Stephen Penman Leads Roundtable Discussion

You may know Columbia Business School Professor Stephen Penman as the 14th-most downloaded author on SSRN.  Or you might know him as a Director of the Center for Excellence in Accounting and Security Analysis. Or perhaps as author of Financial Statement Analysis and Security Valuation. More recently, Stephen has been visible as a critic of [...] Read more > >

Tentative Decisions on Financial Statement Presentation

Jeff Wilks has already noted the FASB/IASB decisions regarding lease accounting.  Last week’s meetings also included a number of tentative decisions on financial statement presentation.  Several decisions pertained to cash flow reporting and supplementary reconciliation schedules.  The Boards tentatively decided that entities should be required to use the direct method of presenting cash flows.  In [...] 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 > >

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 > >

Round Table Discussion on Regulation FD

On Tuesday, Oct 20th, 4 pm ET, we will be joined by Bin Ke (Penn State University).  Bin will be discussing his recent paper, entitled “Why do cross-listed firms voluntarily adopt Regulation Fair Disclosure?” The paper is co-authored with Michael Crawley and Yong Yu, both of whom are from the University of Texas at Austin. [...] Read more > >

Fair Value, the Financial Crisis, and Some Nice Distinctions By Laux and Leuz

Christian Leuz emailed me with a link to his recent paper with Christian Laux, entitled “Did Fair-Value Accounting Contribute to the Financial Crisis.”  He thought it might be of interest to our readership, and having spent some time with the paper this morning, he is right. In short, the paper’s answer is “no,”  which is [...] Read more > >

What Do Standard Setters Optimize?

It is the rare academic article that explicitly considers the objective function of the regulator.  William Bratton is a law professor from Georgetown who takes exactly this focus, and will joins us at the FASRI Roundtable on Wednesday, October 14th at 11am ET to lead us through the thicket of political pressures and machinations that [...] Read more > >

New Revenue Recognition Rules and Tech Firms

A student of mine brought to my attention an article in the Wall Street Journal September 24, 2009, “Investors Should Focus on Apple’s Core.”  In that article, Martin Peers points out that existing guidance for firms who have products that combine hardware and software, like Apple’s iPhone, required firms to obtain specific evidence about the [...] Read more > >

Does an asset-liability approach inevitably lead to fair value?

I’ve heard some people express the opinion that the FASB’s recent emphasis on an asset-liability approach is just a thinly veiled attempt to move financial reporting more in the direction of fair values. Ignoring the fact that the primacy of assets and liabilities is as old as the conceptual framework itself, I think recent evidence [...] Read more > >

The Asset-Liability Approach: Primacy does not mean Priority

By now, most academics with an interest in standard setting are aware that the FASB and IASB view assets and liabilities as ‘primary’ elements of financial statements, from which income is derived.  However, it is all too easy to see primacy as indicating importance, which I suspect Kothari, Ramanna and Skinner have done in their [...] Read more > >