Derivative accounting and financial reporting quality: A review of the literature

The financial crisis of 2008 increased the call for standard setters and financial regulators to review the effectiveness of derivative regulation in improving financial reporting quality. Prior literature defines financial reporting quality as the extent to which financial statements provide information that is useful to investors and creditors in their investment decisions (Schipper, 2003; Schipper & Vincent, 2003). This review summarizes the empirical evidence regarding the effectiveness of derivative regulation in achieving its stated objective. Extant literature shows that although derivative regulations have improved information provided to investors, there is still room for improvement. Recommendations from this stream of literature suggest that the Financial Accounting Standards Board (FASB) require managers to provide more complete, transparent, and forward-looking disclosures surrounding their derivative positions (Campbell, 2015; Franco-Wong, 2000). This review may be useful to standard setters, practitioners, and accounting academics by providing a synthesis of extant academic literature on the effectiveness of current derivative regulation. As the FASB and International Accounting Standards Board (IASB) continue to expand derivative accounting rules, this review may also be useful in identifying areas for future academic research.     

On the intertemporal value relevance of conventional financial accounting in Australia

This paper examines whether the relevance of conventional (earnings focused) accounting information for valuation has declined in Australia over a recent period of 28 years. Motivation is provided by the anecdotal concerns of financial analysts, accounting regulators, and a cluster of US centric academic research papers that conclude that the relevance of financial accounting (and earnings in particular) has declined over time. After controlling for nonlinearities and stock price inefficiencies, we find that the value relevance of core accounting earnings has not declined. A possible exception is found for small stocks. We also observe that net book values are relatively less important in Australia when compared to the USA. Our results are informative for investors who require feedback on valuation issues and the International Accounting Standards Board regulators in any further moves towards a balance sheet focus.     

Teaching financial literacy in a co-curricular service-learning model

The current economic environment has brought to light the financial literacy epidemic in this country. A lack of personal financial education has contributed to the increase in consumer credit debt, a trend evident for many college students who often have significant credit card debt. One way to combat this problem is through financial literacy education. This paper describes a service-learning project implemented through a Beta Alpha Psi chapter, which fulfills the educational objectives of the accounting curriculum and addresses an educational need. The project provides reciprocity of learning between members of Beta Alpha Psi and their audience, college underclassmen. The results indicate that the project is successful in educating both presenters and audience members on basic financial knowledge as well as developing technical and communication skills of Beta Alpha Psi members. The project outline presented in this paper provides a framework for others to use.     

Relevance of Academic Research and Researchers' Role in the IASB's Financial Reporting Standard Setting

The International Accounting Standards Board (IASB) faces a vast number of standard‐setting issues at all levels of financial reporting. The purpose of this article is to explore the relevance of academic research for financial reporting standard setting and the role of academic researchers in the standard‐setting process. We contribute to the current debate surrounding International Financial Reporting Standards (IFRS) by drawing inferences from prior findings regarding the role of research in the IASB's standard‐setting efforts. After defining three broad categories of standard‐setting questions, we explore how the international heterogeneity of its constituency imposes constraints on the IASB's work. Then, whether and how academic research can inform policy makers is investigated from an epistemological perspective. Based on a review of extant literature, the general criteria which a piece of research should fulfil in order to be perceived as relevant and useful by standard setters are discussed. This discussion is followed by more detailed considerations regarding the suitability of different research approaches for each of the three categories of standard‐setting questions. We also touch on the subject of inferential problems inherent in most academic accounting research. Since the main objective is to contribute insights relevant to the IASB's efforts, we analyse academics' career systems and their incentives to engage in research intermediation, before discussing possible ways in which interested researchers can channel their insights into the IASB's standard‐setting process. Overall, the international dimension of IASB standard setting and its implications for relevant research are emphasized.     

