bluuebunny/crossref_metadata_2025 huggingface dataset:
Medicamentos e saúde pública em tempos de AIDS: metamorfoses de uma política dependente
Authors: Loyola Maria Andréa
Published: April 2008

Desde os anos 1970, o Brasil vem tentando pôr em prática uma política de medicamentos que, apesar do mercado predominantemente oligopolizado e dominado pelas empresas farmacêuticas multinacionais, garanta à população o acesso a medicamentos essenciais. Foi nesse contexto que se deu a aprovação da lei de medicamentos genéricos, em 1999. O objetivo deste trabalho é analisar os elementos que interferiram no processo de implantação dessa lei. Com base na bibliografia especializada, na análise dos debates publicados em jornais brasileiros (1990 a 2002) e em entrevistas realizadas com membros da indústria, bem como com médicos, políticos, ativistas e funcionários públicos, procura-se mostrar que a efetiva implantação dos genéricos no Brasil está fortemente relacionada ao advento da AIDS. Mais precisamente, à implantação de uma política bem-sucedida de saúde pública no combate a essa doença, envolvendo a ação de diferentes atores e a combinação de diversos elementos também analisados neste artigo, tais como a política de cópia industrial de medicamentos, a lei de acesso universal aos medicamentos anti-AIDS, o movimento de luta contra a AIDS, a burocracia governamental constituída na luta contra essa epidemia e a forte mobilização da mídia.
Rotulagem de suplementos vitamínicos e minerais: uma revisão das normas federais
Authors: Carvalho Patrícia Borges de , Araújo Wilma Maria Coelho
Published: April 2008

Os produtos à base de vitaminas e minerais têm tido a oferta e o consumo crescentes no Brasil. As diferenças nas dosagens oferecidas ao consumidor em cada produto são o parâmetro para sua classificação como suplementos alimentares ou como medicamentos, de acordo com a legislação sanitária brasileira. Entretanto, este limite entre os conceitos é confuso e pouco claro. Considerando o risco gerado pelo consumo desavisado de tais produtos, e visando facilitar a interpretação e a consolidação das normas que tratam dos produtos à base de vitaminas e minerais e fundamentar a dissertação de mestrado, foram realizados levantamento bibliográfico e avaliação de todo o arcabouço jurídico relacionado à sua rotulagem. Concluiu-se que a normatização é extensa, complexa e de difícil entendimento, com muitas normas de hierarquias diferentes tendo interface com o assunto e que as normas não estão consolidadas, levando a dificuldades de interpretação pelos comerciantes, profissionais de saúde e consumidores e ainda a falhas na aplicação por parte dos órgãos fiscalizadores do Estado. Foram também apresentadas propostas para auxiliar a correção das falhas explicitadas pelo estudo.
Adaptação dos instrumentos de avaliação de eventos adversos para uso em hospitais brasileiros
Authors: Mendes Walter , Travassos Claudia , Martins Mônica , Marques Priscilla Mouta
Published: April 2008

OBJETIVO: Adaptar os instrumentos de avaliação e os critérios de rastreamento do Canadian Adverse Events Study (CAES) para a avaliação da ocorrência de eventos adversos (EAs) em hospitais brasileiros. METODOLOGIA: O processo de adaptação dos instrumentos foi realizado em 4 etapas: (I) tradução do inglês para o português dos formulários; (II) painel de especialistas para julgar com base em consenso os critérios de rastreamento e dúvidas na tradução; (III) pré-teste; e (IV) retro-tradução dos formulários. RESULTADOS: A tradução de EA consensuada no painel de especialista foi "lesão ou dano [injury] não intencional que resulta em incapacidade ou disfunção [disability], temporária ou permanente, e/ou prolongamento do tempo de permanência ou morte como conseqüência do cuidado prestado". O painel modificou a composição dos critérios de rastreamento do formulário do CAES. Resultados do pré-teste questionaram a qualidade da avaliação na fase de rastreamento. Uma avaliação realizada por médico da equipe da pesquisa obteve uma freqüência de potenciais EAs na fase de rastreamento semelhante ao valor obtido no CAES. Um novo treinamento dos revisores foi realizado. CONCLUSÕES: Os instrumentos de avaliação adaptados do CAES mostraram-se aplicáveis ao contexto de hospitais brasileiros. O método de revisão retrospectiva de prontuários requer, no entanto, um treinamento bem estruturado e avaliação do desempenho dos revisores previamente a sua incorporação como revisor.
Subnotificação de acidentes por animais peçonhentos registrados pelo SINAN no Estado do Rio de Janeiro no período de 2001 a 2005
Authors: Fiszon Judith Tiomny , Bochner Rosany
Published: April 2008

