The concept of residual income has become popular in recent years due, in part, to the Ohlson 1995 article on residual income valuation. Since Ohlson assumed clean surplus accounting in that article, the concept of residual income and clean surplus accounting have become intimately linked in the...

This article offers a model that articulates how the capitalization of costs affects contemporaneous earnings and the growth path of expected earnings. It makes three points. First, reported earnings under successful efforts are more price-relevant than earnings under full costing or full...

How does the presence of a growth option affect expected earnings growth? This paper analyzes a firm with one growth option and an accrual accounting policy that, in the absence of a growth option, would equate accounting earnings to Hicksian earnings. Under this accounting policy, the presence...

Do you believe that bank shareholder equity provides an indefinitely lasting source of funding which covers for (residual) risk and loss-absorption? Our innovative approach clarifies and disentangles actual shareholder contribution to bank equity. This case study applies it to Deutsche Bank, a...

This paper examines whether dividend policy is associated with earnings management and whether the relationship varies across countries with wide-ranging degrees of institutional strength and transparency. Based on a sample of 23,429 corporations from 29 countries, we show that dividend payers...

Numerous findings in the literature suggest that paying cash dividend mitigates agency problem between majority shareholders and minority shareholders. Many common law countries require mandatory cash dividend policy to protect minority shareholder's interest. This paper provides opposite...

Existing research on pooling-of-interests accounting suggests that managers are willing to pay additional transaction costs and merger premiums to use pooling to increase future accounting net income. There is currently little evidence indicating whether the firm's shareholders benefit from...

In June 2008, a study by Sen confirmed previous findings that 10b5-1 insider stock sale programs (quot;plan salesquot;) are conducted after unusual price run ups, but Sen also found that, in months subsequent to plan sales, stock performance then essentially matched the market. Sen's results on...

The current study briefly considers KLA-Tencor's 2007 $750 million accelerated stock repurchase (ASR). Companies commonly indicate ASRs contractually promise execution of stock buybacks at a discount to market. To the contrary, analysis of a small sample of 2006-2007 ASRs finds:1) Inferior...

The Financial Accounting Standards Board (FASB) has long recognized shortcomings in fundamental accounting principles that are exacerbated by the proliferation of increasingly complex financial instruments. The FASB has been engaged since 1986 in a project to align financial reporting with...