Tools for Financial Innovation: Neoclassical versus Behavioral Finance

The behavioral finance revolution in academic finance in the last several decades is best described as a return to a more eclectic approach to financial modeling. The earlier neoclassical finance revolution that had swept the finance profession in the 1960s and 1970s represented the overly‐enthusiastic pursuit of only one model. Freed from the tyranny of just one model, financial research is now making faster progress, and that progress can be expected to show material benefits. An example of the application of both behavioral finance and neoclassical finance is discussed: the reform of Social Security and the introduction of personal accounts.     

Personal acquaintances and salespeople in financial services: Differences between customers and friends

The existence, benefit and management of customer–salesperson relationships in the marketing of financial services are topics of increasing interest. Much of the sales and marketing literature implies that because of time spent together, salespeople and some of their customers develop close relationships that are akin to friendships. Evidence from social psychology confirms that strong relationships are founded in deep knowledge of others gained over long periods after sharing personal information. This paper reports on the results of a study of salespeople's assessments of their personal acquaintance with customers and friends in a financial services setting. The results indicate that salespeople do not classify customers as friends on all the dimensions of personal acquaintance. Furthermore, the nature of personal acquaintance differs between ‘good’ customers (those salespeople enjoy serving), and ‘bad’ (those they do not), with the exception of the personal acquaintance dimensions of interaction frequency and personal disclosure. We discuss the implications for practice and make recommendations for future research.     

Adverse effects of uniform written reporting standards on accounting practice,education, and research

When transactions have multiple attributes, achieving uniformity in their classification depends on whether similarities or dissimilarities are of interest; uniformity with respect to both is not possible. The pursuit of uniform written standards at the expense of social norms diminishes the effectiveness of financial reporting in stewardship and governance, and in keeping the security markets informed. A shift to written standards discourages thoughtful classroom discourse on alternatives which develop professional judgment. It also engenders ‘‘by the book” attitudes and drives talent away from accounting programs and, ultimately, from the accounting profession. Judgment and personal responsibility being the hallmarks of a learned profession, the dominance of uniform written standards weakens the claim that accounting programs belong in universities alongside architecture, dentistry, engineering, law, and medicine. Uniformity discourages research and debate in academic and practice forums and promotes increasingly detailed rule-making. It shuts the door on learning through experimentation, making it difficult to discover better ways of financial reporting through practice and comparison of alternatives. Improved financial reporting calls for a careful balance between written standards and unwritten social norms.     

Financial service elimination: Objectives and problem situations

Despite the importance of financial institutions' ability to rationalise their service ranges in today's competitive environment, the area of financial service elimination decision making is one of the least researched in the literature on services marketing. This paper reports preliminary empirical research into the objectives that British financial institutions pursue by eliminating financial services, as well as into the problem situations that make financial services candidates for elimination. The findings suggest that there is a wide array of service elimination objectives and problem situations. It is also suggested that there is a need for financial institutions to distinguish between what is their service elimination objective and what is the problem situation that makes them examine a financial service for possible elimination. The practical and theoretical implications that are discussed at the end of this paper point to the need for more empirical research, if the body of knowledge on service elimination is to grow.     

Knowledge and the academic accountant: An empirical study

This article concerns the way that academic accountants approach and perceive knowledge. Knowledge within disciplines is based upon knowledge strategies, which are the sets of beliefs and “rules” by means of which academics deal with knowledge. Knowledge strategies underlie the basic philosophy of the various departments which make up the university business school, and affect the way in which academics research and teach their disciplines. The origin of this article lies in our speculation about what it is that academic accountants consider worth knowing about accountancy issues, and further, what rules and strategies impact on their perception of what is valid or appropriate knowledge. In order to ascertain whether or not the concept of knowledge strategies has any validity and whether accounting faculty hold different knowledge strategies compared to nonaccounting business faculty, a study was undertaken involving the seven English university business schools which cover the full range of undergraduate, MBA, doctoral, and executive programmes. A questionnaire was sent to 407 academics at these schools. Following a factor analysis of the data collected, three strategies were identified as the Personal Knowledge Strategy (characterised by reliance on individual creativity, personal experience and judgement), the External Strategy (characterised by the view that knowledge can be found by means of objective criteria), and the Collegial Knowledge Strategy (characterised by debate and consultation with colleagues in order to compare, contrast, discuss and evaluate knowledge). A comparative analysis of the 68 accounting faculty who responded to the questionnaire and the 165 responding nonaccountant faculty revealed that academic accountants hold a significantly lower personal knowledge strategy and also a significantly higher external strategy, when compared with nonaccountant faculty. These empirical findings lend support to Zeff's concern that academic accountants' approach to education does not result in students being acquainted “with a field of professional endeavor consistent with the liberal tradition of universities” (Zeff, 1989b, p. 204).     

