Financial reporting, Confidence interval statements, Disclosures

Accounting students at both the beginning and advanced levels sometimes have difficulty in mastering the concept of reporting the financial position of two or more companies on a consolidated basis. The purchase method, with concepts such as goodwill and minority interest and the pooling of interest method, for which varying relationships between the total par or stated value of the shares issued by the acquirer and the total paid-in capital of the company whose shares are acquired require alternative treatments, cause many students some consternation. Often, these techniques are not mastered by students because there is too much data to be processed at one time. Students are expected to manage the numerical complexities as well as to grasp the theoretical concepts using a single illustration. To alleviate this problem, models reflecting consolidation at acquisition were developed as a means of focusing on concepts involved and have been used in the classroom setting with some success. The principal advantage of these models is that they are succinct, that is, concepts are presented in a small amount of space, in a short period of time and can be presented independently of numerical data.

This article reports the results of an empirical study which has bearing upon issues of the accuracy of management forecasts of income in particular and the time series properties of earnings data. From the standpoint of whether corporate forecasts of earnings should be disclosed, the question of accuracy is relevant. This article utilizes the Box-Jenkins methodology in the determination of the most appropriate time series model for each firm in the sample. The proposition that management forecasts of income should prove fairly accurate is not supported by the results of this study. In cases in which management forecasts proved reasonably accurate, overall they were not more so than those generated from the time series models. It remains possible that the management forecasts may contain additional information regarding risk or return. For example, market participants may use management forecasts and time series analysis. With respect to the time series properties of quarterly earnings, the results clearly demonstrate the significance of seasonality in quarterly earnings.

The task is an analysis of the traditional labor supply model using several competing methodologies. The approach is a step-by-step exploration of alternative labor supply estimating equations that attempts to identify the independent (marginal) effect of each particular change in the form of these equations. By systematically exploring what difference each of these changes makes to the parameter estimates, one can isolate which factors strongly affect estimated response parameters. Results from existing research can then be evaluated within a larger context, and future research can concentrate on resolving those methodological issues that do make a difference.