Knowledge that Transforms

Reviews the book "Readings and Cases in Governmental and Nonprofit Accounting," edited by Richard J. Vargo and Paul A. Dierks.

Recently, several state legislators have supported the imposition of a mandatory five-year accounting education requirement for entrance into the public accounting profession. This has occurred despite controversy over the efficacy of such a proposal. This paper explores the economic incentives of accounting labor suppliers in providing an extra year of accounting education, and evaluates the ramifications of an imposed five-year minimum education requirement upon the accounting labor market. Education will be presented as a quality signal from which potential employers can predict employee productivity in markets characterized by information asymmetry.

Reviews the book "The Efficient Market Hypothesis and the Implications for Financial Reporting," by Simon M. Keane.

Linear model and retrospective process tracing methods of judgment modeling are compared in terms of predictive validity and convergence between measures of cue importance, in addition, the reliability of the linear model is examined. The experimental task required each of 31 subjects to provide either a buy or no-buy decision for 45 stocks (each described by six information cues). For each subject, a linear model was estimated and a retrospective process tracing model was generated by reference to post-experimental verbal reports. The results indicated that (1) each approach exhibited predictive validity, but the retrospective process tracings exhibited a superior ability to replicate the observed judgments, (2) linear model and retrospective process tracing measures of cue importance were related (exhibited convergent validity), and (3) the linear models were generally reliable.

Reviews the book "Humanvomögensrechnung," edited by Herbert Schmidt.

Reviews the book "Developments in Financial Reporting," edited by Thomas A. Lee.

Reviews the book "Internal Auditing: Theory and Practice," by Andrew D. Chambers.

Reviews the book, "Financial Accounting," by Belverd E. Needles.

Reviews the book "Readings in Management Control in Nonprofit Organizations," edited by Kavasseri V. Ramanathan and Larry P. Hegstad.

The article presents the author's opinions on corporate accounting and economics. Accounting and economics go back a long way. I am not a historian of thought nor am I sufficiently versed in the history of thought in either subject to trace their relationship properly, but it certainly goes back to the prehistory of economics and, perhaps, to the origins of accounting as well. The traditional data of the economist comes from the study of markets where information on prices and quantities sold can be observed. The prices that the markets place on securities issued by firms and the changes in these values over time provide an ongoing assessment of the value of such firms. Accounting data, on the other hand, provide an alternative view of the same firms. The information on the balance sheets and in the income statements provides a historical record of where the firm has been and where it currently stands. One way to view the accounting data is to think of them as providing information on the resources used by the firm and on its performance.