Amir and Lev (1996) address two interesting issues: the value-relevance of reported financial information for fast-changing, science-based companies and the value-relevance of nonfinancial information incremental to financial information. Using a sample of cellular phone companies, they report that the financial accounting information is only value-relevant after the inclusion of the nonfinancial information and that the nonfinancial information they examine is value-relevant both by itself and incremental to the financial information. I first discuss details specific to the tests conducted by Amir and Lev before discussing some of the implications offered by Amir and Lev.

Using a sample of LIFO users, we examine the strengths and weaknesses of adopting a simultaneous equations approach to study managers' adjustments of interacting accounting measures that meet multiple objectives. We focus on the importance of considering differences in the costs and the effectiveness of adjusting accounting measures. In addition, we examine managers' objectives in subsequent years and how adjustments' reversals affect those objectives. Although generally consistent with earlier studies of LIFO inventory adjustments, our results indicate that modelling interacting accounting measures, such as other current accruals and depreciation, leads to differing conclusions about the role of taxes.

This paper examines the exercise of employee stock options (ESOs) by executive officers. We document a positive relation between the variance of ESO returns and the remaining life of the option at exercise, and show that the strength of the relation is reduced by the extent the firm hedges the returns on the ESO. We thus provide empirical evidence of a link between an ESO's expected term and its investment risk to the executive, and document that some firms provide a hedge against option risk.