Com o objetivo de verificar se o Sistema de Informação de Agravos de Notificação (SINAN) já permite prescindir de sistemas de informação paralelos voltados ao controle da distribuição do soro, essencial ao atendimento das vítimas de acidentes por animais peçonhentos, foram comparados os dados dos acidentes causados por serpentes, aranhas e escorpiões, disponibilizados pelo SINAN para o Estado do Rio de Janeiro, com os registrados pela Secretaria de Estado de Saúde do Rio de Janeiro (SES-RJ), de 2001 a 2005. Constatou-se o aumento da capacidade do SINAN para registrar os acidentes e a existência de discrepâncias de dados em municípios e regiões do Estado. Foi especialmente alta a subnotificação de acidentes ofídicos pelo SINAN. Discute-se as implicações desse resultado para estudos e pesquisas, bem como para o planejamento e a gestão dos serviços e distribuição dos soros, e conclui-se que ainda não é possível prescindir dos dados da SES-RJ.
Abandono do tratamento de tuberculose utilizando-se as estratégias tratamento auto-administrado ou tratamento supervisionado no Programa Municipal de Carapicuíba, São Paulo, Brasil
Authors: Vieira Amadeu Antonio , Ribeiro Sandra Aparecida
Published: April 2008

OBJETIVO: Verificar as taxas de abandono e identificar as variáveis relacionadas ao abandono do tratamento, segundo o tipo de estratégia utilizada em pacientes matriculados no Programa de Controle da Tuberculose do município de Carapicuíba (SP) Brasil. MÉTODO: Estudo longitudinal não concorrente de duas coortes de tratamento de tuberculose, a primeira de 1 de janeiro a 31 de dezembro de 2003 com a estratégia tratamento auto-administrado (173 casos) e a segunda de 1 de julho de 2004 a 30 de junho de 2005 com a estratégia tratamento supervisionado (187 casos). RESULTADOS: A taxa de abandono diminuiu significativamente (p < 0,05), de 13,3% (tratamento auto-administrado) para 5,9% (tratamento supervisionado). Na estratégia tratamento auto-administrado, as variáveis associadas significativamente ao abandono foram: estar trabalhando na informalidade (risco relativo [RR] = 3,06); ser caso de retratamento (RR = 2,73); ser alcoolista (RR = 3,10); e não ter os contatos examinados (RR = 8,94). Não houve variável associada ao abandono para os casos sob a estratégia tratamento supervisionado. CONCLUSÃO: A estratégia tratamento supervisionado reduziu a taxa de abandono e produziu bons resultados quanto ao desfecho do tratamento, mesmo nos pacientes com fatores de risco para abandono como na coorte tratamento auto-administrado.
A General Notion of Realizability
Authors: Birkedal Lars
Published: April 2008

We present a general notion of realizability encompassing both standard Kleene style realizability over partial combinatory algebras and Kleene style realizability over more general structures, including all partial cartesian closed categories. We show how the general notion of realizability can be used to get models of dependent predicate logic, thus obtaining as a corollary (the known result) that the category Equ of equilogical spaces models dependent predicate logic. Moreover, we characterize when the general notion of realizability gives rise to a topos, i.e., a model of impredicative intuitionistic higher-order logic.
Is Analyst Forecast Accuracy Associated with Accounting Information Use? (Retracted)
Authors: McEwen Ruth Ann , Hunton James E.
Published: March 2008

In 1994, the AICPA's Special Committee on Financial Reporting recommended that participants in business reporting can improve the reporting process by focusing on user needs and finding cost-effective ways of aligning business reports with those needs. The Committee noted that professional financial analysts are among the most important users of business reporting and that an examination of their accounting information needs would provide useful insight to the profession. Further, the Committee suggested that an investigation of the link between information usage and decision quality could provide a starting point for determining whether currently reported business information is relevant. The current study examines the relation between the forecast accuracy of financial analysts and specific accounting information items used during financial statement analysis. Findings indicate that relatively more accurate analysts tend to emphasize different information items prior to issuing an earnings forecast than do less accurate analysts. Study results also provide evidence of an association between specific accounting information items and decision quality.
A Comparison of Reported Earnings Under Chinese GAAP vs. IAS: Evidence from the Shanghai Stock Exchange
Authors: Chen Charles J. P. , Gul Ferdinand A. , Su Xijia
Published: March 2008

This paper reports the results of an empirical examination of the difference between earnings based on Chinese GAAP and those based on International Accounting Standards (IAS). Specifically, the study determines how current Chinese accounting standards are different from the IAS, whether these differences are systematically biased toward under- or overstated earnings, and which items from the financial statements contributed most to these differences. The findings suggest that reported accounting earnings based on current Chinese GAAP are significantly different from those based on IAS. On average, the reported earnings determined under the Chinese GAAP are 20–30 percent higher than earnings reported under IAS. After restatement, 15 percent of the B-share companies changed from a reported profit to a reported loss. The findings suggest that the differences between the two sets of earnings are caused by differences in accounting standards and financial rules, opportunistic applications of Chinese GAAP, and unusual market-wide events. An analysis of recently promulgated accounting standards indicates that the difference between the two sets of accounting earnings is likely to be significantly reduced from those reported for 1998 as a result.
Corporate Reporting on the Internet
Authors: Ashbaugh Hollis , Johnstone Karla M. , Warfield Terry D.
Published: March 2008

