Research Papers, Essays, Term Papers.
Accounting
Type: thesis. Topic: Accounting. Code: acco0005.
Format: pdf. Pages: 140
Format: pdf. Pages: 140
Accounting Choice in Troubled Firms
The purpose of this research is to examine whether managers of troubled firms engage in income-increasing earnings management for capital market purposes to maintain a listing on the NASDAQ National Market. Troubled firms are defined as those firms whose share price has fallen below the specified dollar-per-share minimum mandated by the market. The two hypotheses attempt to answer two separate, but interrelated questions: First, do managers of troubled firms engage in earnings management more in periods of distress than in periods of non-distress? And second, do managers of troubled firms engage in earnings management more than similar firms not in jeopardy of delisting? Both a time-series and cross-sectional approach is used to answer these questions.
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Type: thesis. Topic: Accounting. Code: acco0004.
Format: pdf. Pages: 116
Format: pdf. Pages: 116
ACCOUNTING DATA AND CAPITAL BUDGETING
The purpose of this dissertation was to analyze the susceptibility of capital budgeting decisions to bias. Based on the political nature of many of these decisions, attribute framing effects were analyzed in a capital budgeting decision context. Specifically, two independent variables were analyzed: accounting data and attribute frames. This research proposed that attribute framing effects would be conditional on the nature of the accounting data being considered. When the accounting data elicited a positive or negative evaluative reaction, attribute frames were expected to be unobtrusive to capital budgeting decisions. However, when the accounting data was neutral, eliciting an ambiguous evaluative reaction, attribute frames were predicted to bias these decisions. An experiment was conducted that considered the issue across two types of capital budgeting decisions: accept/reject decisions (dichotomous decision) and strategic alliance judgments (monetary allocations). Experimental findings strongly support the predicted relationships. These results suggest that persuasive descriptions are not effective in capital budgeting contexts when accounting data provides a clear picture as to the investment’s future success; however, these tactics may be vitally important when accounting information is unclear about the investment’s future success.
Keywordws: Capital Budgeting | Information Ambiguity | Evaluative Reactions | Attribute Framing | Accounting
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Type: thesis. Topic: Accounting. Code: acco0003.
Format: pdf. Pages: 141
Format: pdf. Pages: 141
Accounting decision-making and motivation
The present study investigated the effects of reward structure and environmental conditions (i.e., context) on integrated motivation for an accounting task using 101 undergraduate accounting students. A computer-simulated task in which students were asked to estimate allowance for doubtful accounts was used to create and manipulate reward structure (i.e., performance-contingent vs. task-contingent) and context (i.e., self-determined vs. controlled). It was hypothesized that a self-determined context would create greater motivation than a controlled context when motivation was measured by response intensity, response persistence, integrated response intensity, and integrated response persistence. An ordinal interaction was also hypothesized such that in a self-determined context, performance-contingent rewards would create more motivation than task-contingent rewards, and in a controlled context, performance-contingent rewards would create less motivation than task-contingent rewards.
Results indicated that response intensity, as measured by time on task, did not support the hypothesized main effect or the ordinal interaction; however, when self-reported effort was used as a measure of response intensity, support for both hypotheses was found. Similarly, when response persistence was measured by time on task, support for the hypotheses was not found; however, when number of problems worked during the free choice period was used to assess response persistence, hypothesized effects were supported. For integrated response intensity and persistence, support for the hypotheses was not found.
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Type: thesis. Topic: Accounting. Code: acco0007.
Format: pdf. Pages: 112
Format: pdf. Pages: 112
Accounting for Business Combinations
The purpose of this research is to examine whether accounting methods for business combinations (purchase and pooling-of-interests accounting) have a different effect on firms’ market value of equity in the combination year and thereafter. In particular, after the accounting method is no longer disclosed in the financial statements, does it have an impact on market value of equity of the combined firms because the accounting figures are different? A five-year period subsequent to a particular business combination is used because public companies are not required to disclose the details of the combination for more than three years after the effective date of the combination. This research, thus, tests whether market participants still take into consideration the accounting method of past business combinations when this information is no longer disclosed in the financial statements. In addition to the testing of the impact of the accounting methods, the value-relevance of goodwill amortization is investigated.
The sample consisted of 100 U.S. business combination transactions during the period 1985–1995 (77 pooling firms and 23 purchase firms). The results do not indicate that market participants price pooling firms and purchase firms differently at the time of business combinations. The results, in addition, do not confirm that when the details of a particular business combinations do not appear in the financial statements, pooling firms’ accounting figures have a more positive effect on security prices than those of purchase firms. It seems that market participant are able, even in the long term, to account for the accounting difference between purchase and pooling-of-interests. Also, goodwill amortization does not appear to be value relevant.
