FINANCIAL ACCOUNTING SEMINAR
SPRING 2002
Bikki Jaggi
732-445-3539
E-Mail: Jaggi@RBS.rutgers.edu
Seminar Objective
The primary objective of this seminar is to expose students to ongoing and
emerging financial accounting issues and to acquaint them with various research
methodologies used in empirical financial accounting research.
Requirements
1. Important financial accounting topics have been selected for presentation and
discussion in the seminar and a number of papers are listed for reading on
each topic. The students are required to read the suggested papers for every
meeting, and they are encouraged to do their own search of the literature to
identify additional research papers on each topic.
2. All students are required to submit every week a written report on the topic of
the week. In addition to analyzing the assigned research papers, the report
should deal with important issues related to the topic.
3. Students are required to make at least one presentation in the seminar on the
assigned topic. The presentation will consist of critical analyses of the
assigned papers on the topic of the week, which shall highlight the research
focus of the paper, research methodology used to achieve the objective, and
include interpretation of the results. The analytical review shall also highlight
the strengths and weaknesses of the assigned papers.
4. A research term paper of about 20 pages will be required by the end of the
semester. The term paper can replicate any empirical study discussed in the
seminar or it can focus on any other financial accounting topic, and the topic
would require the instructor's approval.
The term paper shall clearly identify the research issue being studied,
methodology used to seek answers to the problem presented in the study, and
discussion of test results and analyses.
Grading
Presentation in the seminar - 25 points
Weekly Report and
Class Participation
- 25 "
Term (Research) Paper
- 50 "
FINANCIAL ACCOUNTING SEMINAR
SPRING 2002
Bikki Jaggi
TENTATIVE OUTLINE
(The final outline will be distributed on the first day of the class)
Topic 1: Introduction to Financial Accounting Research
Reading:
1. Abdel- Khalik, R, and B.B. Ajinkya, Empirical Research in
Accounting: A Methodological Viewpoint" (chapters 2 & 3, pp. 9-48).
Accounting Education Series, Vol. No. 4, AAA, 1979.
2. William Kinney, "Empirical Accounting Research Design for Ph.D.
Students", Accounting Review (April 1986): 338-350.
3. Beaver, W.H. "Directors in Accounting Research, NEAR AND FAR",
Accounting Horizons (June 1996): 113-124.
Additional Reading:
4. Smith E, Dan, "The Effect of the Separation of Ownership from
Control on Accounting Policy Decisions, " Accounting Review
(October 1976) pp. 707-723.
5. May and Sundem, "Research for Accounting : An
Overview,"Accounting Review (October 1976) pp. 747-763.
Topic 2 : Earnings, Price, and Returns
Reading:
1. Ball R. and Brown, " An empirical evaluation of accounting income
numbers", Journal of Accounting Research 6 (Autumn) 1968: 159-178.
2. Kothari, S.P. and J.L. Zimmerman, "Price and Return Models.", Journal
of Accounting and Economics (September 1995): 155-192.
3. Ball and Kothari, "Security ReturnsAround the Earnings
Announcements", Accounting Review, Octonber 1991, 718-731
Additional Reading:
4. Bernard V. and J. Thomas, "Evidence that stock prices do not fully
reflect the implications of current earnings for future earnings", Journal
of Accounting and Economics, 11 (December 1989) : 305-340.
5. Bernard V. and J. Thomas "Post-earnings announcement drift : Delayd
price response or rsik premium?" Journal of Accounting Research, 27
(Supplement) 1989: 1-48.
6. Eli Bartov, "Patterns in Unexpected Earnings as an Explanation for
post-announcement drift", The Accounting Review, Vol. 67, No. 3, July
1992: 610-62.
Topic 3 : Events and Association Studies and Earnings Response Coefficient
Reading :
1. Kormendi & Lipe, "Earnikngs Innovations, Earnings Persistence, and
Stock Returns, Journal of Business 1997, pp
2. East P. and T. Harris, "Aggregate accounting earnings can explain
most of security returns : The case of long return intervals, Journal of
Accounting and Economics, 14 (July/September 1992): 19-142.\
3. Collins D. and S.P.Kothari, "An Analysis of intertemporal and cross
sectional determinants of earnings response coefficients," Journal of
Accounting and Economics, 11 (July 1989) : 143-181.
Topic 4 : Review of Market Studies and Usefulness of Accounting Information
Reading :
1. Baruch Lev, "On the Usefulness of Earnings and Earnings Research :
Lessons and Directions from Two Decades of Empirical Research",
Journal of Accounting Research, Vol. 27, Supplement 1989.