In this paper, we examine firms' use of the Internet to enhance the relevance of their financial reporting. We define a firm as practicing Internet Financial Reporting (IFR) when it provides in its web site either (1) a comprehensive set of financial statements (including footnotes and the auditors' report), (2) a link to its annual report elsewhere on the Internet or (3) a link to the U.S. Security and Exchange Commission's (SEC) Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. While 70 percent of the firms in our sample engage in IFR, we find substantial variation in the quality of firms' IFR practices. Specifically, the variations in quality pertain to the timeliness and therefore, the usefulness of firms' financial reporting on the Internet. We find that some firms provide more timely financial disclosures via the Internet (e.g., monthly sales) while other firms report outdated financial data (e.g., two-year old annual reports). We also observe that the usefulness of firms' financial reporting on the Internet depends on how easy it is to access that data, the amount of data disclosed and/or whether users can download or analyze the data.

To substantiate firms' incentives for engaging in IFR, we sent surveys to firms with web sites in our sample and asked them to report their perceived costs and benefits related to establishing an Internet presence. Firms responded to our questions about why they established an Internet presence by indicating that they perceive their web sites to be an important vehicle to disseminate information to shareholders. After documenting how and why firms use the Internet to voluntarily disclose financial information, we develop the implications of such practices for consumers who demand financial information, firms that supply financial data, auditors and market regulators.
SFAS No. 123 Disclosures and Discounted Cash Flow Valuation
Authors: Soffer Leonard C.
Published: March 2008

One of the cornerstones of financial statement analysis is the discounted cash flow valuation. Despite the broad use of this valuation technique, and the economic importance of employee stock options to firm values, there is little guidance on how employee stock options should be incorporated in a valuation. This paper provides a comprehensive approach to doing so, including consideration of the income tax implications of option exercises, the simultaneity of equity and option valuation, and the use of the disclosures that were mandated recently by Statement of Financial Accounting Standards No. 123. The paper provides a comprehensive example using Microsoft's fiscal 1997 financial statements and employee stock option disclosure. This paper should be of interest to academics and practitioners involved in corporate valuation and financial statement analysis.
An Exploratory Analysis of the 1989 Accounting Firm Megamergers
Authors: Ivancevich Susan H. , Zardkoohi Asghar
Published: March 2008

The 1989 “megamergers” (creating Ernst & Young and Deloitte & Touche), as well as recent merger activity within the accounting profession, have attracted widespread attention from regulators. Given the magnitude of such mergers, and the regulatory interest generated by them, it becomes increasingly important to understand the impact that such mergers have within the public accounting market.

This study is a descriptive exploratory investigation into the effects of the 1989 mergers. Data for the firms involved in the mergers were compared to data for competitor firms not involved in the mergers (direct rivals) to help to control for the effect of market forces. The post-merger period was characterized by a slight decline in market share for the merged firms compared to their direct rivals, a decline in audit price for both groups, and a decrease in factor costs for the merged firms relative to their direct rivals.

The results of data analysis are consistent with the premise that 1989 megamergers predominantly resulted in increased efficiencies within the audit market that were then passed through to end-users in the form of lower prices. Further study is needed to determine whether these efficiencies within the audit market were offset by market power influences in nonaudit services.
CPAs' Perceptions of the Emerging Multidisciplinary Accounting/Legal Practice
Authors: Frank Kimberly E. , Hanson Randall K. , Lowe D. Jordan , Smith James K.
Published: March 2008

This paper reports the results of a survey of 219 American Institute of Certified Public Accountant members about legal services their public accounting firms currently offer and plan to offer in the future, and how they would organize their firm to deliver these services to clients. The survey is motivated by the legal profession's current investigation of whether to allow nonattorneys to share fees and become partners with nonattorneys and by the American Bar Association's call for evidence on the current existence of multidisciplinary practice (MDP). Forty-four states established MDP committees to recommend whether legal ethics rules should be relaxed to allow MDP. Relaxed ethics rules allow public accounting firms to employ attorneys to offer a full array of legal services to their clients. We find that public accounting firms already offer a number of legal services to their clients and are interested in increasing the offering of these services if allowed. The results also indicate that the size of the public accounting firm is likely to influence the types of legal services offered and the arrangements used to deliver the legal services to clients. The findings are important because they highlight the need for the legal and accounting professions to formulate rules regarding MDP.
Application of the Business Risk Audit Model: A Field Study
Authors: Eilifsen Aasmund , Knechel W. Robert , Wallage Philip
Published: March 2008

After confronting unprecedented challenges in the last decade, accounting firms have undertaken extensive effort to improve the basic financial statement audit and to expand external assurance beyond the traditional audit. The re-examination of audit methods has produced a new emphasis on assessing business and process risks in the conduct of an audit. This paper describes the fundamental changes in the audit process and examines their impact in an actual engagement. We first identify outcomes that we expect to observe in an audit based on the business risk model and then study an actual engagement to gather preliminary evidence about our expectations.

