Abstract ABSTRACT: The annual reports of 141 Fortune 500 Industrial companies were reviewed to determine which financial ratios are reported. The values for 11 selected ratios are computed for all companies using a standardized computational rule. Three of the 11 ratios are significantly more favorable for reporting than for nonreporting firms, suggesting that Fortune 500 firms may selectively report these ratios.

Abstract ABSTRACT: The expected value of information is an important concept in cost and managerial accounting. Quite often students have difficulty integrating and applying statistical techniques to accounting problems. Contributing to this difficulty is the occasional lack of standardization of terms in the two disciplines. This article describes an approach which introduces information economics to managerial and cost accounting classes, Included is an Appendix which can serve as the basis for a classroom presentation by the instructor or which can be reproduced and distributed to students.

Abstract Reviews the book "Financial Statement Analysis: Using Financial Accounting Information," 2nd ed., by Charles H. Gibson and Patricia A. Frishkoff.

Abstract A normative model of expected behavior was developed and used to evaluate the effects of measurement concepts on the investment policy decisions of trustees. Traditional concepts of trust income and trust corpus were compared with purchasing power concepts. It was found that traditional concepts affect investment policy decisions in three ways. (1) Defining income as cash dividends and interest could create constraints that would not allow the selection of a portfolio for the trust on the basis of risk-yield preference. (2) Constraints imposed by attempts to offset the effects of secular inflation could cause the selection of portfolios not considered optimal on the basis of risk-yield preference. (3) The differential tax features of securities can cause the selection of a sub-optimal port- folio in order to avoid appearing biased. Investment policy decisions under the purchasing power concepts do not appear to be affected by the first two constraints, but could be affected by constraints imposed by the differential tax treatment of securities; this would depend upon whether the distribution formulation considered tax effects. Many (if not most) state statutes would preclude this approach to the problem. Although this does not mean the statutes are preferable, the purchasing power concepts, though theoretically sound, are probably not capable of implementation under current conditions. It is possible, however, through direct specifications in the terms of the trust, to achieve many of the advantages that would be gained by utilizing purchasing power concepts. The primary advantage would be to free the trustee's investment decisions from constraints caused by the conflict of interests between life tenants and remaindermen.

Abstract The purpose of this article is to propose a new method of making the lease-loan choice. This should be of interest to accountants since methods of lease evaluation have important implications for accounting. Much of the disagreement referred to in the preceding paragraph relates to the proper treatment of lease obligations in financial statements. Just as these statements and the judgment of accountants that lies behind them are important determinants of the attitudes of lenders and analysts towards leasing, so also the financial aspects of leasing have implications for proper accounting treatment. The article progresses from a discussion of the nature of leasing to the explanation of a method of lease evaluation that recognizes the nature of leasing. It have fashioned a set of operating instructions that apply this method to lease situations of a particular type. It also applied these instructions in a sample calculation showing also how a computer may be used. There are still questions about estimating the loan rate and the average cost of capital, determining whether the lease choice has a risk effect, applying the method when there is a risk effect, and about the investment decision to take the equipment even in its more advantageous lease or loan form.

ABSTRACT: Performance-based compensation contracts can affect productivity both by motivating effort and by attracting workers whose abilities align best with the offered contracts. Using an experiment in which participants design “rebus puzzles,” this study tests whether the incremental benefits of contract self-selection extend to a multi-dimensional performance environment in which participants choose between a contract that rewards both quantity and creativity versus a contract that rewards quantity only. Findings indicate that participants who choose a creativity-weighted pay scheme perceive themselves to have greater creative potential than those who choose a quantity-only scheme. This perceived creativity advantage manifests itself in the superior initial creativity ratings of such participants’ productive output. However, in the aggregate, participants paid only for quantity eventually surpass the creativity-weighted productivity scores of participants paid for creativity-weighted productivity, whether compensation contracts are self-selected or randomly assigned. Thus, the implications of contract selection on creativity-weighted productivity hinge on the importance of the initial advantage enjoyed by participants who self-select a creativity-weighted contract.

ABSTRACT In an environment where employees have the freedom to direct some time away from their day-to-day routine tasks to work on creative endeavors, we examine whether nonbinding targets for the amount of time to spend (input target) and/or the amount of output to produce (output target) on the routine task affects creative task performance. Results of a laboratory experiment demonstrate that providing both an input and an output target on the routine task leads to greater creative task performance relative to providing one or none of these targets. This result is consistent with theory suggesting that individuals need guidance as to how much routine work to complete in order to achieve the cognitive closure necessary for them to think creatively. However, individuals also need guidance that encourages them to limit time on their relatively comfortable routine work and spend time on more open-ended creative endeavors. By setting expectations as to what employees need to achieve on their more routine day-to-day responsibilities, organizations can increase the efficacy of the growing practice of allowing employees to spend a portion of their work week on creative endeavors. Data Availability: Contact the authors.

ABSTRACT We use a laboratory experiment to examine whether corporate giving to charity motivates employees. We find a strong altruism effect. Even when employees cannot be remunerated for their actions, employee contributions to employers significantly increase as the level of corporate giving increases. We also find a signaling effect. When employees can be remunerated for their actions, employee contributions initially increase as the level of corporate giving increases. Thus, even though corporate giving to charity decreases the amount that can be shared between employees and employers, employees behave as if more charitable employers will return proportionally more to employees. It is not until relatively high levels of corporate giving that employee contributions to employers eventually decrease. Collectively, our results suggest that corporate giving is an effective lever for motivating employee effort and contributions to organizational endeavors. Corporate giving can increase the efficacy of implicit (relational) contracts and reduce the need for formal accounting-based reward systems and controls.

ABSTRACT In an environment where individual productivity can be increased through efforts directed at a conventional task approach and more efficient task approaches that can be identified by thinking outside-the-box, we examine the effects of productivity-target difficulty and pay contingent on meeting and beating this target (i.e., target-based pay). We argue that while challenging targets and target-based pay can hinder the discovery of production efficiencies, they can motivate high productive effort whereby individuals work harder and more productively using either the conventional task approach or more efficient task approaches when discovered. Results of a laboratory experiment support our predictions. Individuals assigned an easy productivity target and paid a fixed wage identify a greater number of production efficiencies than those with either challenging targets or target-based pay. However, individuals with challenging targets and/or target-based pay have higher productivity per production efficiency discovered, suggesting these control tools better motivate productive effort. Collectively, our results suggest that the ultimate effectiveness of these control tools will likely hinge on the importance of promoting the discovery of production efficiencies relative to motivating productive effort. In doing so, our results provide a better understanding of conflicting prescriptions from the practitioner literature and business press.

ABSTRACT In an environment where three-person groups develop a creative solution to an important problem, we examine whether the efficacy of either individual- or group-based creativity-contingent incentives depends on whether they take the piece-rate or tournament form. We predict and find that group (intergroup) tournament pay increases group cohesion and collaborative efforts, which ultimately lead to a more creative group solution, relative to group piece-rate pay. While individual (intragroup) tournament pay increases individual efforts, we find that it does not enhance the creativity of group solutions relative to individual piece-rate pay. Our results advance the burgeoning management accounting literature on creativity-contingent incentives by demonstrating that reward systems are more likely to promote group creativity through collaborative efforts rather than independent individual efforts. We also provide important insights into when and why tournament pay can boost group creativity in organizations. In doing so, we contribute to a better understanding of observations from practice suggesting that organizations valuing creativity often induce intergroup competition. Data Availability: The experimental data are available upon request.