Despite well-known differences, the respective visions of capitalism's future by Marx and Schumpeter show striking and neglected similarities. This is illustrated, first, by their strong focus upon capitalism's progressive and creative properties; second, by their analyses of capitalism's dysfunctional properties; and third, by their respective analyses of the creatively destructive character of institutional and attitudinal change in advanced capitalism.
Roland E. Dukes, Thomas R. Dyckman, John A. Elliott, [Discussion of The Economic Effects of Involuntary Uniformity in the Financial Reporting of R&D Expenditures and Accounting for Research and Development Costs: The Impact on Research and Development Expenditures]: A Reply, Journal of Accounting Research, Vol. 18, Studies on Economic Consequences of Financial and Managerial Accounting: Effects on Corporate Incentives and Decisions (1980), pp. 91-95
In October 1974, the Financial Accounting Standards Board issued FASB Statement No. 2, Accounting for Research and Development Costs (henceforth FAS2). The essence of the mandated accounting treatment is stated in paragraph 12 of the Statement: All research and development [R&D] costs encompassed by this Statement shall be charged to expense when incurred. This accounting treatment was contrary to the practice followed by many firms which capitalized and amortized R&D costs. The Board's definition of R&D costs is quite inclusive following, with some modifications, the commonly used interpretation by the National Science Foundation. The Board defines R&D, in paragraph 8, as follows:
[In this article, we examine the information content of announcements of increased reserves for loan loss by Citicorp and other banks, and the later write-off announcement made by the Bank of Boston. During 1987, most major U.S. banks, led by Citicorp on 19 May 1987, announced large increases in their loan loss reserves because of problem loans in lesser developed countries (LDC). With substantial flexibility in accounting rules for determining loss exposure, the banks announced varying levels of reserve increases. On 14 December 1987, the Bank of Boston began a second round of activity relating to LDC debt by announcing a $200 million write-off of LDC loans and further increase in loan loss reserves. Financial reporters suggested that these events could be interpreted differently. Because Citicorp was a leading money-center bank, its announcement could be interpreted favorably as a signal of willingness to deal with the LDC debt problem. This interpretation could similarly apply to other banks, especially the more exposed money-center banks. In comparison, the Bank of Boston announcement was portrayed in the press as detrimental to the money-center banks for two reasons. First, unlike a reserve increase, a write-off reduces a bank's capital adequacy ratio. Capital adequacy ratios are used by bank regulators in determining the need for, and the level of, supervisory intervention. Second, the write-off was construed as an effort by regional banks to exploit their relatively limited exposure to LDC loans as a competitive advantage in the domestic banking market. We find evidence consistent with the expectations of the financial press. The strongest stock-price increases associated with both the Citicorp announcement and the subsequent announcements of reserve increases by other banks were found for the banks with the greatest exposure to LDC debt. In contrast, those banks with the greatest exposure to LDC debt and with the largest reserves sustained the largest stock-price decreases at the Bank of Boston write-off announcement. The larger money-center banks sustained, on average, a three-day decline in value of 5 percent around the Bank of Boston announcement date.]
This article discusses several issues underlying a dispute between Aetna and the SEC about accounting for the tax benefits of loss carryforwards. We discuss current accounting requirements for these benefits, Aetna's accounting for its tax benefits, and the reaction of security markets to its dispute with the SEC. We believe that accounting for these tax benefits should be changed to reflect changes in the tax laws, current definitions of assets, and criteria for accounting recognition.
This paper reports analyses of data obtained using a field-based questionnaire in which 253 auditors from one Big 5 firm recalled and described 515 specific experiences they had with clients who they believe were attempting to manage earnings. This approach enables us to analyze separately managers' decisions about how to attempt earnings management and auditors' decisions about whether to prevent earnings management by requiring adjustment of the financial statements. Our results indicate that managers are more likely to attempt earnings management, and auditors are less likely to adjust earnings management attempts, which are structured (not structured) with respect to precise (imprecise) standards. We also find that managers are more likely to make attempts that increase current-year income, but auditors are more likely to require that those attempts be adjusted, that managers are more likely to make attempts that decrease current-year income with unstructured transactions and/or when standards are imprecise, and that auditors are more likely to require adjustment of attempts that they identify as material or that are attempted by small clients.