Financial Accounting Standards Research Initiative

I recently read a paper in The Accounting Review (Vol 85, No. 2) titled “Correcting for Cross-Sectional and Time-Series Dependence in Accounting Research” by Ian Gow, Gaizka Ormazabal, and Daniel Taylor. The paper deals with how to adjust for clustering across two dimensions (normally firm and year). After reading the paper I was was curious how [...] Read more > >

As most FASRI followers are aware, the IASB and FASB are revising their Conceptual Frameworks.  The new and old frameworks posit that relevance of information for making decisions is a key attribute for determining if a particular number should be included in financial reports. I recently attended a presentation of a research paper by [...] Read more > >

As I’ve been preparing to enter a PhD program, several professors have recommended that I find an “area of expertise” such as statistics, datasets, writing, experimental design, SAS, etc. Obviously there are a lot of factors that go into this decision, the first of which probably being what I enjoy most and the second being what [...] Read more > >

In a May 2010 Harvard Business Review article, Dana Carney (assistant professor at Columbia University) answers questions about her research that examines the relationship between a sense of power and the ability to deceive others. Although I highly recommend reading the actual paper (which is very well written, I might add), let me summarize the basics [...] Read more > >

Just this morning, a team of researchers went live with a website that ranks accounting programs’ research by topic and methodology. If you’ve ever wondered which accounting programs are the strongest in analytical methodology, based on published research in the past 6, 12, or 20 years by faculty currently in the program, this site can [...] Read more > >

On Wednesday, April 14th, 11 am ET, we will be joined by Eddie Riedl (Harvard University). Eddie will discuss on-going research relating to fair value accounting. This will include a paper co-authored with George Serafeim (also of Harvard University), entitled “Information Risk and Fair Values: An Examination of Equity Betas.” He will both [...] Read more > >

The paradoxical title of this post is quoted from this article in Science News about the inconsistent and often inappropriate use of statistics in academic research.  I would strongly recommend every accounting researcher read the article, make sure they understand the criticisms, and then promptly ignore most of them. The article emphasizes that statistical significance is [...] 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 > >

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 > >

The Financial Accounting Standards Research Initiative (FASRI) is issuing an open call for academic researchers to serve as Research Consultants for a Revenue Recognition Research Project.  Research consultants will work with members of FASRI to develop rigorous research studies likely to be helpful with the FASB and IASB deliberations on revenue recognition and related topics.  [...] Read more > >

You are probably aware that someone has (apparently illegally) published email correspondence involving climate scientists at the University of East Anglia.  This prompts me to think of writing two posts.  Later on, if I get the courage, I will write a post about how we deal with messy data — the emails discussing the matter [...] 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 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 > >

A student of mine brought to my attention an article in the Wall Street Journal September 24, 2009, “Investors Should Focus on Apple’s Core.”  In that article, Martin Peers points out that existing guidance for firms who have products that combine hardware and software, like Apple’s iPhone, required firms to obtain specific evidence about the [...] Read more > >

#gallery-1 { margin: auto; } #gallery-1 .gallery-item { float: left; margin-top: 10px; text-align: center; width: 33%; } #gallery-1 img { border: 2px solid #cfcfcf; } #gallery-1 .gallery-caption { margin-left: 0; } On Wednesday, September 16th, 11 am ET, Dain Donelson, Ross Jennings, and John McInnis, all of the University of Texas at Austin, will join us to discuss their recent paper entitled “Changes over Time in the Revenue-Expense Relation: Accounting [...] Read more > >

What industries have the largest percentage of their assets measured under fair value standards?  Whisper your answer to the person sitting next to you before clicking to see the answer, courtesy of this paper by Gartenberg and Serafeim of HBS. Click on the graph to enlarge it.  I was surprised to see the high proportions in [...] Read more > >

To prepare for tomorrow’s round table discussion (Wed Sept 2, 11am ET) on FASRI’s Financial Statement Presentation research, take a look at this report on an experiment I conducted with Frank Hodge, Pat Hopkins and Kristi Rennekamp.  A few points I’d like to make off the bat: I fully expect this research to result in a [...] Read more > >