The engagement used in this study is the 1997 audit of the Czech bank Cˇeskoslovenska´ Obchodni´ Banka (CˇSOB). Important observations about the new audit process included changes to the audit team structure, changes in administration and timing of the engagement, changes in the risks addressed during the audit and the evidence gathered, increased assurance to the client, and increased opportunities for value-added services. Although the generalization of results from a field study is constrained, this study identifies expectations and effects that can be examined in future larger sample studies.
Stock Option Expense: The Sword of Damocles Revealed
Authors: Botosan Christine A. , Plumlee Marlene A.
Published: March 2008

Statement of Financial Accounting Standards (SFAS) No. 123 is one of the most controversial accounting standards ever issued by the Financial Accounting Standards Board (FASB 1995) (SFAS No. 123, para. 376). More than five years have passed since SFAS No. 123 first required firms to either recognize or disclose stock option expense based on the fair value of options granted. In light of the fractious debate surrounding its passage and ongoing differences of opinion regarding the usefulness of stock option expense data, this paper reports how the standard impacts firm performance.

This study examines the effect of stock option expense on the diluted earnings per share and return on assets of 100 firms identified by Fortune magazine as “America's Fastest-Growing Companies.” We find that stock option expense has a material impact on the performance measures for a majority of our sample firms. Moreover, our analysis predicts stock option expense will grow over the next several years, potentially doubling in magnitude during that time. We also document some noncompliance with the disclosure requirements of SFAS No. 123, finding that 12 percent of the sample firms provided incomplete information during the most recent year examined.
Going-Concern Opinions in the “New” Legal Environment
Authors: Geiger Marshall A. , Raghunandan K.
Published: March 2008

The Securities and Exchange Commission (SEC 2000) recently asserted that the litigation environment facing auditors has changed significantly since 1994, and that the reduced threat of litigation can influence auditor behavior. This study examines the potential impact of the “new” legal environment described by the SEC by examining the audit reports on 1,871 companies under financial stress during the years 1992–93, 1996–97, and 1999–2000. We find that after controlling for financial stress, company size, and default status, going-concern audit reports were less likely (1) in 1996–97 than in 1992–93, and (2) in 1999–2000 than in 1996–97. Our results indicate that changes in the litigation environment are associated with the issuance of fewer going-concern-modified opinions to stressed companies in recent years. This finding is consistent with the SEC's claim that auditors' behavior in recent years has been influenced by reduced litigation pressures.
Some Thoughts on the Intellectual Foundations of Accounting
Authors: Demski Joel S. , Fellingham John C. , Ijiri Yuji , Sunder Shyam
Published: March 2008

We report on a panel discussion at the 2001 CMU Accounting MiniConference under the title “Intellectual Foundations of Accounting.” We provide a background and the motivation for the discussion and present the remarks by the four panelists. A number of perspectives are taken. Professor Sunder emphasizes dualities in accounting. Professor Demski stresses the endogeneity of accounting measurement activities. Professor Fellingham examines the core and superstructure of accounting. Professor Ijiri observes the microcosmos in accounting and its philosophical connection. We also argue that accounting's intellectual foundations are far from settled and an ongoing discussion is likely to help reinvigorate accounting scholarship.
The Impact of Split Adjusting and Rounding on Analysts' Forecast Error Calculations
Authors: Baber William R. , Kang Sok-Hyon
Published: March 2008

This study finds that analysts' forecast data files, commonly used by accountants and financial analysts to estimate market expectations about earnings announcements, contain inaccurate historical data for companies that split their common stock. These inaccuracies result because stock split adjustments are made retrospectively and split-adjusted data are rounded. Moreover, because well-performing firms are more likely to execute stock splits, the consequences of the stock split problem are systematic, potentially distorting both time-series and cross-sectional characteristics of forecast errors. The analysis also demonstrates that the problem can influence interpretations of security price reactions to earnings announcements. To illustrate this point, we report evidence suggesting that errors induced by rounding split-adjusted data alter conclusions about how investors interpret earnings that meet, but do not exceed, the consensus forecast.
Knowing What Others Know: Common Knowledge, Accounting, and Capital Markets
Authors: Sunder Shyam
Published: March 2008

