Business Commons^™

Loan Purpose And Accounting Based Debt Covenants, Daniel Gyung Paik, Timothy L. Hamilton, Brandon Byunghwan Lee, Sung Wook Yoon

Accounting Faculty Publications

Purpose

The purpose of this paper is to investigate the association between the purpose of a loan and the type of debt covenants, separated into balance sheet-based and income statement-based covenants.

Design/methodology/approach

Using private loan deal observations obtained from the DealScan database over the period between 1996 and 2013, the authors classify the sample loan deals into three categories based on the purpose of borrowing, namely, borrowings for corporate daily operating purposes, financing purposes and acquisition and investing purposes. The authors conduct multinomial logistic regression analysis to test the relationship between the choice of financial ratios in a debt covenant …

Paul M. Klekner (B), Roger R. Schnorbus

Robins School of Business White Paper Series, 1980-2022

This is a fictitious case study, including the name of the restaurant and the people involved.

Paul Klekner graduated first in his class from the Culinary Institute of America (CIA) in 1998; his fellow students named him the chef most likely to succeed in the future. After graduation, he and his wife, Sarah, moved back to his home in Richmond, Virginia where he was employed as a chef at several restaurants including Bottega and Old Original Bookbinders. In 2003, he decided to open his own restaurant, Rogerios, in the Tobacco Row section of Richmond. With an inheritance of $300,000 he …

Understanding The Impact Of Financial Decisions On Financial Statements: A Pedagogical Note, Tom Arnold, Leroy Brooks, Terry D. Nixon

Finance Faculty Publications

Viable financial planning requires financial managers' understanding of the consequences of impending decisions on their company's financial performance and position. Understanding the impact of prior decisions on their financial statements also enables future decisions aimed at improving their shareholders' wealth. This note intends to contribute to developing this capacity in finance students. We provide a presentation format directly connecting financial decisions to financial statement impacts. Bridging material covered in accounting courses and a finance student's needs as a possible future manager or analyst, this classroom pedagogy supplements and reinforces the objectives of the financial planning component of a finance course.

Summary #4: The Effects Of Internal Audit Outsourcing On Perceived External Auditor Independence, D. Jordan Lowe, Marshall A. Geiger, Kurt Pany

Accounting Faculty Publications

The accounting profession is attempting to redefine itself, in part by expanding the types of services it provides. This expansion of services has raised questions about whether CPA firms can maintain their independence and still provide an ever-increasing array of other types of services to audit clients. In this study we addressed financial statement user perceptions about CPA firms performing internal auditing outsourcing activities—an area in which CPAs are becoming increasingly involved.

On The Answer-Arrangement Bias Of Professional Certification Examinations In Accounting, Marshall A. Geiger, Mark M. Higgins

Accounting Faculty Publications

The test construction literature has emphasized the randomization of answers within multiple-choice items as a way to eliminate test construction bias. This study examines the answer placement bias of the multiple-choice portion of the 1987 - 1992 CIA, CMA, and CPA exams. The results indicate a consistent bias toward the "A" position in the CIA exam and against the "A" and "E" positions on the CMA exam. Also, all three exams were found to have significantly fewer correct answer runs (e.g., four "A's" in a row) than would be expected from the random placement of answers. A discussion of test …

Further Comments On The Use Of The Lsi In Research On Student Performance In Introductory Accounting, Marshall A. Geiger, Edmund J. Boyle

Accounting Faculty Publications

In this note we respond to the comments of Ruble and Stout (1993) concerning the use of the revised Learning Style Inventory (LSI) developed by Kolb (1985). While our more recent psychometric research on the LSI leads us to conclude that the standard version should no longer be used, unlike Ruble and Stout, we see promise for new or modified versions in future research. We also indicate where several of their comments on our work, as well as the work of others, are not well founded.

Learning Styles Of Students And Instructors: An Analysis Of Course Performance And Satisfaction, Marshall A. Geiger, Edmund J. Boyle

Accounting Faculty Publications

Accounting educators have utilized Kolb's Learning Style Inventory (LSI) in the assessment of accounting students and the accounting curriculum. This study extends these earlier works by examining the effect of student and instructor learning style, as measured by the revised 1985 LSI, on introductory course performance and ratings of satisfaction with both the course and the instructor.

