Accounting Research: An Overview
Ph.D. in Business Administration Seminar
Seminar Outline
ADMI 860E
Fall 2006
Instructor
Michel Magnan, Ph.D., FCA
Associate Dean – Masters’ and Graduate Diplomas
Lawrence Bloomberg Chair in Accountancy
John Molson School of Business
Concordia University
Office: GM 710
Telephone : 514-848-2424 X 4145
Fax: 514-848-4518
Email: mmagnan@jmsb.concordia.ca
Summary
As a professional field, accounting encompasses a wide range of activities,
practices, and concepts with accounting professionals acting in various
capacities (e.g., auditor, controller, financial executive). Hence, in their efforts to
understand how and why accountants make decisions as well as the impact of
these decisions, accounting researchers need to rely on a broad set of
theoretical and methodological tools that are drawn from various disciplines. The
purpose of the seminar is to expose students to these theoretical and
methodological tools. However, by emphasizing emerging issues and current
trends, the seminar adopts a forward-looking stance with respect to accounting
research so that students can better identify relevant and promising research
themes.
Objectives
The purpose of Accounting Research : An Overview is threefold:

Provide students with a comprehensive perspective of the tools,
theoretical as well as methodological, that are currently driving accounting
research;


Expose students to emerging trends in accounting research;
Introduce students to databases that are widely used in accounting
research.
With this background, students will be better able to delineate their research
interests as well as faculty members who may potentially serve as advisers.
Pedagogical Approach
Since the seminar is an introduction to accounting research, a mixed pedagogical
strategy will be used. Each lecture investigates a particular research question
from different theoretical and methodological perspectives. At the beginning of
each lecture, the instructor will provide students with background knowledge and
information so that they can better understand the context in which the studies to
be discussed were realized. Afterward, the lecture will turn into a more traditional
seminar format, with students leading the discussion on some papers.
Evaluation
The seminar is to be viewed as a learning laboratory. Therefore, at each lecture,
students are expected to turn in a short critique of a paper they would have
selected. That critique could have the following format:





What is the paper’s research question ?
What is the paper’s underlying theory ?
How was the study performed (method) ?
What does the paper show ?
What is the paper’s relevance (why is it interesting, important) ?
Students who have critiqued a particular paper are expected to provide
leadership when it is discussed in the seminar.
Students are expected to write a term paper. The term paper will take the form of
a research proposal (5-10 pages), with a research question, a theoretical
framework and a methodology. The proposed study’s contribution will also need
to be discussed.
Weekly outlines and presentations
Class discussion
Term paper
30 %
20 %
50 %
100 %
Detailed Content of Lectures
Week 1
Accounting Research – Some background
 A brief history of accounting research
 A paradigm view of accounting research
 From a normative world to positive accounting
o An user’s perspective of accounting information
o A managerial perspective of accounting information
 The accountant as decision-maker
Week 2: Is Accounting Information Useful and/or Relevant ?
Aboody, D., M.E. Barth and R. Kasznik. 2004. SFAS No. 123 Stock-Based
Compensation Expense and Equity Market Values. The Accounting Review
79(2): 251-276
Botosan, C. and M. Stanford. 2005 Managers’ Motives to Withhold Segment
Disclosures and the Effect of SFAS No. 131 on Analysts’ Information
environment. The Accounting Review 80(3):751-771
Guenther, D.A. and R. C. Sansing. 2004. The Valuation Relevance of Reversing
Deferring Tax Liabilities. The Accounting Review 79(2): 437-452.
Ely, K.; G. Waymire. 1999. Accounting Standard-setting Organizations and
Earnings Relevance: Longitudinal Evidence from NYSE Common Stocks 19271993. Journal of Accounting Research 37(2): 293-318.
Francis, J. and K. Schipper. 1999. Have Financial Statements Lost Their
Relevance ? Journal of Accounting Research 37(2): 319-352.