The concept of common knowledge concerning higher orders of knowledge has seen exciting new developments in the fields of philosophy, game theory, statistics, economics, and cognitive science in the recent decades. Even though information lies at the heart of accounting and capital markets research, these new developments have remained at the periphery of these fields. Common knowledge thinking may significantly advance our understanding of financial reporting, analysis, securities valuation, managerial control, auditing, and information systems. Such accounting and business applications will also make important contributions in the form of concrete, real-life examples and applications to the basic fields where the idea of common knowledge originated. This paper is an overview of common knowledge and its actual and potential applications to accounting and capital markets research.
Regulation Fair Disclosure, Analyst Following, and Analyst Forecast Dispersion
Authors: Irani Afshad J. , Karamanou Irene
Published: March 2008

This paper presents preliminary evidence of the effect of Regulation Fair Disclosure (FD) on the quantity and quality of firm-specific information released to the market by comparing analyst forecast data from pre-FD to post-FD time periods. By prohibiting selective disclosure of material information to privileged individuals, the Securities and Exchange Commission intends to provide a level playing field to all investors. However, opponents argue that FD has a negative impact by decreasing the quantity and quality of publicly available information. Consistent with this argument, we document a decrease in analyst following and an increase in forecast dispersion following the passage of FD.
Managing Pro Forma Stock Option Expense under SFAS No. 123
Authors: Balsam Steven , Mozes Haim A. , Newman Harry A.
Published: March 2008

We investigate whether footnote disclosures under Statement of Financial Accounting Standards (SFAS) No. 123 are managed in 1996, the first year that the disclosure was required. The 1996 phase-in of SFAS No. 123 provided firms with a unique opportunity to manipulate the pro forma disclosure in the initial years. SFAS No. 123 allows firms discretion in estimating the value of their stock option grants and in allocating that value across accounting periods. Although we find little evidence that firms manage the estimated value of their option grants, we find that firm-specific incentives affect how that value is allocated. Specifically, firms that provide high levels of either CEO compensation or stock option compensation relative to performance allocate a smaller proportion of the options' value to the 1996 pro forma expense, apparently to reduce criticism of that compensation. Small firms and firms that recently went public also allocate a smaller proportion of option value to the 1996 pro forma expense, apparently to increase perceptions of their profitability.

We conjecture that firms were less likely to manage the value of the options granted than the allocation of that value in 1996 because the parameter estimates underlying the reported option value must be disclosed in the footnote, whereas the inputs to the allocation computation are not disclosed.

These results, which suggest that firms manipulated pro forma stock option expense when their estimate choices cannot be observed, have implications for both standard setters and financial statement users. In particular, the FASB's current deliberations on the transition from footnote disclosure to income statement recognition for stock options should consider additional disclosures to minimize unobservable choices. More generally, the FASB may reduce potential manipulation by requiring expanded disclosures about the choices used in computing both pro forma and reported numbers.
Decision Usefulness of Alternative Joint Venture Reporting Methods
Authors: Graham Roger C. , King Raymond D. , Morrill Cameron K. J.
Published: March 2008

Depending on the country and circumstances, reporting rules for intercorporate investments may require the cost method, the equity method, proportionate consolidation, or full consolidation, and may yield dramatically different accounting numbers. In the post-Enron environment there is a particular focus on investments for which liabilities remain off balance sheet. We compare the information content of alternative accounting treatments for a sample of Canadian firms reporting joint ventures under proportionate consolidation. We restate their financial statements using the equity method, and we compare the information content of the two accounting methods in predicting accounting return on common shareholders' equity. We find evidence consistent with the view that financial statements prepared under proportionate consolidation provide better predictions of future return on shareholders' equity than do financial statements prepared under the equity method. We conclude that, for these firms, proportionate consolidation provides information with greater predictive ability and greater relevance than does the equity method.
An Examination of Alternative Work Arrangements in Private Accounting Practice
Authors: Frank Kimberly E. , Lowe D. Jordan
Published: March 2008

Employees are requesting more flexibility in their work schedules to be able to integrate work with other aspects of their family and personal lives. While alternative work arrangements are being offered at progressively more companies, it is unclear whether the work culture accepts these arrangements as a viable work alternative. Here we examine the extent to which flextime and telecommuting arrangements impact management accountants' performance evaluations, job commitment, and career progression as compared to working a traditional schedule. We also examine whether these arrangements are perceived as being less acceptable for men than for women. One-hundred sixty management accountants from 90 companies participated in our experiment. The results indicate that participation in alternative work arrangements did not impact perceptions of current task performance or job commitment. However, participation led to significantly lower perceptions of long-term career potential.
Analysis of Corporate Disclosures on Relative Performance Evaluation
Authors: Bannister James W. , Newman Harry A.
Published: March 2008

The relative performance evaluation (RPE) hypothesis states that firms benefit from comparing their own performance to that of a peer group when evaluating the CEO's performance. Although in theory firms should be employing relative performance to evaluate the CEO, indirect empirical tests in the 1980s and 1990s generally fail to support the RPE hypothesis. This paper examines RPE-related disclosures found in the compensation committee reports provided in proxy statements to determine whether firms actually employ RPE, and to offer insight into why indirect tests generally fail to support the RPE hypothesis.

