We evaluate the performance of alternative test statistics in event studies which include NASDAQ daily security returns. We document varying degrees of test statistic misspecification in NASDAQ samples. In particular, we find that the commonly used standardized test statistic is misspecified in most settings. Although less pervasive, misspecification is also evident in the portfolio test statistic estimated using the time series of portfolio mean abnormal returns. The nonparametric rank statistic [introduced in Corrado (1989)] performs the best overall in NASDAQ samples; we recommend its use with market model abnormal returns based on an equal-weighted NASDAQ market index.

Abstract This article discusses the dilemma that exists in the classification of the receivable in a lease transaction. The current portion of the receivable may be thought of as the discounted value of the payment to be received within one year ($83,333), or the amount by which the principal of the receivable will be reduced during the year ($40,188). Combined with scholars Michael L. Fetters and Steven D. Grossman dilemma, the authors note four possible ways to report on the Statement of Financial Position. In all four methods the total receivable is the same ($299,060), but there is a significant difference in the Current Asset section. Methods 1 and 3 treat the lease receivable as if it were comprised of five separate notes with staggered maturities. Methods 2 and 4 treat the lease receivable as though the firm had loaned a single sum, $299,060, and any payments will be applied first to interest, on the outstanding balance, then to reduction of principal. Thus, the payment received at the end of period 1 would be composed of principal of $40,188 and interest of $59,812.