMMENT
Authors: Zafiris Nicos
Published: December 2006

This paper attempts to rebut some criticisms advanced by Amey against the conceptual basis of proposals to make an ex post imputation for the cost of equity capital in external fmancial reports. The principle argument is that ‘implicit’ opportunity costs are relevant not only ex ante, for decision‐making, but also ex post, if suitably defined and measured, for performance evaluation. An allowance for the foregone earnings of the equity does, therefore, seem justified. But rather than a standardised imputation of ‘interest’, the need for comparability across firms suggests firm ‐ or industry ‐ specific allowances which would take account of each firm's gearing and overall riskiness.
INTEREST ON EQUITY CAPITAL AS AN EX POST COST: A REPLY
Authors: Amey Lloyd R.
Published: December 2006

It is argued by Zafiris that the conceptual framework relevant for decisionmaking is also relevant for performance evaluation. He uses this argument to justify the charging of interest on equity capital in determining income. Implicit opportunity costs are thus included in both observed results and in the standard against which performance is measured, revalued in the former case. This argument, in both its general and particular forms, involves two principle misconceptions: about the significance and purpose of implicit opportunity costs, and about what Buchanan means by “what might have been”, which in fact corresponds to Demski's ex post performance measure.
THE PERFORMANCE OF CORPORATE MERGERS IN JAPAN
Authors: Hoshino Yasuo
Published: December 2006

This paper presents an objective and systematic analysis of the performance of corporate mergers in Japan. Two types of tests are provided. One is to compare fmancial ratios of merging firms before and after the merger. Negative effects of mergers are verified. The other is to compare the financial performances of merging and nonmerging firms before and after the merger in the same industry. No clear distinction is obtained between them. General comparisons between merging and nonmerging fms indicate negative effects of mergers.
GOLD AS AN INFLATION HEDGE: A COMPARATIVE STUDY OF SIX MAJOR INDUSTRIAL COUNTRIES
Authors: Chua J. , Woodward R.S.
Published: December 2006

This study considers whether or not gold has been an effective hedge against inflation for investors in six major indusrial countries over the period 1975 to 1980, Gold is considered a hedge against inflation if changes in the returns on gold investments systematically offset changes in the general price level of a particular country. The results indicate that gold has only been an effective hedge against US inflation, and only over one and six month investment holding periods. When the actual inflation rate was decomposed into an expected and unexpected component, it was again found that only US investors could hedge themselves against inflation using gold.
THE EFFECTS OF BORROWING ON THE RATE OF GROWTH OF CAPITAL AND THE RISK OF RUIN OF A FIRM
Authors: Lohmann Jack R. , Oakford R.V.
Published: December 2006

The research reported in this paper used Monte Carlo simulation to study the long term effects of borrowing policy on the rate of growth of capital and the risk (probability) of ruin of hypothetical firms, operating in explicitly described, realistic capital budgeting environments. The capital rationing environment is described explicitly. The debt policies modeled were based on the results of interviews with senior financial executives in eight major firms. The results indicate that three intuitively appealing ranking procedures performed equally well and all out‐performed a random selection decision procedure: yielding higher rates of capital growth with lower risks of ruin. In general, an aggressive borrowing policy resulted in a higher average capital growth rate for a firm but a conservative borrowing policy resulted in a lower risk of ruin. It is believed that the results provide some interesting insights which indicate that a computer simulation model could be used to aid management in the evaluation of their capital budgeting procedures and borrowing policies.
SOME ECONOMIC DETERMINANTS OF MANAGEMENT LOBBYING FOR ALTERNATIVE METHODS OF ACCOUNTING: EVIDENCE FROM THE ACCOUNTING FOR INTEREST COSTS ISSUE
Authors: Dhaliwal Dan S.
Published: December 2006

This paper extends the theory of management lobbying on accounting standards. Specifically, it is hypothesized that, in addition to the variables previously identified in literature, the capital structure of the firm would affect its management's lobbying position on an accounting standard. The results of an empirical investigation of the lobbying position of firms on the accounting for interest costs issue, reported in the paper, confirm the extended theory.
THE VALUATION OF FIXED ASSETS IN THE FINANCIAL ACCOUNTS OF UK NATIONALISED INDUSTRIES AND THE IMPLICATIONS FOR MONITORING PERFORMANCE: A COMMENT
Authors: Davies J.R. , McInnes W.M.
Published: December 2006