We find that firms do use RPE in determining executive compensation, thus supporting the RPE hypothesis, although RPE usage is not widespread. We also find that several key assumptions underlying prior indirect tests are misspecified for many firms, helping to explain the difficulty in detecting RPE in random samples of firms and suggesting improvements to methodologies employing indirect tests for RPE.

Our results also beg the question of why some firms use RPE while other firms do not. We find that RPE usage is positively related to greater monitoring and stakeholder concern about pay and performance, but that performance and CEO power and insulation from pressure do not explain cross-sectional variation in RPE usage. We also examine disclosures related to peer groups and adverse performance-related events since they indirectly relate to RPE and find that many firms filter out negative-performance-related events, but not positive ones. This is equivalent to using one-sided RPE, where a firm excuses the CEO from factors that affect industry performance adversely, but credits the CEO for factors that aid industry performance.
Discretion in Financial Reporting: The Voluntary Adoption of Fair Value Accounting for Employee Stock Options
Authors: Robinson Dahlia , Burton Diane
Published: March 2008

This paper investigates the market reaction to announcements by firms of their decision to adopt the fair value provisions of SFAS No. 123 in accounting for their employee stock option (ESO) expense. Additionally, this paper examines ESO usage and expense of adopting firms and compares the impact of the expense on profitability measures for adopting firms relative to a matched set of control firms. We find a positive and significant abnormal return in the three days around the adoption announcements, suggesting that the decision to expense using the fair value method is value relevant. The positive abnormal announcement returns are mainly attributable to the earlier announcements, consistent with early announcements serving as a credible signal of a commitment to transparency in financial reporting. We find evidence that in the three years prior to the announcement year, adopting firms report significantly higher earnings than control firms yet fail to earn higher market returns, suggesting that adopters stand to benefit the most by improving the market's perception of their accounting reports. We also find that ESO usage, ESO expense, and the impact of ESO expense on profitability are significantly lower for adopters relative to control firms, although the impact of ESO expense is economically significant for 43 percent of the adopters.
A Resource Granularity Framework for Estimating Opportunity Costs
Authors: Balakrishnan Ramji , Sivaramakrishnan K. , Sunder Shyam
Published: March 2008

This paper presents a framework to help decision makers better measure the opportunity cost of resources with differing economic characteristics. After characterizing resources by the intrinsic lumpiness of acquisition (acquisition granularity), storability of benefits (expiration granularity), and control over the rate of consumption of available benefits (consumption granularity), this paper illustrates how these concepts can lead to improved decisions and assessment of observed practices.
What Valuation Models Do Analysts Use?
Authors: Demirakos Efthimios G. , Strong Norman C. , Walker Martin
Published: March 2008

This paper adopts a structured positive approach to explaining the valuation practices of financial analysts by studying the valuation methodologies contained in 104 analysts' reports from international investment banks for 26 large U.K.-listed companies drawn from the beverages, electronics, and pharmaceuticals sectors. We provide a descriptive analysis of the use of alternative valuation models focusing on the value-relevant attributes that analysts seek to forecast and the methodologies analysts use to convert the forecasts into estimates of firm value. We postulate and test a number of hypotheses relating to how the valuation practices of analysts vary systematically across industrial sectors. We find that: (1) the use of valuation by comparatives is higher in the beverages sector than in electronics or pharmaceuticals; (2) analysts typically choose either a PE model or an explicit multiperiod DCF valuation model as their dominant valuation model; (3) none of the analysts use the price to cash flow as their dominant valuation model; and (4) contrary to our expectations, some analysts who construct explicit multiperiod valuation models still adopt a comparative valuation model as their preferred model. We believe the study's findings are important for increasing our understanding of the valuation practices of financial analysts. The study also provides a basis for further research that tests a richer and more det ailed set of hypotheses.
Local and Regional Audit Firms and the Market for SEC Audits
Authors: Read William J. , Rama Dasaratha V. , Raghunandan K.
Published: March 2008

The period after the demise of Enron and Andersen has been tumultuous for the accounting profession. In congressional hearings and in responses to the SEC and GAO, auditors have stated that provisions of the Sarbanes-Oxley Act of 2002 (SOA) and related SEC rules changes would cause many local and regional audit firms to terminate audit work for SEC registrants. In this study, we provide empirical evidence about small audit firms and recent changes in the market for SEC audits. After examining all auditor resignations during 2000–2003, we find that 47 local and regional audit firms disclosed in Form 8-Ks filed in 2002–2003 that they were ceasing all SEC audits; only eight such firms that made this disclosure in 2000–2001. From interviews with audit partners of such firms, we find that the primary reasons for ceasing SEC audits is the perception of a more stringent oversight by the recently created Public Company Accounting Oversight Board (PCAOB), increased professional liability insurance costs, and increased scrutiny of SEC registrants. We also find that many local and regional audit firms that had no SEC audit clients in 2002 voluntarily registered with the PCAOB. Interviews with partners of such audit firms indicate that the primary reason for voluntarily registering with the PCAOB is to signal their audit quality to non-SEC registrants (private companies, nonprofits, etc.) and their stakeholders.
How Do Earnings Numbers Relate to Stock Returns? A Review of Classic Accounting Research with Updated Evidence
Authors: Nichols D. Craig , Wahlen James M.
Published: March 2008

