Roger Lirely

Previous literature has discussed the use of cooperative and experiential learning as a means of augmenting student udent involvement in the learning process. Teamwork has been one method of employing cooperative learning and having students play games has been used extensively in experiential learning approaches. Often the two pedagogies are employed simultaneously by having students teams participate in games. This research combines the cooperative and experiential learning approaches by involving student teams in designing the games that other students will play with the goal of increasing student retention of knowledge. The sample included consumer behavior and integrated marketing communications students in two subsequent semesters. The pedagogy employed in the first of the two semesters included PowerPoint-based lectures, whereas the students in the second semester identified important concepts from the previous week’s lectures and integrated that content into a review game. A...

This study examines the impact of brand value on the representational faithfulness of balance sheets. The results of this research reveal that brand value is significant in explaining variations in the price to book value ratios over and above the explanatory power of variables that are typically thought to be related to price to book value differentials. These results suggest that assets of firms with significant brand value may be underreported on the firms' balance sheets. Accordingly, if the representational faithfulness of balance sheets is to be enhanced, accounting standards should consider including reliable measures of intangible assets (especially for high brand value firms) in balance sheets. BACKGROUND Little and Coffee (2000) found that the balance sheets of knowledge and service based companies are less representationally faithful than the balance sheets of more traditional firms because they systematically under-report assets. They suggest that one reason for this...

WARWICK MERCHANTS FLEET 2013Diane Crump, CPA and audit partner with Gayle & Fisher (a regional northeastern CPA firm) sits at a table in the Crow's Nest, a commercial fishing and merchant marine hang-out in the coastal town of Closter, Massachusetts. It is late November and there is a definite chill in the air. Across the table is Michael Still, Chief Financial Officer of WM Fleet division of World Ocean Logistics (WOL). Diane is continuing a discussion with Michael that began a few weeks ago as part of the initial planning for the audit of WOL for 2013. WOL owns and operates a fleet of seven large ocean-going freighters, which they refer to as the Warwick Merchants Fleet (WM). The seven freighters were purchased in early 2010 for $66 million each from HH Heavy Industries and represent the latest in freighter technology. The fleet has an expected useful life of thirty years, and each ship can be salvaged for an estimated $1.2 million. The WM fleet is a class of freighters called...

This paper examines the effects of the Tax Reform Act of 1986 (TRA86) on the relationship between corporate taxes and ability to pay taxes using two dimensions of tax equity, horizontal equity and vertical equity. We define a corporation 's ability to pay as windfall profits, which because it explicitly adjusts for differences in the risk associated with corporate investment, is a better measure of economic income than financial statement measures prevalent in prior research. We find that TRA86 had ambiguous effects on corporate tax equity and, thus, may not have achieved its intended purpose of enhancing corporate tax equity under an ability-to-pay criterion. INTRODUCTION The U.S. Congress sought to tax more closely the economic income of corporations (U.S. Congress, House 1985, 59,306-7; U.S. Congress, Senate 1985, 518-520) by modifying the corporate tax provisions as part of the Tax Reform Act of 1986 (TRA86). These modifications were designed, in part, to increase corporate ...

