On Wednesday, September 16th, 11 am ET, Dain Donelson, Ross Jennings, and John McInnis, all of the University of Texas at Austin, will join us to discuss their recent paper entitled “Changes over Time in the Revenue-Expense Relation: Accounting or Economics?”  Their paper follows the work of Dichev and Tang (2008), who document that over the last 40 years there has been a substantial decrease in the contemporaneous revenue-expense correlation, an increase in earnings volatility, and a decline in earnings persistence.

Whereas Dichev and Tang suggest that this trend reflects a decline earnings quality linked to the FASB’s move away from matching and the FASB’s increased use of fair value measurements, Donelson et al. argue that the trend has less to do with accounting changes and more to do with changes in the economic environment in which companies operate.

For more information on matching, check out these posts by Jeff Wilks (here) and Steven Zeff (here).

Be sure to join us for what is sure to be a lively and engaging discussion!

Remember that you can attend Round Table Discussions in Second Life (instructions here) or on the web at our LIVE page.

UPDATE: Here are some slides for the presentation.