The results indicate no significant effect of student/teacher learning style interaction on final course grade or students' ratings of satisfaction. However, instructors having a convergent learning style were given significantly higher satisfaction ratings regardless of student learning style.

Learning Styles Of Introductory Accounting Students: An Extension To Course Performance And Satisfaction, Marshall A. Geiger

Accounting Faculty Publications

Togo and Baldwin (1990) have recently utilized Kolb's 1976 Learning Style Inventory (LSI) in the assessment of introductory accounting student performance. This study extends this earlier work by examining the effect of learning style, as measured by the 1985 LSI, on introductory exam performance and ratings of satisfaction with the introductory course. Learning style was found to be significantly related to overall exam performance; with those maintaining a similar learning style as the instructor (i.e. assimilator) performing best. Additionally, learning style was also found to affect student ratings of course satisfaction.

The Myth Of "Conventional Wisdom" On Changing Multiple-Choice Answers, Marshall A. Geiger

Accounting Faculty Publications

Business students are often warned not to change multiple-choice answers once an original selection has been made. This "conventional wisdom," that the first answer selected usually is the correct answer, is in contrast with the conclusions of research in the education and psychology fields. This study extends these earlier studies by using students in accounting principles I and principles II classes, and by examining whether the type of question (numeric or non-numeric) affects answer-changing behavior. On average, for every point lost roughly three points were gained by changing answers for both groups. Additionally, gender was found not to be a …

Teaching Accounting Concepts Versus Applications: An Analysis Of Student Attitudes, Marshall A. Geiger

Accounting Faculty Publications

Accounting faculty have long debated the usefulness and appropriateness of their teaching endeavor. One of the central themes in this continuing discussion is that of teaching concepts versus teaching applications of current accounting principles. In order to empirically address this issue, students' attitudes toward the conceptual aspects and toward the practical application aspects of financial accounting were assessed. This research also reports on the development and validation of an instrument that measures attitudes of students toward these aspects of financial accounting. The instrument demonstrated high reliability with both intermediate and introductory students. Intermediate students were found to distinguish between attitudes …

Some Concerns In Implementing The New Education Requirements For Accounting Graduates, James A. Schweikart, Phillip A. Jones Sr.

Robins School of Business White Paper Series, 1980-2022

Graduates in accounting expecting to enter the profession of public accounting in the United States will soon be required to have five years of college education. While the education of accounting graduates may be enhanced, there are several repercussions of this requirement on colleges and universities as well as on the accounting profession in general. Some of these consequences may actually impair accounting education for those entering fields other than public accounting, as college and university resources will be unable to support the needs of all accounting fields.

The Erratic Equity Position May Be Caused By Fas 52: An Investigation Of The Results Of Unrecognized Gains And Losses From Foreign Currency Translations, James A. Schweikart, Robert H. Sanborn

Robins School of Business White Paper Series, 1980-2022

Financial Accounting Standards Board Statement No. 52 (FAS 52) replaced FAS 8 in 1981 and the new guidelines have been accepted widely for providing noncontroversial and adequate disclosure of foreign currency matters. The nine years since the adoption of FAS 52 have seen erratically fluctuating exchange rates, however, and the equity positions of many firms have responded accordingly. This article provides an investigation into the erratic equity positions and recommends actions that can be taken currently that may avoid future embarrassments for the profession.

A Comparison Of U.S. And Japanese Attitudes About The Relevance Of Current Consolidation Accounting Procedures, James A. Schweikart, Walter F. O'Connor

Robins School of Business White Paper Series, 1980-2022

Consolidation accounting has not materially changed since APB Opinions 16 and 18. Only minor changes have been made such as the new rules requiring financial subsidiaries to be consolidated (FAS 94, 1989). The recent trend of mergers and acquisitions, however, represents a significant change in business environment from that which existed when consolidation accounting as we know it was formalized. Accordingly, there is concern that current consolidation practices may be less appropriate or relevant than before.

