The article presents the author's response to a commentary related to his article on the concepts of information value and accounting. The author said that he does not share the faith and enthusiasm of the the writer of the commentary as to the viability and practical utility of the pure information economics approach as an aid to choosing alternative accounting systems. He said that the commentary's writer seems to misinterpret the thrust of his argument. He also does not share the disdain of the commentary's writer concerning historical measures used as estimates of information value.
The article presents a case study on the effect of risk on the use of financial statements by investment decision-makers. The results of a study supported the hypothesis of a positive relationship between the declared use of financial reports by investors, as well as an assumed, theoretical, partial ordering of investments according to risk. Broad ranking in terms of major types of investments were found, including the highest degree of use which occurred with securities and loans not guaranteed by the government and not traded on the stock exchange.
This article presents a reply to the comments made by professor Tsvi Ophir to the author's article on gift tax computation. The author was trying to show that the decision to make a gift is determined by how long the individual is expected to live. It was stated clearly that the property did not appreciate or depreciate during the period of time between the date of gift and date of death of the donor. Thus, in his example the estate tax of $150,000 remained the same whether the individual lived five more years or ten years. What did change, however, was the fact that the taxpayer who elected not to make the gift has the use of the funds in his estate for five additional years. Present value refers to the broad area of time value of money. To be more precise he was attempting to incorporate the concept of time value of money into the problem under consideration. bracket. But the gift tax rate schedule is progressive in nature. As more and more gifts are made, the donor moves into a higher and higher gift tax bracket. After a point the individual's gift tax bracket may become higher than his estate tax bracket.
The article discusses stationarity economic problems associated with the use of market model of security price behavior. A table presented in the article indicates the percentages of variance in the logarithms of monthly price relatives for 94 stocks. The findings indicates that the signs or magnitudes of residuals are caused by any factors other than a poorly specified model. The authors of the article did not intent to suggest that the use of the market model in measuring the effect of accounting numbers on individual stock prices should be abandoned.
This article presents information on the feasibility of utilizing the conference call technique in accounting and related courses at the University of Texas in Austin. The failure of teachers effectively to utilize the services of practitioners can be ascribed to at least two difficulties. First, classroom visits are expensive. A one hour visit to a classroom would normally take up several hours of a guest speaker's time. If extensive travel is required, then the time factor becomes even more significant. Persons in high-level positions may be unable to give even an hour or two of their time. In addition, travel costs themselves may make visits impractical. Second, an instructor may find it unprofitable to devote an entire session to a guest speaker. He might wish to ask questions which would take but a short time to answer, but it is hardly reasonable to expect a visitor to put in a ten-minute appearance. One efficient means of introducing the views of practitioners into the classroom is the use of conference telephone calls. The feasibility of utilizing the conference call technique was recently demonstrated at The University of Texas at Austin.
This article presents information on an experimental study concerning the impact of budget feedback information and the budgetary process on decision and performance. Two types of learning which can be helped by accounting feedback are, learning of the system or model that affects payoffs and learning which decision strategies or policies are effective in coping with ill-structured and changing decision environments. Information useful in these two senses has previously been labeled model and action effectiveness values of information. In order to generate some empirical data on the value of such information, a set of business-game experiments was conducted. These experiments are described in the following section of this paper, but first consideration of sequential decision processes is necessary. The explicit hypotheses as to how each information structure and each motivational treatment are expected to affect performance and learning depend upon which theory of decision one bases his hypotheses on and which of several problem or environmental classifications the particular decision problem fits most closely.
The article presents the use of Laspeyres indexes, proposed by German economist Étienne Laspeyres, in calculating variances in direct costs and in production and sales. The Laspeyres indexes will be used throughout for calculating variances in direct costs and in production and sales. It should be noted that the conventional price variance includes the joint effect due to changes in quantities. Variance analysis in cost accounting has been given an economic meaning in this paper. By using Laspeyres indexes the meaning of variance analysis in direct costs and in production and sales has been elucidated. The quantity variance is often split into two components: mix and volume variances. The price and quantity variances are found to be multiplication of the total budget by the respective average change. Further, a way to allocate the joint variance between price and quantity variances is suggested. The new interpretation of variance analysis, as developed in this paper, has an additional advantages that it is more informative to managers and it is easier to compute.
The article discusses how in-process inventories could be incorporated into a quantitative planning model for multiproduct production systems, in reference to an article written by Gerald A. Feltham in the January 1970 issue of the periodical "The Accounting Review." By determining first a standard transfer cost, costing of inventories is facilitated. The article explains that the standard transfer cost i is equal to the standard cost of all resources required preceding a unit of activity in process i. It is possible to employ standard costs in costing the in-process inventories of the production system.