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The generally accepted method of presentation with respect to going-concern reporting in a global context is to modify the auditor’s report with an explanatory paragraph in addition to having a separate note to the financial statements. In Canada, however, the auditor’s report is clean, and the going concern uncertainty is restricted to the endnotes. This research, using Canadian students as subjects and conducted as a between-subjects experiment, examines unsophisticated investor’s behavior to the signal conveyed by different reporting formats by auditors (U.S. versus Canadian). The results indicate that the form of the auditor’s report does significantly influence subjects’ decisions to invest and their perception of risk.

The recently passed Statement Financial of Accounting Standard (SFAS) 123R mandates that stock-option compensation costs be recognized in the income statement. This supersedes SFAS 148 and the earlier SFAS 123 which required only disclosure in the notes to the financial statements. The motivation of the Financial Accounting Standards Board (FASB) was to increase transparency in reporting of financial statements. The objective of this chapter is to test whether sophisticated users’ perceptions and judgments are affected by the different reporting format that has been mandated by SFAS 123R. Members of the Institute of Management Accountants (IMA) were used as the participants in this study. The study finds a (1) higher perceived risk, (2) lower expected accounting return, (3) more pessimistic overall perception, (4) more negative future stock price direction, and (5) lower stock price valuation by sophisticated users in the presence of recognition versus disclosure. These findings support the stance of the FASB and indicate that that information content is accentuated in the presence of recognition relative to disclosure.

To better detect potential audit issues, since 2010, the Internal Revenue Service has required firms to file a separate schedule individually disclosing each of their uncertain tax positions (UTPs). This study uses an experiment to examine how this increase in detection risk from the newly created IRS schedule influences both a firm’s tax reporting and financial reporting concurrently. We find that corporate tax professionals were more likely to recommend an UTP when their firm had a strong UTP reporting quality, regardless of the detection risk level of the reporting environment. However, we find an interaction effect for the recording of the tax reserve. In a low detection risk environment, corporate tax professionals recorded a higher (lower) tax reserve when their firm had a weak (strong) UTP reporting quality. However, in a high detection risk environment, corporate tax professionals recorded a lower (higher) tax reserve when their firm had a weak (strong) UTP reporting quality. Overall, the results provide insight into the dual nature of UTP reporting and the determinants that influence each reporting behavior.

The income tax rules concerning distributions from qualified retirement plans are considered by most to be a maze of rules defying logic. Some distributions qualify for a variety of special federal income tax treatments while others are taxed as ordinary income.In 1974, Congress proposed to equalize the total tax of taxpayers who receive distributions from retirement plans regardless of whether the distributions are received in a lump sum or as an annuity. The legislation provided a ten-year forward averaging rule for determining the tax to taxpayers receiving a lump sum distribution from a qualified pension plan. This rule was subsequently modified to five-year forward averaging in 1986.Congress recently repealed the five-year averaging rule and enacted a simplified method for determining an annuity's return on investment. The justification for the new legislation was “simplicity” rather than the original purpose — to prevent the bunching of taxable income into a single year as results from a lump sum distribution.Although Congress set out to equalize the income tax across the two forms of distributions, after two decades of tinkering, the law penalizes taxpayers who elect to receive the deferred compensation in the form of a lump sum distribution and, thereby, encourages the withdrawal of retirement assets over the life of the retiree all in the name of simplification. However, the result of the changes in the law is neither equality nor simplicity.

This paper ranks university faculties, accounting doctoral programs, individual behavioral accounting researchers, and the most influential articles based on Google Scholar citations to publications in Advances in Accounting Behavioral Research (AABR). All articles published in AABR in its first 15 volumes are included and four citation metrics are used. The paper identifies the articles, authors, faculties, and doctoral programs that made the greatest contribution to the development of AABR. Such an analysis provides a useful basis for understanding the direction the journal has taken and how it has contributed to the literature (Meyer & Rigsby, 2001). The h-index and m-index for AABR indicates it compares favorably among its peers. Potential doctoral students with an interest in behavioral accounting research, “new” accounting faculty with an interest in behavioral accounting research, current behavioral accounting research faculty, department chairs, deans, and other administrators will find these results informative.

There is ample evidence that many firms do not fully disclose environmental liabilities. Since it is likely that full disclosure of these liabilities may lead to greater accountability by a firm, it is important to identify factors related to the treatment and disclosure of these specific liabilities. This study reports on factors found to be related to the intentions of 263 financial executives to accrue and disclose environmental liabilities based on scenarios developed for this research. Using the Theory of Planned Behavior, we find that intentions to accrue and disclose environmental liabilities are positively related to an executive's attitudes, subjective norms, perceived behavioral control, and sense of obligation. We also provide evidence that the magnitude of the environmental and financial consequences has a positive, significant relation to these intentions and find that financial executives from privately held companies are less likely to accrue and disclose environmental liabilities than those from companies that are publicly traded. These findings suggest that encouraging positive attitudes toward environmental accruals and disclosures, enhancing the behavioral control of financial executives over the accrual decision, and heightening their moral obligation to disclosure these liabilities may lead to better accounting treatment and transparency of environmental matters.

Self-employed business owners are far less compliant in reporting and paying their taxes than wage earners (employees). Discounted utility theory suggests that people act rationally and would not be willing to prepay an upcoming obligation. Mental accounting and behavioral economics theory take a different view, asserting that taxpayers will prefer a pay-as-you-go pattern (i.e., regularity). In response to these opposing theories, we conducted a behavioral experiment to see if a taxpayer who is given the opportunity to pay estimated federal income taxes monthly (instead of quarterly) will do so, and also whether they are less delinquent than those in the control group, who paid estimated federal income taxes quarterly. Our results indicate that when respondents were explicitly offered the opportunity to make monthly rather than only quarterly payments, the majority of the respondents opted to make monthly prepayments at least once. Additionally, those with an explicit option to pay as often as monthly rather than quarterly had significantly fewer dollars of delinquency. Paying more frequently could alleviate some budgeting pressures for the self-employed and result in fewer delinquencies to be collected at the federal level.

This study reports the experience of management from 83 electronic plants located in the USA in dealing with time‐based performance. The general finding is that by managing time effectively, a firm is able to enjoy reductions in manufacturing cost, warranty cost, and more importantly increased market shares. Also, despite some prominent features offered by some of the more advanced quality related techniques, such as quality function deployment technique (QFD) and the Taguchi methods, our survey showed that very few electronic firms in the sample have actually adopted either of these two techniques. Yet consistent with the robustness of these theories, results indicate that those firms embracing these methods experienced a greater reduction in product development time. Thus, our study has important implications for manufacturing firms, particularly those which are still searching for better ways to improve their product development time. For example, according to Ray Stata, the president of Analog Device “The thing that hung us up for the longest time in the product development area is that we didn’t have anybody in the company who had a clue as to how to improve product development. It wasn’t that we didn’t think it was important, but how do you do it?”.

Heavy reliance on college students as surrogate experimental subjects has historically generated a great deal of controversy. Interestingly, despite its rudimentary importance to behavioral experimentation, recent dialogues on the issue are curiously scarce. This essay seeks to re-open a critical dialogue on the subject by reflecting on three theoretical or methodological issues central to the historical strife surrounding experimental subject surrogation.