Knowledge that Transforms

Reviews the book "Accounting Estimates by Computer Sampling," 2nd ed., by Maurice S. Newman.

This study examines the relationship between information announcements and bid/ask spreads. The results indicate no significant changes in bid/ask spreads surrounding quarterly earnings announcements, but significant increases in the size of bid/ask spreads are found on the day of large price changes.

A significant issue frequently raised in the accounting literature is whether judgments of auditors from large CPA firms vary substantially from those of auditors employed by regional or local firms. This issue has important implications as to the reliability of accounting reports and auditor independence. This article presents the results of an experiment comparing the disclosure attitudes of national and regional/local CPAs on two actual audit cases. Significant differences in preferences were found, with auditors from national firms favoring adjustment while those from smaller firms favored footnote disclosure. Participants demonstrated low consensus in their judgments, especially those from national firms. Reliance on environmental factors was found to vary significantly by CPA-firm size. However, there was no apparent pattern across cases. The perceived weighting on 'various decision factors was similar for both national and regional/local CPAs. The differences in disclosure preferences found should raise concerns for auditing policy-setting bodies. To the extent that preferences mirror reporting decisions, the differences found may result in substantial variations in accounting reports as a function of the size of the auditing firm involved.

Reviews the book "State Audit: Developments in Public Accountability," edited by B. Geist.

Reviews the book "Accounting Theory," by Kenneth S. Most.

Diverse interpretations of the security market reaction to the Exposure Draft for FASB Statement No. 19 exist. This paper provides a detailed analysis of the oil and gas accounting controversy, First, expanded theoretical models for the potential incentive effects and political effects that have been proposed as explanations for the observed security price behavior are developed. Second, the independent variables isolated by our models are used to explore the differential security market reactions of the full cost firms to the Exposure Draft. The empirical results indicate that the variables posited by our theoretical models explain a non-trivial portion of the differential security market reaction for full cost firms. These results provide evidence which is consistent with the existence of an incentive effect.

Reviews the book "Intermediate Accounting," 4th ed., by Donald E. Kieso and Jerry J. Weygandt.

Reviews the book "Multinational Accounting: A Research Framework for the Eighties," edited by Frederick D.S. Choi.

Reviews the book "Sampling Methods for the Auditor: An Advanced Treatment," by Herbert Arkin.

Reviews the book "Financial Econometrics for Researchers in Finance and Accounting," by H. Russell Fogler and Sumdaram Ganapathy.