Accounting Research An Overview

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Accounting Research An Overview

    Accounting Research: An Overview Accounting Research An OverviewAccounting Research: An Overview

    Ph.D. in Business Administration Seminar Ph.D. in Business Administration Seminar

    Seminar Outline Seminar Outline

    ADMI 860E ADMI 860E

    Fall 2006 Fall 2006


Michel Magnan, Ph.D., FCA

    Associate Dean Masters’ and Graduate Diplomas Lawrence Bloomberg Chair in Accountancy John Molson School of Business

    Concordia University

Office: GM 710

    Telephone : 514-848-2424 X 4145

    Fax: 514-848-4518



    As a professional field, accounting encompasses a wide range of activities,

    practices, and concepts with accounting professionals acting in various

    capacities (e.g., auditor, controller, financial executive). Hence, in their efforts to

    understand how and why accountants make decisions as well as the impact of

    these decisions, accounting researchers need to rely on a broad set of

    theoretical and methodological tools that are drawn from various disciplines. The

    purpose of the seminar is to expose students to these theoretical and

    methodological tools. However, by emphasizing emerging issues and current

    trends, the seminar adopts a forward-looking stance with respect to accounting

    research so that students can better identify relevant and promising research



    The purpose of Accounting Research : An Overview is threefold:

    ? Provide students with a comprehensive perspective of the tools,

    theoretical as well as methodological, that are currently driving accounting


    ? Expose students to emerging trends in accounting research;

    ? Introduce students to databases that are widely used in accounting


    With this background, students will be better able to delineate their research

    interests as well as faculty members who may potentially serve as advisers.

Pedagogical Approach

    Since the seminar is an introduction to accounting research, a mixed pedagogical

    strategy will be used. Each lecture investigates a particular research question

    from different theoretical and methodological perspectives. At the beginning of

    each lecture, the instructor will provide students with background knowledge and

    information so that they can better understand the context in which the studies to

    be discussed were realized. Afterward, the lecture will turn into a more traditional

    seminar format, with students leading the discussion on some papers.


    The seminar is to be viewed as a learning laboratory. Therefore, at each lecture,

    students are expected to turn in a short critique of a paper they would have

    selected. That critique could have the following format:

    ? What is the paper’s research question ?

    ? What is the paper’s underlying theory ?

    ? How was the study performed (method) ?

    ? What does the paper show ?

    ? What is the paper’s relevance (why is it interesting, important) ?

Students who have critiqued a particular paper are expected to provide

    leadership when it is discussed in the seminar.

Students are expected to write a term paper. The term paper will take the form of

    a research proposal (5-10 pages), with a research question, a theoretical

    framework and a methodology. The proposed study’s contribution will also need

    to be discussed.

Weekly outlines and presentations 30 %

    Class discussion 20 %

    Term paper 50 %

     100 %

Detailed Content of Lectures

Week 1

    Accounting Research Some background

    ? A brief history of accounting research

    ? A paradigm view of accounting research

    ? From a normative world to positive accounting

    o An user’s perspective of accounting information

    o A managerial perspective of accounting information ? The accountant as decision-maker

    Week 2: Is Accounting Information Useful and/or Relevant ?

    Aboody, D., M.E. Barth and R. Kasznik. 2004. SFAS No. 123 Stock-Based Compensation Expense and Equity Market Values. The Accounting Review

    79(2): 251-276

Botosan, C. and M. Stanford. 2005 Managers’ Motives to Withhold Segment

    Disclosures and the Effect of SFAS No. 131 on Analysts’ Information

    environment. The Accounting Review 80(3):751-771

Guenther, D.A. and R. C. Sansing. 2004. The Valuation Relevance of Reversing

    Deferring Tax Liabilities. The Accounting Review 79(2): 437-452.

    Ely, K.; G. Waymire. 1999. Accounting Standard-setting Organizations and Earnings Relevance: Longitudinal Evidence from NYSE Common Stocks 1927-

    1993. Journal of Accounting Research 37(2): 293-318.

Francis, J. and K. Schipper. 1999. Have Financial Statements Lost Their

    Relevance ? Journal of Accounting Research 37(2): 319-352.