This comment on the paper by MacArthur (1980) focuses on the conceptual problems of valuing assets when technological progress results in more efficient assets becoming available. MacArthur concluded that if valuation is undertaken on the modem equivalent asset basis it will not be possible to use the current cost income statements to identify the use of inefficient technology. In this comment it is argued that MacArthur's conclusion does not hold if a valuation basis consistent with the logic of economic analysis is employed.
THE VALUATION OF FIXED ASSETS IN THE FINANCIAL ACCOUNTS OF UK NATIONALISED INDUSTRIES AND THE IMPLICATIONS FOR MONITORING PERFORMANCE: A REPLY
Authors: MacArthur J.B.
Published: December 2006

This reply to the comment by Davies and McInnes deals with an apparent misconception concerning an article by MacArthur (1980). It also challenges the suitability of the approach taken in the comment for valuing business assets, which seems to be confusing an economic decision‐model with an economic valuation‐model
MUTUAL FUND PERFORMANCE IN THE CONTEXT OF MODELS OF EQUILIBRIUM CAPITAL ASSET PRICING
Authors: Appleyard A.R. , Strong N. , Walker M.
Published: December 2006

This paper examines the question of mutual fund performance within an equilibrium asset pricing framework, and in particular gives attention to the reinterpretation of tests of fund performance provided by Peasnell, Skerratt and Taylor (JBFA 1979). The paper concludes that the reinterpretation provided by Peasnell et. al is flawed, and moreover, that prospects for some new interpretation are bleak.
COMPOUNDING RISK OVER TIME: A NOTE
Authors: Beedles William L. , Joy O. Maurice
Published: December 2006

The widely used risk‐adjusted discount rate technique of investment evaluation has long been believed to be strictly appropriate only for projects whose risk increased with time. The “certainty equivalent proof” of that belief has recently been refuted. This paper attempts to demonstrate that the other proof of that belief, called the “compounding the risk premium” approach, is also flawed since it confuses the level of investment and the rate earned on investment.
CASH FLOW ACCOUNTING AND THE ALLOCATION PROBLEM
Authors: Lee T.A.
Published: December 2006

Cash flow accounting (CFA) proposals typically have included firm statements that CFA data are allocation‐free. This is not entirely true if the term allocation is interpreted in a wide sense. However, it can be argued that most allocations can be avoided in CFA systems, and this paper is an attempt to present this argument. In particular, it aims to strengthen the case for CFA in practice.
AN ANALYTICAL APPROACH TO ACCOUNTING MATERIALITY
Authors: Ro Byung T.
Published: December 2006

Despite its importance for financial information disclosures, accounting materiality remains relatively unexplored within an analytical framework. The present study analytically explores certain conceptual issues of materiality within the framework of decision theory. Based on the analysis, it is concluded here that even in a highly simplified situation where there is only one financial information user who has given tastes and beliefs, materiality judgment consistent with the judgment by information producers, and homogenous decision problems, the derivation of a unique, fvred materiality standard for an accounting information item is, in general, infeasible if the standard is set at the item's particular magnitude.
MARGIN TRADING: A RISK‐RETURN ANALYSIS
Authors: Yagil Joseph
Published: December 2006

This paper attempts to present an integrated valuation analysis of investment options involving margin trading. The analysis is based on valuation theories such as Modigliani and Miller's capital structure model, the capital asset pricing model and the option pricing model. It is shown (i) that in margin trading, the return on equity is given by the return on investment plus a risk premium which increases proportionally with the margin‐trading rate; (ii) that both the total risk (variance) and systematic risk (beta) of the return on equity increases proportionally with those associated with the return on investment; and (iii) that, when the option pricing model is applied to the case of margin trading, a more precise valuation formula can be employed.
JUDGEMENT RELATED ISSUES IN PERFORMANCE EVALUATION
Authors: Belkaoui Ahmed
Published: December 2006

