Ball and Brown and the Usefulness of EPS

At the AAA meeting in DC, I attended a presidential address by Ray Ball and Phil Brown regarding their seminal research paper (JAR 1968).  They described the motivation for their study as a test of existing scholarly research that painted a dim picture of reported earnings. The earlier writers noted that earnings were based on [...] Read more > >

Auditor Judgment Frameworks; or Principles-Based versus Rules-Based Accounting Standards Part II

A recent paper by Backof, Bamber, and Carpenter (2011, International Financial Reporting Standards and Aggressive Reporting: An Investigation of Proposed Auditor Judgment Guidance) investigates auditors’ judgments under IFRS and US GAAP.  The authors conduct an experiment where 200 auditors from a Big 4 accounting firm were asked whether they agree with management’s preferred accounting methods [...] Read more > >

FARS Midyear Meeting

The FARS midyear meeting starts tomorrow.  Some blog readers are probably at the airport or in the air as I type.  The preliminary program is available here.  Looks like standard setting issues will once again be prominent at the meeting.  The plenary session Friday afternoon is titled “Current Topics in Standard Setting”, with panelists Jim [...] Read more > >

"Must Reads" in the Earnings Management Literature

We had a great Round Table with Paul Zarowin yesterday, where we talked about the large and ever-growing literature on earnings management.  While much has been done in this area, it was clear from yesterday’s discussion that there remain many fruitful areas for future research.  If you didn’t get the chance to join us, I [...] Read more > >