Accounting Commons^™

Short Sellers And The Informativeness Of Stock Prices With Respect To Future Earnings, Michael S. Drake, James N. Myers, Linda A. Myers, Michael D. Stuart

Faculty Publications

In this paper, we examine whether short interest improves the informativeness of stock prices with respect to future earnings. We find that short selling strengthens the relation between current returns and future earnings, especially in settings where short sellers are likely to possess an information advantage, such as when a firm’s information environment is weak or when analysts are highly optimistic about future earnings growth. Collectively, our results illustrate the important role that short sellers play in improving the extent to which current stock prices reflect information about future earnings and thus, in improving market efficiency.

The Value Of Luxury Brand Names In The Fashion Industry, Tricia Wang

CMC Senior Theses

Brand names in the Fashion industry are often times perceived as overpriced and unreasonable. Nevertheless, the success of well-known luxury brands in the industry has been growing domestically and internationally at a breakneck pace. Forbes publishes an annual list on the top 100 most valuable brands annually using a formula of their own making. 8 out of these 100 brands are luxury fashion brands. Why are luxury fashion brands so coveted? It can’t only be because of humans’ desires to own superior goods or even for the sake of their egos. In this paper I will delve into the hidden …

Player Compensation And Team Performance: Salary Cap Allocation Strategies Across The Nfl, Max Winsberg

CMC Senior Theses

The National Football League’s salary cap constrains the available resources each franchise is allotted to spend on player personnel. I examine the effects of executive management’s compensation allocation strategies on team performance from 2006 to 2013. The findings suggest that spending more than the league-average on offensive lineman hurts overall team performance. Spending above the league average on both the offensive line and quarterback positions negatively affects offensive performance as well. This supports previous research stating that taking a superstar-approach to cap distribution negatively affects team performance. Furthermore, I find evidence of increased compensation inequality among players under the Collective …

Friends In High Places: Measuring The Effects Of Compensation Committee Characteristics On Ceo Pay Packages In 2013, Danielle M. Knott

CMC Senior Theses

In the past decade, public scrutiny surrounding rising levels of executive compensation has led to more stringent independence requirements for compensation committees. However, there is little research studying the effects of compensation committees on executive pay from the time these new requirements were implemented. My paper studies the effects of compensation committee chair personal ties to the CEO, economic interests, and group committee characteristics on both the level and structure of CEO compensation. My findings suggest that certain committee chair personal ties to the CEO are associated with both a higher level of CEO compensation and a higher percentage of …

Better Measurement Of Governments Through The Application Of Accrual Accounting For Government-Wide Financial Statements, Caleb D. Cunha

CMC Senior Theses

In this paper, we will look at and discuss the differences and similarities between governmental entities and for-profit business. We will mainly discuss the different goals, purposes, users, and issues between government and for-profit accounting in order to show that changes to governmental accounting standards would lead to more transparency and accountability, which in turn would help determine the success of an individual governmental entity. We will conclude by looking at countries that have implemented accrual accounting for government-wide financial statements, and we will explain how the adoption of accrual accounting for government-wide financial statements in the United States will …

Credit Ratings And Firm Litigation Risk, Huixian Xie

CMC Senior Theses

This paper looks at whether firms’ credit ratings are negatively affected by litigation risk after controlling for known factors that affect credit ratings. The conventional wisdom is that litigation risk and credit ratings have an inverse relationship. However, my hypothesis is that the inverse relationship will not be stable if the model of credit ratings has taken other factors into account. The methodology first constructs a model of litigation risk, and then regress the credit ratings on the measurement of litigation risk. Previous empirical research on litigation risk measurement uses industry proxies as indicators for litigation risk. In this paper, …

Why Does The U.S. Continue To Use Gaap And Will It Ever Converge To Ifrs?, Hester Lam

