American Accounting Association

About: American Accounting Association is a other organization based out in Sarasota, Florida, United States. It is known for research contribution in the topics: Basel III & Corporate governance. The organization has 24 authors who have published 88 publications receiving 835 citations. The organization is also known as: American Association of University Instructors in Accounting.

The Role of Supplementary Statements with Management Earnings Forecasts

Abstract: We investigate managers' decisions to supplement their firms' management earnings forecasts We classify these supplementary disclosures as qualitative “soft talk” disclosures or verifiable forward-looking statements We find that managers provide soft talk disclosures with similar frequency for good and bad news forecasts but are more likely to supplement good news forecasts with verifiable forward-looking statements We examine the market response to these forecasts and find that bad news earnings forecasts are always informative but that good news forecasts are informative only when supplemented by verifiable forward-looking statements, supporting our argument that these statements bolster the credibility of good news forecasts

CEO Centrality and Meeting or Beating Analysts’ Earnings Forecasts

Abstract: Using a sample of S&P 500 firms over the period 2000–2005, we examine whether CEO centrality – the relative power of the CEO within the top executive team – is associated with a higher probability of meeting or barely beating financial analysts’ earnings forecasts. We argue that CEOs with relatively high centrality are able to manipulate earnings in order to meet or just beat analysts’ forecasts. Specifically, our results show that there is a positive association between CEO centrality and the likelihood of meeting or just barely beating analysts’ forecasts. This finding holds after controlling for previously identified determinants proxying for managerial incentives, and earnings-related and forecast-related attributes. Additional tests show that CEO centrality is related to managing reported earnings upwards so that earnings targets can be met. Interestingly, our results show that as an explanatory variable, CEO centrality outperforms other proxies for CEO power used in prior studies. Collectively, our results suggest that a concentration of power in the top management team with the CEO can result in undesirable financial reporting behavior.

Bank Relationships and the Value Relevance of the Income Statement: Evidence from Income‐Statement Conservatism

Abstract: This study examines the effects of a firm's debt financing decision on the informativeness of the income statement This study specifically examines the association between a firm's bank dependence and the value relevance of the income statement by investigating the income-statement conservatism of firms with bank loans Focusing on relatively small businesses, this study finds that income-statement conservatism, measured as timely loss recognition, is increasing in a firm's bank dependence This study also finds that the value relevance of the income statement is increasing in a firm's bank dependence The findings of this paper suggest that the usefulness of the income statement varies with a firm's bank dependence, indicating that the value relevance of the income statement is a function of a firm's debt financing decision The findings further suggest that bank relationships affect the value relevance of the income statement through their influence on income-statement conservatism

Accounting Doctoral Education—2007 A Report of the Joint AAA/APLG/FSA Doctoral Education Committee

Abstract: INTRODUCTION Over the past few years the profession has witnessed a visible decline in the number of students graduating from US accounting doctoral programs A review of the accounting PhD program listing in the Hasselback Directory reveals that output over the last eight years (941 graduates) significantly trails output in the eight prior years (1488) and the eight years preceding that (1664) The ramifications of this trend are numerous One ramification is that current output levels are inadequate to provide replacements for retiring faculty over the next decade It is estimated that about 1,500 doctoralqualified accounting faculty will retire in the next eight years; thus, at recent levels of output the shortage currently experienced will be greatly exacerbated (ie, an additional shortfall of 500! doctoral-qualified faculty can be predicted) Another ramification of this trend is that there will be fewer research-active faculty to work with new doctoral students Current enrollments in US PhD programs suggest future output may be in a further decline, and the shortage of faculty may be even greater Various efforts (including those of the AICPA Foundation, AACSB, and the Big 4) are underway to address the current and future shortage of doctoral-qualified accounting faculty One of these efforts was initiated by a joint American Accounting Association, Accounting Programs Leadership Group, and Federation of Schools of Accountancy (AAA/FSA/ APLG) committee (hereafter, the Committee) This Committee’s objective was to gather and disseminate information of interest to those considering entry to the accounting academic profession and those providing advice to potential students Doctoral students from across the US were queried with respect to what information they would have found informative in their career deliberations and school selection From this information a survey was developed and sent to each of the PhD program schools listed in Hassleback’s Accounting Faculty Directory 2006–2007 The survey was distributed during the summer

Audit Independence : Its Importance to the External Auditor's Role in Banking Regulation and Supervision

Abstract: The role of the external auditor in the supervisory process requires standards such as independence,objectivity and integrity to be achieved. Even though the regulator and external auditor perform similar functions, namely the verification of financial statements, they serve particular interests. The regulator works towards safeguarding financial stability and investor interests. On the other hand, the external auditor serves the private interests of the shareholders of a company. The financial audit remains an important aspect of corporate governance that makes management accountable to shareholders for its stewardship of a company. The external auditor may however, have a commercial interest too. The debate surrounding the role of external auditors focusses in particular on auditor independence. A survey by the magazine “Financial Director” shows that the fees derived from audit clients in terms of non-audit services are significant in comparison with fees generated through auditing. Accounting firms sometimes engage in a practice called “low balling” whereby they set audit fees at less than the market rate and make up for the deficit by providing non audit services. As a result, some audit firms have commercial interests to protect too. There is concern that the auditor's interests to protect shareholders of a company and his commercial interests do not conflict with each other. Sufficient measures need to be in place to ensure that the external auditor's independence is not affected. Brussels proposed a new directive for auditors to try to prevent further scandals such as those of Enron and Parmalat. The new directive states that all firms listed on the stock market must have independent audit committees which will recommend an auditor for shareholder approval. It also states that auditors or audit partners must be rotated but does not mention the separation of auditors from consultancy work despite protests that there is a link to compromising the independence of auditors. However this may be because Brussels also shares the view that there is no evidence confirming correlation between levels of non-audit fees and audit failures and that as a result, sufficient safeguards are in place.