AMIS 6202 – Accounting Policy and Research
Fisher College of Business, The Ohio State University
Spring 2014 (Term 1)
Course Objective
This course is designed for students in the Masters of Accounting program (MACC). 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 expose students to important academic research in accounting and the primary methods
underlying it.
This course will center on in-class discussions. I will try to provide some loose structure around
class discussions, but expect the discussions to evolve in a partially-random way. 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@fisher.osu.edu
Contact
Email: The most efficient means to contact me is through email: zach_7@fisher.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 Harvard Cases to be purchased by students.
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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
25%
25%
25%
25%
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 500 words) and should be worked on and handed in individually. The writeups should address the following questions:
Writeup 1
Date
1/17
Questions
How would you characterize a market in which the PEAD persists over a
long period of time?
Writeup 2
1/24
Summarize articles 10 & 11. How are they related to each other? Provide
at least one possible extension to them.
Writeup 3
2/3
Compare and contrast Accrual Earnings Management and Real Earnings
Management.
Writeup 4
2/10
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. Please do not write your name on the writeup. Instead, use your
student ID. Also, the file name that you upload on Carmen should be your student ID number. I will
grade a random sample of the write-ups each week.
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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 20. 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.
The username: amis6202; password: YYau{8W4$V . 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 17. 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. Its
importance is reflected in its quite high weight in the final grade.
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 February 25, 2014.
Carmen:
All relevant course material will be available on Carmen, except for the two 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.
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AMIS 6202 Course Schedule
Spring 2014 (Term 1)
CLASS/DATE
Class 1
Monday
January 6
Class 2
Wednesday
January 8
Class 3
Friday
January 10
Class 4
Monday
January 13
Class 5
Wednesday
January 15
Class 6
Friday
January 17
Class 7
Wednesday
January 22
Class 8
Friday
January 24
Class 9
Monday
January 27
Class 10
Wednesday
January 29
Class 11
Friday
January 31
Class 12
Monday
February 3
Class 13
Wednesday
February 5
Topic
Readings
Assignment
Introductions
Regression Basics
1,2
Event study basics
3
Market Efficiency (General)
4,5
Behavioral Finance (General)
6,7
Market Efficiency & Behavioral
Finance (PEAD)
8
Market Efficiency & Behavioral
Finance (PEAD)
9
Market Efficiency & Behavioral
Finance (Accrual Anomaly)
10,11
Market Efficiency & Behavioral
Finance (Limited Attention)
12
Incentives and earnings
management (General)
13,14
Incentives and earnings
management
15
Real Earnings Management
16
International accounting
convergence
17
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Writeup 1
Writeup 2
Writeup 3
CLASS/DATE
Class 14
Friday
February 7
Class 15
Monday
February 10
Class 16
Wednesday
February 12
Class 17
Friday
February 14
Class 18
Monday
February 17
Class 19
Wednesday
February 19
Tuesday
February 25
Topic
Readings
International accounting
convergence
18
Options backdating
SOX
19,20, 21
Assignment
Writeup 4
22
Projects Presentations
Projects Presentations
Projects Presentations
Final Exam due
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Project writeups
1.
Regression Background
1. Frei, F., Campbell, D., Simple Regression Mathematics, Harvard Business Case 9-605-
061.
2. Dranove, D., Practical Regression: Regression Basics, Harvard Business Case.
2.
Event Studies - General
3. MacKinlay, C., 1997, Event Studies in Economics and Finance, Journal of Economics
Literature 35(1), 13-39.
3.
The Efficient Markets Hypothesis
4. Ball, R., 1995, The Theory of Stock Market Efficiency: Accomplishments and
Limitations, Journal of Applied Corporate Finance 8, 4-17.
5. 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
6. Thaler, R., 1999, The End of Behavioral Finance, Financial Analyst Journal 55, 12-17.
7. 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
8. 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).
9. 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.
Accrual Anomaly
10. Sloan, R., 1996, Do Stock Prices Fully Reflect Information in Accruals and Cash Flows
About Future Earnings?, The Accounting Review 71, 289-315.
11. Bradshaw, M., Richardson, S., Sloan, R., 2001, Do Analysts and Auditors Use
Information in Accruals, Journal of Accounting Research 39 (1), 45-74.
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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.
6.
Incentives and earnings management
General
13. Dechow, P., and D., Skinner, 2000, Earnings Management: Reconciling the Views of
Accounting Academics, Practitioners, and Regulators, Accounting Horizon 14(2), 235250.
14. 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
15. 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
16. Roychowdhury, S., 2006, Earnings Management through Real Activities Manipulation.
Journal of Accounting and Economics 42, 335–70.
7.
International Financial Reporting
17. Ball, R., 2006, International Financial Reporting Standards (IFRS): Pros and Cons for
Investors, working paper, University of Chicago.
18. DeFond, M., Hu, X., Hung, M., Li, S., 2011, The Impact of Mandatory IFRS Adoption
on Foreign Mutual Fund Ownership: The Role of Comparability, Journal of Accounting
and Economics 51, 240-258.
8.
Options Backdating
19. Yermack, D., 1997, Good timing: CEO stock option awards and company news
announcements, Journal of Finance 52(2), 449-476.
20. Lie, E., 2005, On the timing of CEO stock option awards, Management Science 51(5),
802-812.
21. 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.
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9.
Sarbanes-Oxley
22. Zhang, I., 2007, Economic Consequences of the Sarbanes-Oxley Act of 2002, Journal of
Accounting and Economics 44, 74-115.
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