Kuman, K. and G. Visvanathan. 2003. The Information Content of the Deferred
Tax Valuation Allowance. The Accounting Review 78(2): 471-490.
Lev, B. and P. Zarowin. 1999. The Boundaries of Financial Reporting and How to
Extend Them. Journal of Accounting Research 37(2): 353-386.
Altamuro, J., A. Beatty, and J. Weber. 2005. The Effects of Accelerated Revenue
Recognition on Earnings Management and Earnings Informativeness: Evidence
from SEC Staff Accounting Bulletin No. 101. The Accounting Review 80(2): 373401
Week 3: Is Accounting Information Reliable and Unbiased ?
Beatty, A. and J. Weber. 2003. The Effects of Debt Contracting on Voluntary
Accounting Method Changes. The Accounting Review 78(1): 119-142.
Beatty, A. and J. Weber. 2006. Accounting Discretion in Fair Value Estimates: An
Examination of SFAS 142 Goodwill Impairments. Journal of Accounting
Research 44(2): 257-296.
Bloomfield, R., R. Libby and M.W. Nelson. 2003. Do Investors Overrely on Old
Elements of the Earnings Time Series? Contemporary Accounting Research
20(1): 1-32.
Bowen, R., A.K. Davis and S. Rajgopal. 2002. Determinants of RevenueReporting Practices for Internet Firms. Contemporary Accounting Research
19(4): 523-562.
Burgstahler, D. and M.J. Eames. 2003. Earnings Management to Avoid Losses
and Earnings Decreases: Are Analysts Fooled? Contemporary Accounting
Research 20(2): 253-294.
Cheng, Q. and T. Warfield. 2005. Equity Incentives and Earnings Management.
The Accounting Review 80(2): 441-476.
Krishnan, R. M. Yetman and R.J. Yetman. 2006. Expense Misreporting in
Nonprofit Organizations. The Accounting Review 81(2): 399-420.
Rosner, R. 2003. Earnings Manipulation in Failing Firms. Contemporary
Accounting Research 20(2): 361-408.
Hirst, E.; Koonce, L.; Miller. 2000. The joint effect of management’s prior forecast
accuracy and the form of its financial forecasts on investor judgment. Journal of
Accounting Research, supplement: 101-134.
Hirst, E. and P. Hopkins. 1999. Comprehensive Income Reporting and Analysts’
Valuation Judgments. Journal of Accounting Research, supplement: 47-84.
Magnan, M.; C. Nadeau and D. Cormier. 1999. «Earnings Management During
Anti-Dumping Investigations: Analysis and Implications». Canadian Journal of
Administrative Sciences/Revue canadienne des sciences de l’administration 16
(2): 149-162.
Week 4: Is Accounting Information a Sufficient Indicator of Firm
Performance ?
Craighead J., M. Magnan, and L. Thorne. 2004. The Impact of Mandated
Disclosure on Performance-Based CEO Compensation. Contemporary
Accounting Research 21(2): 369-398
Bradshaw, M. T., Sloan, R. G., 2002. GAAP versus the Street: an Empirical
Assessment of Two Alternative Definitions of Earnings. Journal of Accounting
Research 40: 41-66
Clarkson, P.M., Y. Li and G.D. Richardson. 2004. The Market Valuation of
Environmental Capital Expenditures by Pulp and Paper Companies. The
Accounting Review 79(2): 329-354.
Francis, J., K. Schipper and L. Vincent. 2003. The Relative and Incremental
Explanatory Power of Earnings and Alternative to Earnings Performance
Measures for Returns. Contemporary Accounting Research 20(1): 121-164.
Ittner, C. and D. Larcker. 1999. Are nonfinancial measures leading indicators of
financial performance ? An analysis of customer satisfaction. Journal of
Accounting Research, supplement: 1-46.
Nwaeze, E.T., S. Yang and Q.J. Yin. Accounting Information and CEO
Compensation: The Role of Cash Flow from Operations in the Presence of
Earnings. Contemporary Accounting Research 23(1): 227-266.