Performance evaluation of individuals, processes and activities in management accounting involves mostly a clinical judgment on whether or not to investigate a variance between actual performance and standard performance. Two judgment‐related issues are examined in relation to the lack of validity of performance evaluation, namely: a) the difficulty in the determination of the base rate advocated by the normative accounting control models, and b) the evidence on the judgment fallibility and its effect on performance evaluation.
POWER AND POLICY MAKING: THE DEVELOPMENT OF AN R & D STANDARD
Authors: Hope Tony , Gray Rob
Published: December 2006

This paper addresses the question of policy‐making by such bodies as the UK Accounting Standards Committee (ASC) and suggests that an understanding of the nature of power is a necessary prerequisite to rigorous analysis of the political process. Using the example of SSAP 13, the paper investigates the applicability of political methodologies to attempt to understand and analyse ASC behaviour. The paper attempts to provide: (a) a deeper understanding of the issues which determined the outcome of the R & D standard; (b) support for the importance of the political science experience in this field; and (c) suggestions on how future research may be formulated and developed.
TOWARDS A VALUE‐NEUTRAL POSITIVE SCIENCE OF ACCOUNTING: A COMMENT
Authors: Ryan Robert J.
Published: December 2006

This comment points out that Thomas (1981) has misrepresented the views of Lakatos and has misunderstood the role of empirical research in the development of science.
TOWARDS A VALUE‐NEUTRAL POSITIVE SCIENCE OF ACCOUNTING: A COMMENT
Authors: Laughlin Richard C. , Lowe E. Anthony , Puxty Anthony G.
Published: December 2006

It is argued that Thomas's paper is deficient in three respects. Firstly, it accepts unquestioningly the myopic view that scientific knowledge is the only valid form of knowledge. Secondly, its demarcation between science and technology is of doubtful validity and usefulness. Thirdly, the “science of accounting” which resulted from its prescriptions can only be trivial by virtue of the very tenets of science which it relies upon.
TOWARDS A VALUE‐NEUTRAL POSITIVE SCIENCE OF ACCOUNTING: A REPLY
Authors: Thomas Andrew P.
Published: December 2006

The main criticisms of “A Value‐Neutral Positive Science of Accounting” relate to three issues: (1) The status of scientific knowledge and the ‘superiority’ of the scientific method; (2) The role of empirical research; and (3) The values implicit in scientific research. These are both fundamental and controversial, and will hopefully be pursued further in the accounting literature. However, debate in terms of cliches aimed at a manufactured stereotype of science, and individual values, is unlikely to be productive. This Reply attempts to show that such criticisms are exaggerated misrepresentations of the original paper in the hqte that future contributors will consider them more thoroughly.
ON THE MEASUREMENT OF AUDITING STANDARDS
Authors: Chow Chee W.
Published: December 2006

This study analyzes whether it is appropriate to use the percentage of qualified opinions issued by an auditor as a measure of his auditing standards, as is often done. It points out that incentives exist for auditors to specialize by auditing standards, and for clients to self‐select on this dimension. As a result, even if auditing standards affect the propensity to issue qualified opinions, the observed percentages of qualified opinions will not necessarily reflect differences in auditing standards. This proposition is supported empirically with US data. A sample of auditors was split between a “higher standard” and a “lower standard” category based on the percentage of qualified opinions issued. After controlling for client firm size, leverage, systematic risk and “unexpected” earnings, auditing standard category is found to have no significant relation with firm‐specific stock returns.
THE STRUCTURE AND PERFORMANCE OF THE UK BUILDING SOCIETY INDUSTRY 1970–78
Authors: Barnes Paul , Dodds Colin
Published: December 2006

This article seeks to discuss some of the issues concerning the evolving structure of the Building Society Movement in the UK during the 1970's and to present some statistical evidence for certain hypotheses concerning the performance during this period. It is hypothesized that the successful operation of the price cartel affected its performance in a number of ways; for instance, with regard to its discretionary policies. The article cites branching policies particularly of the medium sized Societies and the regression results presented cast doubt upon the efficacy of such policies, validating in turn the hypotheses of expense preference and X inefficiency. In addition, evidence is offered on the concentration and competition within the Movement which together with the apparent discretionary policies found, provide a justification, in the view of the authors, for future legislative action.
DOMINANCE CRITERIA FOR THE RANKING OF PROJECTS WITH AN IMPERFECT CAPITAL MARKET
Authors: Wilkes F.M.
Published: December 2006

