bluuebunny/crossref_metadata_2025 huggingface dataset:
Equity Classification Of Convertible Debt?: Tax And Cash Flows Considerations
Authors: Schneider Douglas K. , Schisler Dan , McCarthy Mark G. , Hagler J. Larry
Published: February 2016

The issue of debt versus equity classification for hybrid securities has been a source of continuing controversy for tax policy-makers and financial accounting standard setters. A large number of corporations have issued hybrid financial instruments which possess the characteristics of both debt and equity. One of the most common examples of hybrid financial instruments is convertible debt. Issuers of convertible debt were motivated by a desire to raise capital that would be attractive to the capital markets while at the same time exploit tax or reporting rules. For instance, the issuer of convertible debt is allowed a tax deduction for interest expense even though the convertible debt instrument may later be converted to equity, thus avoiding repayment of principal at maturity. The Internal Revenue Service (IRS) allows the issuer a tax deduction for interest expense, while requiring the holder to recognize taxable interest income. However, the IRS and the Financial Accounting Standards Board (FASB) have considered treating convertible debt according to its underlying economic substance and ultimate outcome as opposed to treating it strictly as debt. If the IRS, the FASB, or both were to move towards an economic substance approach with respect to convertible debt, what implications would this have on the issuers and holders of convertible debt? This article speculates on changes in tax and reporting rules for convertible debt and analyzes the potential impact of such changes on the treatment of distributions from convertible debt. Our analysis shows that if convertible debt were treated as equity and its distributions no longer eligible for interest expense deductions, issuers would experience a decrease in cash flow from operations due to the presumed increase in tax liability. Conversely, holders of convertible debt may be eligible for the dividends-received deduction.
The Impact Of Options Listing Upon The Optimistic Bias In Analysts Quarterly Earnings Forecasts
Authors: Senteney David L. , Snyir Andrew G.
Published: February 2016

We provide evidence that firms options listing increases the divergence of analysts opinions and, at the same time, leads to a reduction in the systematic optimistic bias in an important element of the market expectation of earnings, analysts consensus earnings forecasts. Our contribution is added insight into how the increased divergence of analysts opinions following options listing drives a reduction of systematic optimistic bias in consensus analysts forecasts.
Cognitive Moral Development And Organizational Commitment: Two Potential Predictors Of Whistle-Blowing
Authors: Street Marc D.
Published: February 2016

The recent popularity of whistle-blowing as a research topic has results in numerous publications attempting to identify the variables and antecedent conditions related to an individual act of whistle-blowing. Following suit this paper proposes that two individual characteristics, cognitive moral development and organizational commitment, will affect the likelihood of an individual engaging in whistle-blowing behavior.
Corporate Performance, Stock Option Compensation, And Measurement Error In CEO Pay
Authors: Griner Emmett H.
Published: February 2016

Previous investigations of the association between executive pay and corporate performance have relied heavily on the sum of salary and bonus as a proxy for total compensation. This study shows that the sum of salary and bonus contains a substantial amount of unsystematic measurement error. The results underscore the need for future research in this area to use compensation proxies that incorporate executive stock options.
The Performance Of Popular Investment Magazine Stock Analysts
Authors: Brody Richard G. , Rees Lynn
Published: February 2016

This study examines the stock price performance for a sample of 239 firms that were recommended by analysts in popular investment magazines (214 buy and 25 sell recommendations). The study was motivated by the magazines claims that abnormal profits can be earned by following the investment advice published in their respective magazines. The empirical results are not consistent with this claim. For our sample and during the time period investigated, investing in the buy recommendations and selling short the sell recommendations would not earn returns in excess of the market average.
Cash Flow Accounting: is It Time For Increased Disclosures?
Authors: McEnroe John E.
Published: February 2016

Cash flow reporting has attracted increased attention in the United States, especially in the past decade. However, despite the use of per share cash flow information by security analysts, the Financial Accounting Standards Board (FASB) has prohibited its disclosure. This article provides a historical perspective of cash flow accounting in the U.S., as well as a discussion of cash flow advocates. The final section presents arguments for increased disclosures in the area of cash flows, including operating cash flow on a per share basis and a schedule of free cash flows.
External And Internal Customer Managers: Differences In Perception And Decision-Making In The Marketing And Human Resource Dyad
Authors: Berthon P. R. , Pitt L. F. , Morris M. H.
Published: February 2016