提高财经类学术期刊核心竞争力的思考

财经类学术期刊核心竞争力是财经类学术期刊长期积累所形成的并融入期刊内质中的独特的支撑期刊竞争的内在品质及其优势,并取得可持续性生存与发展的核心竞争能力集成。本文结合我国财经类学术期刊业的现状,阐述了财经类期刊核心竞争力的特征,分析了提升财经类期刊核心竞争力的难点,提出了培育期刊核心竞争力的对策建议。     

The Financial Accounting Standards Board: Profiles of seven leaders

Since its inception over four decades ago, the Financial Accounting Standards Board (FASB) has been led by seven individuals who have served as Board Chair. This paper includes a biographical sketch of the individuals, their terms of service, standards topics and some points of commonality and difference in their prior experience and Board service. This study provides a synoptic review to assist those interested in learning more about the Board Chairs, and to inform as to the role and style of each individual in contrast to the others. The paper provides a foundation for future research of these individuals, their activities and actions through other historical research such as oral histories, collections of writings and speeches and similar catalogues of activity.     

Practical Problems In The Reporting Entity Concept

The concept of a reporting entity has been introduced into financial reporting in Australia through a number of statements and standards. These documents require reporting entities to prepare so-called general-purpose financial reports which comply with all statements of accounting concepts and accounting standards, whereas non-reporting entities are not bound to the same level of compliance. Unfortunately, little authoritative guidance on interpretation and application of the reporting entity concept has come from either the Australian Accounting Standards Board or the Auditing Standards Board, despite the fact that the reporting entity concept has applied since 30 June 1992. The solutions proposed here may be temporary, given that the Corporations Law could be amended. It would be in readers' interests to consider any further authoritative guidance which might become available.     

Measurement in Financial Reporting: Half a Century of Research and Practice

The paper explores developments in the choice of measurement method in financial reporting over the half century that has elapsed since the foundation of Abacus in 1965. The discussion is confined to the specific problem of measuring individual assets and liabilities, rather than the wider problems of the choice of measurement unit (as in inflation accounting) or capital maintenance (as in income measurement). Changes in financial reporting practice and standards are considered in relation to developments in academic research. This has been a two‐way process: research has been stimulated by problems of practice, and practice, particularly as embodied in standards, has been influenced by the results of research. Both have been influenced by significant events in the world economy, notably the inflation of the 1970s and the global financial crisis that started in 2007. Historical cost has retained its position as the predominant measurement technique in practice, but considerable progress has been made in the implementation and understanding of current value measurements, although the principles for choosing between alternative current values (particularly ‘entry’ values as opposed to ‘exit’ values) require further exploration by standard setters, assisted by academic research.     

An exploration of student failure on an undergraduate accounting programme of study

Academic failure creates financial and emotional issues for students, with associated resource and performance implications for higher education institutions. The literature reveals that much of the work on student performance is quantitative, restricting understanding of the deeper feelings and perceptions of students towards their studies. This paper explores undergraduate student performance from an experiential perspective, recognising the complexity and subjectivity of academic performance. Findings appear to highlight: the negative focus of reasoning underlying the choice of study; the impact of affect; the importance of the role of the tutor; the tutor expectations gap; levels of control and personal responsibility for learning; and patterns of participation as possible significant and important factors in understanding academic performance. Finally, the implications of the findings are discussed and further research outlined in terms of developing a predictive model that could offer early identification of students who are susceptible to academic failure and establishing appropriate, proactive support strategies for such students.     

