Pro forma estimation of financial statements often builds on constant ratios to sales revenue. While constant ratios may be relevant for established firms operating in predictable industries, they yield noninformative and possibly misleading information when applied to new firms, and...

This paper models the borrowing decision of a small firm seeking a bank loan when it can optionally hire, at a cost, an independent external auditor to convey its risk characteristics to lenders. The analysis shows that a necessary condition for a potential borrower to prefer having an audit to...

This paper uses an agency theory perspective to develop an understanding of the determinants of auditor change for small firms in the United Kingdom. The paper, therefore, extends the existing literature (see Williams [22] and Francis and Wilson [9]) from a consideration of auditor change for...

We examine whether and how investors' reliance on financial information is affected by the rate of sales growth of a start-up venture. We find that investors discern between firms by the extent to which their products are adopted by the market. For firms that failed to increased their sales...

The motivation for this contingency-type study is based on the notion that prior studies on management accounting systems (MAS) has almost entirely focused on large business organizations and neglected consideration of the effects of contextual variables and MAS on organizational effectiveness...

Often economists are asked to value business. Many times the information provided is minimal and of questionable value. Data may be provided by parties wishing to bias the valuation. The financial statements typically provided are balance sheets and income statements. These sources can be...

We empirically examine a sample of over 350 entrepreneurial firms that successfully receive an SBA guaranteed loan. The first portion of the paper contains descriptive statistics that lend anecdotal evidence concerning the organization type of borrowers, the incidence of collateral, the reasons...

The close link between the personal financial affairs of a small business owner and his or her firm has been noted in prior research. This article compares attitudes toward risk on the part of small business owners (SBOs) and non-small business owners (NSBOs). In addition, it compares the...

The importance of an accurate sales forecast to financial management in general is well documented. Although large firms' forecasting practices as they relate to financial management have been surveyed, this is the first such study on small (manufacturing) firms. Surprisingly, the two groups are...

This paper contains a review of issues pertaining to the valuation of privately held businesses, noting significant inconsistencies in the rationale and approaches taken in the valuation process. In addition to suggesting that appraisers stay with the "tried and true" rather than testing the...