AMIS 6202 – Accounting Policy and Research
Fisher College of Business, The Ohio State University
Spring 2015 (Term 1)
Course Objective
This course is designed for students in the Masters of Accounting program (MACC). The course
exposes students to important academic research in accounting and the primary methods
underlying it. This course will enable students to develop their knowledge and appreciation of
current debates that surround the accounting profession. Students will sharpen their critical
thinking skills in the context of these issues and form and defend opinions about contemporary
regulatory and market issues. The course will have a lot of reading material. Your learning will
depend on your reading and your class participation.
Instructor
Professor Tzachi Zach
Office: Fisher Hall 450
Phone: 614-292-4101
E-mail: zach.7@osu.edu
Contact
Email: The most efficient means to contact me is through email: zach.7@osu.edu. Please
write down “6202” in the subject line whenever you are emailing me.
Office hours: Wednesday 3:00 p.m. – 4:30 p.m. (or by appointment)
Required Course Materials
Course material is available on Carmen, mostly through pdf files, categorized by topic. There
will be two optional Harvard Cases to be purchased by students.
Page 1 of 8
Grading
The final grade in the course will be a function of several components as described in the table
below:
% of Total
Date
Grade
Topic Write-ups & Assignments
Project
Class Participation
Final Exam (Take Home)
Total
Throughout the semester
Last week of semester
Throughout the semester
30%
25%
15%
30%
100%
Topic write-ups:
Students are expected to hand in four write-ups during the semester. The write-ups are due on the
dates listed below and as outlined in the course schedule. The write-ups should not be longer than
one page (maximum of 750 words) and should be worked on and handed in groups of two. For every
write-up, you will be paired with a random student. I will announce these groups a week before a
writeup is due. The write-ups should address the following questions:
Writeup 1
Date
1/26
Questions
How would you characterize a market in which the PEAD persists over a
long period of time?
Writeup 2
2/2
Summarize articles 13 & 14. How are they related to each other? Provide
at least one possible extension to them.
Writeup 3
2/9
Compare and contrast Accrual Earnings Management and Real Earnings
Management.
Writeup 4
2/16
Discuss the evidence that supports the allegations of options backdating.
What is, in your opinion, the most convincing piece of evidence and
why?
These write-ups are meant to force you to think critically about the weekly readings and, as
importantly, to improve your writing skills. These skills are critical for your future success in
anything that you do.
The write-ups are due by the beginning of the relevant class (08:30 or 10:00) by uploading them to
the dropbox section on Carmen, and handing one hardcopy per group in class. Please do not write
your name on the writeup. Instead, use your student ID.
Page 2 of 8
Group project:
Students are required to conduct an event study on an event of their choosing. I will assign students
to groups of four at random. Groups are expected to submit a project proposal to me no later than
Monday, January 26. The actual data analysis can be conducted on a platform called Eventus
which is available at the Wharton Research and Data Services (WRDS) web site
(http://wrds.wharton.upenn.edu). We have a class account in there and you need to use it to log in. I
will post the username and password in a separate file on Carmen. You will need to learn how to use
Eventus on your own. The WRDS web site contains detailed explanations on how to use Eventus.
Each group will present its project in class for about 10 minutes during the last week of classes. In
addition, a 3-page summary of the project (a maximum of 2000 words) is due on Monday,
February 25. The summary should also include references to relevant studies that do similar things
to the exercise your group did. You can use Google Scholar and the Social Science Research
Network (www.ssrn.com) as resources for your searches.
Grading will be based on the research summary and on class presentations. In addition, each group
member is expected to email me the weights based on which I should allocate the grade amongst the
rest of the group members (excluding him/her self).
Participation:
You are expected to read the papers assigned to each class, as outlined in the course schedule. You
should be prepared to be called on and participate in class discussion of issues described in the
papers. Your participation is extremely important to your and your classmates’ learning.
Final Exam:
The final exam will cover all the material we discuss in class. It will be a take-home exam. You will
have 24 hours to respond. The exam is due on March 3, 2015.
Carmen:
All relevant course material will be available on Carmen, except for the two optional Harvard cases
which you should obtain on your own. Also, you are required to use the dropbox in Carmen to
submit your write-ups, projects and final exam.
Page 3 of 8
AMIS 6202 Course Schedule
Spring 2015 (Term 1)
Articles denoted by * are optional reading.
CLASS/DATE
Class 1
Monday
January 12
Class 2
Wednesday
January 14
Class 3
Friday
January 16
Class 4
Wednesday
January 21
Class 5
Friday
January 23
Class 6
Monday
January 26
Class 7
Wednesday
January 28
Class 8
Friday
January 30
Class 9
Monday
February 2
Class 10
Wednesday
February 4
Class 11
Friday
February 6
Class 12
Monday
February 9
Class 13
Wednesday
February 11
Topic
Readings
Assignment
Introductions
Event studies
1*, 2*, 3
Event studies - Example
4, 5*
Market Efficiency (General)
6, 7
Behavioral Finance (General)
8, 9
Market Efficiency & Behavioral
Finance (PEAD)
10
Market Efficiency & Behavioral
Finance (PEAD)
11
Market Efficiency & Behavioral
Finance (Limited Attention)
12
Market Efficiency & Behavioral
Finance (Accrual Anomaly)
13, 14
Incentives and earnings
management (General)
15, 16
Incentives and earnings
management
17
Real Earnings Management
18
Benford’s law
19
Page 4 of 8
Writeup 1
Writeup 2
Writeup 3
CLASS/DATE
Class 14
Friday
February 13
Class 15
Monday
February 16
Class 16
Wednesday
February 18
Class 17
Friday
February 20
Class 18
Monday
February 23
Class 19
Wednesday
February 25
Class 20
Friday
February 27
Tuesday
March 3
Topic
Readings
IFRS
20, 21
Options backdating
SOX
22, 23, 24
Assignment
Writeup 4
25
Audit Fees
26
Projects Presentations
Project writeups
Projects Presentations
Projects Presentations
Final Exam due
Page 5 of 8
1.
