Reviews the book "Intermediate Principles of Accounting," by Donald E. Kieso, R.K. Mautz and C.A. Moyer.

Reviews the book "Readings in International Accounting," by Kenneth B. Berg and Gerhard G. Mueller and Lauren M. Walker.

Reviews the book "Studies in Accounting for Management Decision," edited by A.M. Bourn.

The article comments on the compatibility of auditing and management services. Compatibility advocates admit that the performance of management services may create pressures which threaten independence, but quickly point out that pressure exists whether or not the CPA functions as a consultant. Economic pressure is felt by the CPA to retain a client in auditing as well as in consulting. Advocates of compatibility fear that if the CPA were forbidden to perform management and auditing services for the same client this would add substantially to the cost of providing business with all the professional accounting service it needs. In other words, the cost associated with a restriction on services to ensure independence outweighs the cost resulting from a possible decrease in the utility of audited financial statements caused by an impairment of independence. Advocates of compatibility counter that no matter how influential advice is, neither the offering of it nor the acceptance of it gives the adviser the authority or the responsibility of management. No matter how much strength is accorded to either argument, the distinction between advising and decision-making is obviously a debatable one.

Reviews the book "The Income of Nations," by Paul Studenski.

Reviews the book `Government Accounting,' by C.G.A. Fletcher.

Reviews the book "Internal Control Against Fraud and Waste," by Bradford Cadmus and A.J.E. Child.

This study presents evidence that option expensing, whether voluntary under SFAS 123 or mandatory under SFAS 123(R), is associated with changes in CEO compensation that are beneficial to shareholders. I find that the reporting benefits of aggregate-employee option grants under SFAS 123 are associated with the change in the mix of CEO option grants and stock grants that occurs after SFAS 123(R), suggesting that reporting benefits of option grants may have influenced some CEO compensation decisions. Additionally, I find that the reduction in CEO pay after SFAS 123(R) is greater when shareholders have more power to act in their own best interest and when there is evidence of pre-expensing CEO compensation rents. The findings suggest that SFAS 123 may have encouraged inefficient, CEO-preferential pay practices and that SFAS 123(R) may have contributed to a reduction in CEO compensation inefficiencies. Data Availability: All data are publicly available.

This study investigates whether paying higher wages motivates employees to provide higher effort and whether firm profit moderates this relation. Consistent with gift exchange (Akerlof 1982) and reciprocity (Rabin 1993) models, my experimental results show that workers provided more effort when they were paid higher wages even though there was no ex post financial reward for doing so. Moreover, firm profit influenced the relation between wages and effort. Workers provided higher effort when firm profit decreased compared to when it increased. This suggests that the degree of reciprocity is affected by firm profit. However, workers' responded asymmetrically to firm profit, in that they behaved as if they expected to share in firm profit increases but not decreases. Although firms were fairly adept at predicting the profit-maximizing wage strategy, they apparently did not anticipate workers' reluctance to share in firm profit decreases.

I report the results of an experiment designed to investigate the influence of noncredible communications and group affiliation on auditors' formation of self-serving bias. I find that manager-subjects use noncredible communications to induce auditors to develop an unwarranted trust of managers (i.e., a biased judgment). However, the bias is neutralized when auditor-subjects belong to groups that create social pressure to conform to group norms. Thus, my finding calls into question the Bazerman et al. (1997) conclusion that auditors cannot conduct impartial audits due to self-serving biases resulting from repeated interactions between auditors and their clients.