Interfunctional relations and their implications for organizational effectiveness is increasingly becoming a major strategic issue. Marketing and human resources (HR) are concerned with building relationships; marketing is the function charged with managing relationships with external customer, whilst HR is the function obligated to the task of managing relationships internally. Indeed, there seems to have been a certain crossover between these functions as issues such as internal marketing (cf. George 1990) and the marketing of the HR function (cf. Price 1993) have received attention of late. This article explores the Marketing-HR dyad from the perspective of problem perception. How a problem is perceived determines to a substantial degree the subsequent course of problem solving action. The concept of decision-making context is introduced as the ratio of problem types encountered. To differentiate managers on an individual level the construct of perception type is expounded. The study finds significant differences in perceptions between the marketing and HR, and between different perception types. It is argued that a better understanding of the differences in the decision-making processes between key functions is essential if the hope of enhancing organizational effectiveness through inter-functional cooperation is not to remain an elusive Shangri-La.
The J-Curve Hypothesis And Currency Devaluation: Cases Of Egypt And Ghana
Authors: Kulkarni Kishore G.
Published: February 2016

The paper reviews effects of devaluation on balance of trade by using Marshall Lerner condition, J-Curve hypothesis. It extends the hypothesis further to consider a case of continuous devaluations of exchange rates. After initially contributing to conventional theory of J-Curve hypothesis, and the paper then tests the theory for cases of Ghana and Egypt. In both cases it is found that theoretical arguments are consistent with empirical evidence. Paper consists of four sections including introduction.
Ethnicity And Consumer Choice: A Study Of Hispanic Decision Processes Across Different Acculturation Levels
Authors: Kara Ali , Kara Natasha R.
Published: February 2016

This article examines the effects of the subcultural component and the degree of acculturation on consumer choice behavior. The choice behavior of Hispanics and non-Hispanics (Anglos) are compared for high and low involvement products using the Single-Beta-Main Effect (SBM) hybrid conjoint model. The findings of the study suggest that the utilities of different product attributes for low acculturated Hispanics are different from those of high acculturated Hispanics and non-Hispanics.
The Faster, The Better?: An Empirical Study On The Speed Of Strategic Change And Firm Survival And Performance
Authors: Kim Eonsoo , McIntosh John C.
Published: February 2016

This study questions the conventional wisdom that strategic change and a rapid pace of change are necessary for firm survival in a changing environment. Recognizing the potential costs of strategic change, we argue that conventional wisdom might be oversimplified. Drawing on the U.S. trucking industry and its deregulation, this paper concludes that mere change in strategy is insufficient to guarantee organizational survival and success, and hasty change may exert a negative impact on firm performance. Conclusions drawn from this study should be given appropriate caveats since we focus on conditions idiosyncratic to strategic change prompted by industry deregulation.
Bias And Random Measurement Error In Accounting-Based Surrogates For Internal Rate Of Return
Authors: Fritsche Steven R. , Dugan Michael T.
Published: February 2016

Limitations inherent in alternative profitability measures as estimates of internal rate of return (IRR) often require that managers and researchers employ accounting-based profitability measures. Using published accounting and stock market data, this study models accounting rate of return (ARR) and conditional estimate of internal rate of return (CIRR) as functions of product market risk; growth (g) inventory cost flow assumption (INV), and depreciation method (DE). The models support inferences about the bias and efficiency (i.e. systematic and random error) in the relationships between the two accounting-based profitability measure and IRR, as estimated by the bias and efficiency in their relationships with a factor that is suggested in the finance literature as a determinant of systematic risk (product market risk). The results indicate that ARR estimates IRR with bias attributable to g; however, ARR is unaffected by INV and DEP. Whether g, INV, or DEP affect CIRRs ability to estimate IRR depends on the interval over which CIRR is estimated and the assumed cash flow pattern. On the other hand, CIRR generally estimates IRR with significantly greater efficiency. These results have research design implications, as well as implications for both accounting policy formulation and anti-trust policies.
A Comment On The Accountability Of The Accounting Profession
Authors: Kleinman Gary G. , Farrelly Gail E.
Published: February 2016

This essay reflects on the history, present status, and future promise of the accounting profession. Comparisons are drawn between accounting and the professions of medicine and law. The critique of the profession made by Walter P. Schuetze, former Chief Accountant to the SEC, and the formal response of the profession to this critique are examined. The essay also provides some preliminary suggestions for limiting the use of accounting techniques that do not conform to professional literature and practice. Included in the essay is a discussion of the 1994 report of the Advisory Panel on Auditor Independence, a panel appointed by the Public Oversight Board of the SEC Practice Section of the AICPA.
Controlling The Moral Hazard Created By Limiting Liability
Authors: DeFusco Richard , Shoemaker Paul , Stara Nancy
Published: February 2016

Accounting firms may choose to organize either as Limited Liability Companies (LLC) or as Limited Liability Partnerships (LLP) to eliminate joint and several liability for their partners. However, before firms consider adopting either new entity form to limit tortuous liability, the moral hazard problem associated with these entity choices should be evaluated. This article examines the issue of accountant liability and offers suggestions to reduce moral hazard while still protecting the accountant from personal liability.
Business Risk And Performance: An Examination Of Industry Effects
Authors: Veliyath Rajaram
Published: February 2016