Kuman, K. and G. Visvanathan. 2003. The Information Content of the Deferred

    Tax Valuation Allowance. The Accounting Review 78(2): 471-490.

Lev, B. and P. Zarowin. 1999. The Boundaries of Financial Reporting and How to

    Extend Them. Journal of Accounting Research 37(2): 353-386.

Altamuro, J., A. Beatty, and J. Weber. 2005. The Effects of Accelerated Revenue

    Recognition on Earnings Management and Earnings Informativeness: Evidence

    from SEC Staff Accounting Bulletin No. 101. The Accounting Review 80(2): 373-


    Week 3: Is Accounting Information Reliable and Unbiased ?

    Beatty, A. and J. Weber. 2003. The Effects of Debt Contracting on Voluntary Accounting Method Changes. The Accounting Review 78(1): 119-142.

Beatty, A. and J. Weber. 2006. Accounting Discretion in Fair Value Estimates: An

    Examination of SFAS 142 Goodwill Impairments. Journal of Accounting

    Research 44(2): 257-296.

Bloomfield, R., R. Libby and M.W. Nelson. 2003. Do Investors Overrely on Old

    Elements of the Earnings Time Series? Contemporary Accounting Research

    20(1): 1-32.

    Bowen, R., A.K. Davis and S. Rajgopal. 2002. Determinants of Revenue-Reporting Practices for Internet Firms. Contemporary Accounting Research

    19(4): 523-562.

Burgstahler, D. and M.J. Eames. 2003. Earnings Management to Avoid Losses

    and Earnings Decreases: Are Analysts Fooled? Contemporary Accounting

    Research 20(2): 253-294.

Cheng, Q. and T. Warfield. 2005. Equity Incentives and Earnings Management.

    The Accounting Review 80(2): 441-476.

Krishnan, R. M. Yetman and R.J. Yetman. 2006. Expense Misreporting in

    Nonprofit Organizations. The Accounting Review 81(2): 399-420.

Rosner, R. 2003. Earnings Manipulation in Failing Firms. Contemporary

    Accounting Research 20(2): 361-408.

Hirst, E.; Koonce, L.; Miller. 2000. The joint effect of management’s prior forecast

    accuracy and the form of its financial forecasts on investor judgment. Journal of

    Accounting Research, supplement: 101-134.

Hirst, E. and P. Hopkins. 1999. Comprehensive Income Reporting and Analysts’

    Valuation Judgments. Journal of Accounting Research, supplement: 47-84.

    Magnan, M.; C. Nadeau and D. Cormier. 1999. ?Earnings Management During Anti-Dumping Investigations: Analysis and Implications?. Canadian Journal of Administrative Sciences/Revue canadienne des sciences de l’administration 16

    (2): 149-162.

Week 4: Is Accounting Information a Sufficient Indicator of Firm

    Performance ?

Craighead J., M. Magnan, and L. Thorne. 2004. The Impact of Mandated

    Disclosure on Performance-Based CEO Compensation. Contemporary

    Accounting Research 21(2): 369-398

Bradshaw, M. T., Sloan, R. G., 2002. GAAP versus the Street: an Empirical

    Assessment of Two Alternative Definitions of Earnings. Journal of Accounting

    Research 40: 41-66

Clarkson, P.M., Y. Li and G.D. Richardson. 2004. The Market Valuation of

    Environmental Capital Expenditures by Pulp and Paper Companies. The

    Accounting Review 79(2): 329-354.

Francis, J., K. Schipper and L. Vincent. 2003. The Relative and Incremental

    Explanatory Power of Earnings and Alternative to Earnings Performance

    Measures for Returns. Contemporary Accounting Research 20(1): 121-164.

Ittner, C. and D. Larcker. 1999. Are nonfinancial measures leading indicators of

    financial performance ? An analysis of customer satisfaction. Journal of

    Accounting Research, supplement: 1-46.

