Knowledge that Transforms

Reviews the book "Accounting Theory: Text and Readings," 2nd ed., by Levis D. McCullers and Richard G. Schroeder.

Policymakers have been concerned with whether financial leases should be capitalized and supported by supplementary footnote disclosure or be disclosed solely in notes to financial statements. Arguments in support of capitalization have included assertions regarding the effect of these accounting alternatives on creditors' evaluations and decisions. A field experiment was conducted to investigate the effect on lenders' decisions of alternative lease accounting and financing methods. Results suggest that lenders' credit evaluations and decisions are affected by "real" levels of leverage of loan applicants, but not by their method of accounting for financial leases or by whether the applicants' debt financing is by term loan or financial lease.

Reviews the book "Goodwill in Accounting: A History of the Issues and Problems," by Hugh P. Hughes.

Reviews the book "Essays in British Accounting Research," edited by Michael Bromwich and Anthony G. Hopwood.

Reviews the book "Financial Accounting," by Philip E. Fess and Carl S. Warren.

Reviews the book "Financial Accounting: An Introduction to Concepts, Methods, and Uses," 3rd ed., by Sidney Davidson, Clyde P. Sticney and Roman Weil.

Over the last ten years, large corporations, have significantly increased their voluntary disclosures of socially-oriented information in annual reports. External organizations such as the Council on Economic Priorities (CEP) also have been active in producing information bearing on firms' social performances--particularly with respect to pollution control. This study investigates whether security price movements are associated with the release of externally produced information about companies' performances in the pollution-control area--information which has attributes of consistency and comparability not typically found in voluntarily reported, socially-oriented data. Specifically, the study investigates security price movements associated with the release of eight major studies conducted by the CEP of firms' environmental performances in four industries. The observed price movements are consistent with changes in investors' perceptions of the probability distributions of future cash flows of the sample firms at the times of release of the CEP studies. The reported results also are consistent with investors using the information released by the CEP to discriminate between companies with different pollution-control performance records.

Reviews the book "Accounting Theory," by Eldon S. Hendriksen.

This paper demonstrates that the treatment of self-services, their inclusion or exclusion, affects neither the decision relevance of the information made available by the reciprocal method of cost allocation nor the internal versus external acquisition decision made through the underlying technology matrix. Three propositions and proofs are provided, showing that there is a one-to-one transformation between the two treatments of self-services in each of the analyses.

Magnitude-estimation procedures are used to establish a ratio-scale "quality" ranking of journals in which accounting faculty typically publish. The Journal of Accounting Research and The Accounting Review are the highest-ranked journals. Significant differences were found in the journal rankings across the specialty areas of auditing, financial, managerial, and tax. Substantial differences are observable in comparisons of rankings of (1) faculty at doctoral-granting institutions versus faculty at institutions granting only master's or bachelor's degrees, and (2) assistant professors versus full professors. In comparison to an earlier ranking, the two top journals are identical but several new and accounting-related journals are included in the current ranking.