Both business risk and industry sales volatility decreased across the computing equipment manufacturing, airline and pharmaceutical industries. Earnings performance and industry environmental munificence were both the highest among airlines. High volatility, while posing greater business risks, also offered the opportunity for improved risk-performance payoffs in the computer industry. Individual firms in the computer and pharmaceutical industries successfully reduced business risk while simultaneously increasing earnings performance (i.e., negative within-firm correlations), indicating idiosyncratic firm-specific effects.
Alternative Disclosure Methods For Accounting Changes And Analysts Earnings Forecasts
Authors: Buchman Thomas A. , Fort C. Patrick
Published: February 2016

Generally accepted accounting principles (GAAP) require that firms changing accounting principles must report the change in one of three ways: the cumulative effect method, the retroactive restatement method, or a no-adjustment (prospective) method. The method a company should use is determined by the type of change being made. This raises the following question: can it be demonstrated that one of these methods is better, in some sense, than the other methods? A major problem in evaluating alternative methods of accounting of the same economic event and in deciding which one method should be adopted as GAAP is that it is impossible to objectively determine which of the alternatives is best. However, it is possible to rank alternatives on one dimension of interest-which method minimizes the income forecasts in years after the change. We obtained a sample of forms making accounting changes and formed three portfolios of firms based on the method they used to account for the change in accounting principle. We then compared financial analysts earnings forecast errors for the firms in the three portfolios. After controlling for relevant variables, we found that, in the year firms made accounting changes the firms making the changes requiring retroactive restatement had significantly larger forecast errors than the firms making changes requiring the other forms of disclosure, but in years subsequent to the year of change there were no significant differences in forecast errors. This leads us to the conclusion that, from an earnings forecast accuracy perspective, there is no advantage to calculating and presenting the cumulative effect of an accounting change or in preparing restated or pro-forma financial statements.
Capturing Competitive, Cannibalistic, And Variety-Seeking Influences On Market Share: An Asymmetric Modeling Approach
Authors: Richard Michael D. , Allaway Arthur W. , Berkowitz David , D'Souza Giles
Published: February 2016

This paper attempts to focus on the asymmetric source-of-share issue by building and calibrating a probabilistic choice model which estimates market share at the consumer level while also capturing the asymmetric influence of inter-brand competition, intra-brand cannibalism, and cross-form variety-seeking. The results suggest that the inclusion of asymmetric influences improves the fit to the data. Asymmetric variety-seeking is demonstrated to be a function of the dissimilarity between offerings. Managers who ignore asymmetric variety-seeking may be ignoring some of their closest competitors. The importance of asymmetric competition and symmetric cannibalism must also be taken into account. Both are demonstrated to be functions of the similarity between offerings. Managers who ignore asymmetric cannibalism may introduce offering extensions that leave the firm no better off financially. These extensions conceivably could have a negative impact on the financial viability of the firm given the extra cost of expanding their offering mix. In addition, asymmetric competition provides new insights as to the competitors most likely to be affected by a given firms actions.
Do Macroeconomic Factors Help In Predicting International Equity Risk Premia?: Testing The Out-Of-Sample Accuracy Of Linear And Nonlinear Forecasts
Authors: Dropsy Vincent
Published: February 2016

This paper investigates whether macroeconomic variables can improve the predictability of equity risk premia. Ex ante forecasts of excess returns are generated recursively from both linear regression analysis and nonlinear neural networks. Empirical results suggest that these forecasts are superior to the random walk predicator at almost all horizons in the U.S., Japanese, British and German stock markets. However, there does not appear to be a significant difference between linear and nonlinear forecasts.
A Chaos Approach To Bankruptcy Prediction
Authors: Lindsay David H. , Campbell Annhenrie
Published: February 2016

Chaotic systems, although deterministic and predictable over short horizons, appear to be random. This study applied chaos theory to bankruptcy prediction using a pair-matched sample of bankrupt firms. Given that healthy systems exhibit more chaos than unhealthy ones, it was hypothesized that the returns of firms nearing bankruptcy would exhibit significantly less chaos, measured with Lyapunov exponents, than at an earlier period. Successful univariate and multivariate bankruptcy prediction models were then constructed using the obtained Lyapunov exponents.
Shareholder Wealth Effects Of Poison Pills In The Presence Of Anti-Takeover Amendments
Authors: Johnson Dana J. , Meade Nancy L.
Published: February 2016

