EVALUATING THE EFFICIENCY OF NONPROFIT ORGANIZATIONS: AN APPLICATION OF DATA ENVELOPMENT ANALYSIS TO THE PUBLIC HEALTH SERVICE

In this paper we have tried to evaluate the usefulness of the DEA model as a management tool when applied to the measurement of the efficiency of health centres. We have chosen the DEA model because it does not need prior specifications. This could be very useful when we lack data on costs. The overall evaluation of a number of health centres provides information on the distinctive features and comparative advantages of the most efficient ones. The information gathered could also be of great use in the selection of those centres in which operational audits should be carried out.     

THE USE OF PROTOCOL ANALYSIS IN ACCOUNTING

The primary objective of accounting is to provide information that helps decision makers make better decisions. Yet knowledge about how accountants and other professionals make decisions is limited. This article examines verbal protocol analysis, a methodology that uses detailed process information to model decision making behavior. There are many protocol analysis techniques, with different ways to collect data and different ways to analyze it. The selection of a particular technique depends on the specific research objectives. The article concludes with an illustration of a detailed protocol analysis study and a discussion of its results.     

THE ROLE OF INFLATION-ADJUSTED ACCOUNTING DATA IN CORPORATE RISK ANALYSIS: AN EMPIRICAL INVESTIGATION*

Both in the U.S. and abroad, certain large companies are required to report accounting data adjusted for the effect of changing prices. This study investigated the role of such adjusted accounting data in corporate risk analysis. Loan decision situations were constructed for a firm whose income from continuing operations reported in accordance with Statement of Financial Accounting Standard No. 33 (SFAS 33) was drastically reduced. Questionnaires were mailed to 1,050 randomly selected bank lending officers (BLOs) in 240 banks in 40 states and the District of Columbia. A group of BLOs received no SFAS 33 data and served as a control. While most of the responding BLOs did not seem to use SFAS 33 data in making their decisions, those who reported that they used such data reached significantly different decisions from those of the control group. More specifically, the users evaluated the firm twice as risky and recommended significantly lower loans than the control group with respect to both short-term and long-term loans. Furthermore, the users spent significantly more time in data analysis and decision making than the control group.     

EVALUATING THE PERFORMANCE OF EMPLOYEES OF CHARTERED ACCOUNTING FIRMS IN AUSTRALIA

This study contains the Australian evidence of an international study aimed at identifying those variables which influence the perceived performance of employees of chartered accounting firms. Perceived performance is hypothesised to be a function of perceived effort, perceived ability and perceived luck. The results strongly support the view that effort and ability as perceived by employees have an impact on all performance measures, while luck is perceived to have a major role in promotion prospects.     

VOLUNTARY DISCLOSURE OF ACCOUNTING RATIOS IN THE UK

This paper investigates whether the voluntary disclosure of ratios in corporate annual reports can be explained by agency and signalling theory. The two theories are discussed and the applicability to explaining ratio disclosures considered. Drawing on agency and signalling theory, seven hypotheses are tested using data collected over five years, for 313 UK companies. More specifically, associations are considered between ratio disclosure and the following characteristics: company profitability; return on investment; gearing; liquidity; company efficiency; size and industry. The paper finds some evidence of an association between ratio disclosure and company performance, size and industry. The implications of these findings are considered and areas of further research discussed.     

A NOTE ON THE USE OF REGRESSION ANALYSIS IN ACCOUNTING: COPING WITH MULTICOLLINEARITY*

A major obstacle to the effective utilization of regression analysis in accounting practice and research is the presence of multi-collinearity. This paper analyzes the impact of multicollinearity on ordinary least squares (OLS) estimation, and describes a recently developed estimation procedure, ridge regression analysis (RRA), that offers the possibility of improved coefficient estimation. An auditing example is provided comparing the results of OLS to those of RRA.     

THE LOCAL AUTHORITY ANNUAL REPORT IN THE UK: AN EXPLORATORY STUDY OF ACCOUNTING COMMUNICATION AND DEMOCRACY

The paper reports upon an exploratory examination of certain aspects of the role played by the Annual Report in the communication process between UK Local Authorities and the general public. The paper concentrates on one specific formal (as opposed to informal) communication channel and adopts a loose communication framework (as reviewed in Adelberg, 1983), focusing upon message encoding/decoding (readability); message destination (availability of reports) and message discovery and use.     

CHARITY ACCOUNTING: AN EMPIRICAL ANALYSIS OF THE IMPACT OF RECENT CHANGES

Since the early 1980s attempts have been made to reduce the diversity in accounting practice and improve the quality of the published financial statements of charities. Two major events in this process were the publication of the original Statement of Recommended Practice (SORP) 2 in 1988 and its revision in 1995. Changes have been predicated on the dominance of the user-needs model and it is argued that inconsistencies in the financial statements of charities and the adoption of dubious accounting practices make it difficult for users of charity accounts to understand (and therefore use) the information provided. This paper presents the results of an empirical analysis of 151 financial statements of large fund raising charities in England and Wales as a basis for identifying the impact of both the original SORP and the revised SORP. The study's main conclusion is that charity accounting has improved significantly since the 1980s (where improvement is seen in terms of increasing compliance with recommended practice) and it is suggested that the impact of the revised SORP, like the original SORP, is likely to be major although not immediately so.     

ACCOUNTING FOR THE COST OF CAPITAL: AN EMPIRICAL EXAMINATION

One of accounting's oldest issues, accounting for interest costs, has become a subject of increased concern in recent years. This study empirically addresses the issue of whether the cost of equity capital should be charged against income. Fourteen measures of the cost of equity capital are examined. The empirical tests involve contemporaneous correlation of accounting betas for each income measure with market betas for a sample of 200 companies. The results of these association tests indicate that income measures, net of the cost of equity capital, may have greater information content than income as presently reported.     

THE RISE AND USE OF BALANCED SCORECARD MEASURES IN AUSTRALIAN GOVERNMENT DEPARTMENTS

This paper examines the rise and use of balanced scorecard performance measurement systems in Australian government departments. Through a survey of all Australian federal, state and territory government departments we find that Australian government departments include a broad set of financial and non‐financial measures within a balanced scorecard approach. Theoretically, our findings lend support for both economic and ‘external’ institutional rationales for the implementation and use of balanced scorecard measures. We find that those government departments reporting greater implementation of balanced scorecard performance measures also report greater benefits for organisational decisions. Our findings shed light on the use, and further potential, of BSC performance measurement systems as part of the management control system in Government departments.     

AN EMPIRICAL EVALUATION OF THE COMMUNICATION OF AUTHORITATIVE PRONOUNCEMENTS IN ACCOUNTING

The cloze procedure, a psycholinguistic technique, was used to empirically evaluate the communication of authoritative pronouncements in accounting. Three of the most recent pronouncements of five different authoritative bodies were tested via a random sample of 750 certified public accountants, 750 academic accountants, and 600 private accountants. Using the cloze procedure's 57% criterion level, evidence was found (contrary to expectations) that communication problems do not exist with either authoritative bodies or classes of accountants. However, evidence was found (as expected) that communication problems do exist with two of the fifteen authoritative pronouncements tested. I want to express my sincerest appreciation to the City University of New York PSC-BHE Research Award Program for the grant that made this project possible.