(ProQuest: ... denotes formulae omitted.)INTRODUCTIONWe study the accounting choices managers make to manage reported earnings during layoff announcements. Prior studies (Groshen and Potter, 2003; Farber and Hallock, 2008) suggest that layoff announcements after the 1990s were generally considered efficiency-improving, wealth-increasing events, whereas layoff announcements before that time were viewed as negative news events (Worrell, Davison, and Sharma, 1991; Chen, Mehrotra, Sivakumar, and Yu, 2001). In addition, prior research finds that CEOs of firms announcing layoffs receive significantly more stock-based compensation and more total pay in the subsequent year relative to CEOs of non-layoff companies. However, little is known about whether external pressures or contracts explicitly tied to accounting numbers affect the accounting choices by managers in layoff firms.To our knowledge, only one study, Hall, Stammerjohan, and Cermignano (2005), addresses how managers make accounting choices around layoff announcements. Covering the years 1976 through 1995, Hall et al. descriptively examine the accrual behavior of layoff firms and document that companies appear to use accruals to decrease reported earnings in the layoff announcement year. They proffer that their findings are consistent with several theories of earnings management, including the "big bath" hypothesis and the bonus hypothesis. These hypotheses posit that earnings performance is poor, managers further reduce earnings to save income for increased earnings in future years (the "big bath hypothesis) or to increase the likelihood of management bonuses in future years (the bonus hypothesis). Hall et al. did not attribute their findings to either of these hypotheses as the singular motive for earnings manipulation.Our study differs from Hall et al. in that, first, to determine whether their findings are robust over time and in later years when layoffs appear to be more dynamic, we examine layoffs in a ten-year period, 1997 - 2006. Second, we add explanatory variables to capture the impact of executive compensation and characteristics of the firm, CEO and governance. Third, we analyze whether accounting choices differ based on the stated reason for the layoff. Finally, we include control variables for the size of the layoff, state of the economy, fiscal quarter and industry.Using a sample which includes more than 2,100 layoff firm-year observations, our empirical analysis shows that firms tend to have higher intensity of earnings management (measured by discretionary accruals) during the year of a layoff announcement, and that executive compensation structures economically impact the intensity. We argue these findings support both the "big bath" and bonus hypotheses.Our paper contributes to the literature on layoffs, earnings management, and incentive-based compensation by providing analyses of how managers of layoff firms use accrual-based earnings management to respond to external pressure, and to serve self-interests in firms' stock prices. In addition to examining a more recent time period of layoffs than prior evidence, we incorporate characteristics of corporate governance and layoff reasons for sample and control firms within a multivariate setting. We thus provide new evidence on the impact of the external pressure and self-interested motives on the accounting choices made by managers of layoff firms.The next section provides background and reviews the relevant literature. In the third section, we present the research design and describe the sample and data. The fourth section contains our results. Finally, we provide concluding remarks in section five.LITERATURE REVIEWManagerial Incentives and Earnings ManagementConsiderable evidence suggests that incentive compensation can motivate managers to make superior decisions (e.g., Baker, Jensen, and Murphy, 1988). However, managers can also exert their influence and power on the design of compensation arrangements (e. …

CASE DESCRIPTION This case considers the financial accounting and tax issues associated with a loan made by a manufacturing company to the Atlanta Braves baseball team. The case has a difficulty level of four/five and is appropriate for an upper level financial accounting class or tax class. It is designed to be taught in one hour and requires two hours outside preparation by students. CASE SYNOPSIS A manufacturing company loans the Braves money at an interest rate below market. The Braves donate 20 season tickets to the company. Students are required to evaluate this transaction to determine: (1) how it should be treated for financial reporting purposes by the lender; and (2) the proper tax treatment of the transaction by the lender. The case demonstrates how financial accounting issues and tax issues can be similar as well as different in a business transaction. INSTRUCTORS' NOTES Introduction This is an illustrative case. The subject matter concerns the lender's financial...

With the pending US adoption of International Financial Reporting Standards (IFRS) and the potential elimination of last-in-first-out (LIFO) as an accepted inventory valuation method, the use of LIFO is receiving renewed attention in the financial community. This study examines accounting distortions created by the use of LIFO inventory valuation and the materiality of these distortions on liquidity measurements. Our sample consists of three-hundred-five active publicly traded US Companies with a positive LIFO reserve. We measure the materiality of LIFO balance sheet distortions relative to net assets, inventory turnover, total working capital, and current ratio. We conclude that the use of LIFO inventory valuation generates significant balance sheet distortions across a broad spectrum of company sizes and industries. These distortions, and the related comparability problems they create, provide evidence that, at least for this aspect of generally accepted accounting principles, IFR...

The purpose of this paper is to focus on the Family Limited Partnership as a potential harvesting strategy. The use of a family limited partnership (FLiP) in succession planning has proliferated in recent years. The popularity of FLiPs can be attributed to the unique benefits they offer to manage and transfer family assets, while minimizing gift and estate tax liabilities through careful planning of intra-family transfers. However, a recent court decision may be of concern to those who use a FLiP to reduce taxes and fail to establish sufficient non-tax business reasons for transferring assets to a FLiP. INTRODUCTION It has often been said that it is easier to start a new venture than to close or leave a successful business. One of the most misunderstood aspects of the entrepreneurial adventure is developing and implementing a strategy for harvesting the results generated from successful new ventures. A major reason for this phenomenon is the lack of planning a harvesting strategy at...