In the 1980s managers were innovating in implementing arsenals of devices to prevent possible takeovers of their firms. These anti-takeover devices were usually amendments to the corporate charter or poison pills. Prior studies have examined market reactions to either amendment devices or poison pills. This study provides an extension to those studies by examining marketing reactions to poison pills as the first anti-takeover devices compared with pill adoptions as an addition to an already existing arsenal of charger amendment devices. Results indicate that market reactions differ between these two types of events. Stockholder wealth effects differ also according to the type of charter amendment in place at the time of pill adoption.
The Concentration-Profitability Relationship In American Industry: A Varying Parameters Model
Authors: Webster Allen L.
Published: February 2016

The theoretical foundation upon which the structure-conduct-performance paradigm is built assumes that concentrated markets permit noncompetitive behavior on the part of the market participants permitting abnormal profits to accrue. Previous research examines this relationship in a variety of forms. In each case, no allowance is made for the relationship to change dependent upon the prevailing levels of economies of scale. This paper employs a varying-parameters model which relaxes the classes OLS assumption of constant coefficients for all sample observations. Instead, a factor-dependent, nonstocastic variable is incorporated which captures the manner in which concentration relates to profit margins based on measures of economies of scale The results show that while market concentration is associated with profit, the nature of the relationship varies with the prevailing scale economies. Scale economies prove effective based on the sample data in restraining noncompetitive behavior and limiting the ability of participating units to extract profits in excess of those witnessed in more competitive environments. This conclusion support the hypothesis that the use of scale measures as a varying parameter is suggested in any attempt to estimate the SCP relationship.
Perceived Spousal Influence In The Service Decision-Making Process: A Cross Cultural Investigation
Authors: Stafford Marla Royne , Ganesh Gopala , Luckett Michael G.
Published: February 2016

Although spousal influence in the decision-making process has been investigated in the academic literature, most of the existing research has focused on decision-making for consumer goods. This paper reports the results of a cross-cultural study of consumer decision making for two broad types of services, across three different household samples (US Americans, Indian Tamil US Immigrants, and Indian Tamils living in India). Findings of the study suggest that for both types of services, there is more joint decision making within American US households than in Indian-Tamil households. Joint decision making is least prevalent in Tamil households in India.
Consumer Issues In Coupon Usage: An Exploratory Analysis
Authors: Bonnici Joseph , Campbell David P. , Fredenberger William B. , Hunnicutt Kathryn H.
Published: February 2016

This article investigates consumers salient issues which influence their decisions for not using coupons. Questionnaire data are factor analyzed, and five underlying constructs are identified: embarrassment; forgetfulness, hassle, proneness to expire, and limited financial worth. In the face of such obstacles, marketers should be more proactive in addressing consumer concerns about the redemption process.
Can Managers Appraise Performance Too Often?
Authors: Kite Devaun M. , Katz Jeffrey P. , Zarzeski Marilyn T.
Published: February 2016

This paper discusses the relationship between the frequency of performance appraisal and escalation of commitment to a losing course of action. It is commonly thought that the more often employees are appraised, the more effective they become. Contrary to this view, we discuss conditions that cause employees, particularly project managers responsible for capital budgeting decisions, to stick with decisions that have been shown to result in negative consequences for the company. We report the results of a set of work place simulations where the frequency of performance appraisal affected the length of commitment to losing courses of action as well as the managers perceptions about their personal benefits resulting from those decisions. The results suggest that frequent performance appraisals during the course of long-term projects may divert managers from the profit maximization goal sought by the owners of the firm.
Impact of Gender, Race, And Dress On Choice of CPAs
Authors: Khan Zafar U. , Chawla Sudhir K. , Devine Elton A.
Published: February 2016

The study investigated the effect of client gender, CPA ethnic origin, CPA gender and CPA dress on the likelihood of hiring a CPA. Subjects perceptions of CPAs for important determinants of the hiring decision were collected and analyzed. Results indicate that Caucasian CPAs were rated highest on most dimensions including likelihood-of-hiring and African-American CPAs were rated lowest. While the dress of Caucasian CPAs did not seem to matter, casually dressed minority CPAs were rated significantly lower than formally dressed minority CPAs.
A Test Of The Differential Information Hypothesis Explaining The Small Firm Effect
Authors: Nathan Siva
Published: February 2016

Previous research has shown that, on average, small firms earn higher risk-adjusted returns than large firms. So far there has been no satisfactory empirical explanation for this pricing anomaly. Theoretical research has shown that firms for which less information is available should, ceteris paribus, earn higher returns to compensate for estimation risk. Since, on average, less information is available for small firms, this is a possible explanation for the small firm effect. Using the number of articles in the Wall Street Journal as a measure of information availability, I find that the small firm effect can be entirely explained by differential information availability among firms.
A Comparison Of The Financial Characteristics Of Companies Surveyed By Accounting Trends And Techniques (ATT) And Non-ATT Companies
Authors: Krishman Gopal V.
Published: February 2016