Otley, D. and A. Fakiolas. 2000. Reliance on accounting performance measures:
dead end or new beginning ? Accounting, Organizations and Society 25(4-5):
497-510.
Reck, J.L. 2001. The usefulness of financial and nonfinancial performance
information in resource allocation decisions. Journal of Accounting and Public
Policy 20(1): 45-72.
Smith, MJ. 2002. Gaming Nonfinancial Performance Measures. Journal of
Management Accounting Research 14: 119-134.
Week 5: Databases and Capital Markets Research
Kothari, S.P. 2001. Capital Markets Research in Accounting. Journal of
Accounting and Economics 31: 105-231 (continued in the following class)
Kinney, W. 1986. Empirical Accounting Research Design for Ph.D. Students.
Accounting review (April):338-350.
Hanlon, Michelle, Shivaram Rajgopal, and Terry Shevlin. 2003. Are Executive
Stock Options Associated With Future Earnings?. Journal of Accounting and
Economics 36: 3-43
Kothari, S.P. 2001. Capital Markets Research in Accounting. Journal of
Accounting and Economics 31: 105-231 (continued from the previous class)
Bradshaw, M. T., Sloan, R. G., 2002. GAAP versus the Street: an Empirical
Assessment of Two Alternative Definitions of Earnings. Journal of Accounting
Research 40: 41-66
Lo and Mackinlay. 1997. The Econometrics of Financial Markets. Princeton
University Press: Ch3 to ch7 (?)
Week 6: Does an Audit Add Value to Financial Statements ?
Krishnan, G.V. 2005. Did Houston Clients of Arthur Andersen Recognize Publicly
Available Bad News in a Timely Fashion. Contemporary Accounting Research
22(1): 165-194.
Weber, J. and 2003. Do Experts Informational Intermediaries Add Value?
Evidence from Auditors in Microcap Initial Public Offerings. Journal of Accounting
Research 41(4): 681-720.
Myers, J.N., Linda A. Meyers and T.C. Omer. 2003. Exploring the Term of the
Auditor-Client Relationship and the Quality of Earnings: A Case for Mandatory
Auditor Rotation? The Accounting Review 78(3): 779-800.
Clarkson, P. 2000. Auditor Quality and the Accuracy of Management Earnings
Forecasts. Contemporary Accounting Research 17(4): 595-622.
Chen, C., Xijia Su and R. Zhao. 2000. An Emerging Market’s Reaction to Initial
Modified Audit Opinions: Evidence from the Shangai Stock Exchange.
Contemporary Accounting Research 17(3): 429-456.
Background readings
Becker, C.; M. Defond, J. Jiambalvo; K.R. Subramanyam. 1998. The Effects of
Audit Quality on Earnings Management. Contemporary Accounting Research
15(1): 1-24.
Blackwell, D.; T. Noland; D. Winters. 1998. The Value of Auditor Assurances:
Evidence from Loan Pricing. Journal of Accounting Research 36(1): 57-70.
Reed, B.J.; M.A. Trombley; D.S. Dhaliwal. 2000. Demand for Audit Quality: The
Case of Laventhol and Horwath’s Auditees. Journal of Accounting, Auditing and
Finance 15(2): 183-200.
Kinney, Palmrose and Scholz. 2004. Auditor independence, non-audit services
and restatements: Was the U.S. Government Right ? Journal of Accounting
Research 42(3): 561-588.
Week 7: Why Do Firms Disclose More Information Than Is Required ?
Aboody, D., M. Barth and R. Kasznik. 2004. Firms’ Voluntary Recognition of
Stock-Based Compensation Expense. Journal of Accounting Research 42(2):
123-158.
Botosan, C. and M. Plumlee. 2002. A Re-examination of Disclosure Level and
the Expected Cost of Equity Capital. Journal of Accounting Research 40(1): 2140.
