Knowledge that Transforms

[Mainstream accounting is grounded in a common set of philosophical assumptions about knowledge, the empirical world, and the relationship between theory and practice. This particular world-view, with its emphasis on hypothetico-deductivism and technical control, possesses certain strengths but has restricted the range of problems studied and the use of research methods. By changing this set of assumptions, fundamentally different and potentially rich research insights are obtained. Two alternative world-views and their underlying assumptions are elucidated-the interpretive and the critical. The consequences of conducting research within these philosophical traditions are discussed via a comparison between accounting research that is conducted on the "same" problem but from two different perspectives. In addition, some of the difficulties associated with these alternative perspectives are briefly dealt with.]

[Publication of the October 1985 issue of The Accounting Review marked the culmination of the journal's first 60 years of contributions to the profession. This study identifies and summarizes the contributing authors, their academic affiliation, and where they earned their doctoral degrees. The authors, academic employers, and doctoral degree-granting institutions appearing most frequently in the journal are ordered for the entire 60-year period and for three 20-year subperiods.]

[This study examines empirically whether unfunded vested pension obligations that are not recorded in corporate balance sheets are viewed as a form of debt by the capital market participants when assessing firm risk. This is accomplished by using a model developed by Hamada [1972] which relates the systematic risk of a firm to its financial risk and business risk. The explanatory power of the model is improved when unfunded vested pension liabilities are included in the measurement of financial leverage. Furthermore, the effect of unfunded vested pension liabilities on market-perceived risk of the firm is not significantly (statistically) different from that of debt and other liabilities.]

[A versatile computer model for audit-staff scheduling based on a zero-one integer program was presented by Balachandran and Zoltners [1981] (BZ). This paper extends the work of BZ by demonstrating how precedence constraints, due dates, penalty costs, resource leveling, and other audit considerations can be added to the zero-one integer program for audit scheduling. These additional features help improve the realism of the scheduling model, thus making the model more practical for applications.]

[Considerable research has examined the ability of accounting information to predict bankruptcy. Bankruptcy, however, represents only one of many possible outcomes for the distressed firm. A timely merger can serve as a bankruptcy alternative. The study compares a sample of distressed firms that merged to a sample of distressed firms that entered bankruptcy. Theory suggests that the owners of distressed firms should prefer merger. The managers, however, may feel that their interests are better served through bankruptcy. The examination focuses upon both firm-related characteristics and the personal interests of owners as determinants of the merger/bankruptcy choice. A probit analysis was used to test the importance of three firm-related variables-revenues, financial leverage, and the magnitude of tax carryforwards in explaining the merger/bankruptcy decision. The examination shows that the distressed firms that merge have lower financial leverage and are larger than firms that enter bankruptcy. Tax carryforwards are not important in the model. We also examined the association of ownership concentration with the merger/bankruptcy choice. The tests reveal that distressed firms with high ownership concentration (or owner control) show an increased tendency to merge rather than to declare bankruptcy. The results suggest that the self interest of managers, rather than just the interests of shareholders and creditors, seems to help motivate the merger/bankruptcy choice.]

[This study assesses the relative effectiveness of searches of the Wall Street Journal Index and Dialog data base searches for information release analyses. The results indicate that the Wall Street Journal Index is more effective than Dialog, but a substantial number of information events do not appear in either service. In addition, the Wall Street Journal Index searches found a large number of financial type announcements but found only about 35 percent of nonfinancial items. Stock price data are presented which indicate that items not appearing in the Wall Street Journal Index are as likely to occasion significant price reactions as items which do appear in the Index.]

[This study reports the results of two experiments designed to determine the anchor used by experienced auditors in their judgmental evaluation of a compliance test sample and a substantive test of details sample. Kinney and Uecker [1982] suggest that auditors use even odds as an anchor when evaluating compliance test samples. However, there are a number of other possible anchors. For instance, in a compliance test the auditor may also anchor on the tolerable error rate or an expectation of what will be found. The experiments reported in the following study discriminate among alternative explanations (anchors). The results indicate that there is anchoring behavior, but rather than showing that even odds or that a value stated in the problem is the anchor, it appears that experienced auditors make assessments of risk by starting from an "internal anchor" of five to ten percent.]

[This research examines the ability of FAS 33 returns on equity to explain security returns. Initially, the ability of FAS 33 returns to add to the explanatory power of historical cost returns is assessed. Subsequently, the ability of historical cost returns to add to the explanatory power of FAS 33 returns on equity is evaluated. Data for 1980, 1981, and 1982 are analyzed. A matched-pair design is used to control for the effects of cross-sectional correlation on the dependent and independent variables. Four versions of FAS 33 returns on equity are tested. Results indicate that constant dollar, current cost, and net holding returns do not demonstrate information content incremental to historical cost returns in explaining security price changes. Purchasing power returns on equity, however, are shown to possess incremental information content. Furthermore, results indicate that while historical cost returns on equity do increase the ability of constant dollar, purchasing power, and net holding returns on equity to explain security price changes, historical cost returns do not increase the explanatory power of current cost returns on equity.]

[Little empirical research exists concerning the factors most conducive to research and publication activity by academic accountants. Thus, the basic question addressed by this study is: In the academic accounting community, what are the predominant characteristics of the "research environment" associated with publication activity? Responses by 208 academic accountants to a mailed questionnaire indicate the overall perception that access to the computer and two other categories of research facilitators are particularly important. Those categories are time-related items (reduced teaching loads and committee assignments) and people-related items (abilities/quality of fellow faculty members and graduate students). Employers are perceived by respondents as providing/supporting people-related items the best, access to the computer next, and time-related items the least. Responses are analyzed in terms of doctoral-granting programs, divided into two groups, and nondoctoral-granting programs. Results based on alternative grouping schemes are also reported.]

[A model proposed by White [1981, 1984] for distinguishing bankrupt firms that successfully reorganize from those that liquidate is tested empirically in this study. Using probit analysis, two factors were found to have significant discriminating power: the proportion of assets not secured or pledged at the bankruptcy filing date (referred to as the free assets percentage) and the change in profitability in the years preceding bankruptcy. The probit model was able to classify accurately 69 percent of the firms in the estimation sample and 59 percent of the firms in a holdout sample.]