Abstract In this article, the author presents a reply to the criticism of his study by researcher Thomas R. Dyckman, which discussed effects of restating financial statements for price-level changes. The author argues, that Dyckman concentrates unduly on the purported advantages of his own work, and implies that the limitations of the author and his colleagues' studies are so significant that the conclusions are somehow invalid. The author's comments are presented in various parts. First, the question of the data base used in the experiments is addressed. Second, the subjects used and related matters are discussed. In the third section, clarifications regarding his own work are provided, and misconceptions and incidental matters in the Dyckman correspondence are considered. The purpose of the research was to examine the effects of price-level adjusted financial statements on investment behavior. Given the nature of the experiment and the question being researched, a reasonably sophisticated group of subjects seemed appropriate, subjects whose background suggested an adequate understanding of accounting, the investment environment, and price-level adjustments.

Abstract Reviews the book "Current Value Accounting and Price-Level Restatements," by L.S. Rosen.

Abstract First, the evidence indicates that investors who used only price-level restated or both price-level restated and conventional financial statements did not make forecasts different from those made by investors who used only conventional in- formation. With the exception of period 4, the isolated differences which did appear between the forecasts of the groups were attributed to chance. With respect to period 4, the evidence did reveal forecasting differences among the groups. Two possible explanations for this occurrence were considered. The information content explanation suggests that differences in forecasts occurred only in period 4 because this was the only period in which investors made a sufficiently thorough comparative analysis of the combined statements. However, analysis to the extent possible within the research design could not validate this explanation. An alternative explanation, called the shock effect explanation, attributes the period 4 differences to the shock of the initial decision experience and holds that the forecast differences had nothing to do with any differences between the conventional and price-level restated statements. This explanation does seem to be in accord with most of the evidence. Second, the evidence indicates that neither the users of the restated statements nor the users of the combined statements made decisions different from those made by the users of the conventional statements.

Abstract B & C have raised a number of important points regarding our original paper. Many of the issues were addressed in the original paper so that our response to them here necessarily has been some- what repetitious of the previous discussion. Nevertheless, we are grateful to B & C for pointing out some potential difficulties in applying the technique, for emphasizing the need for validation before the technique can be of practical value, and for giving us the opportunity to clarify and expand upon numerous issues which possibly were not dealt with satisfactorily in the original paper.

Abstract The purpose of this article is to demonstrate a technique for scaling industries according to degree of risk. In recent years a considerable amount of research has been performed examining the relationship between financial ratios and company risk. The bulk of this research has concentrated on company factors. In spite of the apparent interest by researchers in the industry element of company risk, research dealing directly with the classification of industries according to risk or other characteristics has been limited. Risk is affected both by the characteristics of the corporation itself and by the fact that the corporation is part of a given industry with characteristics of its own. The authors deal primarily with the second aspect of company risk--the industry factor. More specifically, they develop a ranking of industries according to degree of risk based on particular industry characteristics as reflected in industry financial ratios. Such a ranking has potential value to investors in evaluating opportunities and to researchers in studying the relationships among company and industry risk, and security ranking and performance.

Abstract Reviews the book "Analytical Review: A Guide to Evaluating Financial Statements," by Edward Blocher and John J. Willingham.

Abstract The article reviews the book "Behavior Patterns in Internal Audit Relationships," by Frederic E. Mints.

Abstract Reviews the book "Modern Auditing," by Walter G. Kell and Richard E. Ziegler.