How to Access Financial Data of the Internet and Use for Research In Finance And Economics

Information access at no cost or low cost is becoming vital for academic researchers in finance and economics. As a result of the budget cuts at most universities in the United States, the vast majority of schools of business, other than research I institutions are now unable to purchase readily available financial data on CDs or tapes (such as CRSP or Compustat data). In order to continue their research agenda, researchers at such schools must find alternative low cost sources of data. In addition to the difficulty in locating the data, iit is a challenge to downloadthe data that one needs in a timely manner. In fact, locating and downloading a particular set of financial data when time is at a premium can be a source of frustration for researchers and educators. This paper removes some of the difficulties that researchers and educators encounter when trying to locate and access financial data on the Internet. It provides an easy way of accessing and downloading one of the most useful financial data sets available on the Internet. In particular, the author shows how to download sets of selected interest rates of the Federal Reserve Bank of Chicago web site. The same steps could be used to access and download other financial data sets that are available on the Board of Governors web site or any of the remaining eleven Federal Reserve Banks' web sites. The data sets include current and historical daily, weekly and monthly rates for a number of financial securities including, certificates of deposit, commercial paper, federal funds, banker's acceptance, Eurodollars deposit, Treasury‐bills, Treasury ‐bonds, finance paper, state and local bonds, conventional mortgages, and rated corporate bonds. The data sets also include the Federal Reserve discount rate, foreign exchange rates and a wide selection of macroeconomic variables.     

Advances in transdisciplinarity: Epistemologies,methodologies and processes

There has been a proliferation of contributions about transdisciplinarity during the last decade. Today transdisciplinarity is known and referenced in the natural and social sciences, and the humanities, as well as numerous professions. Hence it is appropriate to take stock of what has been achieved in both education and research during the last 10 years. These achievements include development of conceptual and analytical frameworks, a diversification of methods and approaches in precise localities, specific cases showing the creative, reflexive and transformative capacity of transdisciplinary inquiry, and concerns about the asymmetries of power and control of participants during processes of the co-production of knowledge. However, conceptual and institutional barriers for transdisciplinary inquiry are still common whereas incentives remain rare. This is not only due to the scepticism of decision makers in academic institutions, in conventional funding agencies and in policy decision making but also to the formal education and personal motives of scientific researchers in academic institutions.     

Consumer rationality/irrationality and financial literacy in the credit card market: Implications from an integrative review

This study analyzes consumer rationality/irrationality and financial literacy in the credit card market. Through literature review, it reveals that consumers, as a whole, make a rational decision when they borrow using a credit card and bear the high interest rate. However, consumers make various mistakes in their individual financial decisions and credit card behavior. Financial literacy, affected by cognitive ability, financial knowledge and financial education can improve consumers’ behavior. This article presents new insights on the implications for consumers, credit card issuers, policymakers and researchers. It has both practical and academic contribution to the credit card market.     

A bibliometric review of liquidity creation

Liquidity creation is a core function of financial intermediation and an important factor for economic growth. Using performance and bibliometric analysis, we trace the knowledge structure of the academic research on liquidity creation conducted over 45 years. Bibliographic material from the Scopus database is used to perform co-citation, co-word, and bibliographic coupling analyses of influential aspects of the literature, such as authors, articles, journals, countries, institutions, and topics. Through content analysis, we identify three prevalent areas of research in this field of study.     

Accounting policies in the public sector: Characteristics and consequences of accounting for capital assets

We study the evolution of American state and local governments’ capital asset accounting policies from the initial adoption of Governmental Accounting Standards Board Statement No. 34 through the fiscal year ending in 2016. We document substantial cross-sectional and time-series variation in capital asset accounting policies, which potentially diminishes the comparability of capital asset accounting information across governments and over time. We also explore the economic implications of those policies in terms of capital investment decisions and capital asset condition ratios, as reported in governments’ annual financial reports. Our findings, which are relevant to the Governmental Accounting Standards Board and its constituents, extend prior research examining the adoption and application of generally accepted accounting principles in the public sector.