Dominance criteria are established for problems of choice between alternative discrete investments where financial markets have unequal borrowing and lending interest rates. In the general case, the necessary and sufficient condition for all investors to prefer cash flow Q to cash flow R under non‐satiety, is that Q can be converted to a superior flow to R ‐ element by element. Where negative arguments of the decision maker's utility function are prohibited, it is necessary and sufficient that realisable value for Q exceeds realisable value for R at all times. A four stage procedure completes the decision making process where no inter‐project dominance exists.
BOUNDING CERTAINTY EQUIVALENT FACTORS AND RISK ADJUSTED DISCOUNT RATES
Authors: Bøhren Øyvind
Published: December 2006

The risk adjustment parameters of the certainty equivalent and risk adjusted discount rate models are defined under the additive time‐state‐preference valuation. Bounding numerical values of such parameters before estimation starts is of little help when expected cashflow value is close to zero or if the cashflow is a mixture of contingent in ‐ and outflows. A constant parameter over time involves very restrictive cashflow and valuation assumptions in either model. Intuition may be a poor guide for a priori sefecting a class of time profiles, particularly so if the cashflow changes sign over time.
ON THE NEGATIVE RISK PREMIUM FOR RISK ADJUSTED DISCOUNT RATES: A REPLY
Authors: Dyson R.G. , Berry R.H.
Published: December 2006

This short paper shows that the results of Professor Booth's application of the Time State Preference framework to the negative risk premium problem are in fact consistent with the analysis presented in Berry and Dyson (1980). Professor Booth's criticisms of this earlier paper are thereby shown to be invalid. Some further comments are then offered about the phenomenon of negative risk premia.
THE SIGNIFICANCE OF BASE YEAR IN DEVELOPING FAILURE PREDICTION MODELS
Authors: El Hennawy R.H.A. , Morris R.C.
Published: December 2006

Most failure prediction models developed over the past fifteen years have been based on firms' financial characteristics one year before they collapsed. This article reports the results of a study employing multiple discriminant analysis on a sample of fifty‐three British companies which failed over the period 1960–1971. Models were developed on various financial ratios and an industry indicator for each of the five years, prior to failure, and the results in fact show that the model developed from data five years before failure performed at least as well as that derived one year prior to bankruptcy.
AN ECONOMIC ANALYSIS OF VALUE TO THE OWNER
Authors: Ashton R.K.
Published: December 2006

This short paper applies the economists' concept of consumer surplus to the accountants' concept of value to the owner. It is shown that the two relevant concepts of consumer surplus ‐ the equivalent consumer surplus and the compensating consumer ‐ result in valuations that differ from the traditional Solomons, et al., analysis. This proposition is established by use of traditional neoclassical demand theory. It is also shown that whilst the analysis is essentially of a short run nature this is also true of the accountants' concept of value to the owner.
AN ASSESSMENT OF THE RISK AND RETURN OF FRENCH COMMON STOCKS
Authors: Hawawini Gabriel A. , Michel Pierre A. , Viallet Claude J.
Published: December 2006

In this paper the relationship is examined between the average return and the risk of a sample of 144 French common stocks which traded continuously over the decade 1969–1979. Although it was found that a negative relationship existed between average return and systematic risk, sufficient evidence could not be gathered to reject the hypothesis that the pricing of French common stocks conforms to the Capital Asset Pricing Model. The nature and implications of the observed negative risk‐return trade‐off are discussed.
ON THE PREDICTABILITY OF GROWTH IN EARNINGS PER SHARE
Authors: Brandon Charles , Jarrett Jeffrey , Khumuwala Saleha
Published: December 2006

Arguments are given to support the hypothesis that corporate earnings per share are predictable by simple forecasting models. If income numbers have predictable properties, growth is predictable and theories of corporate valuation become more credible. Notions that EPS growth are completely unpredictable are disputed.
THE COST OF RETAINED EARNINGS: A FURTHER NOTE, AN ILLUSTRATION AND A COMPUTER PROGRAM
Authors: Lister Roger
Published: December 2006

