Middle East Technical University
Department of Business Administration
Spring 2009-2010
Mugan
BA 6402 Topics in Accounting Research
Course Objective:
The course is designed to familiarize students with empirical research in accounting and to endow
students with skills to critically analyze the overall design of a research paper. Topics covered will be
grouped under the main research areas within accounting research including the impact of accounting
information on stock prices, the effect of accounting discretion on other firm behavior, the use of
accounting numbers to predict firm performance, and the role of management accounting information
in performance evaluation and decision-making within firms as well covering current developments
regarding corporate governance and disclosure issues.
Prerequisites:
BA 6401
Course Requirements:
You are responsible for studying the assigned papers and preparing written synopsis of the articles
included in weekly reading material. You are expected to participate in class discussions to critically
evaluate the purpose, motivation, methodology, results and conclusions of each article assigned.
Moreover, you are expected to conjure future implications of the findings on the accounting literature.
You will review the assigned papers with the following topics on mind:
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The research objectives/questions -- What is (are) the specific research question(s)?
The motivation – What was the reason to carry out this research? Is the question important for
accounting?
The theory – Is there underlying theoretical framework? What are the assumptions?
The hypotheses- Are the hypotheses well-developed? Do they follow the theoretical
foundations? Do they help to answer the research questions?
The research method/design -- What are the features of the research design? Discuss in terms
of
o Type of design e.g. experimental, quasi, empirical etc. –
o Sampling and data gathering
o Statistical methods employed – can you suggest other methods?
o Hypotheses testing
o external and internal validity
Analysis and Results – Did the analysis and results help to answer the research question? Are
the author's (s') conclusions consistent with the evidence presented? What is the primary
conclusion? What are the limitations of the evidence?
What did YOU learn from this article that will help you in your own research? Or the field?
Future research issues suggested by this research.
In addition to class discussion and written reports, the students are required to design, carry out and
write a journal quality (i.e. publishable quality) research paper about a topic of their own choice by the
end of the semester. The students will be closely monitored throughout the research and paper-writing
phase.
Grading Policy:
Synopsis reports
Class Participation
Research Paper
25%
25%
50%
Recommended texts:
Empirical Research in Accounting: A Methodological Viewpoint
By A. Rashad Abdel-khalik and Bipin B. Ajinkya. Published 1979
American Accounting Association Volume No. 4.
Experimental and Quasi-experimental Designs for Research
Campbell, Donald T. and Julian C. Stanley..
Boston, MA: Houghton Mifflin Company, 1963
Week 1 and 2
Measurement, Income determination and quality of earnings will be discussed with specific
reference to standards, financial statements and accounts.
Week 1
1. Axioms and Structures of Conventional Accounting Measurement, Y.Ijiri, The Accounting
Review, Vol.40, No.1, 1965,36-53(19p)
2. Reliability and Objectivity of Accounting Measurement, J.Ijiri and R.K.Jaedicke, The
Accounting Review, Vol.41. No.3,1966, 474-483(10p)
3. The Nature of Income Measurement, W.H.Beaver and J.S.Demski, The Accounting
Review, Vol.54, No.1, 1979,38-46(9p)
4. Metrical and Empirical Laws in Accounting, R.J.Chambers, Accounting Horizons, 1991,115(15p)
5. An Induced Theory of Accounting Measurement, G.Staubus, The Accounting Review,
Vol.60. No.1,1985, 53-75(23p)
Week 2
6. Recognition: An Information Content Perspective, P.J.Liang,2000, Working paper,(23p)
7. Continuously Contemporary Accounting :Misunderstandings and Misrepresentations,
R.J.Chambers, ABACUS,1976,137-151(15p)
8. Replacement Cost Accounting by Lawrence Revsine, Book Review by R.J.Chambers,
The Accounting Review, 1974,175-178(4p)
9. Value to the Owner: A Review and Critique, R.K.Ashton, ABACUS, Vol.23, No.1, 1987,
1-9 (9p)
10. “Econometrics of Fair Values Sunder, Shyam. .” Accounting Horizons, 22 no.1, (March
2008): 111-125 (15p)
11. The Crisis of fair value accounting: making sense of the recent debate, C.Laux, and
C.Leuz, Accounting, Organizations and Society, 2009, 34; 826-834 (9 p)
Week 3 Empirical Research Topics
1. Zimmerman, J., “Improving a Manuscript’s Readability and Likelihood of Publication,” Issues
in Accounting Education v. 4 n. 2,1989, 458-66 (9 p)
