GAAP and Macroeconomics: Intangibles Edition

We have seen the articles linking fair value accounting to financial and macroeconomic instability.  Now comes an article in BusinessWeek arguing that expensing of internally-generated intangibles leads firms to look first to R&D and marketing when times get tough.  Moreover, they argue that this effect distorts GDP measures, because cost-cutting show increased income due to [...] Read more > >

Lessors not to derecognize leased assets

In their joint meeting in Norwalk, Connecticut this past week, the IASB and FASB reached the tentative conclusion that lessors will no longer derecognize leased assets. Instead, lessors will recognize a receivable and a performance obligation with revenue being recognized over time. Some think this approach is more consistent with the proposed new revenue recognition [...] Read more > >

I'm in APIC hell.

I have a comment and a question for all of you. Comment, I think the credit to APIC on a non-qualified employee stock option plan is crazy.  I understand the logic that the reason why we are crediting APIC is because our GAAP compensation expense is less than the tax deduction, so to credit ITexpense [...] Read more > >

I’m in APIC hell.

I have a comment and a question for all of you. Comment, I think the credit to APIC on a non-qualified employee stock option plan is crazy.  I understand the logic that the reason why we are crediting APIC is because our GAAP compensation expense is less than the tax deduction, so to credit ITexpense [...] Read more > >

Can IFRS produce global comparability?

I just read the abstract of a forthcoming paper (Kvaal and Nobes 2010) that compares the accounting policies of blue chip companies in the largest five stock markets that use IFRS. By comparing the policy disclosures in annual reports, the authors find “significant evidence that pre-IFRS national practice continues where this is allowed within IFRS.”  [...] Read more > >

Stewardship, Financial Reporting, and Investment

We had a very interesting discussion with Gilles Hilary and Rodrigo Verdi on their paper linking better financial reporting quality to less overinvestment among firms with lots of cash on hand and less underinvestment among firms with lots of leverage.  It sparked a number of questions, so of which I recount here: What specific aspects [...] Read more > >

The Financial Instruments Reporting and Convergence Alliance and This Week's Joint FASB-IASB Meetings

I learned today of a consortium of financial industry groups called “The Financial Instruments Reporting and Convergence Alliance” (FIRCA).  The groups who joined together to form FIRCA include: American Council of Life Insurers, Commercial Mortgage Securities Association, Council of Federal Home Loan Banks, Group of North American Insurance Enterprises, Mortgage Bankers Association, Property Casualty Insurance [...] Read more > >

The Financial Instruments Reporting and Convergence Alliance and This Week’s Joint FASB-IASB Meetings

I learned today of a consortium of financial industry groups called “The Financial Instruments Reporting and Convergence Alliance” (FIRCA).  The groups who joined together to form FIRCA include: American Council of Life Insurers, Commercial Mortgage Securities Association, Council of Federal Home Loan Banks, Group of North American Insurance Enterprises, Mortgage Bankers Association, Property Casualty Insurance [...] Read more > >

Interesting nugget that I learned last week

The accounting department here at UT has an outside advisory council.  We had a semi-annual meeting last Friday.  We happened to be talking about the new FASB codification system.  One advisor mentioned that the consequence they have seen is companies now FORGOING any mention of any standard in their footnotes.  You know, we are used [...] Read more > >

Round Table Discussion on Financial Reporting Quality and Investment Efficiency

On Wednesday, Oct 28th, 11 am ET, we will be joined by Gilles Hilary (HEC Paris) and Rodrigo Verdi (MIT). They will be discussing their paper, entitled “How Does Financial Reporting Quality Relate to Investment Efficiency?” The paper is co-authored with Gary Biddle at the University of Hong Kong. The abstract of their paper reads: Read more > >