TEMPORAL ADDITIVITY: A PROBLEM IN ACCOUNTING MEASUREMENT

The currently accepted set of accounting principles and practices have been formulated such that the length of the accounting period, a non-economic variable, has been incorporated into the accounting system as an independent variable. Accounting reports are, therefore, temporally non-additive - they will not add up over time. Interim reporting has become increasingly important in recent times. Interim reports for any period other than one year cannot articulate with the annual report unless temporal additivity is required of generally accepted accounting principles. L'ensemble des principes et des pratiques comptables généralement admis a été formulé de telle facon que la durée de la période, une variable non économique, scit intiroduite dans le système comptable en tant que variable indépendante. Les rapports comptables sont donc non additifs: ils ne se totaliserunt pas dans le temps. Les rapports comptables établis dans une période provisoire - c'est-à-dire dans une période inférieure à 12 mois - ont récement pris une importance considérable. Ils peuvent ainsi difficilement constituer un ensemble flexible compatible avec le rapport annuel, à moins que cette additivité temporelle respecte les principes comptables généralement admis. Die gegenwätigen Grundsätze und Prinzipien ordnungsmässiger Rechnungslegung sind so formuliert, dass die Dauer der Rechnungsperiode - eine nicht-ökonomische Variable - als unabhängige Variable in das Rechnungssytem aufgenommen worden ist. Rechnungsberichte sind deshalb zeitlich nicht-additiv. Vorläufige Berichterstattung ist in letzter Zeit von grGsserer Bedeutung geworden. Vorläufige Berichte für Rechnungsperioden, ausser für die Dauer ekes Jahres, können mit dem Jahresbericht nicht harmonisieren. falls nicht die zeitliche Additivität von den gegenwärtigen Rechnungsprinzipien verlangt wird.     

Taxes and the Theory of Trade Debt

In this paper, we show that taxes motivate the flow of trade credit without involving the assumption of credit market imperfections. The direction of trade credit flow depends on the distribution of marginal tax rates among buyers and sellers. In equilibrium, the trade credit decision follows a tax-induced clientele on both the supply and demand side.     

The Wealth Effects of Bank Financing Announcements in Highly Leveraged Transactions

We analyze the effect of financing announcements of highly leveraged transactions (HLTs) on the stock prices of the banks that lead HLT-lending syndicates. For our sample of 41 HLTs, we document that the first HLT and bank financing announcements result in positive wealth effects for the lending banks. We also find that these wealth effects are lower in 1985, for smaller HLTs, and for banks with a high loan loss reserve to total asset ratio. Finally, we report that Leveraged Buyout (LBO) targets gain about 2 percent, whereas leveraged recap targets lose about 2 percent, when the first bank financing agreement is announced.     

The Relevance of Varieties of Accounting Information: A U.S.A. Survey

Diverse kinds of financial information have been claimed to be relevant, for one purpose or another. A survey by mailed questionnaire over seven professional groups in five large U.S. cities sought to discover whether certain valuation rules yielded serviceable amounts in specific problem settings or in representations of financial position and income. Most of the questions were posed in the form of simple problem situations. To questions relating to wealth, spending power and financial position, large majority responses rejected conventional accounting values and endorsed market selling prices. To questions on income calculation, majorities favouring use of the same principle were smaller. Cross-tabulations of answers on financial position and income showed substantial inconsistencies; a hypothetical explanation is given. A comparison is given of responses to some questions in similar surveys in Australia and South Africa.