Purpose – The purpose of this case study is to teach students the fundamental and most critical aspects of performing a financial statement risk assessment, a skill vital to help ensure both auditor and public-company compliance with guidance found in the Sarbanes-Oxley Act of 2002 (SOX), the...

After considerable discussion and some controversy the Employers' Accounting for Defined Benefit Pension and Other Post-Retirement Plans Statement of Financial Accounting Standard (SFAS) 158 was implemented in 2006. An important goal of this standard was to enhance financial reporting...

Purpose – Strategic cost structure choices determine how firms divide operating costs between fixed and variable components, and therefore have important implications for financial performance. This study examines the effect of operating leverage on equity Betas when managers have discretion...

SFAS 158 mandated balance sheet disclosure of the funded status of firms' Defined Benefit Pension Plan using the projected benefit Obligation (PBO) to estimate the pension liability. SFAS 158 caused a market phenomenon because the use of the PBO engendered dramatically higher estimates of...

Purpose – Audit quality studies document that accruals decrease when the audit firm is large, or the audit firm is an industry specialist, or the audit-client tenure is long. The purpose of this paper is to posit that incentives related to highly-valued equity mitigate these results, as...

This study evaluates the effect of the Capital Purchase Program during the 2008-2009 financial crisis on the cost of equity of 170 publicly listed banks in the United States that received funding. We document robust evidence that the liquidity provided by the government bailout reduced the cost...

Purpose – This study investigates the relations between long-window stock returns and prior years' increases in DuPont identity components: profit margin and asset turnover. In particular, we examine the relative effectiveness of profit margin and asset turnover to predict years ahead stock...