Miller, G. 2002. Earnings Performance and Discretionary Disclosure. Journal of
Accounting Disclosure 40(1): 173-204.
Lang, M. and R. Lundholm. 2000. Voluntary Disclosure and Equity Offerings:
Reducing Information Asymmetry or Hyping the Stock ? Contemporary
Accounting Research 17(4): 623-662.
Byrd, J.; M. Johnson and S. Porter. 1998. Discretion in Financial Reporting: The
Voluntary Disclosure of Compensation Peer Groups in Proxy Statement
Performance Graphs. Contemporary Accounting Research 15(1): 25-52.
Cormier, D. and M. Magnan. 2001. Corporate Environmental Reporting: An
International Comparison. Working Paper (UQAM).
Kennedy, J.; T. Mitchell; S. Sefcik. 1998. Disclosure of Contingent Environmental
Liabilities: Some Unintended Consequences. Journal of Accounting Research
36(2): 257-278.
Hope, O.-K. 2003. Disclosure Practices, Enforcement of Accounting Standards,
and Analysts' Forecast Accuracy: An International Study. Journal of Accounting
Research 41(2): 235-284.
Week 8: Do Taxes Matter ?
Erickson, M., M. Hanlon and E.L. Maydew. 2004. How much will Firms Pay for
Earnings That Do Not Exist? Evidence of Taxes Paid on Allegedly Fraudulent
Earnings. The Accounting Review 79(2): 387-408.
Phillips, J.D. 2003. Corporate Tax-Planning Effectiveness: The CompensationBased Incentives. The Accounting Review 78(3): 847-874.
Hodder, L., M.L. McNally and C. Weaver. 2003. The Influence of Tax and
NonTax Factors on Banks’ Choice of Organizational Form. The Accounting
Review 78(1): 297-326.
Klassen, K. and A. Mawani. 2000. The Impact of Financial and Tax Reporting
Incentives on Option Grants to Canadian CEOs. Contemporary Accounting
Research 17(2): 227-262.
Kemsley, D. 1998. The effects of taxes on production location. Journal of
Accounting Research 36(2): 321-343.
Sillamaa, M.A. 1999. Taxpayer behavior in response to taxation : comment and
new experimental evidence. Journal of Accounting and Public Policy 18(2): 165178.
Week 9: Does It Make Accounting Sense to be Ethical ?
Schatzberg, J.W., G.R. Sevcik, B.P. Shapiro, L. Thorne, and R.S. O. Wallace.
2005. A Reexamination of Behavior in Experimental Audit Markets: The Effects
of Moral Reasoning and Economic Incentives on Auditor Reporting and Fees.
Contemporary Accounting Research 22(1): 229-264.
Chaney, P.K. and K. Philipich. 2002. Shredded Reputation: The Cost of Audit
Failure. Journal of Accounting Research 40(4): 1221-1246.
DeFond, M., K. Rahunandan and KR. Subramanyam. 2002. Do Non-Audit
Service Fees Impair Auditor Independence? Evidence from Going Concern Audit
Opinions. Journal of Accounting Research 40(4): 1247-1274.
McCracken, S. 2003. Auditors’ Strategies to Protect Their Litigation Reputation:
A Research Note. Auditing 22(1): 165-180.
Cushing, B. 1999. Economic analysis of accountants’ ethical standards: The
case of audit opinion shopping. Journal of Accounting and Public Policy 18(4-5):
339-364.
Falk, H.; B. Lynn; S. Mestelman; M. Shehata. 1999. Auditor independence, selfinterested behavior and ethics: some experimental evidence. Journal of
Accounting and Public Policy 18(4-5): 395-428.
Kaplan, S. 2001. Further Evidence on the ethics of managing earnings: an
examination of the ethically related judgments of shareholders and nonshareholders. Journal of Accounting and Public Policy 20(1): 27-44.
