| |
 |
|
Volume 19, Issue No. 1, April 2012
Special Issue:APJAE Accounting Symposium held at University of Hawaii at Manoa, Honolulu, HI, March 25-26, with a forum to honor Dr. Kashi R. Balachandran
- Suresh Radhakrishnan, Editorial, 1-2
- Joshua Ronen, The state of accounting research: objectives and implementation, 3-11
- Ashiq Ali and Oktay Urcan, Dividend increases and future earnings, 12-25
- Ramgopal Venkataraman, Discussion of dividend increases and future earnings, 26-29
- Umit G. Gurun, Alina Lerman and Joshua Ronen, Anticipatory and implementation effects of FIN 46 on the behavior of different market participants, 30-55
- Umit G. Gurun, Alina Lerman, Joshua Ronen and Ram T.S. Ramakrishnan, Anticipatory and implementation effects of FIN 46 on the behavior of different market participants, 56-60
- Suresh Govindaraj, Mahesh Kumar, and Bharat Sarath, The effects of correlated demand on pricing, inventory, and production, 61-78
- Masako N. Darrough, A discussion on “The effects of correlated demand on pricing, inventory, and production” by Suresh Govindaraj, Mahesh Kumar, and Bharat Sarath, 79-81
- Shu-hsing Wu, Stephen Lin, Shu-hsing Li and Meihua Koo, Impact of market segmentation on value-relevance of accounting information: evidence from China, 82-96
- Albert Tsang, Discussion: the impact of market segmentation on the value-relevance of accounting information: evidence from China, 97-99
- Michèle Pomberg, Hamid Pourjalali, Shirley Daniel and Marinilka Barros Kimbro, Management accounting information systems: a case of a developing country: Vietnam, 100-114
- Simon Yu Kit Fung, Discussion of “Management accounting information systems in a developing country”, 115-118
- Laura Zoni, Andrea Dossi and Marco Morelli, Management accounting system (MAS) change: field evidence, 119-138
- Stewart Jones, A review of “Management accounting system (MAS) change: field evidence” by Zoni, Dossi and Morelli, 139-142
The state of accounting research: objectives and implementation
Joshua Ronena*
a New York University
Abstract
This essay is a reflection on the state of accounting research. It asks whether accounting research to date has served its purpose of helping set accounting policies that improve resource allocation. The essay concludes that most studies to date have failed to offer normative prescriptions for policy making. Most articles are based on non-sustainable premises: either foolish managers not realizing that the market corrects for their manipulations, or foolish traders who are unaware that wise managers exploit their foolishness by successfully manipulating accounting numbers in order to fool them. Unless research focuses on managers and investors who rationally pursue their interests, being aware that they both do so, no sustainable research findings will usefully inform policy.
JEL Classifications: G14; M10; M41; M48; M49
Keywords: Accounting research; accounting policy; research methodology; research objectives |
|
Dividend increases and future earnings
Ashiq Alia and Oktay Urcanb*
a University of Texas
b London Business School
Abstract
We examine the relation between dividend increases and unexpected changes in future earnings. This issue has been the subject of numerous empirical studies. However, the extant evidence on this issue is inconclusive. We allow for the fact that investor demand for dividend paying stocks is time-varying and the market pays a premium for such stocks when the demand is high. Moreover, when the dividend premium (DP) is high, dividend increases could be due to managers catering to high demand for dividends by investors. We find that when the DP is low, there is a significant positive relation between dividend increases and unexpected future earnings changes, consistent with the signaling theory of dividends. However, when the DP is high, the relation between dividend increases and unexpected future earnings changes is insignificant. This finding suggests that when the DP is high, managers increase dividends primarily to cater to investors’ demand for dividends rather than to signal an increase in the future profitability of the firm. Finally, as is the case with prior studies, we find an insignificant relation between dividend increases and unexpected changes in future earnings when we constraint the relation to be constant over time.
