Earnings management by the early adopters of SFAS No. 106

Statement of Financial Accounting Standard (SFAS) No. 106 on Nonpension Postretirement Benefits (NPB) provides managers with a relatively long adoption window and choice of transition methods which can be used by affected companies to manage earnings. This paper examines whether management's choice of adoption timing is motivated by the desire to manage earnings. Fisher's [1934] exact probability analysis is used to test the hypothesis regarding profitability of a sample of 200 early and late adopters of SFAS No. 106. The results indicate that the profitability of adopting the income-reducing accounting standard (SFAS No. 106) early is significantly higher for more profitable firms than for less profitable firms.     

Auditing regulations and bank shareholders’ wealth: An international analysis

This paper examines the ability of auditing regulation to protect bank shareholders’ wealth during the time of normal growth and during the 2007–2009 global financial crises. The study uses the bank regulation database available at the World Bank website. We select a sample of 2467 banks from 107 countries for the years 1999–2009. We perform multivariate regression analyses and find that while auditing regulations enhance bank equity prices in normal growth periods, there is no evidence that auditing regulations are associated with bank share prices during the period of financial crisis. We observe similar results for both developed and emerging countries and for the common and code law countries. Our results suggest an immediate need to strengthen audit regulations so that investor confidence is more likely to persist during periods of financial downturn.     

An examination of financial impacts of SFAS No. 106

Conclusion SFAS No. 106 requires companies to accrue the expected cost of OPEB during the years employees provide services to the company. The Statement is based on the assumption that OPEB are a form of deferred compensation and the resulting obligation should be recognized when services are rendered. This article examined some provisions of the Statement and the possible impact on financial statements of affected companies as well as management efforts to control OPEB costs. The results indicate that adoption of SFAS No. 106 has caused companies to report OPEB transition obligations on their balance sheets and to show higher OPEB annual expenses on their income statements. These perceived negative financial impacts of adopting SFAS No. 106 do not appear to have encouraged management to take immediate actions to curtail the promised OPEB. However, in many cases, management is considering implementing changes in plan design such as increasing or imposing retiree contribution levels or retiree deductibles and higher coinsurance levels, reducing benefits and coverage, and changing coordination of benefits with Medicare in attempt to mitigate the possible negative financial impacts of adopting SFAS No. 106.     

Electronic commerce education: Analysis of existing courses

E-commerce is reshaping business practices and education, yet many have expressed concern over the e-commerce education and training provided to students. This study examines the extent to which business schools, particularly accounting programs, are integrating e-commerce education into their curricula. An analysis of 79 syllabi provides evidence regarding: (1) the scope and nature of e-commerce education; (2) educational approaches to e-commerce; (3) e-commerce topics that could be taught as part of e-commerce education; (4) methods of coverage of e-commerce education; and (5) methods and reference materials for teaching an e-commerce course. This study initiates a general dialogue on the nature, content, objectives, and delivery of e-commerce education. An exploratory review and content analysis of a sample of 79 syllabi, representing different sizes of universities worldwide, reveals that business schools and accounting programs offer e-commerce courses emphasizing a broad range of skills, objectives, perspectives, teaching methods, and cognitive content. However, many common themes, topics, and assignments have emerged. The e-commerce education issues addressed in this study should help business schools and accounting programs prepare students for the challenges awaiting them in the area of emerging technological advances.     

An examination of long-lived asset impairments under SFAS No. 121

Until recently, the impairment of long-lived assets and identifiable intangibles was a controversial and unresolved accounting issue. Statement of Financial Accounting Standards (SFAS) No. 121 on long-lived asset impairments provides guidelines in selecting the conditions or circumstances that justify or necessitate a writedown and in measuring, recognizing, and disclosing the amounts of asset impairments. The results indicate that the financial impacts of 935 writedowns reported by 670 companies are quite significant and, in some cases, up to 10 times that of reported earnings. Moreover, the results indicate that industry classification consistently had a significant effect on the dependent variables used as proxies for the financial impacts of asset impairments.     

Ethical Behavior in Higher Educational Institutions: The Role of the Code of Conduct

The report of the Treadway Commission suggests that all public companies should establish effective written codes of conduct in promoting honorable behavior by corporations. The need for written "codes of conduct" for businesses is evident in the current literature. However, there is not sufficient evidence regarding the implication of codes of conduct in a college. Academic dishonesty has become an important issue in institutions of higher education. Codes of conduct can also provide a basis for ethical behavior in colleges and universities. Survey respondents were generally supportive of the concept of codes of ethical conduct in colleges and universities. The results of this study indicate that college codes of conduct tend to follow a "low road" approach. The results also suggest the following needed improvements in college and university codes of conduct: (1) greater emphasis on preventing financial, scientific, and academic fraud; (2) more inclusion of the faculty in the process; and (3) establishment of a proper process for implementation of the code.     

Islamic Religious Atmosphere and Audit Pricing: Evidence from Iran

This study examines whether the Islamic religious atmosphere of local communities influences audit pricing. We use a comprehensive survey conducted by Iran's Ministry of Culture and Islamic Guidance to measure the Islamic religious atmosphere. Using a sample of 1,204 observations from firms listed in Iran's capital market, we find that firms located in regions with a strong Islamic religious atmosphere pay significantly lower audit fees. Furthermore, the study reveals that family ownership (auditor size) strengthens (weakens) the aforementioned relationship. However, we did not find a significant moderating role for the local community's social capital. We contribute to the ethics literature by providing a better understanding of the economic consequences of the religious atmosphere and offering policy, practical, and educational implications.     

Water resource management

A growing number of countries are now experiencing increasing water stresses because of a higher demand for usable water and a failure to protect available resources from pollution. Water is a precious and scarce commodity that should be properly managed and effectively utilized. A book entitledEconomics of Water Resources: From Regulation to Privatization, coauthored by Nicolas Spulber and Asghar Sabbaghi, analyzes a number of issues in water resource management. The book provides extensive quantitative materials in support of water resource privatization. Water privatization that allows for a voluntary transfer of rights between buyers and sellers and adequate protection for other affected parties can lead to efficient use and conservation of available water resources.