Financial Accounting Standards Research Initiative

On July 20, the FASB issued a new exposure draft of their proposed ASU concerning disclosures of litigation-related loss contingencies.  For anyone who may not have been following this issue over the past 2 years or so, the FASB first issued an exposure draft on June 5, 2008 which proposed enhanced disclosure regarding contingent losses stemming [...] 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 > >

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 > >

On March 9, Scott Dyreng led a session on how social norms affect people’s behavior.  I made a post a few days later on the subject with a cite to work by Steve Huddart.  Yesterday I saw another example of how social objectives affect employee utility functions, but this one seems quite different. Adam Grant, [...] 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 > >

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 > >

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 > >

Yesterday (September 10, 2009), Rob Bloomfield posted regarding a legal perspective on FASB Accounting Standards Codification Topic 450 (FAS 5 – Accounting for Contingencies) and proposed changes in the disclosure rules for litigation-related contingencies.  This post relates to both the FAS 5 issue as well as an earlier discussion regarding conducting research with the FASB. While serving [...] Read more > >

As previously announced, we will be having our first Round Table Discussion hosted by a preparer this week when Bob Laux (Microsoft) joins us on Wednesday at 11 am ET.  Given Bob’s wide-ranging interests and expertise, Wednesday’s discussion promises to be engaging and informative! As if there weren’t already enough to discuss given Bob’s tentative agenda, [...] 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 > >

Just a reminder that Wednesday, April 1, 11am ET,  Christine Botosan (Univ of Utah) will lead a discussion about her recent research on segment reporting, with Susan McMahon and Marry Harris Stanford—with particular emphasis on the role of managerial discretion and standards that require preparers to disclose information that is consistent with management’s own views.  [...] Read more > >

At today’s office hours, Bob Lipe presented this working paper with Lail and Yi.  The upshot of the paper is that we need to be very careful when we think about the standard-setting implications of the accrual anomaly.  It is tempting to say that accrual standards must be a problem because (as the Richardson, Sloan, [...] Read more > >