I have been diving in to the FASB’s (and IASB’s) newly-energized discussions on cash flow reporting.  One of the most contentious aspects of the issue is that users want direct cash flow data that reports the inflows and outflows, broken down by the function and nature of the spending.  For example, is that cash outflow [...] Read more > >

One of the topics that came up in last week’s Round Table on Alternative Conceptual Frameworks was a discussion of the true and fair override. It came up when we were talking about one difference between US GAAP and IFRS being that the FASB’s conceptual framework is not authoritative. Even though IFRS requires [...] Read more > >

The AAA Financial Accounting Standards Committee (FASC) recently submitted a comment letter in response to the FASB/IASB’s discussion paper on revenue recognition. This letter is unusual because it is one of few (if any others) that draw on existing academic research to support its arguments. In that regard, the FASC has provided a useful service [...] Read more > >

Office Hours next week will feature a conversation with Anthony Hopwood about what the financial crisis means for accounting (and finance) researchers.  We will be changing our schedule a little bit:  the session will be at 11am ET, Tuesday, July 14th. Information about getting to the session can be found here. Anthony has a most impressive [...] Read more > >

In our next session of office hours (Tue, June 16th, 4pm ET), we will have our second brainstorming session. For those of you who couldn’t make the first brainstorming session, Bob Lipe led us in a discussion of research ideas related to leasing.  As in any good brainstorming session, Bob wasn’t just giving away research ideas, [...] Read more > >

While some may believe there are limits to the effectiveness of behavioral research in generating evidence on matters under consideration by standard setting agencies, there is no doubt in my mind that such research can contribute to financial accounting standard setting. At a recent doctoral consortium I attended, a certain comment sparked a debate around [...] Read more > >

Kathy Petroni (Michigan State) will be joining us June 10th, 11am ET, to talk about her paper “Comprehensive Income:  Who’s Afraid of Performance Reporting?”. The paper, co-authored with Linda Bamber, John Jiang and Isabel Wang, now forthcoming in The Accounting Review, touches on some timely and controversial topics. For starters, let me say that the [...] Read more > >

Another blog piece from a Doctoral Consortium Student (Dina F El-Mahdy from Virginia Commonwealth University).  Enjoy!–RJB I came across Holthausen and Watts’s (2000) working paper on SSRN and I find it a good starting point to open a discussion on the usefulness of value relevance research to the standards’ setters. This working paper was prepared for [...] Read more > >

This week, office hours (Tue, June 2nd, 4pm ET) will consist of something a bit different.  In particular, I want to see if we can have an interactive session involving bouncing research ideas off of each other.  This is one of the types of sessions that we discussed during May 19th office hours. How can we [...] Read more > >

Anup Srivastava (Northwestern) presented a research paper at today’s FASRI Office Hours. In this post, I briefly recap the takeaways from the paper and some of the questions that were asked by participants in today’s office hours. Anup’s paper examines how the constraints on revenue recognition imposed by SOP 97-2 Software Revenue Recognition affect the informativeness [...] Read more > >

My guess is that most doctoral students in accounting are still being taught the same history I have been:  In the beginning, accounting research was shapeless and without form.  Wait, I meant normative and qualitative.  Then, with the publication of Ball and Brown’s 1968 paper, the literature has taken a sharp turn toward positivism (drawing [...] Read more > >

The FASB is conducting tests of its proposed new financial statement presentation Discussion Paper, and they would like accounting faculty members to provide feedback on the new financial statement format and related reconciliation. To participate, click here; note that this is not a trivial commitment:  you will need to analyze financial statements and then make [...] Read more > >

During today’s Research Office Hours, Christine Botosan, Susan McMahon, and Mary Stanford shared insights from their recent working paper “Representationally Faithful Disclosures, Organizational Design, and Managers’ Segment Reporting Decisions.”  In their paper, they investigate whether SFAS 131 had its intended effect — providing users with better information about segment disclosures by encouraging more disaggregated segment [...] Read more > >