Several researchers restrict their sample selection to firms included in the Accounting Trends and Techniques (ATT), an annual survey published by the American Institute of Certified Public Accountants (AICPA). This paper examines the implications of this restriction. ATT firms are much larger, have higher leverage, larger betas and lower current ratios as compared to non-ATT firms. FIFO is the dominant inventory accounting choice for non-ATT firms; ATT firms tend to prefer LIFO. Both ATT and non-ATT firms favor straight-line depreciation over accelerated methods. ATT firms are under-represented in several industries.
The Influence Of Acculturation On Advertising Effectiveness To The Hispanic Market
Authors: Ueltschy Linda C. , Krampf Robert F.
Published: February 2016

This investigation focuses on the relationship between the level of acculturation of Hispanics and their preferences in terms of language and models used in print advertisements. An on-site advertising experiment was conducted with 501 adult respondents in El Paso, Texas. The LAECA acculturation scale items were used in conjunctions with cluster analysis to identify three groups exhibiting varying degrees of acculturation. Results indicated significant differences in advertising preferences. Managerial implications are discussed.
Vocational Misfit: Source of Occupational Stress Among Accountants
Authors: Cluskey, Jr. G. R. , Vaux Alan
Published: February 2016

The career path of management accountants involves rotation through disparate positions that, we hypothesized, puts these professionals at risk for episodes of vocational misfit. Survey data from 188 management accountants were examined through correlational analyses and structural equation modeling. As predicted, many respondents (40%) met Hollands (1985b) criterion for vocational misfit. Poor vocational fit was significantly associated in correlational analysis with job dissatisfaction, how self-esteem, and turnover, and in a structural equation model, with a stress process that included both stressors and strains.
An Examination Of The Reporting And Disclosure Of Early Debt Extinguishments
Authors: Carpenter Brian W.
Published: February 2016

The accounting treatment of early extinguishments of debt has long been a source of problems for the accounting profession. Due to differences between book and market values of debt, early retirements of debt frequently lead to the following paradox: economically good decisions can be reported as accounting losses and, conversely, economically bad decisions can be reports as accounting gains. This study analyzed auditor attitudes toward possible disclosure modifications which could mitigate the negative influences arising from current accounting practice. The results reveal support for the inclusion of cash flow analyses to improve the resulting disclosure for these transactions.
On Financial Accounting Measurement: A Reconsideration Of SFAC 5 By The FASB Is Needed
Authors: Salvary Stanley C. W.
Published: February 2016

This paper attempts to reinforce by means of social theory the procedure and property (attribute) of financial accounting measurement advanced by Salvary (1985, 1989, 1992). The procedure entails estimating the amount of cash flows derivable form existing investment projects; and the measurement property (attribute) is identified as recoverable cost. The cash-in and cash-out principle establishes financial capital maintenance as the appropriate capital maintenance concept to be followed in the measurement of periodic income. An analogy between a bank savings account and an equity security is used to identify the measurement property (attribute) and validate the additivity of financial accounting numbers. Problems with the monetarist model were used to demonstrate the appropriateness (stability) of the measurement scale (monetary unit). The logical analysis developed in this paper makes a compelling case for a reconsideration of Statement of Financial Accounting Concept No. 5 by the FASB.
Additional Evidence On The Large Audit-Firm Fee Premium As An Indication Of Auditor Quality
Authors: Simon Daniel T.
Published: February 2016

Several studies of the U.S. market for audit services have found evidence of a large audit-firm fee premium. This premium has been interpreted as an indication that large audit firms (typically defined as the Big Eight, now the Big Six), considered as a group, receive higher fees than non-Big Eight firms and thus are perceived to provide higher quality audit services. A common interpretation has been that there is a strong relationship between audit firms size and audit quality. That is, the observed Big Eight fee premium has been interpreted as evidence that this group of large auditors, as a whole, is perceive to provide higher quality audits. Using larger samples than previous studies, this paper decomposes the large auditor fee premium into a separate fee premium effect for each auditor. The results suggest that the observed fee premium is attributable to a subset of large auditors, and therefore it is possible that not all of this group of large audit firms are perceived as offering significantly different audit products, at least when differential audit fees and used as a measure of product differentiation. In addition, when observed audit fee premiums are related to other proxies for auditor quality, there is confirming evidence that large accounting firms are not perceived as a homogeneous group with respect to audit quality.
Linking Issue Labels And Managerial Actions: A Study Of Participation In Crisis Vs. Opportunity Issues
Authors: Ashmos Donde P. , Duchon Dennis , Bodensteiner Wayne D.
Published: February 2016