Keywordws: Pooling | Purchase Accounting | Acquisitions | Business Combinations | Mergers | Accounting
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Type: thesis. Topic: Accounting. Code: acco0015.
Format: pdf. Pages: 125
Format: pdf. Pages: 125
Accounting Method and Earnings Quality
Whether the quality of a firms reported earnings affects investors ability to predict future earnings and stock returns is still a subject of much debate among accounting researchers. Lev (1989) suggests that low quality earnings may be causing the relatively low correlation between reported earnings and stock returns (or the markets evaluation of future earnings).
This dissertation used the valuation model described in Ohlson (1995) and Feltham and Ohlson (1995) to explore the possible links between accounting method choices and the ability of investors to use reported earnings to predict future earnings. The results demonstrate that prior researchers` assumptions regarding which accounting methods are generally conservative or liberal are reasonably accurate over large numbers of firms. The results also show that one group of analysts (Value Line Investment Survey) is able to predict future earnings more accurately over medium-term and long-term forecast horizons for firms using generally conservative accounting methods than those firms employing generally liberal accounting methods.
This research adds to the prior "quality of earnings" research by showing that analysts can predict earnings more accurately for certain classes of firms (i.e., firms using conservative accounting methods), thus increasing our knowledge of what constitutes high-quality earnings.
The research also explores the effects of growth on the quality of earnings question, the effects of firm size, leverage, and industry membership on the relationship, and the robustness of the Feltham and Ohlson Model to alternative definitions of key components of the model.
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Type: thesis. Topic: Accounting. Code: acco0016.
Format: pdf. Pages: 87
Format: pdf. Pages: 87
Accounting Students Ethical Decision Making
This research is designed to gain an understanding of how accounting students respond to realistic, business ethical dilemmas. Prior research suggests that accounting students exhibit lower levels of ethical reasoning compared to other business and non-business majors. This study uses the Defining Issues Test, Version 2 (Rest, et al., 1999) to measure accounting students’ ethical reasoning processes. The Mach IV scale (Christie and Geis, 1970) is used to measure moral behavior. Eight ethical vignettes adapted from prior ethics studies represent realistic, business ethical scenarios.
A total of sixty-eight undergraduate accounting students are used to examine three hypotheses. Literature suggests that individuals with lower ethical reasoning levels are more likely to agree with unethical behavior. Therefore, hypothesis one investigates the relationship between ethical reasoning and ethical decision making. Literature also suggests that individuals agreeing with Machiavellian statements are more likely to agree with questionable activities. Hypothesis two investigates the relationship between Machiavellian behavior and ethical decision making. Prior gender literature suggests that gender influences ethical decision making, with females being more ethical than males. Therefore, hypothesis three examines whether female accounting students agree less with questionable activities compared to males.
Results indicate that ethical reasoning is significantly correlated with students’ ethical ratings on the business vignettes. Similarly, Machiavellian behavior is significantly correlated with students’ ethical ratings. Consistent with prior gender literature, females agree less with questionable activities compared to male accounting students.
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Type: thesis. Topic: Accounting. Code: acco0013.
Format: pdf. Pages: 91
Format: pdf. Pages: 91
Ambiguity, Risk, and Trust of Audit
This research study investigates the relationship between ambiguity, litigation risk, and auditor decision-making. In addition, this study investigates how auditor trust of his or her client may change these relationships. It is important to investigate the relationships of ambiguity, litigation risk, and client trust to auditor decision-making because auditors face these factors on a regular basis.
This research uses a 2x2 experiment to investigate auditor reaction to ambiguity and litigation risk. The first factor, ambiguity is operationalized as auditor reaction to potential real transaction earnings management (low ambiguity) and potential accrual transaction earnings management (high ambiguity). The second factor, litigation risk is operationalized through an income increasing (high) or income decreasing (low) earnings management attempt. Auditors were given company background information, selected account information, and comparative financial statements and then asked to state the likelihood of material misstatement in the financial statements as a whole and the sales, selling and marketing expenses, research and development expenses, and general and administrative expenses individual accounts. The ambiguity manipulation was imbedded in the description of the research and development account while the litigation risk factor was imbedded in the comparative financial statements.
The findings indicate that the subjects reported a relatively high likelihood of material misstatement of research and development expenses regardless of the earnings management method. The findings further indicate that when a real earnings management transaction was present, auditors rated the likelihood of material misstatement in sales and the financial statements as a whole higher than when an accrual earnings management transaction is present. Additionally, when the subject group is limited to individuals working for Big-4 and National non Big-4 firms the auditors assessed the likelihood of material misstatement in the financial statements as a whole, sales, selling and marketing expenses, and general and administrative expenses significantly higher when a real earnings management transaction is present than when an accrual earnings management transaction is present. The lawsuit risk factor was not found to be significant in any of the primary analyses.