Week 10: Is Accounting Information an Effective Management Control Tool
?
Banker, R., S. Devaraj, R.G. Schroeder and K. Sinha. 2002. Performance Impact
of the Elimination of Direct Lavor Variance Reporting: A Field Study. Journal of
Accounting Research 40(4): 1013-1036.
Engel, E., E.A. Gordon and R. Hayes. 2002. The Roles of Performance
Measures and Monitoring in Annual Governance Decisions in Entrepreneurial
Firms. Journal of Accounting Research 40(2): 485-528.
Cavalluzo, K.; Ittner, C.; Larcker, D. 1998. Competition, Efficiency, and Cost
Allocation in Government Agencies: Evidence on the Federal Reserve System.
Journal of Accounting Research 36(1): 1-32.
Clinton, D.; J. Hunton. 2001. Linking Participative Budgeting Congruence to
Organization Performance. Behavioral Research in Accounting 13: 127-142.
Coletti, A.L., K.L. Sedatole and K.L. Towry. 2005. The Effects of Control Systems
on Trust and Cooperation in Collaborative Environments. The Accounting Review
80(2): 477-500.
Harrison, G.L. and J. McKinnon. 1999. Cross-cultural research in management
control systems design: a review of the current state. Accounting, Organizations
and Society 24(4-6): 483-506.
Hoque, Z.; W. James. 2000. Linking Balanced Scorecard Measures to Size and
Market Factors : Impact on Organizational Performance. Journal of Management
Accounting Research 12: 1-18.
Bonner, S.; R. Hastie; G. Sprinkle; M. Young. 2000. A Review of the Effects of
Financial Incentives on Performance in Laboratory Tasks: Implications for
Management Accounting. Journal of Management Accounting Research 12: 1964.
Scott, T.W.; P. Tiessen. 1999. Performance Measurement and managerial
teams. Accounting, Organizations and Society 24: 263-285.
Sisaye, S. 1998. An Overview of the Social and Behavioral Sciences Approaches
in Management Control Research. Behavioral Research in Accounting 10: 11-26.
Fisher, J. 1998. Contingency Theory, Management Control Systems and Firm
Outcomes: Past Results and Future Directions. Behavioral Research in
Accounting 10: 47-64.
Week 11: Do Accounting Standard International Differences Matter ?
Lapointe, P., D. Cormier, M. Magnan and S. Gay-Angers. 2006. The Relative
Reliability and Relevance of IAS and Local Accounting Standards: The Case of
Switzerland. Working paper.
Leuz, C. 2003. IAS Versus U.S. GAAP: Information Asymmetry-Based Evidence
from Germany’s New Market. Journal of Accounting Research 41(3): 445-472.
Black, E., J. White. 2003. An international Comparison of Income Statement and
Balance Sheet Information: Germany, Japan and the U.S. European Accounting
Review 12(1): 29-46.
Barth, M.; Clinch, G.; Shibano, T. 1999. International accounting harmonization
and global equity markets. Journal of Accounting and Economics 26(1-3): 201235.
Cormier, Denis; Magnan, Michel; Morard, B. 2000. The contractual and value
relevance of reported earnings in a dividend-focused environment. The European
Accounting Review 9(3): 387-417.
Saudaragan, S. and J.G. Diga. 1999. Evaluation of the Contingency-Based
Approach in Comparative International Accounting: A Case for Alternative
Research Paradigms. Journal of Accounting Literature: 57-95.
Pope, P. and M. Walker. 2000. International Differences in the Timeliness,
Conservatism, and Classification of Earnings. Journal of Accounting Research,
Supplement: 53-100.
Ball, R.; Kothari, S.P.; Robin, A. 2000. The effect of international institutional
factors on properties of accounting earnings. Journal of Accounting and
Economics 29(1): 1-52.
Week 12: The CAR Files – A look at the review and editorial decisionmaking process at a major journal.
Week 13: Wrap-up and Synthesis