In spite of the proliferation of alternative API metrics, little interpretation and comparison of them has been conducted. Their relationship with the capital asset pricing model has remained obscure. This paper attempts to clarify these and other issues. The major conclusion is that API (or...

An outline for a theory of financial statements is presented. Financial statements are viewed as products of both markets and political processes and the interactions among individuals and groups in these processes. Individuals are assumed to maximize their self-interests. Various hypotheses and...

The ability of two (non-mutually exclusive) potential explanations for executive compensation plans is examined. One is that the plans reduce the combined tax liability of the corporation and its managers. The other is that the plans encourage the managers to maximize the value of the firm. It...