5 research outputs found
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The effect of mutual fund investment style on the accrual and book-to-market anomalies
This paper shows that institutional investor investment style affects the association between accruals and future returns and book-to-market ratio and future returns. Since both the accrual and book-to-market anomalies generate positive future returns to a trading strategy that is consistent with a value investment style, I predict and find that the accrual effect and the book-to-market effect are lower when the percentage of shares held by value mutual funds is high. These findings are consistent with value mutual funds mitigating mispricing. Additionally, these effects are unrelated to total or growth mutual fund ownership. I also find that changes in value mutual fund holdings are positively associated with the book-to-market ratio, consistent with value funds trading to take advantage of the book-to-market effect, while the results are inconsistent with growth funds trading to take advantage of the anomaly. These results suggest that institutional investor investment style at the fund level has an effect on the accrual and book-to-market ratio anomalies
The financial crisis and mark-to-market accounting: An analysis of cascading media rhetoric and storytelling
Purpose – The purpose of this paper is to analyze media storytelling and rhetoric surrounding the credibility of the longstanding accounting practice of mark-to-market valuation. Design/methodology/approach – The cascading storytelling model of progressive framing by the media of mark-to-market valuation was applied to story subsets of the three types of classic Aristotelian rhetorical appeals. Findings – The authors found that the media blamed the accounting profession's mark-to-market valuation practices as substantive cause of recent corporate problems and declines in market values. In addition, the rhetorical framing of mark-to-market accounting practices in the media prompted the Financial Accounting Standards Board to a rush to judgment. Research limitations/implications – The paper is limited to the analysis of the storytelling included. Different results from other sources may provide another result. Practical implications – The failure in the media to address the duality between the logos of accounting and the ethos of the media narratives exacerbated the cascading activation. Understanding this duality may provide a different lens in looking at information dissemination. This is not only relative to stakeholders in making more informed decisions but should also serve as a warning to the profession, to have more voice, to use a rhetorical strategy that can have more saliency in the public arena. Originality/value – The paper examined storytelling as interplay of retrospective narrative, the presentness of living story, and the antenarratives shaping the future of not only the unfolding economic crisis, but the future of accounting itself. In terms of rhetoric, we extended the application of pathos, ethos, and logos by examining a cascading activation theory model. This is one of the few studies of antenarratives and how through cascade rhetoric the future is shaped.Accounting, Marketing, Rhetoric, Storytelling