This paper presents the personal and corporate tax adjusted version of the cost of retained earnings, with particular reference to the problem of computing the effective rate of tax on a unit of pre tax profit when one allows for the delayed incidence of part of the tax impost. The argument is illustrated numerically and supported by a computer program which enables the user to consider and work out the effect of changing one or more variables. A term which appeared in a previous article (Lister 1981) is corrected.
THE PERFORMANCE OF UK CLOSED‐END FUNDS: A COMPARISON OF THE VARIOUS RANKING CRITERIA
Authors: Woodward R.S.
Published: December 2006

This study considers the performance of UK Investment Trusts over the ten‐year period 1968 to 1977, using the major criteria suggested in the literature. The results indicate that UK closedend funds were generally inferior (ex post) to the market portfolio (FT Actuaries All‐Share Index). These findings were invariant to the particular peiformance methodology selected. When the overall test period was broken up into sub‐periods it was also found that the ex post performance findings were not particularly stable or consistent over time. These results highlight the problems a fund investor would face in attempting to predict future fund performance on the basis of historical results.
COST‐VOLUME‐PROFIT COMPLICATIONS USING A SIMPLIFIED FIRM
Authors: Williams David J. , Shreiber Chanoch
Published: December 2006

This paper assesses the problems of using a simplified firm of the typehggested by Sterling and Thomas (1979) to develop internal pricing and output levels generally and for cost‐volume‐profit calculations specifically. The particular choice of industry in this case makes more complicated the development of such internal accounting information. The paper specifies the unusual operating conditions that exist in this industry and the problems that these cause when deriving useful cost‐volume‐profit information for pricing and output decisions.
FINANCIAL ACCOUNTING REPORTS: A MARKET MODEL OF DISCLOSURE: A REPLY
Authors: Bird Ron , Locke Stuart
Published: December 2006

Walker in his Comment appears to disagree with the explicandum and attempts to prove this with alternative explicans. It is a case of post hoc, ergo propter hoc. The development of a normative model or theory requires the choice of a number of assumptions. These observations or statements are themselves theory laden. Nevertheless deductions drawn from the model are either correct or incorrect according to the laws of logic.
AN ANALYSIS OF THE FINANCIAL MANAGEMENT TECHNIQUES CURRENTLY EMPLOYED BY LARGE U.S. CORPORATIONS
Authors: Moore James S. , Reichert Alan K.
Published: December 2006

Economic conditions have placed increased importance upon rigorous financial analysis. In order to determine which analytical techniques are currently emp loyed by management, a questionnaire was sent to each fm on the May 1980, FORTUNE 500 list. The researchsought to establish a profile of the respondents' organizational structure and to identify the primary procedures used in risk assessment, working capital management, capital budgeting, and operations research modeling. The results do suggest a basic profile of the more active employers of analytical techniques. Relatively sophisticated capital budgeting procedures appear to be accepted across most industries, and many firms support their decision making with a “package” of formal tools.
THE CAPITAL BUDGETING BEHAVIOUR AND CORPORATE CHARACTERISTICS OF CAPITAL‐CONSTRAINED FIRMS
Authors: Pike Richard H.
Published: December 2006

This paper addresses (1) the nature and pervasiveness of organisational constraints, frnancial and otherwise, on investment, and (2) the corporate characteristics and capital budgeting behaviour of capital‐constrained firms for a sample of 126 UK companies. The results indicate that corporate size, risk and profitability are important corporate characteristics in this regard, and that financially‐constrained firms tend to adopt naive capital budgeting methods in resolving the capital rationing problem.
METHODOLOGICAL IMPLICATIONS OF NON‐NORMALLY DISTRIBUTED FINANCIAL RATIOS: A COMMENT
Authors: Horrigan James O.
Published: December 2006

This comment argues that proposals to replace financial ratio analysis with regression analysis of the separate ratio components are unnecessary and misguided. Financial ratios are used to predict other variables and not to predict their own components. These ratios also help deal with the size scale problem inherent in regular accounting data, but regression error terms would suffer from the same size effect as the regular data. The actual statistical distribution of financial ratios is an open, important question, but that question in itself does not call for an abandonment of fmancial ratios.
JOINT PRODUCT DECISIONS, THE FIXED PROPORTIONS CASE: A NOTE
Authors: Amey Lloyd R.
Published: December 2006

