Financial Accounting Standards Research Initiative

About a year ago (March 12, 2009) the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Entities held a hearing titled “Mark-to-Market Accounting: Practices and Implications.”  The Committee members directed several hours of fairly hostile questioning to FASB Chairman Bob Herz and SEC Chief Accountant Jim Kroeker.  If you have not seen [...] Read more > >

On Tuesday, January 12th we had a Round Table Event with Jim Leisenring from the IASB. To view the archived video and a brief summary of the event, click here. Additional information about Jim and this Round Table Event can be found here. Follow-up comments from this event can be found here. Read more > >

You may have noticed that we can now directly embed videos in posts. Thanks to our great web development team for making that happen! Over the next few weeks I’ll be posting videos of previous Round Table discussions. We hope this will make the archived discussions more accessible to readers. Read more > >

A big thanks to Naomi and Shayne for their comments today. It was a great Round Table. Thanks to everyone who participated as well. We welcome any comments or follow-up questions regarding today’s Round Table topic. Read more > >

The February 23rd Roundtable will feature a discussion of Emissions Trading Schemes, led by University of Colorado research Naomi Soderstrom, along with insights from the Assistant Project Manager on the FASB’s Emission Trading Schemes project, Shayne Kuhaneck. Many accountants have only passing familiarity with Emissions Trading Schemes.  As the FASB project page describes, Emission trading schemes to [...] Read more > >

Until you hear otherwise, FASRI Roundtables will take place at a new location.  If you participate via Second Life, click this link to be taken directly to the new location.  If you watch via the web, there is no change:  the page is still here.  This change is effective today, for Aaron Beam’s talk. 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 > >

On Wednesday, Feb 3rd, 11 am ET, we will be joined by Steven Orpurt of Pepperdine University. Steve will be discussing his paper, entitled “Do Direct Cash Flow Disclosures Help Predict Future Operating Cash Flows and Earnings? This work is co-authored with Yoonseok Zang, also of Singapore Management University, and was recently published in [...] Read more > >

Stephen Ryan (NYU) joins FASRI to talk about his recent research on the fair value option in the banking industry.  Stephen is one of the most respected accounting academics studying banking and financial instruments these days, so I expect people will have plenty of questions beyond the research study that will form the heart of [...] Read more > >

Jim Leisenring’s remarks at yesterday’s roundtable were great.  In the portion related to the interaction of research and standard setting, he reminded us of two papers in Accounting Horizons on the interaction: “Academic accounting research and the standard setting process” by Katherine Schipper and “Accounting research: On the relevance of research to practice” by Jim [...] Read more > >

Jeremy summarized nicely some of the discussion points that Jim raised during his discussion with Jeffrey Hales.  I won’t repeat his summary.  However, I found Jim’s comments to be particularly insightful today.  I came away with some very good clarification of a few issues. Here’s one that I found particularly interesting: Regarding his objection to the “management [...] Read more > >

* UPDATE: The archived video is shown above. Please note that the welcome screen is displayed for the first 11 minutes and 10 seconds. You’ll want to skip to 11:10 in the video to begin seeing the discussion. We just finished a great Roundtable with Jim Leisenring from the IASB. We will get the video online [...] Read more > >

We had a great Round Table with Paul Zarowin yesterday, where we talked about the large and ever-growing literature on earnings management.  While much has been done in this area, it was clear from yesterday’s discussion that there remain many fruitful areas for future research.  If you didn’t get the chance to join us, I [...] Read more > >

I’ve been thinking about something Jeff Wilks said during this week’s FASRI Roundtable and something that occurred to me during the conference.  In short, it is the notion that it might be useful to consider perspectives other than the customer consideration model for revenue recognition.  (Forgive me, Jeff, if I misunderstood your comments Wednesday, and of [...] Read more > >

On Tuesday, Dec 15th, 4 pm ET, we will be joined by Paul Zarowin. Paul Zarowin is a professor at New York University and an Editor at The Accounting Review. The topic of this session is earnings management, and Paul is going to provide us with a high level review of this literature and the [...] Read more > >

