Management Preferences Over Accounting Standards: A Replication and Additional Tests.

A. James McKee; Timothy B. Bell; James R. Boatsman

doi:10.2308/tar-4483393

Management Preferences Over Accounting Standards: A Replication and Additional Tests.

A. James McKee¹; Timothy B. Bell²; James R. Boatsman³

¹ Assistant Professor of Accounting, North Carolina State University. 1 · ² Assistant Professor of Accounting, University of Texas, Austin. 2 · ³ Professor of Accounting, Oklahoma State University. 3

The Accounting Review 1984

ABSTRACT: Watts and Zimmerman [1978] tested their theory regarding management preferences over accounting standards using submissions on the General Price Level Discussion Memorandum. We first replicate the Watts-Zimmerman study using the same sample and then compare these results with identical tests, based on a larger sample comprised of Exposure Draft submissions. Several biases are identified in the Watts-Zimmerman test procedures. When corrected, the theory's classificatory power deteriorates significantly on both the DM and ED samples. Alternative measurements of the predictor variables are introduced, as well as additional tests, in an attempt to improve the theory's performance. However, the theory's performance remains unimpressive.

DOI: 10.2308/tar-4483393
Volume: 59 (4)
Pages: 647-659
Language: en
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