Auditing, Decision making, Frequency judgements, Internal control evaluations

This paper provides a framework and some empirical evidence to evaluate the seriousness of problems in inference that arise in stockreturn-based studies when the data are cross-sectionally dependent. The study is motivated on the grounds that statistical procedures designed to address such problems are often infeasible, and even when they can be implemented they sometimes introduce other more serious difficulties. Thus, researchers have frequently adopted an approach that ignores the cross-sectional dependence (e.g., ordinary least squares [OLS]). The objective of this paper is to help identify the contexts in which ignoring the dependence would lead to serious misstatement of significance levels. Cross-sectional dependence in stock returns data is likely to exist when at least some of the returns are sampled from common time periods. This would be the case in all studies of the reaction of stock prices to a

Inventory accounting method, LIFO, Event dates, Announcement returns

Thomas L. Stober, The Incremental Information Content of Financial Statement Disclosures: The Case of LIFO Inventory Liquidations, Journal of Accounting Research, Vol. 24, Studies on Alternative Measures of Accounting Income (1986), pp. 138-160

Foreign currency, SFAS No. 8, SFAS No. 52, Accounting method changes

Auditing, Internal auditing, Internal auditor competence, Internal auditor work performance

This paper examines the use of alternative information sets in the construction of inflation hedge portfolios. The study is motivated by consideration of the investor's problem in a multiperiod world. Several authors (e.g., Merton [1973] and Breeden [1979]) have shown that in a multiperiod setting, optimal investment behavior will, in general, involve holding portfolios that can be used to hedge against changes in certain relevant states of nature. One potentially relevant state of nature is the rate of inflation in general prices (Jones [1982] and Elton, Gruber, and Rentzler [1983]). In contrast to prior related research, the empirical results indicate that it is possible to construct inflation hedge portfolios successfully, if certain accounting information is used. However, portfolios constructed on the basis of historical security price information do not serve as effective hedges. One contribution of this paper is to demonstrate the potential usefulness of accounting information to a price-taking investor. Although financial statements play an important role in the setting of equilibrium

Auditing, Professional Judgement, Expected utility framework

Game theory, Decision making, Rationality, IE-DM relationship

Maurice L. Hirsch, Jr., Disaggregated Probabilistic Accounting Information: The Effect of Sequential Events on Expected Value Maximization Decisions, Journal of Accounting Research, Vol. 16, No. 2 (Autumn, 1978), pp. 254-269