2. Strong and Walker, "The Explanatory Powers of Earnings for Stock
Returns", Accounting Review, 1993, 365-399.
3. Baruch Lev and Paul Zarowin, " The Boundaries of Financial
reporting and How to Extend Them,"
Topic 5: Expanded Disclosures
Reading:
1.
David Aboody and Baruch Lev, "Value-relevance of Intangibles :
The Case of Software Capitalization.
2. Lev and Sougiannis, "The capitalization, amortization and valuerelevance of R & D", Journal of Accounting and Economics, 21
(1996): 107-138.
3. Eli Amir, Baruch Lev, "Value-relevance of non-financial information:
The wireless communications industry, Journal of Accounting and
Economics, 22 (1996): 3-30.
Topic 6: Earnings Management
Reading:
1. Jones, J. "earnings Management During Import Relief Investigation"
Journal of Accounting Research, Autumn 1991, 193-228.
2. Paul Healy, " "The effect of bonus schemes on accounting
decisions,"Journal of Accounting and Economics, 7 (1985): 85-107.
3. Mark L. DeFond and James Jiambalvo, "Debt covenant violation and
manipulation of accruals", Journal of Accounting and Economics, 17
(1994): 145-176.
Additional Reading:
4. Patricia Dechow, Richard Sloan and Amy Sweeney, "Detecting
Earnings Management",
5. Christie, A.A. "On cross-sectional analysis in Accounting Research",
Journal of Accounting and Economics (December 1988): 586-604.
6. Wayne R. Guy, S.P. Kothari, and Ross Watts, "A Market-Based
Evaluation of Discretionary Accruals Models", Journal of Accounting
Research, Vol. Supplement 1996: 83-105.
Topic 7: Agency Theory and Positive Theory
Reading:
1. Watts and Zimmerman, "Positive Accounting Theory : A Ten Year
Perspective", Accounting Review, January 1990, 131-150.
2. Holthausen and Leftwich, "The Economic Consequences of
Accounting Choices", Journal of Accounting and Econopmics
(1983) 77-117.
3. The Methodology of Positive Accounting", Accounting Review
(January 1983), pp. 481-517.
Topic 8 : Ohlson's Valuation Model
Reading
1. Ohlson, J.A. "Earnings; Book Values, and Dividends in Equity
Valuation," Contemporary Accounting Research (Spring 1995): 61687.
2. Feltham and Ohlson, "Valuation and Clean Surplus Accounting for
Operating and Financial Activities", Contemporary Accounting
Research, 1995.
3. Lundholm, R. " A Tutorial on the Ohlson and Feltham/Ohlson
Models……", Contemporary Accounting Research, 1995, 746-761.
Topic 9 :
Re-valuation Models
Reading:
1. Mary Barth and Greg Clinch, "Revalued Financial, Tangible, and
Intangible Assets : Associations with Share Prices and Non-Market
Based Value Estimates" (April 1998)
2. David Aboody, Mary Barth, and Ron Kasnik, "Revaluation of Fixed
Assets and Future Firm Performance. Evidence from U.K."
3. Barth, Beaver, and Landsman " Value-Relevance of Banks Fair Value
Disclosures under SGSAS No. 107, Accounting Review, October 26
513-537.
Topic 10 : Earnings Forecast Models
Reading:
1. Brown and Rozeff: "The Superiority of Analyst Gorecasts as
Measures of Expectations : Evidence from Earnings", Journal of
Finance (March 1979), pp. 1-16.
2. John Hassell and Robert Jennings, "Relative Forecast Accuracy and
the Timings of Earnings Forecast Announcements", The Accounting
Review, January 1986, pp. 58-73.
3. Lawrence Brown, "Earnings forecasting research : Its implications
for capital markets" International Journal of Forecasting, 1993, 295321.
4. Schipper, Katherin, "Commentary on Analysts Forecasts",
Accounting Horizons, Dece 1991.
Topic 11 : International Accounting
Reading
1. Alford A. J. Jones, R Leftwick, and M. Zmijewski, "The Relative
Informativeness of Accounting Disclosures in Difference Countries,
Journal of Accounting Research (Supplement 1993): 183-223.
2. Chan, K.C. and G.S. Seow, "The Association Between Stock Returns
and Foreign Gaap Earnings versus Earnings Adjusted to U.S. GAAP,"
Journal of Accounting and Economics (February 1996) : 139-158.
3. Ray Ball, S.P. Kothari and Ashok Rob, "The Effect of Insitutional
Factors on Properties of Accounting Earnings: International
Evidence."