The purpose of this study is to investigate whether the information content of executive earnings forecasts, as measured by changes in trading activity, differed depending on (1) the forecast horizon and (2) the magnitude of the predicted earnings change. The results of the study indicate that the information content of shorter term and longer term forecasts was virtually the same. With respect to the magnitude of the predicted earnings change, the results indicate that predictions of relatively large changes in earnings (greater than 40 percent) were associated with large changes in trading activity. However, no statistically significant relation between predicted earnings change and changes in trading activity was observed.
To respond to the challenge to produce business school graduates who are intelligent users of computer power requires a significant commitment. Yet it is a challenge that must be met. At the Amos Tuck School access to time-shared computer power has given us the hardware characteristics necessary to provide computer accessibility to all our students on a demand basis. Through a formal computer course at the start of the two-year curriculum the student gains the familiarity and technical skill necessary to permit him to make intelligent use of the computer in his other courses at Tuck. As this formal instruction is reinforced in his other courses the student builds his confidence and skill in applying computer power to a wide variety of problems and situations. Many of these applications are formally structured into the curriculum; others are developed by the student simply because he saw a situation where the computer would help him perform more efficiently. Computer education of this sort produces at least two challenges to the faculty. Because readily available computational power can allow the student to learn more and understand better, the faculty is challenged to continue to look for areas within their courses where computer usage might reap these benefits. The second challenge is one of software design to make the computer more useful to the student in studying and solving business problems. The LAFFF language is the first major attempt at business-oriented software design, but certainly not the last. Responding to these challenges is beneficial to the teacher both in his teaching and research activities. More importantly, we feel it is beneficial to our students. These efforts, coupled with the impressive capabilities of time-shared computer facilities, produce an educational environment of unusual potential. Our efforts related here represent only a small start towards realization of the full potential.
Interviews with the top-level financial executives in fifty-one leading corporations have shown them to be seriously concerned with the country's tax depreciation policy. They stress that the administration of the present law by the Internal Revenue Service results in wasteful and annoying haggling over lengths of asset Jives and salvage values. In addition, these executives indicate that adherence to any depreciation method based on historical cost alone fails to adequately meet the problem raised by continuing inflation. However much accountants may desire to restrict depreciation to fixed asset historical cost, the interviews with 150 policy makers have reemphasized management's concern with the problem of replacement of assets in a period of rising prices. Those in management interviewed agreed that, unless a firm has the stability of earnings and credit position which would permit it to acquire or replace plant and equipment by borrowing in perpetuity, funds for replacement and/or betterments can come from only three sources: (1) equity sales; (2) retained earnings (or borrowings, that ultimately must be paid out of retained earnings); and, (3) depreciation accruals. Any long-run augmentation of any one or more of these three sources represents recognized aid in management's solution to the problem of replacement. Concessions in the areas of capital gains and small business benefits were made, at the same time, by these leaders in big business as part of their long-range corporate tax "package." The interviewed executives were in general agreement that favorable depreciation reform is needed for long run modernization and growth of the country's productive machine. An examination of their capital-expenditure decision-making processes has revealed, however, that stimulation is not immediate enough to enable depreciation reform to be used as a tool to fight business cycle recessions. Emphasis was placed on the fact that the results of adequate reform will make themselves felt in the decades which stretch into the future, not in the months immediately following the recognition of a business down-turn. The tax depreciation muddle can only be muddied further by any attempt to use tax depreciation allowances as a means for short-run economic juggling.
Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Share Icon Share Facebook Twitter LinkedIn Email Tools Icon Tools Get Permissions Search Site Cite View This Citation Add to Citation Manager Citation Donald V. Moser, Patrick R. Martin; A Broader Perspective on Corporate Social Responsibility Research in Accounting. The Accounting Review 1 May 2012; 87 (3): 797–806. https://doi.org/10.2308/accr-10257 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentThe Accounting Review Search Advanced Search
Previous research demonstrates that "brand name" (e.g., Big Eight versus non-Big Eight) is a factor affecting audit prices and auditor selection. As a quality surrogate, brand name reflects differences between auditor size categories in concern for reputation (DeAngelo 1981b) and the ability to withstand client pressure (Goldman and Barley 1974). it has not, however, been demonstrated that these features characterize quality differences within an auditor size category Although tests are difficult without a direct measure of quality, recent announcements by the General Accounting Office on CPA quality in governmental audits indicate a need to determine the factors that affect quality differences within auditor size categories, which is the subject of this study. Audit quality is defined as the probability that the auditor will both discover and report a breach in the client's accounting system (DeAngelo 1981a). Two explanations for variations in audit quality involve reputation and power conflict. Because an incumbent auditor captures client-specific quasi-rents, there is incentive to lower audit quality to retain the client. However, audit firm size is a moderating effect since a large client base allows a concern for reputation to remain more important than retention of any given client. The expectations are that (1) audit quality decreases as auditor tenure increases and (2) audit quality increases with the number of clients, in power conflicts, the client can exert pressure on the auditor to violate professional standards, and a large, financially healthy client can exert greater pressure with a threat of replacing the auditor. However, the established review of audit results or audit working papers by third parties can increase the auditor's ability to withstand client pressure. The expectations are that (3) audit quality is negatively related to the size and financial health of the firm and (4) audit quality improves when the auditor knows work will be subject to review, by third parties and that sanctions for poor quality work will occur. This article presents the results of an investigation into the determinants of audit quality provided by small, independent CPA firms in Texas on audits of independent school districts. The study analyzes quality control review (QCR) findings to obtain a relatively more direct measure of audit quality. Between 1984 and 1989 the Audit Division of the Texas Education Agency (TEA) conducted 308 QCRs. Numerical scoring of 232 QCR letters of findings represents the measure of minimum audit quality and the dependent variable in the regression analysis. Explanatory variables associated with reputation effects, power conflict effects, report timeliness, audit hours, and reported breaches were obtained from TEA sources. The major finding of the study is that audit quality definitions (DeAngelo 1981b; Goldman and Barley 1974) considered descriptive among audit size categories are sufficiently robust to explain quality variations within an audit size group. The results also confirm earlier studies relating audit quality to audit report timeliness (Dwyer and Wilson 1989) and actual audit hours (Palmrose 1986, 1989). We conclude that audit hours is a suitable surrogate for audit quality when direct measures are unavailable.
Argues that the economic theory of tax reporting predicting taxpayers' responses depends on economic effects and perceptions of horizontal and exchange equity. Experiment resulting into conditions that influence the perceptions of inequity driving taxpayers' reporting decisions.