This paper examines the potential impacts of artificial smoothing (abnormal accruals) and real smoothing (derivatives) on firm value. We find that the value of the firm decreases with the magnitude of abnormal accruals and increases with the level of derivative use. Moreover, the accrual...

Prior research reveals that write-offs of long-lived assets are both large in magnitude and frequent in occurrence. Responding to calls for enhanced reporting of these items, the FASB issued SFAS 121, Accounting for the Impairment of Long-Lived Assets. However, its effect on the characteristics...

This paper examines how conservative accounting affects the relation between accounting data and firm value. The analysis shows that conservative accounting can be characterized equivalently in terms of book value, earnings, or book rate of return. Furthermore, capitalized earnings generally...

In December 2007 the SEC issued a formal rule release that allows foreign-private issuers that employ the IFRS to file their financial statements without providing a reconciliation to U.S. GAAP. While the rule change was made after the SEC received and analyzed comments from various constituents...

This study examines the value relevance of book value, earnings and dividends for a sample of all non-financial firms listed on the Kuwait Stock Exchange (KSE) over the period 2003–2009. After controlling for the impact of the global financial crisis, empirical results provide evidence on the...

This PowerPoint has proven useful for corporate executives, investors, and business students for thinking about the role of the firm's knowledge-building culture in creating value in general and sustaining competitive advantage in particular. Competitive advantage is reflected via the fade rate...

New accounting rule FIN 48 compels public corporations to disclose how much money they have reserved for financial reporting purposes in order to pay the U.S. and foreign governments in the event that tax-saving transactions are successfully challenged by the IRS and other taxing authorities....

Capitalizing on the disclosure mandated by FAS 157, I examine the equity market's perception of the reliability of internally generated fair value estimates. For the sample of Samp;amp;P 1,500 financial institutions for the first three quarters of 2008, I document a significantly positive...

We analyze a model of voluntary disclosure where investors impose a discount for uncertainty about firm value. We find a commitment to conservative reporting, defined as a requirement that firms disclose bad realizations of economic events, results in firm prices being higher on average....

This paper examines the role of conditional accounting conservatism in mitigating the cost of equity and debt capital in an international setting. I find that firms domiciled in countries with more conservative financial reporting systems have lower cost of equity and debt capital. I further...