Senior Scholars: Is the Brave New World of On-line Publishing for Us?

Active academics whose careers span several decades have witnessed a changing landscape for disseminating their research and scholarship.  As technology changes, the ability to share research increases exponentially, and the choice of outlets becomes more intricate.  This article discusses the role of scholarship in the lives of seasoned college educators, describes some of the major changes in the world of scholarly publication, and speculates about how this evolving environment might change our publishing strategies.  Finally, the article offers advice to senior faculty members for playing a more active role in the future of knowledge sharing

Accounting Issues: An Essay Series Part II Accounts Receivable

This is the second in a series of articles designed to help academics refocus the introductory accounting course on the theoretical underpinnings of accounting.  Intended as a supplement for the principles course, this article connects the asset Accounts Receivable to the essential theoretical constructs, discusses the inherent tradeoffs and measurement dilemmas involved, describes newsworthy examples of “beyond-GAAP accounting,” and offers a brief bibliography for further investigation should students or professors choose to research this element in more depth

Enhance The Study Of Accounting With Those Negative Headlines

The following treatise offers the argument that Enron and like scandals represent an opportunity to serve the profession by exciting our students, dispelling the stereotypes, elevating theoretical objectives above statistical sampling, catapulting accountants into a more symbiotic relationship with managers, expanding the career paths of accountants, and providing a springboard for improved teaching

Consumer Satisfaction And Stock Price Behavior: A Case Of Diminishing Returns

This study investigates stock price behavior of firms with differing levels of customer satisfaction as measured by American Customer Satisfaction Index (ACSI) scores.  Using a fixed effects regression approach, it looks at the association between stock price changes and ACSI scores, total assets, total liabilities, and total revenues for sixty-four firms over a three-year period and discovers a marked difference between stock price changes for high- and low-scoring companies, indicating possible decreasing marginal returns for investments in customer satisfaction

Executive Pay Inefficiencies In The Financial Sector

This study considers the implications of excessive non-salary-based executive pay on capital structure during the years 2005 through 2007, directly preceding the 2008 stock market crash.  The hypothesis proposes that for firms in the financial sector, executives awarded generous compensation packages, compared to salary, implemented a higher use of debt in their firm’s capital structure. The study examines data on 40 firms in the financial sector and 40 firms in the manufacturing sector to empirically test for a relationship between executive pay and leverage.  Cross-sectional analysis of nine models reveals that compensation is a significant determinant of a firm’s total debt-to-total assets ratio for the financial sector, especially with the existence of a one- to two- year lag between the variables, while the manufacturing sector yielded no significant relationship.  These findings reveal sources of agency conflicts and behavioral biases within the financial sector during the three years preceding the financial collapse

Accounting Scandal Announcements: A Test Of Market Efficiency

This paper examines the hypothesis that the stock market overreacted to accounting scandals during 2002, resulting in extensive drops in share value followed by return reversals that reveal market inefficiencies.  Data are gathered for nine firms directly involved in an accounting scandal, as well as the major competitors of those firms.  An empirical test of returns for all thirty-three firms reveals that an investment strategy of selling short scandal firms and their competitors, followed by a contrarian investment strategy of buying those same stocks, resulted in risk-adjusted returns well above those expected for a period of one year after the scandal.  These results reveal stock market inefficiencies and a potential to realize abnormal returns by capitalizing on investor overreaction.&nbsp

A Probability Model For Earnings Restatement

Given their prevalence in recent years, earnings management and financial restatements have been at the center of much of the discussion surrounding corporate malfeasance. This study builds a probability model for predicting the likelihood of earnings restatements by analyzing the trends in and the deviations from the industry averages of the return on assets, accounts receivable turnover, net profit margin, and operating cash flow to net income measures. Data are obtained for a sample of 104 firms (restating as well as non-restating) for the 2000 to 2001 period. The results suggest that deviations from the industry average of the accounts receivable turnover and the variability in the cash flow to net income provide good barometers for detecting fraudulent accounting. Potential restating firms have higher accounts receivable turnover rates than their industry counterparts and downward trends in their cash flow to net income, so an increase (decrease) in the accounts receivable turnover (operating cash flow to net income) significantly increases the likelihood of a restatement, at least in the current study

The Economic Efficacy Of Banking Mergers: 2006-2008

The most recent financial crisis has spurred a number of mergers and acquisitions in the financial industry, specifically among banks. This study examines the hypothesis that mergers and acquisitions did not produce better performing institutions during the 2006 to 2008 period. Data were compiled for six accounting-based ratios for 105 firms directly involved in mergers or acquisitions during this period. An empirical comparison of both firm-to-firm and firm-to-industry performance shows that firms did not benefit from the mergers for the majority of ratios tested. On the whole, these results reveal the inefficiencies of mergers and acquisitions, supporting the hypothesis of this study

Straddle Option Profitability In Corporate Lawsuits

The current study investigates whether abnormal returns may be gained by purchasing a straddle position prior to a verdict or settlement announcement in a lawsuit.  The basis for the hypothesis stems from behavioral finance—more specifically, the Overreaction Hypothesis.  Using CAPM expected rates of return and comparisons of 31 lawsuit firms’ straddle returns, three new straddle trading strategies are devised.  Within the sample of lawsuits, abnormal returns are evident for the three strategies.  The results and their implications support behavioral finance and the Overreaction Hypothesis and thus refute the Efficient Markets Hypothesis

New Equity Performance Following Chapter 11 Emergence

This body of research investigates how the performance of exchange-traded common equity from firms in Chapter 11 bankruptcy emergence compares with common stock from non-bankrupt competitors and recently public peers in short and long-term time horizons.  Return data are gathered for a sample of sixteen financially restructured companies, each paired with two non-distressed industry competitors and one recently-public peer.  Using the Capital Asset Pricing Model as a primary analytical tool, empirical tests show a positive correlation in equity returns among the samples of restructured and non-distressed market competitors and a stock underperformance from the sample of IPO competitors.  These results suggest that markets are better at judging the value of post-Chapter 11 companies relative to newly public companies and refute the theory of IPO price momentum