The purpose of this note is to draw attention to a misleading conclusion in the literature, that in determining the optimal rate of joint production and the optimal quantities of joint products to be finished and sold, the joint costs are implicitly shared in proportion to the respective marginal revenues. This conclusion applies only to a special case which is not typical of most joint production processes.
LIFO‐FIFO, ACCOUNTING RATIOS AND MARKET RISK: A RE‐ASSESSMENT
Authors: Elgers Pieter T. , Murray Dennis
Published: December 2006

This paper re‐examines the effect of the inventory costing method on the association between accounting risk measures (ARMs) and market risk, and extends earlier research in several respects. The groups of FIFO and LIFO firms are matched on the basis of various financial characteristics to reduce selfselection bias, and the effect of inventory costing methods on the usefulness of ARMs in predicting market risk is investigated. The findings indicate that predictions based on FIFO show an improvement on market based predictions, but predictions based on LIFO fail to show such an improvement.
THE EFFECT OF PRESENTATION FORM ON JUDGMENT CONFIDENCE IN PERFORMANCE EVALUATION
Authors: Bell Jan
Published: December 2006

This paper reports the results of an experiment designed to determine if a numeric presentation form is associated with high decision confidence and recognition of information consistency. Financial analysts were provided with a description of companies engaged in research and development or production within the chemical industry; financial statements for each company; and comments made by each company's president. These comments contained either numeric or nonnumeric information about the company, and also a statement by the president regarding his satisfaction with that particular year's financial performance. Subjects were requested to evaluate how well each company had performed financially, and were asked to express the confidence they had in the correctness of each of their evaluations. Statistical results show that higher decision confidence is associated with nonnumeric information but that numeric information makes the recognition of information (in) consistency easier.
TIMELINESS OF ACCOUNTING REPORTS AND THEIR INFORMATIONAL CONTENT ON THE CAPITAL MARKET
Authors: Zeghal Daniel
Published: December 2006

Timeliness is recognized as an important characteristic of accounting information by the accounting profession, the users of accounting information, and the regulatory agencies. According to the evidence presented in this paper, accounting reports with shorter delay have a higher informational content than those with longer delay. At the time of release to the capital market, the effect of delay on the information content seems to be more significant in the case of the interim rather than the annual reports. This may be explained by the major characteristics which differentiate the information contained in the interim reports from that contained in the annual reports, the differences in their role in the investor's decision process, and the existence of substitute information.
AN ECONOMIC ANALYSIS OF VALUE TO THE OWNER: A COMMENT
Authors: Wright F.K.
Published: December 2006

While Ashton's analysis of the concept of value to the owner flows logically from his chosen assumptions, it does not invalidate the use made of that concept by accounting writers.
AN EMPIRICAL INVESTIGATION OF THE CHARACTERISTICS OF PUBLICLY‐QUOTED CORPORATIONS WHICH CHANGE TO CLOSELY‐HELD OWNERSHIP THROUGH MANAGEMENT BUYOUTS
Authors: Maupin Rebekah J. , Bidwell Clinton M. , Ortegren Alan K.
Published: December 2006

This paper investigates whether publicly‐quoted firms which become closely held via management buyouts possess characteristics prior to the change which differentiate them from firms which remain publicly‐quoted. Discriminant analysis procedures are used to test for group differences and to identify the attributes which contribute most to differences. The results indicate that firms becoming closely held through management buyouts possess certain financial statement and stock market characteristics which are significantly different from firms remaining publicly‐quoted.
UNIT TRUSTS, HOMOGENEOUS BELIEFS AND THE SEPARATION PROPERTY: A NOTE
Authors: Draper Paul
Published: December 2006

A recent paper in this journal by J.R. White (1981) provides some evidence on the homogeneity of beliefs of unit trust managers and concludes that ‘Unit trusts are well informed about the market and process information efficiently.’ This note provides some additional evidence on the beliefs of unit trust managers based on a larger sample of trusts embracing different years and a number of objectives. It suggests that White's arguments are not conclusive at the theoretical level and not substantiated by the empirical evidence.
BALANCE SHEET ITEMS AS THE PRESENT VALUE OF FUTURE CASH FLOWS
Authors: Bodenhorn Diran
Published: December 2006