Regression Background* (Optional for students with sufficient statistical background)
1. **Frei, F., Campbell, D., Simple Regression Mathematics, Harvard Business Case 9-605-
061. (Optional)
2. **Dranove, D., Practical Regression: Regression Basics, Harvard Business Case.
(Optional)
2.
Event Studies
3. MacKinlay, C., 1997, Event Studies in Economics and Finance, Journal of Economics
Literature 35(1), 13-39.
4. Nelson, K., Price, R., Rountree, B., 2008, The Market Reaction to Arthur Andersen’s
Role in the Enron Scandal: Loss of Reputation or Confounding Effects?, Journal of
Accounting and Economics 46, 279-293.
5. ** Chaney, P., Philipich, K., 2002, Shredded Reputation: The Cost of Audit Failure,
Journal of Accounting Research 40(4), 1221-1245.
3.
The Efficient Markets Hypothesis
6. Ball, R., 1995, The Theory of Stock Market Efficiency: Accomplishments and
Limitations, Journal of Applied Corporate Finance 8, 4-17.
7. Ball, R., 2009, The Global Financial Crisis and the Efficient Market Hypothesis: What
Have We Learned, Journal of Applied Corporate Finance 21(4), 8-16.
4.
Behavioral Finance
8. Thaler, R., 1999, The End of Behavioral Finance, Financial Analyst Journal 55, 12-17.
9. Shiller, R., 2003, From Efficient Markets Theory to Behavioral Finance, Journal of
Economics Perspectives 17, 83-104.
5.
Accounting Applications of Efficient Markets and Behavioral Finance
PEAD
10. Bernard, V., Thomas, J., 1990, Evidence that Stock Prices Do Not Fully Reflect the
Implications of Current Earnings for Future Earnings, Journal of Accounting &
Economics 13, 305-340. (Skip section 3.2, pages 324-331).
11. Hirshleifer, D., Myers, J., Myers L., Teoh, S., 2008, Do Individual Investors Cause PostEarnings Announcement Drift? Direct Evidence from Personal Trades, The Accounting
Review 83(6), 1521-1550.
Page 6 of 8
Limited Attention
12. Hirshleifer, D., Lim, S., Teoh S., 2009, Driven to Distraction: Extraneous Events and
Underreaction to Earnings News, Journal of Finance 64(5), 2289-2325.
Accrual Anomaly
13. Sloan, R., 1996, Do Stock Prices Fully Reflect Information in Accruals and Cash Flows
About Future Earnings?, The Accounting Review 71, 289-315.
14. Bradshaw, M., Richardson, S., Sloan, R., 2001, Do Analysts and Auditors Use
Information in Accruals, Journal of Accounting Research 39 (1), 45-74.
6.
Incentives and earnings management
General
15. Dechow, P., and D., Skinner, 2000, Earnings Management: Reconciling the Views of
Accounting Academics, Practitioners, and Regulators, Accounting Horizon 14(2), 235250.
16. Graham, J., Harvey, C., and S., Rajgopal, 2005, The economic implications of corporate
financial reporting, Journal of Accounting & Economics 40, 3-73. (Skip section 6, pages
53-65).
Individuals
17. Jiang, J., Petroni, K., Wang, I., 2010, CFOs and CEOs: Who Have the Most Influence on
Earnings Management?, Journal of Financial Economics 96, 513-526.
Real Earnings Management
18. Roychowdhury, S., 2006, Earnings Management through Real Activities Manipulation.
Journal of Accounting and Economics 42, 335–70.
7.
Benford’s Law
19. Amiram, D., Bozanic, Z., Rouen, E., 2015, Firnancial Statement Errors: Evidence from
the Distributional Properties of Financial Statement Numbers, working paper, Ohio State
University.
Page 7 of 8
8.
International Financial Reporting
20. Ball, R., 2006, International Financial Reporting Standards (IFRS): Pros and Cons for
Investors, working paper, University of Chicago.
21. Armstrong, C., Barth, M., Jagolinzer, A., Riedl, E., 2010, Market Reaction to the
Adoption of IFRS in Europe, The Accounting Review 85, 31-61.
9.
Options Backdating
22. Yermack, D., 1997, Good timing: CEO stock option awards and company news
announcements, Journal of Finance 52(2), 449-476.
23. Lie, E., 2005, On the timing of CEO stock option awards, Management Science 51(5),
802-812.
24. Heron, R., and E. Lie, 2007, Does backdating explain the stock price pattern around
executive stock option grants? , Journal of Financial Economics 83, 271-295.
10. Sarbanes-Oxley
25. Zhang, I., 2007, Economic Consequences of the Sarbanes-Oxley Act of 2002, Journal of
Accounting and Economics 44, 74-115.
11. Auditing
26. Badertscher, B., Jorgensen, B., Katz, K.. Kinney, W., 2014, Public Equity and Audit
Pricing in the United States, Journal of Accounting Research 52, 303-339.
Page 8 of 8