The number of tax reform proposals that would scrap our current federal income tax system and replace it with an alternative system continues to grow. Despite the proliferation of major tax reform proposals, research from finance and accounting professionals on the impact of proposed research is scant. The author briefly discusses some of the more popular proposals and identifies research questions that academic researchers need to address. INTRODUCTION Recently I heard a radio advertisement encouraging taxpayers to call a toll-free number and voice their support for a "fair" tax. The ad, placed by an organization called Americans for Fair Taxation, advocated a national sales tax to replace our current federal income tax. Because my research interests include tax equity and efficiency, I have more than a passing interest in what others think constitutes a "fair" tax. To satisfy my curiosity, I accessed the organization's web page the following morning. The we...

We examine the impact of managerial discretion on the independence of firms’ boards and firm performance for the period 1998-2013. We find that high-discretion firms, generally characterized by high product differentiability, high market growth, and a wider array of potential courses of action available to executives, have a smaller percentage of independent directors and a lower likelihood of CEO-chairman duality. Furthermore, firm performance is inversely related to board independence in high-discretion firms, and the negative effect is greater when they are associated with a high cost of acquiring information. Our findings indicate that a uniform “one-size-fits-all” reform of corporate boards may impair board effectiveness in some types of firms.

This study examines the importance of brand and corporate reputations in explaining variations in market-to-book value relationships. Using the 2006 Corebrand database of 500 companies with identifiable brand values and the 2006 Annual Survey of Corporate Reputation conducted by Fortune magazine and Hay Group, the study concludes that companies with high relative brand value and high relative corporate reputation ratings have significantly higher market-to-book ratios than companies with low relative brand value and low relative corporate reputation ratings. The results indicate that corporate reputation adds incremental explanatory value in explaining high book-to-market ratios.

This study examines the importance of brand and corporate reputations in explaining variations in market-to-book value relationships. Using the 2006 Corebrand database of 500 companies with identifiable brand values and the 2006 Annual Survey of Corporate Reputation conducted by Fortune magazine and Hay Group, the study concludes that companies with high relative brand value and high relative corporate reputation ratings

ABSTRACT Minsky proposed classifying firms in three categories: 1) hedge finance units which borrow no more than they are able to service in interest and principal out of operating cash flows, 2) speculative finance units which are over-leveraged to the point where they can service interest on their debt out of earnings, but cannot repay the principal, and thus must continually roll over their existing debt, and 3) Ponzi finance units, whose earnings are inadequate even to service interest on their debt. In Minsky's Financial Instability Hypothesis (FIH), protracted prosperity leads endogenously to firms overleveraging themselves and transforming a market dominated by hedge finance into one dominated by speculative and Ponzi finance. Since Ponzi finance units are forced to sell off assets to service their existing interest payments, once the market is sufficiently dominated by Ponzi finance units, this creates an oversupply of assets offered for sale, and the resulting debt deflation causes a financial crisis and drastic shortage of liquidity. It appears this crisis state can be brought about by a deceptively low critical mass of Ponzi and speculative finance units.This paper uses a large 2002-2009 quarterly data set of all publicly traded North American firms and foreign firms traded on North American exchanges, a total of 8,707 companies. Financial ratios are used to classify these firms in each quarter according to Minsky's FIH categories. Market value is used to weight the categories and average betas are computed as measures of volatility. Results provide direct empirical support for the FIH.The FIH is then reinterpreted in terms of Austrian Business Cycle (ABC) theory, which depends on inflationary credit expansion to drive the unsustainable prosperity. According to Minsky's FIH, unsustainable prosperity emerges endogenously as long periods of economic expansion make borrowers and lenders alike more willing to engage in investment activities for which they fail to see the inherent risk. It becomes clear that this process is amplified and exacerbated by credit expansion. Minsky's FIH helps flesh out some of the missing dynamics of the malinvestment liquidation phase of ABC theory, and the two views turn out to be surprisingly complementary.

ABSTRACT Business schools have established measurement tools to support their AoL systems and assess student achievement of learning objectives. However, business schools have not required their tools be empirically validated thus ensuring that they measure what they are intended to measure. We propose confirmatory factor analysis (CFA) be utilized by business schools to evaluate AoL measurement systems. We illustrate a CFA model used to evaluate the measurement tools at our College. Our approach is in initial steps currently evaluating individual measurement tools, but working towards developing a system that can evaluate the entire AoL measurement systems.

With the pending US adoption of International Financial Reporting Standards (IFRS) and the potential elimination of last-in-first-out (LIFO) as an accepted inventory valuation method, the use of LIFO is receiving renewed attention in the financial community. This study examines accounting distortions created by the use of LIFO inventory valuation and the materiality of these distortions on liquidity measurements. Our sample