Knowledge that Transforms

The article reviews the book "Financial Statements: Form, Analysis and Interpretation," by Stewart Y. McMullen.

Reviews the book "Readings and Cases in Auditing," by Thomas D. Hubbard, David J. Ellison and Robert H. Strawser.

ABSTRACT: Previous studies by Beaver et al. [1970] and Eskew [1979] indicate that the inclusion of accounting-based risk measures in models used to predict the systematic risk of equity securities enables better predictions than security-market-based models which exclude accounting risk measures. This study finds that accounting risk measures do not improve upon market-based systematic risk predictions. The earlier findings of superior predictive ability for accounting-based forecasts are reinterpreted as due to the instability over time of systematic risk, coupled with a fortuitous "shrinking effect" of the ordinary least-squares regression model. Replications of the analysis using portfolios, risk levels, and contemporary values of the accounting risk variables fail to reveal any advantage for accounting-based predictions. Additional tests for the stability of the relationship between accounting and market-based risk measures indicate instability over time and across groups of companies.

The article reviews the book "Guide to Travel Agency Accounting," by M. J. Batham.

Reviews the book "Assessing the Economic Impact of FASB No. 8," by John K. Shank, Jesse F. Dillard and Richard J. Murdock.

Reviews the book "The Law of Tax-Exempt Organizations," 3rd ed., by Bruce R. Hopkins.

Reviews the book "Financial Reporting by the Oil and Gas Industry in Europe: A Survey Based on 1977 Annual Reports," by Kenneth S. Most and Charles W. Mulford.

Reviews the book "Background Papers to Exposure Draft 24 on Current Cost Accounting."

Reviews the book "Foreign Exchange and the Corporate Treasurer," by John Heywood.

Reviews the book "Auditing: Principles and Practices," by F. Clive De Paula and F.A. Attwood.