Knowledge that Transforms

Reviews the book "The Subterranean Economy," by Dan Bawly.

This study reports on an empirical test of the effects of the Securities Act of 1933 and the Securities and Exchange Act of 1934 on investor behavior as revealed by security returns. The study differs from previous research into the effects of the Acts primarily by examining the percentage of annual cumulative abnormal returns that occurred during each month of test periods for years before and after the Acts. For firms with positive cumulative abnormal returns, aggregate market responses occurred earlier during fiscal years of the pre-Act periods tested (1926-1933) than during the fiscal years of post-Act periods tested (1935-1940). These results were robust to a variety of sampling and testing procedures. Implications and limitations of the study are discussed.

Reviews the book "Cases in Accounting Policy and Practice," by Richard J. Boland.

Problems with the performance of U.S. manufacturing firms have become obvious in recent years. Japanese and Western European manufacturers are able to produce higher quality goods with fewer workers and lower inventory levels than comparable U.S. firms. The ability of foreign firms to become more efficient producers has gone largely unnoticed in the education and research programs of many U.S. business schools. A much greater commitment to understanding the factors critical to the success of manufacturing firms is needed. While an understanding of the determinants for successful manufacturing performance will require contributions from many disciplines, accounting can play a critical role in this effort. Accounting researchers can attempt to develop non-financial measures of manufacturing performance, such as productivity, quality, and inventory costs. Measures of product leadership, manufacturing flexibility, and delivery performance could be developed for firms bringing new products to the marketplace. Expanded performance measures are also necessary for capital budgeting procedures and to monitor production using the new technology of flexible manufacturing systems. A particular challenge is to deemphasize the current focus of senior managers on simple, aggregate, short-term financial measures and to develop indicators that are more consistent with long-term competitiveness and profitability.

Reviews the book "Advanced Accounting," by Leopold A. Bernstein and Calvin Engler.

Reviews the book "Intermediate Accounting," by Paul Danos and Eugene A. Imhoff.

The article presents a comment on the effect of chance variation on revenue and cost estimations for breakeven analysis. In traditional breakeven analysis, total revenue and total cost are represented by straight lines with one intersection which indicates the breakeven quantity output. The effect of quadratic revenue and cost curves on breakeven analysis was introduced. Two breakeven points for the quadratic model were derived by solving for the levels of output at which the regressed total revenue equals total cost. Regardless of whether a linear or non-linear breakeven model may be appropriate, however, the revenue and cost functions are often unknown. Givens illustrated the regression analysis, but did not consider the effect of regression forecasting errors. In order to resolve the above issue an attempt was made to demonstrate the determination of what he called "the chance variation" in estimated revenue and cost functions; and to illustrate how these chance variations affect the results of a breakeven analysis. The estimated cost-volume functions were subtracted from the estimated revenue-volume functions to derive an estimated profit-volume function.

Reviews the book, "Independent Auditor's Guide to Operational Auditing," by Dale L. Flesher and Stewart Siewert.

Reviews the book "Objectives of Accounting and Financial Reporting for Governmental Units: A Research Story," vol. 1 and vol. 2, by Allan R. Drebin, James L. Chan and Lorna C. Ferguson.

Reviews the book "Cost and Managerial Accounting," by Jack Gray and Don Ricketts.