The research also explores the relationship between an auditor’s trust of the client and the likelihood of material misstatement assessment. Auditors completed the Kerler and Killough trust scale to measure trust of the experimental client. The findings report that as external auditor experience increases, auditor trust of the client decreases. However, this decrease in trust does not significantly affect the likelihood of material misstatement assessment.
This research study is the first step in developing an understanding of the relationship between ambiguity, risk, trust, and auditor decision-making. The findings indicate that auditors do use information about potential earnings management in one account when evaluating the likelihood of material misstatements in other accounts. Future research should develop an understanding about whether auditors should take these factors into consideration in the planning stages of the audit.
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Type: thesis. Topic: Accounting. Code: acco0011.
Format: pdf. Pages: 126
Format: pdf. Pages: 126
An Experimental Investigation of Select Remunerative Factors in the "Pay-For-Performance" Paradigm
This dissertation presents the results of three experimental research studies investigating factors within the executive compensation process and the effects these factors have on the pay-for-performance paradigm. The first study examines the influence of individual anchoring and the effects of private versus public decisions upon compensation awards by subjects role-playing as either an outside CEO or a non-CEO director. Research results show that subjects anchor to personal pay levels, CEO subjects shield the focal CEO from declining compensation when performance is below average, and that this phenomenon is mitigated when the individual director-subject decision is deemed to be made public. The shielding of compensation is consistent with Social Comparison Theory in that the CEO-subjects identify to and protect the CEO by limiting negative compensation awards of the CEO, and thus, representing an agency cost.
The second study examines affect as an influencing factor on individual decision makers in the compensation setting process. Results are consistent with Prospect Theory in that, in the absence of a tangible payoff, personal affect is the outcome monitored and used by individuals in the decision process in the determination of a gain or loss. Using personal pay and personal performance as anchors for subjects role-playing as directors
on the compensation committee, results indicate that subjects make decisions to
maximize (minimize) positive (negative) affect in compensation awards to the focal CEO. The findings suggest that although individual anchors may interact and add to the complexity of the decision process, the outcomes are consistent with Prospect Theory.
The third study examines group decision making as compared to individual decisions when making compensation awards. Results show that in a committee of individuals where a majority of beliefs is present, group polarization occurs and the compensation results are exaggerated as compared to the individual beliefs. The findings also suggest, though, that the appointment of a leader as chair of the committee, either in the majority or minority view, has a moderating effect on the group outcome. These results highlight the potential for agency costs in the group decision process that may be found in the executive compensation-setting environment.
Overall, these results add to the knowledge of factors affecting executive compensation. These studies provide evidence that individual anchors, individual performance, individual affect, and the group decision process may add to agency costs and be contributing factors in the imperfection of the pay-for-performance paradigm.
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Type: analysis. Topic: Accounting. Code: acco0019.
Format: Ms Word. Pages: 9
Format: Ms Word. Pages: 9
An overview of Cadbury Schweppes
Introduction
Useful information for a manager
Activity based costing
Budgeting
Payback
Pricing
Bibliography
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Type: thesis. Topic: Accounting. Code: acco0002.
Format: pdf. Pages: 106
Format: pdf. Pages: 106
Audit judgments and decisions
The purpose of this dissertation is to investigate auditors` judgments and decisions in the presence of an explicitly stated client preference. This investigation considers two factors. First, the temporal placement (i.e., timing) of the client preference is varied to allow for an examination of differential effects associated with the receipt of an early client preference and a late client preference. Second, client trustworthiness is varied so that participants may have a basis upon which to evaluate the client`s representations (i.e., preferences). Practicing auditors, who were either managers or senior managers at a national accounting firm, participated in the study by completing two audit tasks in which the two factors were manipulated.
Findings indicate that explicitly stated client preferences resulted in significantly different decision processes, but did not significantly influence auditors` judgment processes. However, further analysis indicated that there was no significant client preference (CP) effect observed for auditors` final decisions. Therefore, it appears that the influence of the client`s preference was transitory. Taken together, these findings suggest that the CP did not result in a loss of auditors` objectivity.
Auditors` judgments and decisions were sensitive to the client`s relative trustworthiness. This finding suggests that auditors are responsive to a client`s credibility when evaluating the client`s representations. This result is expected given since generally accepted auditing standards require auditors to consider a source`s credibility. However, it is surprising that auditors` evidence evaluation efforts were not differentially sensitive to the client`s trustworthiness. Such a finding may indicate that the participating auditors` evidence evaluation efforts are more influenced by firm policy than individual judgment.
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