The way in which top level executives frame strategic issues is likely to affect how these e3xecutives go about resolving issues and deciding on a course of action. The particular label given to a strategic issue may alter how much information is processed in resolving the issue. Specifically, differences in the way strategic issues are labeled are believed to affect the amount of top level executive participation in deciding the issues Dutton and Jackson, 1987), although there has been no empirical support of this claim. Data from high ranking executives in 21 defense contracting companies indicate that the participation of top level executives is significantly reduced when responding to issues labeled as crises than when responding to issues labeled as o9pportunities. Further, the absolute extent of these differences is modified by the information processing and participation climate in organizations. The results suggest that top level executives should be aware of the labels given to strategic issues, recognize the implications of such labels, and make special efforts to overcome the tendency to reduce information processing capacity when confronting crisis strategic issues.
Relationships Between Business Strategy, Environment and Controls: A Three Country Study
Authors: Sim A. B. , Teoh H. Y.
Published: February 2016

This paper reports the results of a study on the relationships among business strategy, environment, and control system attributes in three countries, namely, Australia, Singapore and Malaysia. Multiple discriminant analysis revealed significant relationships between business strategy and selected environmental and control system attributes. While the discriminate functions derived could be used to classify firms into strategy types, several of the environmental and control system attributes differed by national contexts. Limitations of the research and areas for further research are discussed.
Why Are Partners And Managers Leaving The Big Six?
Authors: Addams H. Lon , Davis Brian , Mano Ronald M. , Nycum Vicki
Published: February 2016

This article is based on a survey of managing partners of Big Six public accounting firms in the U.S. The purpose of the survey was to obtain the perception of managing partners regarding the reasons for the exodus of numerous managers and partners over the past few years. The 137 managing partner respondents indicated that the major reason that managers left was limited partner opportunities. The major reason that partners left was inadequate business development skills.
The Markets Reaction To The FASB Stock-Based Compensation Project
Authors: Freeman Gary R. , Larsen, Jr. Glen A.
Published: February 2016

Stock-based compensation plans are often used to companies as a method of providing incentive compensation to top executives. In this study we investigate the market response to the announcement and subsequent withdrawal of the FASB stock-based compensation project. Our findings suggest that investors expected the reduction in uncertainty resulting from expensing stock option costs to enhance firm value and were disappointed when the FASB withdrew the project.
Analysts Forecast Accuracy And The Presentation Of A Mandated Accounting Change
Authors: Fort C. Patrick
Published: February 2016

This paper examines whether the presentation method of a mandated accounting change affects financial analysts forecasts. SFAS 96, Accounting for Income Taxes (FASB, 1987), allowed companies to use either the cumulative effect or the retroactive restatement method to account for the adoption of the change. In addition to the comparison of the two presentation methods, a regression model was developed to include the number of analysts making forecasts, the dispersion of their man forecast, prior disclosure of the accounting change, and the relative year of adoption. Analysts forecasts for companies using the two different methods were compared over several periods to determine if the alternative presentations enhanced forecast accuracy and if that was dependent on the forecast horizon. While some of the covariates were significantly correlated, the results indicate that analysis gained no forecast accuracy advantage from having the increased disclosure.
The Privatization Process: A Natural Order Or Shock Therapy?
Authors: Cutler Mary M.
Published: February 2016

McKinnon (1991) argues that there is a natural order of economic liberalization and privatization. Sachs (1990) and Becker (1995) argue that the value of speed is so important it outweighs the value of waiting to discover the optional sequence. This paper investigates the question of order as it specifically applies to privatization of the industrial and financial sectors. Empirical evidence indicates that, while order is important, simultaneous change provides the necessary order. In this case, there is, in fact, no conflict between the natural order case and the shock therapy argument. A quick leap, the simultaneous privatization of the industrial and financial sectors, provides the necessary order.
Reengineering: Internal Controls Are More Important Than Ever Before
Authors: Daly Bonita A.
Published: February 2016

Companies are reengineering their fundamental business processes to improve quality, service, and efficiency. When vital business processes are reengineered, new ways of managing and controlling the processes are required. A reengineered accounts payable system and the controls that should be included in the system are described. Through training and support of those who will perform the new processes and the appropriate use of internal controls, companies will maximize their benefits from business reengineering.
Liability Insurance Decisions And Premium Charges Among CPA Firms: An Empirical Analysis
Authors: Schaefer James , Zimmer Michael
Published: February 2016