An extensive body of academic research in accounting develops theory and empirical evidence on the relation between earnings information and stock returns. This literature provides important insights for understanding the relevance of financial reporting. In this article, we summarize the theory and evidence on how accounting earnings information relates to firms' stock returns, particularly for the benefit of students, practitioners, and others who may not yet have been exposed to this literature. In addition, we present new empirical evidence on the relation between earnings and returns by replicating and extending three classic studies using data from 1988 through 2002. Specifically, we first demonstrate the relation between earnings changes and stock returns, replicating Ball and Brown (1968), and we compare that relation to the relation between changes in cash flows from operations and stock returns. Second, we demonstrate the impact of earnings persistence on stock returns, extending findings from studies such as Kormendi and Lipe (1987), and highlighting the effects of differences in persistence across earnings increases and decreases. Third, we provide evidence to assess the efficiency with which the capital markets impound quarterly earnings information into share prices, showing that the post-earnings-announcement-drift results of Bernard and Thomas (1989) extend to recent data.
Accounting for Liabilities: Conceptual Issues, Standard Setting, and Evidence from Academic Research
Authors: Botosan Christine A. , Koonce Lisa , Ryan Stephen G. , Stone Mary S. , Wahlen James M.
Published: March 2008

In this paper, we summarize conceptual issues that arise in the definition, recognition, derecognition, classification, and measurement of liabilities. We also highlight problems in existing accounting standards for liabilities and identify opportunities to refine those standards. Where relevant, we describe evidence from empirical accounting research involving liabilities and identify opportunities for future research. Our objective is to highlight the inconsistencies and controversies surrounding existing accounting standards for liabilities, and to describe the research evidence that provides insights into accounting for liabilities. A better understanding of the current problems in accounting for liabilities and the related research evidence should help standard setters and their constituents in their attempts to improve GAAP, and should stimulate future academic research to shed new light on accounting for liabilities.
Audit Firm Size and Going-Concern Reporting Accuracy
Authors: Geiger Marshall A. , Rama Dasaratha V.
Published: March 2008

Prior research suggests that the Big 4 audit firms are of higher quality than are non-Big 4 firms. However, existing tests for an association between audit firm size and reporting accuracy are indirect and provide mixed results. Our study extends this line of research by examining whether the Big 4 audit firms exhibit higher quality reporting by having fewer “audit-reporting errors” in the context of issuing going-concern modified reports. Our analyses examine both types of going-concern reporting errors (i.e., type I errors—modified opinions rendered to subsequently viable clients; and type II errors—unmodified opinions rendered to subsequently bankrupt clients) over an 11-year period. We also examine reporting error rate differences between the national second-tier firms and regional/local third-tier firms.

Our findings indicate that both type I and type II error rates for Big 4 audit firms are significantly lower compared to non-Big 4 firms. In contrast, we find no significant differences between the national second-tier and regional/local third-tier audit firms with respect to either type of reporting error. Our results provide evidence about a Big 4 audit quality difference in reporting on client's going-concern problems.
Financial Reporting Regulation and the Reporting of Pro Forma Earnings
Authors: Entwistle Gary M. , Feltham Glenn D. , Mbagwu Chima
Published: March 2008

A primary objective of the Sarbanes-Oxley Act is to bolster public confidence in the U.S. capital markets. The SEC aims to achieve this objective in part by regulating the use of alternate earnings measures (colloquially referred to as “pro forma” earnings) that differ from generally accepted accounting principles. This paper examines whether firms change their reporting practice in response to pro forma regulation. Specifically, it examines whether the use, calculation, and presentation of pro forma measures by S&P 500 companies changes between 2001 and 2003. We document three significant shifts in pro forma reporting in this period. First, the proportion of firms reporting pro forma earnings declines from 77 to 54 percent. Second, by 2003, pro forma is used in a less biased manner. Not only is the proportion of firms using pro forma earnings to increase reported income smaller than in 2001, but also the magnitudes of these increases are reduced. Third, in 2003, firms present pro formas in press releases in a much less prominent and less potentially misleading manner. These results suggest a strong impact of the recent regulation of pro forma reporting and provide important empirical evidence for policy makers.
Recordkeeping and Human Evolution
Authors: Basu Sudipta , Waymire Gregory B.
Published: March 2008

