Presents a reply to comments made by Barry E. Cushing and Edward B. Deakin on a study about the characteristics of companies that are making accounting changes. Concerns over the size hypothesis; Industry analysis of accounting changes.
The article assesses the feasibility and desirability of adopting a report issued by the Study Group on Introductory Accounting titled "A New Introduction to Accounting." An analysis of the recommended modules and topics reveals that many of the subject-matter suggestions are not really innovative. Consequently, any discussion of the feasibility and desirability of adopting the Study Group's recommendations can be limited to the specific suggestions that would require significant revision of the traditional first-year accounting curriculum. Given the imposed school-calendar and classroom-time constraints, it appears that only the first three innovations listed in the article can be feasibly adopted. If much less time is devoted to the discussion of bookkeeping procedures, the instructor should be able to greatly increase the emphasis placed on the use of accounting data in resource allocation decisions. If it is conceded that non-accounting majors do not need exposure to such topics as closing entries, trial balances, work sheets, and special journals, then it must be concluded that at least 80%of the class benefits by the shift in emphasis.
This article empirically examines the motivations that management of a firm might pursue in making accounting changes. The 100 sample firms selected for the study were stratified according to whether or not they had received at least one consistency qualification during the ten-year period of 1959-68. Implicit in the use of size as the variable in the testing of the foregoing hypothesis is the assumption that larger firms have their financial performance subject to greater scrutiny in the financial press. Such an assumption seems realistic in view of the fact that larger firms generally have more stock outstanding and more stockholders, thus making news about those companies of interest to more persons. Data on industry classification were gathered so that it could be determined whether this characteristic had any effect on the number of consistency qualifications received. Firms receiving at least one consistency qualification were found to differ from firms that received no such qualifications with respect to both size and auditor.