Properties of many important valuation rules can be quantified, examined and compared in a unified framework to assist policy decisions. Valuation rules can be viewed as econometric estimators of unobserved values of aggregates. Which valuation rule has minimum mean squared error (relative to...

One objection to fair value accounting for liabilities is that changes in a company’s credit risk are recognized as gains or losses in a manner that is counterintuitive to the way gains and losses are typically interpreted (Lipe 2002). Specifically, when a company’s credit risk increases...

This paper examines the circumstances that led to the incorporation of the LIFO method of inventory valuation into the tax law in 1938 and 1939. An understanding of why the LIFO method was adopted after decades of initial opposition by revenue officials may lend perspective to the current policy...

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are currently working together towards a comprehensive standard of accounting for financial instruments with characteristics of equity, liability, or both. An important facet of this project...

This paper clarifies some of the conflicting arguments about the value relevance of deferred taxes. We address two questions. First, does accounting aggregation hold, or in other words, are deferred tax expense and liability balances valued the same as operating earnings and asset balances,...

Khan and Watts (2009) develop a firm-year measure of conditional conservatism, labeled C_Score, that builds on the Basu (1997) asymmetric timeliness (AT) measure. However, recent research documents an asymmetric relation between lagged earnings and current returns, indicative of bias in the Basu...

I identify issues that bank regulators need to consider if fair value accounting is used for determining bank regulatory capital and when making regulatory decisions. In financial reporting, US and international accounting standard setters have issued several disclosure and measurement and...

We discuss the role and economic significance of the last-in, first-out (LIFO) inventory accounting method in the current tax system, both as a matter of practice and of policy. After examining the traditional justifications for LIFO we argue that LIFO, as it is administered, is inconsistent...

The properties of many important valuation rules can be quantified, examined, and compared in a unified framework to assist policy decisions. Valuation rules can be viewed as econometric estimators of unobserved values of aggregates. Which valuation rule has minimum mean squared error (relative...

We suggest a full consolidation approach that takes into account the property rights structure within the subsidiaries, in particular, the majority requirements on restructurings. Our approach employs a property rights index based on cooperative game theory