The Uniform System of Accounts of the Federal Power Commission, which was adopted on June 16, 1936, was the result of a joint effort of the Federal Power Commission and representatives of several state commissions. The principle of original cost constitutes an entirely new conception of plant accounting for public utilities. It is so important to the needs of regulation and so misunderstood by those outside the pale of regulatory realms and so little has been written to explain its philosophy, that perhaps a rather full treatment of what it is and the reasons for its existence may not be altogether inappropriate. The importance of plant accounting for public utilities can hardly be overemphasized. Plant assets constitute about 86% of total assets of all electric utilities in the U.S. Another factor, which goes a long way towards explaining many problems and economic consequences identified with public utilities, is that the annual gross revenues of electric utilities amount, on an average, to only about 18% of the total investment in plant, so that the plant investment turns over about once in five and one-half years.

Reviews the book "Introduction to Accounting," by Dallas S. Bolon and George W. Eckelberry.

Clifford W. Smith, Jr., Relative Risk in Municipal and Corporate Debt: Discussion, The Journal of Finance, Vol. 38, No. 2, Papers and Proceedings Forty-First Annual Meeting American Finance Association New York, N.Y. December 28-30, 1982 (May, 1983), pp. 647-648

We examine an unusual sample of firms within the life insurance industry: 30 firms which switched from a common-stock to a mutual-ownership structure. Our evidence indicates that the rate of growth of premium income from policyholders remains unchanged, stockholders receive a premium for their stock, and management turnover declines; thus, no group of claimholders systematically loses in the sample of firms which choose to go through the mutualization process. We therefore conclude that for this sample of firms, changing from a stock to a mutual-ownership structure is on average efficiency-enhancing.

This paper analyzes the relation between agency conflicts and risk management. In contrast to previous contributions, our analysis incorporates not only stockholder-debtholder conflicts but also manager–stockholder conflicts. We show that the costs of both underinvestment and overinvestment are essential in determining the firm's hedging policy. In particular, firms that derive more of their value from assets in place (lower market-to-book ratios), although having lower costs of underinvestment, generally display larger costs of overinvestment. Thus, they may be more likely to hedge to control these overinvestment incentives. Our analysis explains why large profitable firms with fewer growth opportunities tend to hedge more (Bartram et al., 2004). It also provides a number of new predictions relating the benefits associated with risk management to various dimensions of the firm's economic environment.

We examine explanations for corporate financing-, dividend-, and compensation-policy choices. We document robust empirical relations among corporate policy decisions and various firm characteristics. Our evidence suggests contracting theories are more important in explaining cross-sectional variation in observed financial, dividend, and compensation policies than either tax-based or signaling theories.