Reviews the book "Management Information Systems: Conceptual Foundations, Structure and Development," 2nd ed., by Gordon B. Davis and Margrethe H. Olson.
ABSTRACT: This paper builds on the results of prior research on the structure of the U.S. market for audit services. Two complementary empirical approaches are pursued. First, inferences are made about specific aggregate Big Eight comparative advantages from an analysis of auditor selections by 299 sample firms from 1964 to 1980. Second, dynamic trends within the Big Eight are considered by examining changes in individual audit firm market shares across extensive client samples at four points in time--1950, 1960, 1970, and 1980. In general, analysis Of auditor change data indicates no substantial upward shift in aggregate Big Eight "equilibrium" market share in the two decades studied. Rather, it would appear that movements in this time-frame to, the Big Eight reflect a long process of adjustment to relatively stable conditions of comparative advantage. Changes in within Big Eight market shares, on the other hand, strongly support the not]on of increasing intra-Big Eight competition for nonregulated clients.
ABSTRACT: This study testa whether there is a relationship between the lobbying activities of firms on a proposed accounting standard (FAS No. 191 and the trading activities of corporate insiders. We find that, on average, insiders of full cost firms that lobbied were net sellers and successful efforts lobbiers were net buyers, while non-lobbiers took opposite positions. The results are consistent with the hypothesis that lobbying activity is correlated with management's expected wealth. The results are also consistent with comment letters to the FASB having information value, since insider, trade on their personal account in the same direction their firms lobby. Alternatively, the results can be interpreted as support for the conclusion of Larcker, Reder and Simon [1983] that FAS No. 19 was perceived to have economic consequences.
ABSTRACT: This study examines empirically whether unfunded vested pension obligations that are not recorded in corporate balance sheets are viewed as a form of debt by the capital market participants when assessing firm risk. This is accomplished by using a model developed by Hamada [1972] which relates the systematic risk of a firm to its financial risk and business risk. The explanatory power of the model is improved when unfunded vested pension liabilities are included in the measurement of financial leverage. Furthermore, the effect of unfunded vested pension liabilities on market-perceived risk of the firm is not significantly (statistically) different from that of debt and other liabilities.
ABSTRACT: A model proposed by White [1981, 1984] for distinguishing bankrupt firms that successfully reorganize from those that liquidate is tested empirically in this study. Using probit analysis, two factors were found to have significant discriminating power: the proportion of assets not secured or pledged at the bankruptcy filing date (referred to as the free assets percentage) and the change in profitability In the years preceding bankruptcy. The probit model was able to classify accurately 69 percent of the firms in the estimation sample and 59 percent of the firms in a holdout sample.
ABSTRACT: The data definitions in the order entry modules of 12 wholesale distribution software packages were studied to determine whether (a) their high-level semantics complied with McCarthy's [1982] REA accounting model; (b) their detailed semantics manifested a common underlying accounting model; (c) their semantics could be modeled adequately using the entity-relationship modeling technique; and (d) their record structures followed the prescriptions of normalization theory. The results indicate that the major elements of the REA model are incorporated in the packages. However, they differ semantically in several important areas that could not be detected by the REA model because it is too general. Use of the entity-relationship modeling technique to represent the semantics of the packages was relatively straightforward. In terms of record structures, the packages conform with the prescriptions of normalization theory to a large extent, although there are still several violations of normal form.