This paper develops balance sheets assuming that assets are future service potentials, or future cash flows. All balance sheet items are the present (discounted) values of future cash flows. All future flows, whether receipts or payments, including transactions with shareholders, are accounted for on the balance sheet. Balance sheets are constructed on the basis of (1) full knowledge of the future, and (2) knowledge only of past flows, assuming that investment projects have zero net present value. Capital gains (losses) are recorded when events demonstrate that projects have positive (negative) net present value.
THE SMOOTHING OF INCOME NUMBERS: SOME EMPIRICAL EVIDENCE ON SYSTEMATIC DIFFERENCES BETWEEN CORE AND PERIPHERY INDUSTRIAL SECTORS
Authors: Belkaoui Ahmed , Picur Ronald D.
Published: December 2006

This study tests the effects of the dual economy on income smoothing behavior. It is hypothesized that a higher degree of smoothing of income numbers will be exhibited by firms in the periphery sector than by firms in the core sector as a reaction to different opportunity structures and experiences. The results indicate that a majority of firms may be resorting to income smoothing. A higher number is included among firms in the periphery sector.
ESTIMATING THE MARKET MODEL ROBUSTLY
Authors: Tomczyk Stephen , Chatterjee Sangit
Published: December 2006

There is now considerable evidence in the literature that the ordinary least squares assumptions fail to hold when estimating the market model parameters. This paper describes a robust estimation procedure which provides automatic protection against departures from normality. The market model parameters are then estimated for a sample of securities using both the least squares method and the robust procedure. Analysis shows that the results under the two procedures may differ considerably.
THE EFFICIENCY OF THE INTERNATIONAL MONEY MARKETS: A COMMENT
Authors: Taylor Stephen J.
Published: December 2006

McInish and Puglisi reccntly claimed that weak form efficiency should be tested by runs tests and not autocorrelation tests, when returns are not Normal. It is the opinion of this author however, that autocorrelation tests are not invalidated by a non‐Normal distribution. Furthermore, it can be shown that the runs test has lower power than autocorrelation tests and ihat the runs test is not preferable.
THE EFFICIENCY OF THE INTERNATIONAL MONEY MARKETS: A REPLY
Authors: Mcinish Thomas H. , Puglisi Donald J.
Published: December 2006

In their original article, McInish and Puglisi (1982) examine the weak form efficiency of nineteen international money market instruments using a runs test. Taylor asserts that on theoretical grounds other tests would have been better. McInish and Puglisi argue that their tests were satisfactory and that until empirical evidence is offered the economic significance of Taylor's claims is uncertain (at best).
ACCOUNTING REGULATION: AN ALTERNATIVE PERSPECTIVE: A REPLY
Authors: Laughlin Richard C. , Puxty Anthony G.
Published: December 2006

The comments by Willmott on the desirability of extending the argument of Laughlin and Puxty (1983) are welcomed. The roles of class and the State in accounting regulation are discussed, and Habermas's theory of communicative competence briefly alluded to as a means of dissolving conflict as an extension of the earlier paper.
OPPORTUNITY COST, DISCOUNTING, AND DEFERRED TAX LIABILITIES: A FINAL NOTE
Authors: Findlay M. C. , Williams E. E.
Published: December 2006

A decade of discussion regarding deferred tax liabilities has been narrowed to the question of whether pre‐ or post‐tax discount rates should be employed. A recent article has once again presented the case for pre‐tax rates. This note raises problems with that argument and presents an alternative case for the use of post‐tax rates of discount.
STOCK MARKET RECOGNITION OF MULTINATIONALITY OF A FIRM AND INTERNATIONAL EVENTS
Authors: Yang Ho C. , Wansley James W. , Lane William R.
Published: December 2006

This paper presents the results of empirical tests on a necessary condition for the diversification service hypothesis: market recognition of the multinationality of a firm and the existence of international factors. Employing both a two‐ factor international market model and residual analyses, this study examines whether the US stock market considers the multinationality of a firm and inter‐ national events which are expected to affect the price of MNCs' stock. The residual analysis is conducted over a period which includes both fixed and floating exchange rates. Results from both analyses support the hypothesis that the US stock market does recognize the multinationality of a firm.
MULTIPRODUCT C‐V‐P ANALYSIS AND UNCERTAINTY: A LINEAR PROGRAMMING APPROACH
Authors: Miller Robert E. , Morris Michael H.
Published: December 2006

