Pulsatile blood flow, shear force, energy dissipation and Murray's Law

BACKGROUND: Murray's Law states that, when a parent blood vessel branches into daughter vessels, the cube of the radius of the parent vessel is equal to the sum of the cubes of the radii of daughter blood vessels. Murray derived this law by defining a cost function that is the sum of the energy cost of the blood in a vessel and the energy cost of pumping blood through the vessel. The cost is minimized when vessel radii are consistent with Murray's Law. This law has also been derived from the hypothesis that the shear force of moving blood on the inner walls of vessels is constant throughout the vascular system. However, this derivation, like Murray's earlier derivation, is based on the assumption of constant blood flow. METHODS: To determine the implications of the constant shear force hypothesis and to extend Murray's energy cost minimization to the pulsatile arterial system, a model of pulsatile flow in an elastic tube is analyzed. A new and exact solution for flow velocity, blood flow rate and shear force is derived. RESULTS: For medium and small arteries with pulsatile flow, Murray's energy minimization leads to Murray's Law. Furthermore, the hypothesis that the maximum shear force during the cycle of pulsatile flow is constant throughout the arterial system implies that Murray's Law is approximately true. The approximation is good for all but the largest vessels (aorta and its major branches) of the arterial system. CONCLUSION: A cellular mechanism that senses shear force at the inner wall of a blood vessel and triggers remodeling that increases the circumference of the wall when a shear force threshold is exceeded would result in the observed scaling of vessel radii described by Murray's Law

The Role of Information and Financial Reporting in Corporate Governance and Debt Contracting

We review recent literature on the role of financial reporting transparency in reducing governance-related agency conflicts among managers, directors, and shareholders, as well as in reducing agency conflicts between shareholders and creditors, and offer researchers some suggested avenues for future research. Key themes include the endogenous nature of debt contracts and governance mechanisms with respect to information asymmetry between contracting parties, the heterogeneous nature of the informational demands of contracting parties, and the heterogeneous nature of the resulting governance and debt contracts. We also emphasize the role of a commitment to financial reporting transparency in facilitating informal multiperiod contracts among managers, directors, shareholders, and creditors

Does recent academic research support changes to audit reporting standards?

The Public Company Accounting Oversight Board (PCAOB) and the International Auditing and Assurance Standards Board (IAASB) have each proposed a standard that could significantly change the independent auditor’s report. Both proposed standards would require the auditor to make additional disclosures intended to close possible information and communication gaps and, in general, improve the relevancy of the auditor’s report. Clearly, changes to the auditor’s report could have significant consequences to financial market participants and other stakeholders. We review prior academic research related to the PCAOB and IAASB proposed standards with the intent of assessing the extent to which prior research provides sufficient, competent evidence for standard setters in their assessments of whether the proposed changes are likely to close the communication and information gaps. While significant research exists in many areas, we identify many areas where there seems to be a lack of sufficient research evidence. These results should interest standard setters as they consider fundamental changes to the auditor’s report and also as they consider ways of stimulating future relevant academic research. Additionally, our summaries that indicate limited research or inconsistent results should help academics identify important opportunities for future research to provide relevant research for the standard setting process and other essential avenues of future research.Jean Bédard, Paul Coram, Reza Espahbodi , Theodore J. Moc

The audit reporting model: current research synthesis and implications

This research synthesis evaluates relevant research concerning the audit report. For too long, there has been a significant “expectations gap” between what financial statement users expect an audit is delivering and what the audit profession believes it is providing. This gap becomes particularly problematic for auditors when there is a “business crisis” and attention is directed to the role of the auditor. Two related gaps are considered in this synthesis, a communications gap, and an information gap. All of these gaps relate to the demand for, understanding of, and use of auditor communications, which is the focus of this synthesis. Our synthesis is driven by two primary research questions: What do financial statement users perceive as information that should be communicated, and what does research show to be the effects on users of existing and other auditor communications currently being considered? As we discuss in detail, prior research does address many aspects of these two questions, but many of the findings are mixed and some important aspects have not been studied. Further research, particularly in areas regarding changes to the audit reporting model currently being considered, could lead to the improvement of the value relevance of auditor services, disclosures, and assurances. The clear interest by regulators and standard setters in such applied research should serve as a strong incentive for academics to conduct such research and for the practicing profession to support it.Theodore J. Mock, Jean Bédard, Paul J. Coram, Shawn M. Davis, Reza Espahbodi, and Rick C. Warn

The audit reporting model: current research synthesis and implications

This research synthesis evaluates relevant research concerning the audit report. For too long, there has been a significant “expectations gap” between what financial statement users expect an audit is delivering and what the audit profession believes it is providing. This gap becomes particularly problematic for auditors when there is a “business crisis” and attention is directed to the role of the auditor. Two related gaps are considered in this synthesis, a communications gap, and an information gap. All of these gaps relate to the demand for, understanding of, and use of auditor communications, which is the focus of this synthesis. Our synthesis is driven by two primary research questions: What do financial statement users perceive as information that should be communicated, and what does research show to be the effects on users of existing and other auditor communications currently being considered? As we discuss in detail, prior research does address many aspects of these two questions, but many of the findings are mixed and some important aspects have not been studied. Further research, particularly in areas regarding changes to the audit reporting model currently being considered, could lead to the improvement of the value relevance of auditor services, disclosures, and assurances. The clear interest by regulators and standard setters in such applied research should serve as a strong incentive for academics to conduct such research and for the practicing profession to support it.Theodore J. Mock, Jean Bédard, Paul J. Coram, Shawn M. Davis, Reza Espahbodi and Rick C. Warn

Joint accounting choices: an examination of firms’ adoption strategies for SFAS No. 106 AND SFAS No. 109

Adoption strategy, Adoption choice, Postretirement benefits, Deferred taxes, M41,