How to Write a Statement of Purpose for a PhD Program in Accounting (or perhaps any other field)

As someone who reads a lot of SoP's, here are the questions I want an applicant to answer, more or less in order: What is your purpose? What are your career aspirations?  What type of research do you want to conduct?  What topics and methods are you intending to pursue? What led you to your [...] Read more > >

Policy Research in an A-or-Nothing World

How many of you work for a university that only values “A-hits”?  To the non-academics, this mean that a publication in one of 3 or so top journals counts as meeting the research expectations placed on the faculty member.  Publication(s) in other journals do not count.  Recently, my institution elevated the value of A-hits, but [...] Read more > >

Annual report readability and analyst following

A recent paper published in The Accounting Review caught my attention. The paper is entitled, “The effect of annual report readability on analyst following and the properties of their earnings forecasts,” and is written by University of Michigan researchers Reuven Lehavy, Feng Li, and Kenneth Merkley. Readability is measured using the Fog index, which is [...] Read more > >

What Standard Setters Wish Researchers Knew (Better)

At the upcoming American Accounting Association 2011 Annual Meetings, I have organized a panel session in which Bob Herz, Mary Barth, Jim Leisenring, and Tom Linsmeier will respond to questions and give guidance on what they think researchers can do to provide more useful input to financial reporting standard setters. The panel is scheduled for [...] Read more > >

EBITDAP and other pension “magic”

The Dow was at about 14,000 during October-November 2007 and at about 7,000 in February 2009. This resulted in losses in many companies’ pension funds. Many companies had unrealized losses exceeding the 10% corridor boundary, which meant the “excess” losses had to be gradually amortized into pension expense under U.S. GAAP.  For example, in 2009-2010 [...] Read more > >

Is it time to “fix” accounting for pensions?

On June 16, 2011, the IASB released its amendments to IAS 19 (Employee Benefits).  David Zion, accounting research analyst for Credit Suisse, reviews the implications of the amendments and concludes that “now it’s FASB’s turn” to “fix” pension accounting. In fact, he recommends that the FASB simply expose the new IASB rules, as is, to FASB [...] Read more > >

Own Credit Risk

I have started to think recently quite a bit about firm’s own credit risk and I think it is an area research has the potential to be helpful to standard setting. Barth Hodder and Stubben (TAR 2008) investigate the association between equity returns and credit risk changes. Consistent with Merton (1974), the relation between credit [...] Read more > >

Permanent and transitory earnings: where did we get these terms?

In 1957, the Princeton Press published Milton Friedman’s famous book, A Theory of the Consumption Function.  An interesting assumption underlying the theory is that “the transitory components of consumption and income can be taken to be uncorrelated with the corresponding permanent components and with each, other.” One of the key inferences is that permanent (smoothed) consumption [...] Read more > >

Unintended positive consequences of FAF’s Post-Implementation Review Initiative?

The FAF described its new Post-Implementation Review (PIR) initiative, whereby a team created within the FAF will systematically review existing standards to assess the extent to which they accomplished their originally-intended objectives. I personally think that this is a valuable initiative and that it appears to be well-designed. A thought that I had in listening [...] Read more > >

Beliefs and Uses of Information

FASB Research Fellow Phil Shane asked me a thought-provoking question last week:  what do we know about the differences between people’s stated beliefs about the value of information and their actual decisions?  I am hoping readers might help me flesh out a few preliminary thoughts. First, a comment on the relevance of the question for [...] Read more > >