Knowledge that Transforms

Abstract Reviews the book "An Essay on Recognition," by Robert R. Sterling.

Abstract ABSTRACT: This study examines the choice of a regulatory accounting principle (RAP) in contrast to generally accepted accounting principles (GAAP) with respect to loan loss recognition in the savings and loan Industry. RAP was permitted by the Federal Home Loan Bank Board for Savings and Loans (S&Ls) In the early 1980s. Many S&L's selected this alternative to GAAP. We examine four factors, conditioned by accounting regulations in the S&L Industry setting, hypothesized to explain the accounting choice. All of the factors ere significant In logistic regression tests in which the choice of RAP or GAAP was the dependent variable. The results are consistent with the conclusion that S&Ls chose to violate GAAP when regulatory constraints induced e conflict between GAAP requirements and the economic welfare of the firm.

Abstract Reviews the book "Creating Investor Demand for Company Stock: A Guide for Financial Managers," by Richard M. Altman.

Abstract Reviews the book "Meeting the Technology Challenge: Cost Accounting in a JIT Environment," by C.J. McNair, William Mosconi and Thomas Norris.

Abstract Reviews the book "The Legal Literature of Accounting: On Accounts by Diego del Castillo," translated by Patti A. Mills.

Abstract Reviews the book "Professional Judgment in Financial Reporting," by Michael Gibbins and Alister K. Mason.

Abstract The article presents several books received by the editor but not published in the April 1989 issue of the journal "The Accounting Review." The names of books include "Accountant's Index 1920: A Bibliography of Accounting Literature," "Cost Accounting for Factory Automation," by Robert E. Bennett, James A. Hendricks, David E. Keys, and Edward J. Rudnicki, "Capital and Its Earnings," by John Bates Clark, "Contemporary Literature in Cost Accounting: A Bibliography With Selected Annotations," by Edward B. Deakin, Michael W. Maher, and James J. Cappel, "History of Public Accounting in the United States," by James Don Edwards," "Contributions of Four Accounting Pioneers: Kohler, Littleton, May, Paton," by James Don Edwards and Roland F. Salmonson, "The Corporate Director's Financial Handbook," by John P. Pertakis, "Evolution of Cost Accounting to 1925," by S. Paul Garner, "Managerial Accounting Changes for the 1990s," by John Y. Lee, "Accounting Evolution to 1900," by A.C. Littleton, "The Investment Side of Corporate Cash Management," by Robert T. March.

Abstract Reviews the book "Public Sector Accounting," 2nd ed., by Rowan Jones and Maurice Pendlebury.

Abstract Reviews the book "Product Differentiation in Auditing: Auditor Choice in the Market for Unseasoned New Issues," by Dan A. Simunic and Michael T. Stein.

Abstract ABSTRACT: Several studies have hypothesized that economic consequences of mandated accounting procedures arise through impacts on firms' accounting-based loan covenants. However, this research has involved very little direct examination of the loan contracts. This study directly examines how public and private loan agreements were affected by an accounting procedure mandated by the SEC. It analyzes 24 loan agreements of 18 oil and gas firms that, as a result of an SEC requirement announced on May 6, 1986, recorded writeoffs of exploration costs for the first quarter of 1986. The principal finding is that, even for a mandated accounting procedure that caused both large financial statement differences and some technical violations of loan covenants, there were no observable economic consequences for the affected firms. This result casts doubt on the Importance of economic consequences of other mandated accounting procedures that might operate through affects on debt covenants.