CMC Senior Theses

The United States has a long history of doing things differently than other countries. Its accounting standards are no different; to date, it continues to use its own Generally Accepted Accounting Principles and have yet to converge to the International Financial Reporting Standards ("IFRS") as set by the International Accounting Standards Board. In 2008, the U.S. Securities and Exchange Commission ("SEC") Chairman Christopher Cox published a press release in which the SEC published for public comment a roadmap towards convergence by 2014. However, in subsequent years, Memorandum of Understandings published by the IASB and the United States' Financial Accounting Standards …

From Legally Confidential To Financially Confident: Resolving The Tension Between Lawyers And Auditors Over Contingent Liability Disclosure, Samantha Nicole Kunz

CMC Senior Theses

Auditors review documented financial figures to test for their accuracy and materiality. Lawyers analyze evidential facts and records to build sound legal arguments. These parties work toward a mutual purpose: to present their clients as legitimate and compliant businesses. But what happens when the concrete facts upon which lawyers and auditors base their work are obscured by their inability to see into the future? In other words, how can these professions conjunctively handle potential future obligations brought about by contingent liabilities?

This study will attempt to resolve the tensions that emerge between lawyers and auditors when tasked with estimating the …

Differences Between Ind As And Ifrs: Can Full Convergence Ever Occur Between The Two?, Shoubhik Pal

CMC Senior Theses

Since the turn of the millennium, there have been various attempts by Indian regulators as well as the government to converge the current accounting system in India (tentatively called Indian GAAP) to a system similar to IFRS, considered today to be the prevalent worldwide set of accounting standards. Indian GAAP has had its fair share of criticism, the most telling being that it avoids the principle of substance over form in various topics in its literature. The first announcement of a plan to converge came in July 2007. While suffering various setbacks through delays in recent years, the current roadmap …

Impact Of Non-Audit Assurance Level (Compilation Versus Review) On Production Management Of Private Manufacturing Companies, Benjamin P. Foster

Faculty and Staff Scholarship

Private small companies have been the subject of much interest by accounting regulators recently. The AICPA issued SSARS 19 and the Financial Reporting Framework for Small- and Medium-Sized Entities in 2009 and 2013, respectively. The Financial Accounting Foundation issued the Blue Ribbon Panel Report on Standard Setting for Private Companies in 2011. This is apparently the first study to compare reporting practices of small private companies whose financial statements are compiled or reviewed.

Overall results indicate that reviewed companies tend to exhibit positive abnormal production while compiled companies tend to exhibit negative abnormal production. However, for the companies most likely …

A Strategic And It Analysis Of Quirky And An Examination Of Business And Accounting Case Studies, Lisa-Marie Schalk

Honors Theses

The purpose of this secondary and primary research is not only to explore the concept of management and information technology consulting in the context of a startup up company based in New York called Quirky, but also to present the culmination of my participation in two accounting case study competitions, PricewaterhouseCoopers' xACT competition and KPMG's International Case Competition. After my secondary research on management and IT consulting and the role of IT in various functional areas such as human resources, supply chain management, and financial reporting, I present a brief background on Quirky, a startup company with the mission to …

Fraud And Its Relation To The Hospitality Industry, Nicole Ross

Honors Theses

The purpose of this study is to analyze and explore the numerous components of fraud, including its relation and presence in the hospitality industry. Additionally, the study contains findings and analyses derived from participation in a professional development series conducted in a classroom setting and two accounting case studies hosted by PricewaterhouseCoopers and KMPG in Fall 2013. I will dissect fraud down to its various elements and compile a work plan and proposal originating from the findings from the study. The study examines the causes of fraud, people who commit fraud, fraud legislation, and fraud trends. Through primary and secondary …

Aicpa Audit Committee Toolkit : Not-For-Profit Entities, American Institute Of Certified Public Accountants. Audit Committee Effectiveness Center, Cna Financial Corporation

Guides, Handbooks and Manuals

No abstract provided.

Take Your Marketing Online!, Kelly Lucas, Sarah Warlick

Guides, Handbooks and Manuals

No abstract provided.

Engaged Employee : 10 Initiatives For Successful Firms, Sandra Wiley

Guides, Handbooks and Manuals

No abstract provided.