JEL Classifications: G35
Keywords: Signaling theory of dividends; catering theory of dividends; future earnings |
|
Anticipatory and implementation effects of FIN 46 on the behavior of different market participants
Umit G. Gurunaa*, Alina Lermanb, and Joshua Ronenc
a University of Texas
b Yale School of Management
c New York University
Abstract
We examine whether Financial Accounting Standards Board (FASB)-mandated modifications of the consolidation rules (FIN 46 and FIN 46R) resulted in perceptible changes in market participants’ decisions as manifested in a variety of financial indicia. We find that financial analysts’ idiosyncratic precision of information decreased and equity market participants acted as if they perceived higher information risk, as evidenced by reduced earnings response coefficients, in anticipation of guidance. We attribute these effects to a perceived increase in information risk and decrease in accounting information quality. We find that the actual implementation of the new rules reversed some, but not all, of these effects. On the other hand, we find that information users that likely had access to information regarding the off-balancesheet debt structures prior to 2001 did not exhibit a similar reaction to the apparent change in information risk either in anticipation or upon implementation of the new guidance. Specifically, we find that banks did not increase the loan spreads for FIN 46 firms and credit rating agencies lowered the ratings of these firms only marginally more than those of other firms. This finding is consistent with our conjecture that these entities were aware of the fundamentals of FIN 46 firms even under the prior limited disclosure regime.
JEL Classifications: G14; G21; M41
Keywords: Consolidation; FIN 46; FIN 46R; variable interest entity; information risk |
|
The effects of correlated demand on pricing, inventory, and production
Suresh Govindaraja*, Mahesh Kumarb, and Bharat Saratha
a Rutgers University
b University of Maryland
Abstract
Existing explanations for price discrimination in products and services invoke reasons like customer segmentation, information rents, transactions costs, or inventory constraints. By contrast, we propose the sellers’ objective to smooth profits as a possible explanation. We show that when sellers carry multiple products, the spread in buying and selling prices of any product depends not only on its own profits and inventory position, but also on the correlations of these variables with the other products. Consequently, sellers may price the same product differently depending on the range of products that they carry.
JEL Classifications: D21, D40, M21, M41
Keywords: Multi-product inventory; price discrimination; profit smoothing |
|
Impact of market segmentation on value-relevance of accounting information: evidence from China
Shu-hsing Wua, Stephen Linb, Shu-hsing Lic*, and Meihua Kood
a Chang Jung Christian University
b Florida International University
c National Taiwan University
d California State Polytechnic University
Abstract
This study examines how the market segmentation policy in China affected value-relevance of accounting information. We find that the price difference between A- and B-shares significantly decreased after the market segmentation policy was diminished in 2001. We also find that the association between A-share price and accounting information increased after 2002. Although the association between share price and accounting information became much weaker for B-shares during the transition period of 2000–2002, this association also increased after 2002. This study provides evidence on how market condition and information environment affect the association between share price and accounting information in China.
JEL Classifications: M41; M48
Keywords: Market segmentation; value relevance; accounting information; A- and B-share markets |
|
Management accounting information systems: a case of a developing country: Vietnam
Michèle Pomberga*, Hamid Pourjalalib, Shirley Danielb, and Marinilka Barros Kimbroc
a Southern Illinois University
b University of Hawaii
c Seattle University
Abstract
This study discusses the relationship between management accounting information systems and the relevance and usefulness of those systems in hospitals in Vietnam. In particular, it investigates how hospitals have improved/intend to improve their accounting activities and how they have tried to implement known managerial (accounting) systems to improve efficiencies. The study shows the influence of management accounting in hospitals in an environment that is rapidly changing from centrally governed to a more open capital market environment. Based on survey data from 53 hospitals in Hanoi and surrounding provinces, the study reports whether those environmental changes have resulted in actual or planned changes in management accounting activities. Our results show that in response to environmental and regulatory changes, Vietnamese hospitals have improved accounting functions and are planning to continue their development further. However, the improvement is not always in-line with what is expected in western countries.
JEL Classifications: M41; M48; I18
Keywords: Management accounting information systems; hospitals; Vietnam |
|
Management accounting system (MAS) change: field evidence
Laura Zonia*, Andrea Dossia, and Marco Morellia
a SDA Bocconi School of Management
Abstract
This paper critically discusses one of the prescriptions of traditional control literature according to which the management accounting system (MAS) should be adaptive to changes in the organizational and strategic context. Drawing from contingency and institutional theories, the paper drafts a framework to pragmatically identify key phases and features of the management accounting change process to highlight its organizational nature. Using this framework, the paper documents four longitudinal case studies of the design and the implementation of management accounting changes. The field studies show how accounting systems are difficult to change despite the formally acknowledged need for change. Findings highlight that the need for change, the technical feasibility of change, the availability of traditional, and the contemporary methodologies are – alone – insufficient reasons to change. A number of other elements interplay in the process of change, namely, the intended MAS use, the stage of the organization life cycle, the potential impact of change on the organization, and the role of key individuals in linking the phases of the change process.
JEL Classifications: M10; M41
Keywords: Management accounting change; management accounting design; management accounting use; organizational change; evolutionary change |
|
|
|
|
|