We seek to characterize the evolutionary role played by the transactional record that is the foundation of modern accounting. We theorize that systematic recordkeeping crystallizes memory and, along with other institutions (e.g., law, weights, and measures), promotes the trust necessary for large-scale human cooperation. Our theory yields two predictions: (1) permanent records emerge to supplement memory when complex intertemporal exchange between strangers becomes more common and (2) systematic records and other exchange-supporting institutions co-evolve and feed back to increase gains from economic coordination and division of labor. Many aspects of ancient Mesopotamian recordkeeping are consistent with these hypotheses, suggesting that our evolutionary theory is plausible. We outline ways to directly test our predictions with experiments, ethnographies, and agent-based models, and describe other techniques that can be used to explore the co-evolution of accounting with the human brain, language, and law.
Including Estimates of the Future in Today's Financial Statements
Authors: Barth Mary E.
Published: March 2008

This paper explains why the question is how, not if, today's financial statements should include estimates of the future. Including such estimates is not new, but their use is increasing. This increase results primarily because standard-setters believe asset and liability measures that reflect current economic conditions and up-to-date expectations of the future will result in more useful information for making economic decisions, which is the objective of financial reporting. This is why standard-setters seem focused on fair value accounting. How estimates of the future are incorporated in financial statements depends on the asset and liability measurement attribute, and on financial reporting definitions of assets and liabilities. The present definitions depend on identifying past transactions or events that give rise to expected inflows or outflows of economic benefits and, for inflows, control over the expected benefits. Thus, not all expected inflows or outflows of economic benefits are recognized. Disclosures in the notes can help users understand recognized estimates and can provide information about unrecognized estimates. Including more estimates of the future in today's financial statements would result in an income measure that differs from today's income, but such a measure arguably provides better information for making economic decisions.
The Nature of Accounting Information Reliability: Inferences from Archival and Experimental Research
Authors: Maines Laureen A. , Wahlen James M.
Published: March 2008

Reliability is an essential characteristic for accounting information to be useful for decision making. Reliability represents the extent to which the information is unbiased, free from error, and representationally faithful (FASB 1980). Despite the central role of reliability, it is a complex and elusive construct of accounting information. Reliability is difficult to specify precisely in accounting standards and practice, and it is difficult to examine directly with research. The primary goal of this paper is to better understand the nature of accounting information reliability by synthesizing archival and experimental research evidence within the context of a framework for accounting information usefulness. Greater understanding of the empirical literature on accounting information reliability should assist standard setters and regulators in establishing financial reporting standards, preparers and auditors in implementing standards, and financial statement users in evaluating accounting information reliability. Finally, greater understanding of reliability should assist academics in conducting research to produce new insights on reliability and in conveying the important role of reliability to students.
The Role and Perceptions of Independent Audit Partners in the Governmental Audit Market
Authors: Lowensohn Suzanne H. , Collins Frank
Published: March 2008

Audits are the primary means of monitoring that public funds are appropriately spent by governmental entities. Currently, independent auditors (rather than governmental auditors) are the primary suppliers of governmental audit services, despite the fact that many of them view governmental audits as “secondary” (AICPA 1987). Furthermore, nongovernmental auditors are believed to be less “independent” and more prone to lose sight of the programmatic demand to safeguard the public trust (Power 1997) than governmental auditors. To better understand the supply of governmental audit services, this study investigates independent audit firm partner opinions of governmental audits and their motivation to pursue these engagements. Multiple regression results of our data reveal that partners are more likely to pursue governmental audits if they believe that desirable intrinsic and extrinsic rewards are attainable through performing these audits. Furthermore, environmental risk factors—an active political climate and authoritative changes—reduce partner motivation to pursue governmental audits. It is suggested that environmental risk factors disrupt the comfortable principal/agent relationship of the auditor and auditee because the relationships have become decoupled (abstracted) from the audit's programmatic mission.
The Impact of Regulatory and Audit Environment on Managers' Discretionary Accounting Choices: The Case of SFAS No. 106
Authors: Asthana Sharad
Published: March 2008

This paper studies the impact of a firm's regulatory and audit environment on managers' discretion in choosing from the set of actuarial choices available under Statement of Financial Accounting Standards No. 106. Data disclosed by 500 firms under SFAS No. 106 during the period 1993–96 is used for the tests. Correlation, portfolio, and fixedeffects regression analyses are conducted on this data. The results show that the magnitude of the discretionary component of the postretirement benefit obligation is negatively associated with the extent of the external regulations and auditor quality. Tests on the market response to the disclosed postretirement benefit obligation show that the market values only the nondiscretionary component of the obligation. This research provides evidence that federal regulation and independent audits serve as useful watchdogs of the public interest. Proper financial disclosures also lead to increased transparency and market efficiency in detecting and correcting for the effects of opportunistic actions of managers.