How often do we get to use big esoteric words from philosophy when we are talking about accounting standards?  Not often enough! Usually, the only philosophical terms we use are ‘normative’ and ‘positive,’ and I think many of us are pretty comfortable with the notion that standard setters are trying to answer normative questions (what should [...] Read more > >

As posted here, FASRI is issuing a call for research consultants to conduct revenue recognition studies.  This call is a little different from the usual ‘call for proposals’ because applicants must be willing to work closely with FASRI and FASB staff to identify research topics that will be most helpful in staff and Board deliberations.   [...] Read more > >

On Tuesday, Dec 1st, 4 pm ET, we will be joined by Patrick Finnegan, who was recently appointed to a 5-year term on the International Accounting Standards Board. Pat is a former Director of the Financial Reporting Policy Group at CFA Institute Centre for Financial Market Integrity, where he led a team responsible for [...] Read more > >

It was great to have Stephen Penman participate in our round table discussion this past week. It is worthwhile to listen to someone else’s views on standard setting, particularly when those views have been somewhat critical of the current state of standard setting. Although I still have many questions about the completeness of Stephen’s framework [...] Read more > >

One of the points that Stephen made early in his remarks was that while the objectives of financial reporting were fairly non-controversial, they didn’t give one any traction in deciding what sort of accounting we should have. As I listened to the rest of his remarks, I found myself having a similar sentiment about the “income [...] Read more > >

On Tuesday, Nov 17th, 4 pm ET, we will be joined by Susan Krische (University of Illinois at Urbana-Champaign).  Susan recently returned from an academic fellowship with the Office of the Chief Accountant at the Securities and Exchange Commission.  In light of her experience at the SEC, Susan will be leading a discussion on how [...] Read more > >

The roundtable discussion with Stephen Penman yesterday was quite good.  Lots of good discussion in both voice and typed chat.  One thing I learned is that Stephen stresses subjectivity as a reason behind his views. While I am convinced that Stephen dislikes some forms of subjectivity, I think his views are more subtle than this.  [...] Read more > >

In preparation for his FASRI Roundtable discussion, Stephen Penman has helpfully shared his CEASA White Paper on Financial Statement Presention, which you can download here. The paper discusses disaggregation in some depth, providing guidelines for how line items should be disaggregated on both the income statement and the balance sheet.  I need to read more carefully, [...] Read more > >

You may know Columbia Business School Professor Stephen Penman as the 14th-most downloaded author on SSRN.  Or you might know him as a Director of the Center for Excellence in Accounting and Security Analysis. Or perhaps as author of Financial Statement Analysis and Security Valuation. More recently, Stephen has been visible as a critic of the [...] 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 > >

On Wednesday, Oct 28th, 11 am ET, we will be joined by Gilles Hilary (HEC Paris) and Rodrigo Verdi (MIT). They will be discussing their paper, entitled “How Does Financial Reporting Quality Relate to Investment Efficiency?” The paper is co-authored with Gary Biddle at the University of Hong Kong. The abstract of their paper reads: “Prior evidence [...] Read more > >

We had a great discussion about Reg FD and foreign filers on Tuesday.  If you were not able to attend, I encourage you to view the archive.  When you do so, you will notice several text comments from me (Accounting Footman) that may at first seem very critical of the study.  I want to clarify [...] Read more > >

On Tuesday, Oct 20th, 4 pm ET, we will be joined by Bin Ke (Penn State University).  Bin will be discussing his recent paper, entitled “Why do cross-listed firms voluntarily adopt Regulation Fair Disclosure?” The paper is co-authored with Michael Crawley and Yong Yu, both of whom are from the University of Texas at Austin. The abstract [...] Read more > >

It is the rare academic article that explicitly considers the objective function of the regulator.  William Bratton is a law professor from Georgetown who takes exactly this focus, and will joins us at the FASRI Roundtable on Wednesday, October 14th at 11am ET to lead us through the thicket of political pressures and machinations that [...] Read more > >

"Libby Boxes" Revenue recognition is one of FASRI’s key target areas for research over the coming year.   We are going to take a big step forward on Tuesday, October 6th, 4pm by laying out some possible approaches to research studies on RevRec.  We will be structuring our discussion around the key independent variables that researchers might [...] Read more > >