Nwaeze, E.T., S. Yang and Q.J. Yin. Accounting Information and CEO

    Compensation: The Role of Cash Flow from Operations in the Presence of

    Earnings. Contemporary Accounting Research 23(1): 227-266.

Otley, D. and A. Fakiolas. 2000. Reliance on accounting performance measures:

    dead end or new beginning ? Accounting, Organizations and Society 25(4-5):


Reck, J.L. 2001. The usefulness of financial and nonfinancial performance

    information in resource allocation decisions. Journal of Accounting and Public

    Policy 20(1): 45-72.

Smith, MJ. 2002. Gaming Nonfinancial Performance Measures. Journal of

    Management Accounting Research 14: 119-134.

    Week 5: Databases and Capital Markets Research

Kothari, S.P. 2001. Capital Markets Research in Accounting. Journal of

    Accounting and Economics 31: 105-231 (continued in the following class)

Kinney, W. 1986. Empirical Accounting Research Design for Ph.D. Students.

    Accounting review (April):338-350.

Hanlon, Michelle, Shivaram Rajgopal, and Terry Shevlin. 2003. Are Executive

    Stock Options Associated With Future Earnings?. Journal of Accounting and

    Economics 36: 3-43

Kothari, S.P. 2001. Capital Markets Research in Accounting. Journal of

    Accounting and Economics 31: 105-231 (continued from the previous class)

Bradshaw, M. T., Sloan, R. G., 2002. GAAP versus the Street: an Empirical

    Assessment of Two Alternative Definitions of Earnings. Journal of Accounting

    Research 40: 41-66

Lo and Mackinlay. 1997. The Econometrics of Financial Markets. Princeton

    University Press: Ch3 to ch7 (?)

    Week 6: Does an Audit Add Value to Financial Statements ?

Krishnan, G.V. 2005. Did Houston Clients of Arthur Andersen Recognize Publicly

    Available Bad News in a Timely Fashion. Contemporary Accounting Research

    22(1): 165-194.

Weber, J. and 2003. Do Experts Informational Intermediaries Add Value?

    Evidence from Auditors in Microcap Initial Public Offerings. Journal of Accounting

    Research 41(4): 681-720.

Myers, J.N., Linda A. Meyers and T.C. Omer. 2003. Exploring the Term of the

    Auditor-Client Relationship and the Quality of Earnings: A Case for Mandatory

    Auditor Rotation? The Accounting Review 78(3): 779-800.

Clarkson, P. 2000. Auditor Quality and the Accuracy of Management Earnings

    Forecasts. Contemporary Accounting Research 17(4): 595-622.

Chen, C., Xijia Su and R. Zhao. 2000. An Emerging Market’s Reaction to Initial

    Modified Audit Opinions: Evidence from the Shangai Stock Exchange.

    Contemporary Accounting Research 17(3): 429-456. Background readings

Becker, C.; M. Defond, J. Jiambalvo; K.R. Subramanyam. 1998. The Effects of

    Audit Quality on Earnings Management. Contemporary Accounting Research 15(1): 1-24.

Blackwell, D.; T. Noland; D. Winters. 1998. The Value of Auditor Assurances:

    Evidence from Loan Pricing. Journal of Accounting Research 36(1): 57-70.

    Reed, B.J.; M.A. Trombley; D.S. Dhaliwal. 2000. Demand for Audit Quality: The Case of Laventhol and Horwath’s Auditees. Journal of Accounting, Auditing and

    Finance 15(2): 183-200.

    Kinney, Palmrose and Scholz. 2004. Auditor independence, non-audit services and restatements: Was the U.S. Government Right ? Journal of Accounting Research 42(3): 561-588.

    Week 7: Why Do Firms Disclose More Information Than Is Required ?

    Aboody, D., M. Barth and R. Kasznik. 2004. Firms’ Voluntary Recognition of Stock-Based Compensation Expense. Journal of Accounting Research 42(2): 123-158.