The most general extension of the traditional one product C‐V‐P model incor‐ porates a multiproduct setting under uncertainty. This study utilizes LP to address both components (product mix and uncertainty of resource prices) to obtain the best product mix available in an ex ante sense. The results provide a benchmark for the evaluation of future operations and enable one to calculate the probability of any level of contribution margin. The study also serves as a useful educational tool by providing a mathematical and graphical depiction of the complexity of the problem, and by explicitly demonstrating the role of uncertain resource costs and uncertain selling prices in a simple LP formulation.
DISAGREEMENTS ON CONDITIONS FOR UNANIMITY
Authors: Ashton D.J.
Published: December 2006

This paper considers two articles which have appeared in this journal on the subject of shareholder unanimity. It argues that their differing conclusions arise in part from errors in the analysis and in part from radically different assumptions about the structure of the economies in which shareholder decisions are made.
TRENDS IN INSTITUTIONAL COMMISSION COSTS FOLLOWING DEREGULATION: EVIDENCE FROM THE USA
Authors: Edmister Robert O. , Walkling Ralph A.
Published: December 2006

This paper examines the impact of the deregulation of stock brokerage commis‐ sions in the United States. The advent of negotiated commissions has led to dramatic structural shifts in commission pricing, particularly for institutional traders, This research examines these structural shifts and their implications for portfolio diversification. The results, based on a sample of over 28,000 institutional trades indicate that diversification of institutional portfolios became costless with respect to commissions following deregulation.
THE OPERATING BETA OF A U.S. MULTI‐ACTIVITY FIRM: AN EMPIRICAL INVESTIGATION
Authors: Mohr Rosanne M.
Published: December 2006

Various researchers have decomposed the firm's beta (or systematic risk) into components that are reflective of the firm's corporate characteristics, for example, leverage position, product mix, etc. In this paper, the theoretical beta decompositions of Hamada (1969 and 1972) and Rubinstein (1973) are sub‐ jected to empirical examination for a sample of diversified (or multi‐activity) firms. The results of the analysis evidence highly significant empirical support for the Hamada‐ Rubinstein model and for the viability of operationalizing that model with available accounting and market data.
ESTIMATING THE INTERNAL RATE OF RETURN FROM PUBLISHED FINANCIAL STATEMENTS: A COMMENT
Authors: Jegers M.
Published: December 2006

In a recent issue of this journal T. Salmi attempted to estimate the internal rate of return from published financial statements. Two reasons lead to the conclu‐ sions that his approach is partly in error. The first is a technical one. Also it has been proved that his objective, estimating the IRR in the case that it is approximately equal to the growth rate, can be reached in a much simpler way.
MATHEMATICAL MODELLING AND STOCHASTIC SIMULATION OF ACCOUNTING ALTERNATIVES
Authors: Rees William , Sutcliffe Charles
Published: December 2006

Computer‐based simulation has been widely used to study the effects of alternative accounting procedures. For simple scenarios, mathematical modelling can also reveal the consequences of employing different accounting methods. This paper uses stochastic simulation to build a complex model which cannot be solved analytically, and compares this approach directly with mathematical modelling of a simplified version of the same accounting problem.
CORPORATE OPERATING PERFORMANCE AROUND THE PROXY CONTEST
Authors: Mukherjee Tarun K. , Varela Oscar
Published: December 2006

By comparing the operating performance (ROE) between a group of firms with proxy contests for control and a matching group of no‐contest firms, this study concludes that contest firms generally underperformed matching firms in both pre‐ and post‐contest periods. Lower profit margins of contest firms appear to be the major cause of underperformance. Results are different when proxy contest companies are segregated into successful and unsuccessful contest groups. Firms in which dissidents succeeded in gaining control were characterized by underperformance in the pre‐contest period and improved performance in the post‐contest period. The improvement seems to be due to more efficient management of the profit margin. The performance of firms in which dissidents failed, however, was close to that of the matching group in the pre‐contest period but deteriorated in the post‐contest period.