Capital Budgeting and Divisional Performance Measurement synthesizes recent work on the use of capital budgeting mechanisms to coordinate decentralized investment decisions in multi-division firms with a focus on two-stage investment problems. Divisional managers often have private information about investment profitability that evolves over time and divisional investments can create positive or negative externalities for other divisions at individual investment stages. The authors show that in these circumstances, formal capital budgeting mechanisms that allocate investment costs to divisions via capital charge rates, depreciation schedules, and inter-divisional cost-sharing rules, can yield divisional performance measures that provide proper two-stage investment incentives. Several recurring themes arise in our analysis. First, positive and negative externalities that arise from divisional investment decisions can cause optimal capital charge rates to deviate substantially from the firm's cost of capital. Second, the optimal inter-divisional cost-sharing rules for shared investments can be approximated by simple rules frequently observed in practice, such as equal cost-sharing or sharing proportional to divisional performance, under sometimes counter-intuitive circumstances. Third, agency costs can change the divisions' investment decisions beyond the standard underinvestment rationing result in two-stage investment problems and can impact the first and second-stage cost charges quite differently. Finally, the analysis shows very broadly that the key components of a two-stage optimal budgeting mechanism, including capital charge rates and inter-divisional cost-sharing rules, can vary significantly across the two investment stages, even when the investment decisions appear to be similar at each stage.

Accountants were present at the creation of civilization, maintained their importance throughout history, and proved essential at various stages of cultural development-from the earliest record-keeping and the invention of writing, to double-entry bookkeeping, cost accounting of complex manufacturing, the development of professional management and accounting (which went hand-in-hand), through the amazing technologies of the information age. In other words, our civilization does not exist without sophisticated accountants and their dynamic inventions. Telling this amazing story is the purpose of this book. The story of accounting and how information is collected, analyzed and disclosed is as old as-and absolutely essential to-civilization. A fair number of key ingredients needed for modern business (and other institutions) were invented in the ancient world-money, record-keeping, numbers, writing, property rights, trade, banking, the corporation. Many of the factors that are part of today's rocket science on Wall Street date back to earlier centuries, including the use of credit, derivatives, and stock markets-not to mention manipulation and fraud. Financial, managerial and other accounting information was needed for successful entrepreneurs. The information revolution started with Gutenberg's press (which conveniently spread Pacioli's Summa across Europe), the Industrial Revolution with the steam engine, mass transit with the railroad, and instantaneous communications with Samuel Morse's telegraph. The internet represents important extensions of earlier innovations, the latest phase of the information revolution. Accountants were directly (or indirectly) involved in all of these and accounting information permeates virtually every aspect of the complex culture that is modern civilization. This book is a brief history of accounting, focusing on the long-term importance of accounting on issues from information accumulation and analysis around money and finance, business and government, and continuing success as technology and innovation expands. The focus is relatively traditional, except it intertwines with commerce, finance, and related business interests that make up what became modern civilization. For example, most corporations and other entities innovated and succeeded long-term because of increasingly complex (and useful) accounting techniques providing necessary information and control. This was true of Josiah Wedgwood, Andrew Carnegie, and General Motors. Accounting applications became early uses of computers, beginning with payroll records at General Electric in the 1950s. From electronic spreadsheets to tax preparation, the computer/accounting partnership continues.

Are you looking for an engaging, decision-focussed approach to financial reporting that encourages students to develop their interpretative skills? Building on the success of the first edition, this textbook takes a 'how, why, what' approach to financial accounting, interwoven in each chapter. From chapter one, students understand how financial information is prepared and presented, why it is prepared and presented in this way, and what the resulting financial information means for users. Designed for students taking a step beyond their introductory financial accounting training, the textbook equips them with all the key tools they will require when they enter professional practice. Reflective of the latest International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS), this textbook delivers concise, clear explanations of all the key issues in accounting standards that students need to know. Content maps to professional accounting body syllabi, making this the perfect choice for accounting courses which offer exemptions. Chapters are rich with 3 types of examples to enhance understanding: - Illustrative examples of real-world situations; - Worked examples demonstrating the calculation of figures required for financial statements; - Extracts from company annual reports demonstrate how the theory relates to financial reporting in practice. More engaging, more balanced, and more applied than other offerings, this is exactly the textbook your financial reporting students need! An extensive Online Resource Centre accompanies the textbook and includes: For students: * Solutions to all the end-of-chapter questions in the book including walkthroughs of solutions to key questions; * Additional graded questions including professional body questions; * Additional interpretative case studies based on real-life companies; * A guided tour through a company report * Specific study skills tips for accounting students For lecturers: * Customisable PowerPoint slides * Solutions to all the additional online questions * Outline solutions to the interpretative case studies * Group discussion questions

Accounting is an economic information system, and can be thought of as the language of business. Accounting principles are created, developed, or decreed and are supported or justified by intuition, authority, and acceptability. Managers have alternatives in their accounting choices; the decision are political, and trade-offs will be made. Accounting information provides individuals, both inside and outside a firm, with a starting point to understand and evaluate the key drivers of a firm, its financial position, and performance. If you are managing a firm, investing in a firm, lending to a firm, or even working for a firm, you should be able to read the firm's financial statements and ask questions based on those statements. This book examines some of the more advanced topics in accounting. As such, it assumes the reader already has some familiarity with basic accounting. (A related book covering the basics is Accounting for Fun and Profit: A Guide to Understanding Financial Statements). The book explains how the user of financial statement should interpret advanced accounting techniques presented, and helps the user conduct in-depth analysis of annual reports. The author will show you that accounting, even the advanced topics, can be informative and fun.

Causal Inferences in Capital Markets Research is an attempt to promote a broad interdisciplinary debate about the notion of causality and the role of causal inference in the social sciences. At the risk of oversimplifying, the issue of causality divides the accounting research community in two polar views: the view that causality is an unattainable ideal for the social sciences and must be given up as a standard, and the view that, on one hand, causality should be the ultimate goal of all scientific endeavors and, on the other hand, theory and causal inference are inextricable. Reflecting and discussing these views was the main motivation for this volume. This volume contains eight articles on three topics: I) Econometrics; III) Accounting, and III) Finance. First, Nancy Cartwright addresses the problem of external validity and the reliability of scientific claims that generalize individual cases. Then, John Rust discusses the role of assumptions in empirical research and the possibility of assumption-free inference. Peter Reiss considers the question how sensitive are instrumental variables to functional form transformations. Finally, Charles Manski studies the logical issues that affect the interpretation of point predictions. Second, Jeremy Bertomeu, Anne Beyer and Daniel Taylor provide a critical overview of empirical accounting research focusing on the benefits of theory-based estimation, while Qi Chen and Katherine Schipper consider the question whether all research should be causal and assess the existing gap between theory and empirical research in accounting. Third, R. Jay Kahn and Toni Whited clarifies and contrasts the notions of identification and causality, whereas Ivo Welch adopts a sociology of science approach to understand the consequences of the researchers' race for discovering novel and surprising results. This volume allows researchers and Ph.D students in accounting, and the social sciences in general, to acquire a deeper understanding of the notion of causality and the nature, limits, and scope of empirical research in the social sciences.