At the close of such a conference as this, it is appropriate that the critical synthesis be as noncritical as possible. Each of the papers has been dissected; what is necessary at this point are some vacuous well-meaning comments that no one can take umbrage at. To ensure getting comments like these requires selecting someone who is certain not to understand the papers. This does not become a formidable obstacle, because the probability of success is very high if the person selected is one with full professorial rank. My first comments will be directed to the title. Question has been raised as to what empirical research is. To answer this I would like to commence with a possible definition of research, namely that research is the formulation and testing of hypotheses with the aim of understanding and predicting behavior. If this definition is accepted, then it is impossible to classify any endeavor as research unless it is empirical. Hypotheses may be stated without observation or experiment but they cannot be tested in a nonempirical fashion. It has been said that one feature of the Renaissance was the replacement of medieval theorizing by research. If this is true, accounting may be said to be in the renaissance period. Up to this time hypotheses have been formulated (any proposal for a change in accounting methods is basically a hypothesis that the use of the proposed accounting method will have some kind of desirable results-the exact nature of these is frequently not stated), but hypothesis testing has been rare. The only possible reason to use the term empirical research for the papers presented here is to point out to the person accustomed to use the term research in a loose sense that these are research papers in the proper sense. These papers are on empirical research in accounting. Accounting

Depreciation, Valuation, Accounting History

R&D, R&D accounting, Expense R&D, Amortization of R&D

Thomas R. Dyckman, Observations on Jensen's Experimental Design for Study of Effects of Accounting Variations in Decision Making, Journal of Accounting Research, Vol. 5, No. 2 (Autumn, 1967), pp. 221-229

John Leslie Livingstone, Accelerated Depreciation and Deferred Taxes: An Empirical Study of Fluctuating Asset Expenditures, Journal of Accounting Research, Vol. 5, Empirical Research in Accounting: Selected Studies 1967 (1967), pp. 93-117

Inventory, Inventory valuation, Quantity and Price effects, Inventory write downs

The question I am concerned with in this paper is the following: Is it possible to predict whether a merger will be accounted for as a purchase or as a pooling? Different predictors have been suggested in accounting literature; how do they compare in terms of their forecasting ability? If the accounting treatment is predictable, it may be possible to infer the decision rule that underlies the choice of treatment. Such knowledge would facilitate the interpretation of accounting data and suggest criteria to appraise auditing procedures. The question is important for the public accounting profession. Let us consider two possibilities: suppose we examine the population of reporting decisions made by business firms and find that the distribution behaves as if decisions were generated by a random process. One possible explanation would be that business men, as a group, do not really consider reporting decisions to be important, and accountants would then have to reconsider their own basic assumption, that reporting decisions have a discernible influence on the behavior of capital markets. Alternatively, let us assume that capital markets impose severe penalties upon firms which do not their reported income. Then, we would expect executives to behave accordingly and we should be able to uncover evidence of such smoothing behavior. Recommendations leading to an increase in the variability of reported earnings would have little chance of being followed.' It has been argued that managers of large firms smooth reported income in order to keep the stockholders happy.2 Such behavior has been

Income tax, Tax allocation, Depreciation, Cyclical asset expenditures

Published accounting reports-the balance sheet, income statement, and funds statement-are prepared for the use of investors, creditors, and others with whom the accountant is not in direct contact. It is therefore difficult for him to determine which data they find useful. Consequently, several arguments have arisen as to which data are the best. Examples of these competing theories are the current operating performance concept versus clean surplus, price level versus historical cost depreciation, and sales versus cash flow versus net income. Even if accountants knew which constructs were best, other questions would remain. For example, are the annual data published in corporate reports used by investors to make decisions? Do quarterly reports add useful information? Most corporations publish comparative data that date back many years. Do stockholders use these past data? This paper seeks to answer some of these questions by determining, empirically, which published data are used by investors, as reflected by changes in the market price of common stocks. To provide a meaningful test, the relationship between common stock prices, published accounting information and other factors is specified first. Then models are developed that describe how investors may use, published accounting data. Finally the model is tested with relevant data, and conclusions are drawn