Financial Accounting Standards Research Initiative

Join us Tuesday, March 9 at 4pm when Scott Dyreng of Duke University discusses his recent research on the cost of violating covenants on private debt.  The key message of the paper is that firms are willing to pay extra taxes in order to avoid debt covenant violations.  The study uses a somewhat unfamiliar data [...] Read more > >

If HRC's actual results fell short of expectations, Scrushy would tell HRC's management to "fix it" by recording false earnings on HRC's accounting records to make up the shortfall. -- SEC vs. HealthSouth Corporation[HRC] You look back and think, 'What was I thinking? Why didn't I just do the right thing?' But when you're caught up in [...] Read more > >

I just read the introduction of a paper that compares commercial and academic risk measures (Price, Sharp, and Wood 2010). And the winner is (drum roll….) commercial risk measures in almost every test. Here’s the abstract: Although a substantial body of academic research is devoted to developing and testing risk proxies that detect or predict accounting [...] Read more > >

I just read an article on CFO.com. It talks about an alleged 31 million dollar embezzlement in a company that reports only 38 million in sales each year. According to the article, The auditor’s response has been to highlight the fact that Koss is one of the companies that are not yet subject to Sarbox’s [...] Read more > >

I just read the abstract of a forthcoming paper (Kvaal and Nobes 2010) that compares the accounting policies of blue chip companies in the largest five stock markets that use IFRS. By comparing the policy disclosures in annual reports, the authors find “significant evidence that pre-IFRS national practice continues where this is allowed within IFRS.”  [...] Read more > >

We had a very interesting discussion with Gilles Hilary and Rodrigo Verdi on their paper linking better financial reporting quality to less overinvestment among firms with lots of cash on hand and less underinvestment among firms with lots of leverage.  It sparked a number of questions, so of which I recount here: What specific aspects of [...] Read more > >

I got an email alerting me to some recent PriceWaterhouseCoopers publications.  Their Transaction Services group appears to be writing a series of papers on Financial Reporting in a Troubled Economy.  One report in particular caught my eye – “How the Economic Slowdown Leads to Added Financial Reporting Complexities.”  An interesting quote is “While financial reporting [...] Read more > >

On Wednesday, Sept 30th, 11 am ET, we will be joined by Kathy Petroni (Michigan State University). Kathy will be talking about her paper, entitled “CFOs and CEOs:  Who Have the Most Influence on Earnings Management?”  The paper is forthcoming in the Journal of Financial Economics, and is co-authored with John (Xuefeng) Jiang and Isabel [...] Read more > >