We document that textual discussions in a sample of 363,952 analyst reports provide information to investors beyond that in the contemporaneously released earnings forecasts, stock recommendations, and target prices, and also assist investors in interpreting these signals. Cross-sectionally, we find that investors react more strongly to negative than to positive text, suggesting that analysts are especially important in propagating bad news. Additional evidence indicates that analyst report text is more useful when it places more emphasis on nonfinancial topics, is written more assertively and concisely, and when the perceived validity of other information signals in the same report is low. Finally, analyst report text is shown to have predictive value for future earnings growth in the subsequent five years.

We examine the effect of lender monitoring through board representation, which we label “affiliated banker on board” (AFB) on conservative accounting. We hypothesize that monitoring reduces lenders' demand for conservatism-facilitated control transfers through debt covenants by reducing the information asymmetry that underlies the agency problem of debt. Consistent with our hypothesis, we find that AFB firms have markedly lower conservative accounting than non-AFB firms. This result is robust to a battery of tests that account for bias from both observable and unobservable factors. We also find additional evidence to support key elements of our hypothesis. First, an examination of the relation between borrower-unfavorable renegotiations and covenant violations suggests that board representation allows lenders to renegotiate in a timelier manner based on private information. Second, an examination of the relation between covenant intensity and conservative accounting suggests that board representation decreases lenders' reliance on conservatism-facilitated control transfers. Finally, an analysis that uses relationship lending as an alternative proxy of lender monitoring suggests that it is lender monitoring, and not AFB per se, that reduces demand for conservative accounting.

We study the joint effects of intercompany investing and reporting of equity method investments on the accuracy and dispersion of analysts' annual earnings-per-share (EPS) forecasts. We compare firm-year observations with and without equity method investments. We posit two non-mutually exclusive explanations for how equity method investments may affect analyst forecast properties. The Opacity Effect posits that the condensed equity method disclosures increase information asymmetry, increasing analysts' forecast errors and forecast dispersion. The Diversification Effect suggests that the diversification of the investor and its investee earnings streams enhances earnings predictability, decreasing analysts' forecast errors and forecast dispersion. Our findings are consistent with both effects operating in the analyst forecasting task. Additional analyses are consistent with the Opacity Effect dominating. This occurrence results, on net, in less accurate and more dispersed forecasts for firm-years with equity method investments.

We examine whether nonprofit organizations understate fundraising expenses in their publicly available financial statements. A large body of anecdotal evidence notes that an inexplicable number of nonprofits report zero fundraising expenses. We provide empirical evidence that the zero fundraising expense phenomenon is at least partly due to inappropriate reporting. We then examine to what extent these misreported expenses are the result of managerial incentives. Prior research finds an association between reported expenses and managerial compensation as well as the level of donations received. Using these findings we construct two incentive variables and find a positive association between misreporting behavior and managerial incentives. Our results also suggest that the use of an outside accountant reduces the probability that a nonprofit will misreport expenses, consistent with the use of an outside paid accountant increasing the reliability and usefulness of nonprofit financial reports. Finally, we find that SOP 98-2 reduced the probability that a nonprofit will misreport fundraising expenses.

To address agents' moral hazard over effort, incentive contracts impose risk on the agents. As performance measures become noisier, the conventional agency analysis predicts that principals will reduce the incentive weights assigned to such measures. However, prior empirical results (Prendergast 2002) frequently find the opposite, i.e., incentive weights are larger (agents bear more risk) in more uncertain environments. This paper provides new evidence on the association between the extent of uncertainty and the level of risk imposed on agents. In the context of contracts between managed care organizations and physicians, we examine the effect of task characteristics and the legal liability environment on the extent of risk that physicians bear. We derive the optimal weighting of multiple performance measures in a model of a physician's choice of revenue-generating and cost-control efforts. The model predicts that physicians who face less task uncertainty bear more cost risk in their contracts, as predicted by the conventional moral hazard model. Likewise, the model predicts that as the association between task uncertainty and legal liability uncertainty becomes stronger, physicians bear less cost risk in their contracts. Our empirical results generally support these predictions. We offer an explanation for why these results tend to be consistent with the conventional moral hazard analysis, contrary to empirical results in a number of previous studies.

