Estimating market values of assets in absence of an observable market price is a problem that arises often in accounting practice. Examples in the areas of taxation, capital budgeting, current cost accounting, and accounting for leases are discussed herein. A usable valuation scheme for such assets is derived from a modification of the popular two-parameter capital asset pricing model. Indirect empirical evidence is presented which suggests that the valuation scheme yields superior predictions to two competing schemes which have been advanced in the literature: indexing and earnings capitalization. In addition, limitations of the valuation scheme are discussed.

While accounting historians agree that cost accounting is a consequence of the industrial revolution, they have not thoroughly explained the economic consequence of the industrial revolution which prompted manufacturing firms to develop actual cost accounting techniques in the nineteenth century. This paper presents an explanation for the rise of nineteenth-century cost accounting which supplements the traditional view that increased use of fixed capital and the resultant need to account for costs of long-lived assets prompted industrial accountants to graft cost accounts onto the double-entry system. The study concludes that not only changes in the temporal structure of their costs, but also changes in the way they organized economic activity, explain the conditions which prompted manufacturers to develop cost accounting procedures for gathering financial information needed by managers

The purpose of this exploratory research is to assess empirically the potential usefulness of municipal accounting data for explaining voting decisions. The economic theory of voting behavior forms a conceptual foundation for examining the utility of accounting information for discriminating between mayoral election results. A stepwise discriminant analysis was used to develop multivariate models that distinguish between samples of cities clustered into three homogeneous groups on the basis of socio-demographic attributes. The dependent variable for the discriminant analysis was the outcome of elections for mayor in 113 cities with populations exceeding 25,000 in 1977, and the independent variables were municipal accounting ratios. Statistically significant discriminant functions were produced which correctly classified a greater-than-chance percentage of the election outcomes. These results suggest that municipal accounting numbers may provide useful information for explaining voter behavior since they measure the effects of municipal policy decisions consistent with voter assessments.

In this study, an exploratory analysis of the work of the audit manager was undertaken using the critical incident methodology. Eighty-eight critical requirements of managerial work were identified from a total of 582 critical incidents that were reported in a series of 69 structured interviews involving partners, managers, and senior field staff from five national and international public accounting firms in Canada. Critical task requirements were assigned to one of ten managerial roles originally identified by Mintzberg [1973] by a panel of seven judges. Analysis of the pattern with which critical incidents were reported was undertaken. Significant differences were found to exist in the pattern with which partners, managers, and field staff reported particular incidents. The role of the individual within the firm thus seemed to be associated with the character of the incident reported. When the pattern of critical incidents reported was analyzed for partners, managers, and senior field staff on a firm-by-firm basis, only the character of the incidents reported by senior field personnel seemed to be associated with their firm affiliations

Jachomo Badoer, a Venetian merchant, spent more than three years trading in Constantinople. His ledger is important because it is the only commerical document written in Constantinople that survived, in its entirety, the conquest by Turkish forces in 1453. Two previous papers describe Badoer's modus operandi, wares traded, multiple currencies used, and his bookkeeping procedures. This article discusses his closing procedures, one of the earliest examples in extant ledgers of the period. A discussion of Badoer's most important partnership venture, the Majorca voyage, is first undertaken and then the winding down of operations and the adjustment procedures and closing of the ledger is explained. Of particular importance is Badoer's lack of concern about his ledger not balancing. Small balances are left in supposedly closed accounts, which preclude the taking of a trial balance. Nevertheless, Badoer does use a balance account to close his ledger, one of the early instances in which such an account is used. On February 26, 1440, Badoer terminated his venture in the Levant, boarded the galleys loaded with his final shipment of wares and set sail for Venice

Municipal bond rating changes can have significant consequences for both borrowers and investors. Multivariate discriminant analysis (MDA) was used to examine whether financial ratios could discriminate between cities that had their ratings upgraded or downgraded from an A rating. In addition, both the upgraded and the downgraded groups of cities were matched, using a paired sample design with a control group to examine the predictive ability of fiscal information. Fiscal variables do appear to be associated with rating revisions, in addition, it appears that rating revisions are more closely associated with operating working capital flow than the "total flow of resources" statement generated by current generally accepted accounting principles (GAAP

This paper is concerned with the effect of different uses of accounting performance measures on the behavior of subordinates in different situations. It is argued that the incidence of dysfunctional behavior associated with different uses of accounting performance measures is a function of task uncertainty. The main hypotheses developed from the analysis are that a medium to high (medium to low) reliance on such measures minimizes the incidence of dysfunctional behavior in situations of low (high) task uncertainty. A number of subsidiary hypotheses are developed, and it is suggested that existing evidence is consistent with these hypotheses

Auditors require empirical information about the characteristics of errors in audit populations. In this paper, the error characteristics in 55 accounts receivable and 26 inventory audits are examined. First, the error rates present in these audits are analyzed, and the balance between overstatement and understatement errors is examined. The distributions of the error amounts and error taintings are then studied, as well as the relation between error amounts and book amounts. Some major findings are contrary to auditors' expectations, emphasizing the need for replication studies to further explore this area

This article formulates a method for determining, without computing the tax liabilities, whether it is to the advantage of a corporation to use the alternative tax on capital gains rather than the regular tax. Examples are presented and the criterion developed is illustrated graphically.

This study reports an empirical investigation of whether the SEC-mandated replacement cost disclosures, as set forth in ASR 190, had any effect on weekly transaction volumes of common stock shares. Using the standard t testing procedure, no evidence of the volume effect being investigated was found. This result appears to imply that the replacement cost accounting data made public under ASR 190 did not contain information important to investors as asserted by the SEC, if the revision of common stock portfolio holdings is a criterion.