2. Ijiri,Y, “The Nature of Accounting Research”, in Research Methodology in Accounting, ed.
R.Sterling, 1971, Scholar Books Co., Houston Texas, 59-69 (11 p)
3. Jensen, M.C., Reflections on the State of Accounting Research and The Accounting
Regulation, 1976, Stanford Lectures in Accounting, (26 p)
4. Kinney, W. "Empirical Accounting Research Design for Ph.D. Students." The Accounting
Review, 1986, 61(2): 338-350 (23p)
5. K Lukka, E Kasanen ,The problem of generalizability: anecdotes and evidence in accounting
research, - Accounting, Auditing & Accountability Journal, 1995, 5:71-90 (20p)
6. Laughlin, T, Empirical Research in Accounting: alternative approaches and a case for
“middle-range” thinking, Accounting, Auditing and Accountability Journal, Vol. 8, No.1,
1995, 63-87 (26p)
Week 4- Term paper – first submission- identify the research question; state why it is interesting,
motivation (why is it important? Is there no answer to the question currently?), literature review
and methodology
Week 4-6
Financial Accounting and Capital Market Research
Week 4
1. Ball, R., and Brown,P., An Empirical Evaluation of Accounting Income Numbers, Journal of
Accounting Research, Autumn 1968, 159-178 (20 p)
2. Beaver, The Information Content of Annual Earnings Announcements,1968, Journal of
Accounting Research, Vol. 6, Empirical Research in Accounting: Selected Studies, pp. 67-92,
(26 p)
3. Landsman and Maydew, Beaver(1968) Revisited: Has the Information Content of Annual
Earnings Announcements Declined in the Past Three Decades?, Available at SSRN:
http://ssrn.com/abstract=204068 or doi:10.2139/ssrn.204068 (38 p)
Week 5
4. Beaver, 1971, The Behavior of Security Prices and Its Implications for Accounting Research
(Methods), in Research Methodology in Accounting, ed. R.Sterling, 1971, Scholar Books Co.,
Houston Texas, 9-37 (29 p)
5. Mayer-Sommer, Understanding and Acceptance of the Efficient Market Hypothesis and its
Accounting Implications, 1979, The Accounting Review, LIV (1): 88-106 (19 p)
6. Beaver, W., R. Clarke, and W. Wright, “The association between unsystematic security
returns and the magnitude of earnings forecast errors,” Journal of Accounting Research, 1979,
17(2): 316-340 (25 p)
Week 6
7. P Brown, B Howieson Capital markets research and accounting standard setting, - Accounting
and Finance, 1998, 38: 5-28 (24p)
8. P.D.Easton, Security Returns and the value relevance of accounting data, 1999, Accounting
Horizons, 13(4):399-412 (13p)
9. PD Easton, GA Sommers Scale and scale effects in market-based accounting research
- Journal of Business Finance & Accounting, 2003, 25-55 (31p)
Week 7-8
Behavioral Accounting Research Fundamentals
Week 7
1. Einhorn, H.J.,Overconfidence in Judgment, New Directions for Methodology of Social and
Behavioral Sciences, 1980, vol.4, 1-16 (not available at the library), 16p
2. Tversky A., and D.Kahneman, Judgment under Uncertainty: Heuristics and Biases, Science,
1974,Vol.185,no.4157,1124-1131, 8p
3. Jensen and Meckling, Theory of the Firm: Managerial Behavior Agency Costs and Ownership
Structure, 1976, Journal of Financial Economics, October, V. 3, No. 4, pp. 305-360. (56 p)
Week 8
4. Libby, R., The Use of Simulated Decision Makers in Information Analysis, the Accounting
Review, July 1975, 475-489 (15 p)
5. Williams, Paul F., Jenkins, J. Gregory, Ingraham, Laura, The winnowing away of behavioral
accounting research in the US: The process for anointing academic elites, Source:
ACCOUNTING ORGANIZATIONS AND SOCIETY Volume: 31 Issue: 8 Pages: 783818,36p
6. Choi and Levich, Behavioral Effects of International Accounting Diversity, 1991, Accounting
Horizons, 5(2), 1-14 (14p)
7. Mason and Gibson, Judgment and U.S. Accounting Standards, 1991, Accounting Horizons,
