AIA submission: CEO overconfidence and the incidence of financial restatement

The role of the Chief Executive Officer (hereafter, CEO) in financial reporting is almost universally assumed to be significant (Carcello, Neal, Palmrose & Scholz, 2011; Cohen, Krishnamoorthy, & Wright, 2002; Connelly, 2005; Paredes, 2004). While academics and regulators agree that the CEO can have a large impact on financial reporting decisions, there is very little research on how individual CEO characteristics actually influence the financial reporting process. This paper examines the impact of one such CEO characteristic – CEO overconfidence – on the incidence of financial restatement. We utilize a matched-pairs research design consisting of 75 restatement firms (obtained through the GAO restatement sample) and a set of 75 non-restatement control firms. Using an options-based measure of CEO overconfidence developed by Malmendier and Tate (2008), we document a statistically significant positive relation between CEO overconfidence and financial statement restatement.     

SOURCES OF EXPORT EARNINGS INSTABILITY: THE ROLE OF AGRICULTURE

Previous studies of export earnings for less developed countries have suggested that earnings from primary products — including agriculture — might be more stable than those from industrial goods. Those studies used highly aggregated sectors, so that individual agricultural sectors could not be identified as stable or not. This study measures the export earnings instability of 20 commodity aggregates — more than half of them agricultural — for 27 countries between 1962 and 1983. The results indicate that some agricultural sectors were unstable and that no individual sector was universally stable. Agricultural sectors tended to be among the more stable sectors in low and middle income countries and among the less stable sectors in high income countries.     

Fair Value Measurement and Mandated Accounting Changes: The Case of the Victorian Rail Track Corporation

VicTrack in the State of Victoria in Australia began using fair value to value its assets in 2011. In doing this the company encountered the difficulties normally associated with valuing long‐lived assets that are specific to their use. In this paper, a case study is presented centred on VicTrack in order to provide information on the basic difficulties of determining the fair value of assets that are long‐lived, specific‐to‐use and in markets that are incomplete; and to better understand some of the implications of the switch from historical costs to fair value.     

Students’ perceptions of their first accounting class: implications for instructors

The purpose of this action research study is to learn directly from undergraduate students, through focus groups, about their experiences in their first accounting class, especially about the students’ knowledge and practice of critical thinking and about which classroom experiences engaged their attention and enhanced learning. The findings show that students want to understand how the first accounting course connects to the business world and to their other classes. Participants were unsure about when and how they practiced critical thinking; for improved learning outcomes, instructors need to keep critical thinking front and center. Students also need instruction in how to study accounting and how to utilize effectively the resources provided in their textbooks and as supplemental tools (e.g. integrated accounting software). Accounting professors must adapt their teaching methods to help students to meet professional demands, such as critical thinking skills and ability to handle a complex global business environment.     

The emergence of a new industrial relations actor—the role of the citizens’ Advice Bureaux?

How do employees seek representation and how is workplace conflict resolved in the absence of trade unions? This article contributes to this debate by suggesting that employees are seeking advice and representation outside the traditional labour movement and from voluntary organisations such as the Cititzens’ Advice Bureaux (CABx).     

Determining the reasons for the failure of British aircraft manufacturers to invest in Australia's industry, 1934–1941

The aim of the article is to identify the factors that prevented British aircraft manufacturers from investing in Australia in the second half of the 1930s, a period when rearmament was creating demand for aircraft. The article looks at several unsuccessful proposals by British manufacturers to establish factories in Australia to build aircraft in the late 1930s, with additional attention being given to one proposal in particular. There is evidence that the Australian Government favoured the creation of an Australian-owned industry building aircraft under licence to foreign manufacturers, and it was this factor that largely deterred British investors.     

The case for cancellation

Given the chronic and crippling impact which their mounting international indebtedness exerts on the economies of many developing countries, cancellation on a fairly comprehensive basis seems the only realistic way of coping with this problem. According to the author, the existing objections to a write-off are mainly emotional and psychological and refuse to recognise that relationships have changed.