In 1993 accountants faced 5,000 liability suits in which judgments were sought exceeding $30 billion. In response to potential litigation, numerous CPA firms have purchased liability insurance for protection. AT present little is known about the types of firms that become insured, and factors influencing the sources from which insured firms buy their coverage. Results o this study indicate that insurance coverage is less likely among small firms and firms that provide data processing services, while tax firms are more likely to acquire coverage. Among firms that purchase insurance, premiums tend to be higher among older firms, partnerships, and firms providing data processing services. Provision of auditing or tax services tends to be associated with lower premiums, other factors held constant. We do not find evidence of self selection bias in the determination of premiums. Further results provide insight into choices among insured firms regarding the sources of coverage.
Structure As A Predictor Of Strategic Planning Use
Authors: Drago William A.
Published: February 2016

This article provides: (1) support for the configurational approach in the study of organizations by empirically deriving ideal organizational factors, and (2) insights into the interrelationship between organization structure and strategic planning use. Three structural factors are identified resembling Mintzbergs (1993, 1979) machine, diversified and adhocratic ideal forms. Through a regression analysis these factors were found to be significantly and positively related to the use of strategic planning. The model formed explained approximately 48% of variance in the use of stragtegic planning in participating firms. Results also indicate tha thte emphasis on individual planning tools (mission/vision/ long and short-term objectives, action plans and policies) varies with the intensity of particular factors.
Evaluating Uses Of Information Technology In Health Care Administration
Authors: Post Jerry , Kagan Albert
Published: February 2016

This paper examines the distributional properties of stock returns in the Nigerian stock market. Because emerging stock markets present several institutional, political and economic barriers, we hypothesize that the structural adjustment program begun in 1986 resulted in a sustained increase in the variability of stock returns. Conventional variance homogeneity tests could not reject the hypothesis of changing volatility in the security returns process. However, the Lagrange multiplier test reveals the presence of autoregressive conditional heteroscedasticity (ARCH) effect in the stock returns.
Factors Stimulating Export Business: An Empirical Investigation
Authors: Leonidou Leonidas C.
Published: February 2016

The article reports the findings of an empirical investigation into the export stimulation behavior of Cypriot manufacturers. The study revealed that the thrust of the motivation originated from internal and proactive forces, in contrast to the findings of earlier research. Export stimuli were categorized into eight conceptually meaningful groups using factor analysis, with managerial and enterprise competence being the most significant stimulus. Overall, both organizational and internationalization parameters had a weak discriminating effect on the emerging stimulating factors; however, some of these parameters exhibited a significant differentiating role in relation to certain export stimuli. Several conclusions are extracted from the findings, and directions for future research are indicated.
The Influence Of Pension Obligations And Other Postretirement Benefits On Primary Bond Pricing
Authors: Mahar John J. , Thompson G. Rodney
Published: February 2016

This paper investigates alternative measures of pension obligations and other postretirement benefits in an effort to assess their incremental value in determining risk premia of primary market corporate bonds. The results indicate that the information pertaining to pension liabilities (SFAS 87), and presented on the balance sheet, have not observable impact upon the firms primary market bond yields beyond that impounded in the firms bond rating. However, the information pertaining to other postretirement benefits (SFAS 81), and required in the footnotes to the financial statements, is found to be related to higher risk premia.
Marketing-Driven Factors Influencing Savers In The Hellenic Bank Market
Authors: Mylonakis John , Malliaris Peter G. , Siomkos George J.
Published: February 2016

This paper studies the influencing factors on bank savings customers decisions regarding selection of a bank, in the Hellenic bank market. An empirical study was conducted on 811 bank customers in the greater Athens area. Results point to similar conclusions with prior studies conducted in the U.S. and Europe. Discussion of results also refer to different consumer perceptions of Greek public, private and foreign banks operating in Greece, as well as to the identification of reasons for switching a customers main bank.
Income Inequality: Another Look
Authors: Redmon Alonzo
Published: February 2016

The purpose of this article is to examine the inequality in the distribution of income. The distribution of income is an important issue for all facets of our society. Many governmental policies (taxation, etc.), for example, influence the distribution of income. This article will look at the distribution of income on the basis of race, comparing the income distribution of Blacks versus the income distribution of Whites. Comparisons will be made between races as well as within each race.
Measuring The Evolution Of Generally Accepted Accounting Principles
Authors: Fisher Steven A.
Published: February 2016

Generally Accepted Accounting Principles (GAAP) guide financial reporting. Although numerous opinions and standards have been issued over the past 45 years, there is little quantitative evidence concerning the degree of change in GAAP. The purpose of this study is to generate a quantitative understanding of the degree of evolution in GAAP since Accounting Research Bulletin (ARB) 43. The results indicate that significant changes are occurring in GAAP. Less than 50% of the GAPP issued in the 1950s and in the 1960s remains in effect today. Furthermore, significant changes have occurred in GAAP issued within just the past 20 years. The primary implication is that GAPP is continually being reviewed and revised in response to investors and creditors changing information needs.
Multilocation Audit Risks
Authors: Allen Robert D. , Loebbecke James K.
Published: February 2016