The article presents a report on teaching methods and programmed instructions in the U.S. During the past few years, in the process of continuing search to discover means for increasing instructional efficiency and for developing new materials to cope with the rapidly expanding demands for additional education and training by a burgeoning number of learners, the experimentation and development of programed learning has received the attention of educators and training directors across the country. Programed instruction has found wide-spread usage in industry and in the armed forces in various aspects of training for specific assignments or tasks, in which predetermined performance levels or behavioral patterns had been established. In numerous situations in both education and industry, programed instruction has proved to be effective, and under some circumstances more so than conventional methods. However, at this time research findings, especially at the college level, are totally inadequate to serve as a basis for making decisions on the adoption of programed learning for use throughout any specific course or program.

The path leading to a degree with a major in accounting is a rugged one at best. Obstacles are to be encountered at every turn. Many an eager student has dashed confidently down this path only abruptly to encounter a sizeable obstacle known as partnership dissolution resulting from the admission of a new partner. Managerial Accounting as a course of study represents a recent addition to the accounting curriculum of many schools of higher education. The addition of this course reflects the current demand for an approach to accounting that emphasizes the utilization of accounting data for management planning and control. At the present time many accounting departments are in the process of reevaluating their entire accounting curriculum to determine to what extent present offerings may continue to serve their traditional purpose as well as fulfill the need for an approach which takes into greater consideration the managerial aspect. The non-accounting major terminates his study of accounting with the Managerial Accounting course. The accounting major, almost without exception, takes the same Managerial Accounting course as the non-major which means that he takes the course between Introductory Accounting and Intermediate Accounting.

This article presents a report of the Task Committee, American Accounting Association on the standards of accounting instruction. From its inception, the American Accounting Association has been concerned with accounting education. This interest has been manifested in various projects and special committee activities undertaken by the Association, alone and jointly with other groups. One of the Association's special task committee in the area of education is the Committee on Standards of Accounting Instruction. It operates in cooperation with, and as a task force of, the Joint Committee on Education. The first project of the Committee on Standards of Accounting Instruction was a questionnaire study of the undergraduate courses taken by accounting majors. The questionnaire was carefully prepared and tested before being released. It was sent to most of the colleges and universities in the U.S. , which offered a major or concentration in accounting in an undergraduate program. The study indicated that the largest school in the sample graduated 837 students in 1954 with bachelor degrees in business. It was notable that 1954 saw less than half as many accounting majors graduating as in 1950. The decline in degrees in business was considerably sharper than for all bachelor degrees. The Committee felt that course work in cost accounting is properly required by nearly all schools

This article comments on inventory pricing and changes in price levels. Ideally, the measurement of accounting profit involves the matching precisely of the identified costs of specific units of product with the sales revenues derived there from. Secondly, where conditions are such that precise matching of identified costs with revenues is impracticable, identified cost matching may be simulated by the adoption of an assumed flow of costs. Also, a flow assumption can be realistic, in that it reflects the dominant characteristics of the actual flow of goods; thus it may reflect an actual dominance of first-in, first-out, average, or last-in, first-out movement. A flow assumption can be artificial, on the other hand, in that it premises a flow of costs that is clearly in contrast with actual physical movement. However, the periodic income of a business enterprise is computed by deducting from the revenues of the period the costs which are properly associated with those revenues. In the case of certain costs, for example sales commissions, the relationship to the revenues of a period is quite direct and the matching process is accomplished with a minimum of uncertainty.

This article discusses the information on the paragraph no. 5. The Paragraph No. 5 under "Expense" in the 1948 Revision of Accounting Concepts and Standards Underlying Corporate Financial Statements of the U.S. reads that An assignment of all or a portion of the cost of an asset to expense, made in good faith after considered judgment and after competent review, in accordance with the accounting concepts and standards of the time, is not subject to reversal in a later period. Errors of a mechanical and non-judgment nature should be corrected in the period of their discovery. The Committee on Concepts and Standards is in agreement with the apparent basic purpose of this statement to reduce the possibility of manipulation of the net income calculation through reversals, revisions and reaccounting of past depredation charges and other amortizations. At the same time it recognizes that a position unalterably opposed to the correction of errors of judgment is both arbitrary and difficult to defend.