At the fundamental level, the key challenge to a theory of income measurement is to resolve the problem caused by soft information, which leads to incomplete preferences within the entity (i.e. some alternatives are not always unambiguously ranked). This paper presents a formal axiomatic...

This paper explores corporate disclosure in a dynamic oligopoly setting. In each period, a firm receives a signal on market size and must decide whether or not to publicly disclose the information before engaging in price competition in the product market. The main insight here is that firms'...

In this essay, I wish to invite young scholars to learn, use, and contribute to accounting theory. In this invitation, I argue theory has lineage, is important and can be fun. Its lineage comes from the post-WWII scientific revolution in management education and research. Theory is important...

We examine the real effects of the Greenhouse Gas Reporting Program (GHGRP) on electric power plants in the United States. Starting in 2010, the GHGRP requires both the reporting of greenhouse gas emissions by facilities emitting more than 25,000 metric tons of carbon dioxide per year to the...

In a 1997 Review article, the authors described the good, the bad, and the ugly features of what they called the new risk management, which is the use of financial derivatives to hedge risk in firms. Since the article was first published, the “new” risk management has become commonplace and...

Two complementary sources of information are studied in a multiperiod agency model. One is an accounting source which partially but credibly conveys the agent’s private information through accounting recognition. The other is an unverified communication by the agent (i.e., a self-report). In a...

In 1914, an accounting professor named Arthur Andersen founded a public accounting practice that became the world’s largest professional-services firm. For years preceding the Enron debacle and Andersen’s collapse, the firm had struggled to create incentives within the organization for...

In this paper, we model earnings management as a consequence of the interaction among self-interested economic agents -- namely, the managers, the shareholders, and the regulators. In our model, a manager controls a stochastic production technology and makes periodic accounting reports about his...