This paper uses a laboratory experiment to show that investors systematically over-rely on firms' previous performance levels: when previous performance is high (low), prices are too high (low). This error creates two types of anomalies. Too much reliance on previous levels gives the appearance...

This paper uses recent experimental studies of financial accounting to illustrate our view of how such experiments can be conducted successfully. Rather than provide an exhaustive review of the literature, we focus on how particular examples illustrate successful use of experiments to determine...

This paper reports results of two experiments aimed at (1) assessing whether companies are less willing to record immaterial income decreasing audit differences when the adjustment causes the company to report earnings below the consensus analyst forecast and (2) determining whether...

This paper shows that whether laboratory markets over- or under-react to information is influenced by two factors: the reliability of investors' information and the portfolio formation rule used to identify price anomalies. Consistent with research in psychology, prices tend to over-react to...

"The award-winning author team of Bob Libby, Pat Libby, and Frank Hodge continue Financial Accounting's best-selling tradition of helping the instructor and student become partners in learning. Libby/Libby/Hodge uses a remarkable learning approach that keeps students engaged and involved in the...

"From the award-winning, market-leading Libby/Phillips author team comes a modern, relevant, and engaging textbook for today's managerial accounting student. Whitecotton/Libby/Phillips Managerial Accounting brings lively and engaging coverage of managerial accounting topics and decision-making...

This paper outlines strengths and limitations of three approaches to providing process evidence in experimental accounting research: moderation, mediation, and multiple experiments and methods. We argue that the research question determines the importance of process evidence in experimental...

The overall market for derivative securities is often estimated as more than ten times the World's GDP and many decry the complexity of derivatives as a main contributor to the subprime financial crisis. In this paper, we investigate whether and why complexity is used as a proxy for risk when...

We investigate analysts? reactions to qualitative warnings of adverse earnings, and attempt to reconcile analysts? more negative forecast revisions, as documented in previous research, and the apparently conflicting anecdotal evidence that suggests more positive responses to firms that warn. We...

Prior research provides evidence that auditors encounter difficulty in applying the error frequencies they have experienced to judgments of the probability that an audit objective is violated given a particular transaction cycle. This may occur because of a mismatch between the organization of...