5(2), 14-24 (11p)
Week 9-11 Auditing Research
Week 9
1. Simunic The Pricing of Audit Services: Theory and Evidence, 1980, JAR, 18(1),161-190
(30p)
2. Wilson, Auditing: Perspectives from Multi-person Decision Theory, 1983, AR, LVIII (2),
305-318 (14p)
3. Ashton and Ashton, Sequential Belief Revision in Auditing, 1988, AR, LXIII (4), 623-641
(19p)
4. Wright and Ashton, Identifying Audit Adjustments with Attention Directing Procedures,
1989, AR, 64(4), 710-728 (19 p)
Week 10
5. Waller, Auditors' Assessments of Inherent and Control Risk in Field Settings, 1993, AR,
66(4), 783-803 (21p)
6. Koonce, Anderson, Marchant ,Justification of Decisions in Auditing, Journal of Accounting
Research,1995, Vol. 33 No. 2 Autumn, 369-84 (16p)
7. Peecher, M., The Influence of Auditor’s Justification Processes on Their Decisions: A
Cognitive Model and Experimental Evidence, 1996, JAR, 34(1) 125-140 (16 p)
8. Houston, Peters and Pratt, The Audit Risk Model, Business Risk and Audit Planning
Decisions, 1999, AR, 74(3);281-298 (17 p)
Week 11
9. Kinney, Twenty-Five Years of Audit Deregulation and Re-Regulation: What Does it Mean for
2005 and Beyond?, 2005, AUDITING: A JOURNAL OF PRACTICE & THEORY,
24(supplement),89-109 (21p)
10. Discussion: Simunic 2005, AUDITING: A JOURNAL OF PRACTICE & THEORY,
24(supplement),89-111-113 (3p)
11. Bell, T.B., R.Doogar and I. Solomon, Audit Labor Usage and Fees under Business Risk
Auditing, Journal of Accounting Research, Sep2008, Vol. 46 Issue 4, p729-760, 32p
12. Gibbins,M., S.Salterio, and A.Webb, Evidence about Auditor-Client Management
Negotiations Concerning Client’s Financial Reporting, Journal of Accounting Research, 2001,
39(3), 535-563 (28p)
Week 12 -14 Managerial Accounting Research
Week 12
1. Zimmerman JL, Conjectures regarding empirical managerial accounting research, 2001,
- Journal of Accounting and Economics, 32, 411-427 (17p)
2. Ittner, C.D., D F. Larcker, Assessing empirical research in managerial accounting: a valuebased management perspective, Journal of Accounting and Economics 32 (2001) 349–410
(62p)
3. Lillis, Anne M.; Mundy, Julia Cross-Sectional Field Studies in Management Accounting
Research--Closing the Gaps between Surveys and Case Studies. Journal of Management
Accounting Research, 2005, Vol. 17, p119-141 (23 p)
Week 13
4. MA Abernethy, WF Chua, PF Luckett, FH Selto Research in managerial accounting: Learning
from others' experiences – 1999, Accounting and Finance, 39, 1-27
5. Otley,D., Performance management: a framework for management control systems research,
1999, Management Accounting Research, 10, 363-382 (20p)
6. Baiman S, Baldenius T,Nonfinancial Performance Measures as Coordination Devices
ACCOUNTING REVIEW, Volume: 84 Issue: 2 Pages: 299-330 , MAR 2009,32p
Week 14
7.
Rajan MV, Reichelstein S, Objective versus Subjective Indicators of Managerial
Performance, Source: ACCOUNTING REVIEW Volume: 84 Issue: 1 Pages: 209237 Published: JAN 2009, 29p
8. Banker, R, Mashruvala, R., The Moderating Role of Competition in the Relationship between
nonfinancial Measures and Future Financial Performance Contemporary Accounting
Research, Vol. 24, No. 3, 2007,763-93 (31p)
9. Davila A, Foster G, Li M ,Reasons for management control systems adoption: Insights from
product development systems choice by early-stage entrepreneurial companies, Source:
ACCOUNTING ORGANIZATIONS AND SOCIETY Volume: 34 Issue: 3-4 Pages:
322-347 Published: APR-MAY 2009,26p
FINALS WEEK – Final presentation of term paper- should be in a publishable format including
the motivation, research question, literature review, hypothesis, methodology, initial ( or better the
final) results and analysis, and caveats.