Reviews the book "Accounting for Data Processing Costs," by Robert W. McGee.

This paper demonstrates that the treatment of self-services, their inclusion or exclusion, affects neither the decision relevance of the information made available by the reciprocal method of cost allocation nor the internal versus external acquisition decision made through the underlying technology matrix. Three propositions and proofs are provided, showing that there is a one-to-one transformation between the two treatments of self-services in each of the analyses.

The article presents a comment on the effect of chance variation on revenue and cost estimations for breakeven analysis. In traditional breakeven analysis, total revenue and total cost are represented by straight lines with one intersection which indicates the breakeven quantity output. The effect of quadratic revenue and cost curves on breakeven analysis was introduced. Two breakeven points for the quadratic model were derived by solving for the levels of output at which the regressed total revenue equals total cost. Regardless of whether a linear or non-linear breakeven model may be appropriate, however, the revenue and cost functions are often unknown. Givens illustrated the regression analysis, but did not consider the effect of regression forecasting errors. In order to resolve the above issue an attempt was made to demonstrate the determination of what he called "the chance variation" in estimated revenue and cost functions; and to illustrate how these chance variations affect the results of a breakeven analysis. The estimated cost-volume functions were subtracted from the estimated revenue-volume functions to derive an estimated profit-volume function.

This article focuses on an article which was published in the April 1974 issue of the journal "The Accounting Review," which discussed three methods of allocation in reporting controlling and minority earnings on the consolidated income statement by simultaneous equations. The article demonstrated that the traditional treasury stock method in reciprocal stockholding situations understates the minority interest and is not consistent with a true treasury stock approach, and suggested the inclusion of additional earnings per share figures in revealing the current per-share equity claim of two equity interests on current earnings. The purpose of this article is to demonstrate that the two alternative models of allocating total consolidated net income to controlling and minority interests, proposed in the article published earlier, were improperly constructed and were not valid, and to illustrate the inefficiency in communicating the effective earnings per share of minority interests of subsidiaries through consolidated financial statements of the parent company.

This article investigates the nature of the stewardship concept, its historical development and implications in financial reporting. This concept of management's stewardship seems to encompass two of the four objectives of accounting suggested by a committee of the American Accounting Association: effectively directing and controlling an organization's human and material resources, and maintaining and reporting on the custodianship or stewardship of resources. Although it is generally recognized as a principal purpose of financial reporting, little research has been conducted as to its specification, and the concept remains without a settled definition. Stewardship is an old concept with a strong religious, particularly Christian, implication. According to Christian theologians, things or resources were created by God, who gave them to all men in common. The essence of things falls under the power of God, and man has only the right to use these things. In order to use them, a possession of the things may become necessary. This gives rise to the concept of property and human ownership.

In economics, business income is defined as the maximum amount that the firm can distribute as dividends and still be as well off at the end of the period as at the beginning. To be as well off economically, a firm must maintain intact the present value of the expected future net receipts of the capital. In measuring business income as the residual from matching revenue against costs consumed, the accountant must value all assets on the basis of unabsorbed original money costs. The differences between the accountant's income statement and the economist's income statement are that the former includes only realized income while the latter includes both realized and unrealized income, and the former does not include gains and losses due to price level changes while the latter does. In a world where everything changes from time to time and nothing stands still, the three basic issues of accretion versus realization as the criterion for income recognition, inclusion versus exclusion of unexpected gain, and real income versus money income, will continue. Hence, accounting income and economic income will never be in agreement.

We investigate the effect of information asymmetry on corporate tax avoidance. Using a difference-in-differences matching estimator to assess the effects of changes in analyst coverage caused by broker closures and mergers, we find that firms avoid tax more aggressively after a reduction in analyst coverage. We further find that this effect is mainly driven by firms with higher existing tax-planning capacity (e.g., tax-haven presence), smaller initial analyst coverage, and a smaller number of peer firms. Moreover, the effect is more pronounced in industries where reputation matters more and in firms subject to less monitoring from tax authorities.

This paper investigates a sequential social learning problem in which individuals face ambiguity about others’ signal structures and have max-min expected utility preferences, thereby exhibiting ambiguity aversion. Unlike previous findings, which suggest that learning outcomes depend on the specifics of the learning environment, this study establishes information cascades as a robust outcome under ambiguity. With sufficient ambiguity, cascades arise almost surely, regardless of the statistical properties of signal structures. Moreover, standard results predicting the absence of cascades can easily break down: Even minimal ambiguity can trigger cascades when signals are bounded and lead to incorrect herding when signals are unbounded.

Languages differ widely in the ways they encode time. I test the hypothesis that the languages that grammatically associate the future and the present, foster future-oriented behavior. This prediction arises naturally when well-documented effects of language structure are merged with models of intertemporal choice. Empirically, I find that speakers of such languages: save more, retire with more wealth, smoke less, practice safer sex, and are less obese. This holds both across countries and within countries when comparing demographically similar native households. The evidence does not support the most obvious forms of common causation. I discuss implications for theories of intertemporal choice.