Cgma Exam Case Study Guide, American Institute Of Certified Public Accountants (Aicpa)

Guides, Handbooks and Manuals

No abstract provided.

Adviser's Guide To Health Care, Volume 2: Consulting Services, Robert James Cimasi, Todd A. Zigrang

Guides, Handbooks and Manuals

No abstract provided.

Tax Research Techniques, Robert L. Gardner, Dave N. Stewart, Ronald G. Worsham

Guides, Handbooks and Manuals

No abstract provided.

Essentials Of Forensic Accounting, Michael A. Crain, William S. Hopwood, Carl Pacini, George R. Young

Guides, Handbooks and Manuals

No abstract provided.

March Market Madness: The Impact Of Value-Irrelevant Events On The Market Pricing Of Earnings News*, Michael S. Drake, Kurt H. Gee, Jacob Thornock

Faculty Publications

Each year, the NCAA basketball tournament (March Madness) is a daytime distraction for millions of people, providing a largely exogenous shock to investor attention. We investigate whether March Madness influences the market response to earnings by diverting investor attention away from earnings news. We find that the price reaction to earnings news released during March Madness is muted. This result generally holds across several samples and additional analyses. We also find that the result is more muted for low institutional ownership firms, consistent with the effect being driven by less-sophisticated investors. Furthermore, we find that it takes the market 30 …

When Does Pre-Ipo Financial Reporting Trigger Post-Ipo Legal Consequences?, Mary Brooke Billings, Melissa F. Lewis-Western

Faculty Publications

Prior research suggests that the fear of litigation precludes most managers from manipulating earnings in the initial public offering (“IPO”) setting. Yet, managers’ restraint is perhaps unwarranted: research has not yet linked instances of aggressive pre-IPO reporting to increased litigation risk. This paper investigates when aggressive IPO reporting triggers legal consequences. Examining 2,037 IPOs, we find that even when ex post evidence indicates the presence of earnings inflation, litigation is more likely to occur when investors have relied on the suspect earnings during the pricing process. Why might investors rely on some firms’ abnormal accruals when valuing the IPO and …

Historical Cost Measurement And The Use Of Dupont Analysis By Market Participants, Asher Curtis, Melissa F. Lewis-Western, Sara Toynbee

Faculty Publications

We investigate whether historical cost measurement of assets lowers the usefulness of DuPont analysis for investors. Because firms report assets at modified historical cost under US GAAP, accounting ratios can be biased upward when assets have appreciated. Thus, variation in asset turnover, which is the DuPont ratio most affected by asset measurement, can be due to both economic forces and measurement effects. We assess the extent of measurement effects using the average age of a firm’s assets and find that asset turnover ratios are higher and more persistent for firms with older assets. Forecast errors of asset turnover are associated …

Disclosure Transparency About Activity In Valuation Allowance And Reserve Accounts And Accruals-Based Earnings Management, Cory A. Cassell, Linda A. Myers, Timothy Seidel

Faculty Publications

We examine the relation between the transparency of disclosures about activity in valuation allowance and reserve accounts and accruals-based earnings management. We classify disclosures as being transparent if they provide detailed information about activity in the allowance and reserve accounts during the fiscal period. We find strong evidence that the extent of accruals-based earnings management is lower among companies with transparent disclosures than among companies without transparent disclosures. We also investigate whether the extent of accruals-based earnings management is lower for companies that provide transparent disclosures in one comprehensive schedule (i.e., the Schedule II) relative to those that provide transparent …

Market (In)Attention And The Strategic Scheduling And Timing Of Earnings Announcements, Ed Dehaan, Terry Shevlin, Jacob Thornock

Faculty Publications

We investigate whether managers “hide” bad news by announcing earnings during periods of low attention, or by providing less forewarning of an upcoming earnings announcement. Our findings are consistent with managers reporting bad news after market hours, on busy days, and with less advance notice, and with earnings receiving less attention in these settings. Paradoxically, our findings indicate that managers also report bad news on Fridays, but we do not find lower attention on Fridays. Further, we find negative returns when the market is notified of an upcoming Friday earnings announcement, which is consistent with investors inferring forthcoming bad news.