    Botosan, C. and M. Plumlee. 2002. A Re-examination of Disclosure Level and the Expected Cost of Equity Capital. Journal of Accounting Research 40(1): 21-40.

    Miller, G. 2002. Earnings Performance and Discretionary Disclosure. Journal of Accounting Disclosure 40(1): 173-204.

    Lang, M. and R. Lundholm. 2000. Voluntary Disclosure and Equity Offerings: Reducing Information Asymmetry or Hyping the Stock ? Contemporary Accounting Research 17(4): 623-662.

    Byrd, J.; M. Johnson and S. Porter. 1998. Discretion in Financial Reporting: The Voluntary Disclosure of Compensation Peer Groups in Proxy Statement Performance Graphs. Contemporary Accounting Research 15(1): 25-52.

    Cormier, D. and M. Magnan. 2001. Corporate Environmental Reporting: An International Comparison. Working Paper (UQAM).

    Kennedy, J.; T. Mitchell; S. Sefcik. 1998. Disclosure of Contingent Environmental Liabilities: Some Unintended Consequences. Journal of Accounting Research 36(2): 257-278.

    Hope, O.-K. 2003. Disclosure Practices, Enforcement of Accounting Standards, and Analysts' Forecast Accuracy: An International Study. Journal of Accounting Research 41(2): 235-284.

Week 8: Do Taxes Matter ?

Erickson, M., M. Hanlon and E.L. Maydew. 2004. How much will Firms Pay for

    Earnings That Do Not Exist? Evidence of Taxes Paid on Allegedly Fraudulent

    Earnings. The Accounting Review 79(2): 387-408.

Phillips, J.D. 2003. Corporate Tax-Planning Effectiveness: The Compensation-

    Based Incentives. The Accounting Review 78(3): 847-874.

Hodder, L., M.L. McNally and C. Weaver. 2003. The Influence of Tax and

    NonTax Factors on Banks’ Choice of Organizational Form. The Accounting

    Review 78(1): 297-326.

Klassen, K. and A. Mawani. 2000. The Impact of Financial and Tax Reporting

    Incentives on Option Grants to Canadian CEOs. Contemporary Accounting

    Research 17(2): 227-262.

Kemsley, D. 1998. The effects of taxes on production location. Journal of

    Accounting Research 36(2): 321-343.

    Sillamaa, M.A. 1999. Taxpayer behavior in response to taxation : comment and new experimental evidence. Journal of Accounting and Public Policy 18(2): 165-


    Week 9: Does It Make Accounting Sense to be Ethical ?

Schatzberg, J.W., G.R. Sevcik, B.P. Shapiro, L. Thorne, and R.S. O. Wallace.

    2005. A Reexamination of Behavior in Experimental Audit Markets: The Effects

    of Moral Reasoning and Economic Incentives on Auditor Reporting and Fees.

    Contemporary Accounting Research 22(1): 229-264.

Chaney, P.K. and K. Philipich. 2002. Shredded Reputation: The Cost of Audit

    Failure. Journal of Accounting Research 40(4): 1221-1246.

    DeFond, M., K. Rahunandan and KR. Subramanyam. 2002. Do Non-Audit Service Fees Impair Auditor Independence? Evidence from Going Concern Audit

    Opinions. Journal of Accounting Research 40(4): 1247-1274.

McCracken, S. 2003. Auditors’ Strategies to Protect Their Litigation Reputation:

    A Research Note. Auditing 22(1): 165-180.

Cushing, B. 1999. Economic analysis of accountants’ ethical standards: The

    case of audit opinion shopping. Journal of Accounting and Public Policy 18(4-5): 339-364.

    Falk, H.; B. Lynn; S. Mestelman; M. Shehata. 1999. Auditor independence, self-interested behavior and ethics: some experimental evidence. Journal of

    Accounting and Public Policy 18(4-5): 395-428.

Kaplan, S. 2001. Further Evidence on the ethics of managing earnings: an

    examination of the ethically related judgments of shareholders and non-shareholders. Journal of Accounting and Public Policy 20(1): 27-44.

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