Multilocation audits (MLAs) pose unusual risks for external auditors. Recent lawsuits against auditors manifest these risks. Despite the complexity and risk, there is little existing research and/or professional guidance that address MLA issues. This sparsity is especially surprising given that most companies of medium and large size conduct business activities in multiple locations. The purpose of this paper is to identify risks that exist in a MLA environment that do not necessarily exist in a single-location audit. The MLA risk framework was developed by 1) identifying risk factors specific to MLAs that we believe are important in audit planning, 2) evaluating the risk factors through interviews with MLA experts, 3) examining the policy and procedure manuals of public accounting firms, and 4) relating the risk factors to the audit risk model. The paper is intended to provide a framework for future research related to MLAs.
Corporate Liquidity And The Significance Of Earnings Versus Cash Flow
Authors: Lancaster Carol , Stevens Jerry L.
Published: February 2016

This paper replicates and extends prior work appearing in this journal on the relationship between liquidity and accrual income versus cash flow. The measure of corporate liquidity is expanded to include both static liquidity (current and quick ratios) and dynamic liquidity (cash conversion cycle). The analysis is also extended to more recent data. Prior conclusions on the insignificance of cash flow from operations in explaining liquidity are revised. Cash flow from operations is significantly related to both the current ratio and the cash conversion cycle and has significant incremental explanatory power relative to accrual income. Statistical significance of cash flow from operations in explaining the quick ratio is sensitive to the sample period and is more difficult to generalize.
The Effectiveness Of Insider Trading Regulations
Authors: Bettis J. Carr , Duncan William A. , Harmon W. Ken
Published: February 2016

This work evaluates the effectiveness of the courts and regulators in achieving a fair and honest market. The regulatory system and market based empirical research are reviewed and evidence of regulatory failure are identified and examined. The advantages and disadvantages of four possible policy changes including new disclosure standards, a bar on insider trading, corporate fines for insider trading, and a new market based standard are discussed. Finally, recommendations for future research are offered.
The Impact of CEO Turnover On Security Analysts Forecast Accuracy
Authors: Sheikholeslami Mehdi , Wilson Michael D. , Selin J. Roger
Published: February 2016

This paper reports the results of a study on the impact of CEO turnover on the accuracy of financial analysts earnings forecasts. Using Value Lines earnings forecasts and a control sample design, the study reveals marginally more accurate earnings forecasts for CEO change firms after CEO turnover. This result may be attributed to the publicity surrounding the CEO replacements.
Antitrust Merger Investigations And The Quality Of Reported Earnings
Authors: Makar Stephen D. , Alam Perviaz , Pearson Michael A.
Published: February 2016

Antitrust merger policy under Section 7 of the Clayton Act prohibits acquisitions that substantially lessen competition or tend to create a monopoly. Previous studies, however, indicate that government regulators have not been effective in identifying anticompetitive behavior. This paper examines whether accounting information used in assessing the competitive impact of mergers is subject to manipulation by investigated firms. We examine both total accruals and current accruals for manipulation and consider the implications of such earnings management for the quality of reported earnings. The results indicate that firms investigated for Section 7 violations during the 1974-1992 period do indeed manage reported earnings to influence regulatory efforts in discerning excess profits and anticompetitive behavior.
Implied Standard Deviations And Put-Call Parity Relations Around Primary Security Offerings
Authors: Broughton John B. , Chance Don M. , Smith David M.
Published: February 2016

This study examines the response of the options market to new security registrations and issuances. Two methods are employed to gauge option market response. The first involves the calculation of implied standard deviations (ISDs) around primary security registration and issuance dates. The second employs American put-call parity to simultaneously evaluate the relationship between put, call and stock prices around these dates. We find a statistically significant mean decrease in relative ISD five trading days before announcement of new stock issuances and a statistically significant mean increase in relative ISD one day before announcement of new debt issuances. Put-call parity tests provide evidence that the options market anticipates stock price decreases prior to announcements of both stock and debt issuance.
Underreporting Chargeable Time: A Continuing Problem For Public Accounting Firms
Authors: Akers Michael D. , Eaton Tim V.
Published: February 2016

Prior research shows that underreporting chargeable time has been a concern for public accounting firms even though many of these firms have policies and procedures that prohibit eating time. The purpose of this study is to examine the current state of this problem and to provide recommendations to manage the problem more effectively. Practicing public accountants at all professional levels were surveyed to determine the extent, opportunity, ethical perception and perceived benefits of underreporting time. The results show that although the majority of the respondents believe underreporting time is unethical, the majority of them did not report all of their chargeable hours in the prior year. The main reasons for such behavior stem from the desire to: (1) receive better periodic performance evaluations, (2) be viewed as competent by superiors, and (3) receive promotions.