A Performance Model For Staff Auditors In An Internal Audit Environment, Joseph M. Larkin, James A. Schweikart

Robins School of Business White Paper Series, 1980-2022

Labor turnover, especially at the staff level, is a pervasive problem throughout the accounting environment. The related costs can be substantial to the organization. While turnover is not necessarily dysfunctional, managing it is crucial to the success of organizations. Much of this turnover is due to unsuccessful performance of auditors. This study empirically examined selected variables of staff members in the internal audit environment in an attempt to associate them with successful auditor performance. The results showed that motivation to perform and job satisfaction were most strongly related to successful performance.

A Performance Model For Staff Auditors In An Internal Audit Environment, Joseph M. Larkin, James A. Schweikart

Robins School of Business White Paper Series, 1980-2022

Understanding individual traits associated with successful performance in internal auditing is needed to enhance efficiency in personnel policies affecting staffing, career development and retention of auditors. This study attempted to ascertain salient characteristics of individuals which may be associated with successful performance, by examining traits of successful and less successful auditors of a large manufacturing firm. The results show that individual levels of job satisfaction and motivation are most closely associated with performance. The results also show that other variables may have the potential to be associated with performance.

Measuring The Incremental Learning Achieved With Computer Enhanced Instruction, Larry N. Bitner, Gail B. Wright

Robins School of Business White Paper Series, 1980-2022

There has been increasing pressure by the AACSB on accounting educators to include the use of computers as an instructional tool in the 1980s with the advent of separate accreditation for accounting programs. In response, researchers have sought to study student attitudes and report on software available for classroom uses. From the educational perspective, however, the most important type of research would be that which would evaluate the impact of the computer on the level of learning achieved by the student or would indicate sensitivity to the computer enhanced instruction (CEI). The focus of this paper is to suggest a …

Postexpansion Planning Considerations For New Multioutlet Retailers, Larry N. Bitner, Judith D. Powell

Robins School of Business White Paper Series, 1980-2022

Successful small retailers invariably are tempted to test the adage "more is better." While the expansion allure is more than many can resist, it must be tempered by the realization that many hidden challenges await the unsuspecting entrepreneur.

Success of the new organization will require not only more but a different kind of effort than used in managing the single store. First, successful operation will now depend on delegating operating decisions to professional managers. The autonomy given these managers is a complex decision and may be placed anywhere within a three dimensional continuum depending on the desired image, supervision, and …

Estimating Earning Impacts Of The Vocational Rehabilitation Program, David H. Dean, Robert C. Dolan

Robins School of Business White Paper Series, 1980-2022

This paper estimates earnings impacts of services provided by a state agency of the Vocational Rehabilitation (VR) program. To appreciate the significance of this effort requires some historical perspective on evaluation of the VR program as well as familiarity with more recent developments within the manpower training literature in general.

Today VR is a $1 billion dollar program, and it certainly appears that this level of public funding is well founded on a long history of demonstrated cost-effectiveness. In fact, however, considerable skepticism exists with regard to the data and methods that have generated impressive benefit-cost ratios in the past. …

The Fasb Approach To Income Determination: Is It Viable?, Gail B. Wright, Francis A. Bird

Robins School of Business White Paper Series, 1980-2022

A question which has been debated by the accounting profession for decades is whether there exists a single set of correct rules for use in reporting 'true income' which would enable comparability in reporting for all firms to be achieved. Those who believe a 'true income' figure does exist, advance their position by attempting to reduce choices among alternatives.

Not infrequently the debate centers around the matching principle, i.e., the timing of recognition of an expense. Accounting has its basis in the accrual system. It does not necessarily convey cash inflows and outflows of the current period so much as …

Current Staffing Versus Accreditation Requirements And Versus Perceived Needs--A Survey Of Accounting Faculties, Jerome Bennett

Robins School of Business White Paper Series, 1980-2022

For a number of years there have been a series of reports detailing accounting faculty vacancies. As an underlying inference it seems that reported vacancies represent the genuine needs of the reporting schools as perceived by the administration. Categories include current vacancies, new vacancies and new positions. There has been in prior reports no other objective criteria against which the reported vacancies were to be analyzed. The recent set of accreditation standards regarding faculty positions as adopted by the American Assembly of Collegiate Schools of Business offers such a criteria. To test the correspondence of reported vacancies versus the accreditation …