The Effects Of Out-Of-Regime Guidance On Auditor Judgments About Appropriate Application Of Accounting Standards, H. Scott Asay, Tim Brown, Mark W. Nelson, T. Jeffrey Wilks

Faculty Publications

Accountants making judgments with respect to a particular set of standards are increasingly aware of standards from other reporting regimes that offer additional or conflicting guidance. In fact, IFRS encourages reliance on out-of-regime standards when IFRS lacks guidance. This paper reports the results of two experiments which provide evidence that auditors in such circumstances are vulnerable to contrast effects, whereby reporting judgments under IFRS are systematically influenced away from the accounting treatment supported by standards from another regime (U.S. GAAP). Contrast effects are observed (1) when out-of-regime standards are considered before making a reporting judgment under IFRS and (2) when …

An Examination Of How Entry-Level Staff Auditors Respond To Tone At The Top Vis-À-Vis Tone At The Bottom, Jeffrey Pickerd, Scott L. Summers, David A. Wood

Faculty Publications

Prior academic and practitioner literature argues that the ethical tone at the top of an organization is a key factor in establishing an effective internal control environment. Drawing on self-concept maintenance theory and in-group bias theory, we predict that entry-level staff auditors will disregard a company’s ethical standards unless they observe a strong ethical tone from both their partner (tone at the top) and their supervising senior (tone at the bottom). Also, we predict that staff auditors will be more influenced by the tone of their supervising senior than the partner when these two individuals provide conflicting tones. In a …

Citation-Based Accounting Education Publication Rankings, Mark Metcalf, Kevin Stocks, Scott L. Summers, David A. Wood

Faculty Publications

We extend prior accounting education research by ranking accounting education publications based on citation counts. We collect publications in two accounting education specialty journals, Issues in Accounting Education and Journal of Accounting Education, and 11 other high-quality journals included in the Summers and Wood (2015a) database. We aggregate rankings by institution and by individuals for both traditional publications (including “instructional resource” papers that are not case-based) and cased-based publications. We also provide citation-based benchmarking data for accounting education scholarship. We present our results in time windows of the most recent 6 years (i.e., 2008–2013, inclusive), 12 years (i.e., 2002–2013, inclusive), …

Them’S Fightin’ Words: The Effects Of Violent Rhetoric On Ethical Decision Making In Business, Joshua R. Gubler, Nathan P. Kalmoe, David A. Wood

Faculty Publications

Business managers regularly employ metaphorical violent rhetoric as a means of motivating their employees to action. While it might be effective to this end, research on violent media suggests that violent rhetoric might have other, less desirable consequences. This study examines how the use of metaphorical violent rhetoric by business managers impacts the ethical decision making of employees. We develop and test a model that explains how the use of violent rhetoric impacts employees’ willingness to break ethical standards, depending on the source of the rhetoric. The results of two experiments suggest that the use of violent rhetoric by a …

Organizational Strategies: Retaining And Developing Women Leaders, American Institute Of Certified Public Accountants. Women’S Initiatives Executive Committee

Guides, Handbooks and Manuals

No abstract provided.

Strategic Planning In Real Estate Investment Trust, Xinyi Long

Honors Theses

This paper investigates various strategic planning models and then applies the models to the strategic planning process for a Real Estate Investment Trust (REIT). Several strategic models covered in this paper include Basic Strategic Planning Model, Issue-Based Strategic Planning Model, Kepner-Tregoe Matrix Model, and the Impact Analysis Model. Next, I discuss the roles of different functional areas within a REIT with respect to strategic planning. After fully analyzing these strategic models and the roles of various functional areas, I choose a REIT (AmREIT, Inc.) and perform a SWOT analysis to identify four issues facing this REIT. These four issues are …