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The purpose of this paper is to examine, in the context of movement towards a fair‐value based pension accounting standard, the value relevance of both recognized and disclosed pension accounting information.

Using hand‐collected data from Fortune 200 firms, this study includes both recognized and disclosed pension accounting measures (aggregated and disaggregated) in multivariate regression models. The investigation employs tests of relative and incremental value relevance in both equity and credit rating evaluation contexts.

Findings indicate that pension information recognized under a fair‐value‐based accounting model is no more or less value relevant than pension information recognized under the SFAS 87 model. Also, the disclosed off‐balance sheet pension amount is incrementally value relevant for determining share prices. However, it is not value relevant for the credit rating decision.

This study tests the relevance and reliability of accounting information jointly. Theoretically, however, relevance and reliability affect information usefulness and, thus, valuation decisions independently.

This paper yields a number of significant implications for standard setters. The unique evidence that investors apply off‐balance sheet pension amounts in the equity valuation context implies that required recognition under a fair‐value standard may not provide a significant incremental benefit over DB plan disclosures. However, such a standard may yield potential improvements in the credit rating decision context and may be much more likely to impact credit rating decisions going forward. Considering the continued shift towards fair‐value‐based pension accounting standards internationally, recognizing transitory elements of fair‐value pension cost separately from operating income is essential for mitigating any potential loss in value relevance.

The paper's aim is to research and discuss the issue of the lack of transparency in financial reporting and how companies take advantage of accounting rules in ways that inhibit transparency.

A literature review was carried out to see what had been written and discussed. Various legal cases were studied as well as Securities and Exchange Commission (SEC) and Financial Accounting Standards Board (FASB) studies of the impact of off‐balance‐sheet arrangements allowed by the FASB and SEC.

There are many ways that companies accomplish off‐balance‐sheet financing by taking advantage of rules‐based accounting. If there is not a rule to prevent an entity from handling a particular transaction a certain way, then it is difficult for the auditor to stop it from happening.

The paper is of descriptive nature. There are many policy implications from the results of the paper for all regulatory agencies. The economic substance of transactions needs to be communicated.

Financial managers and financial consultants need to refocus the structuring of financial transactions so that they comply with generally accepted accounting principles and that the economic substance of financial transactions is communicated. More accountability and ethical awareness needs to be instilled in the individuals who deceitfully structure financial transactions. Regulatory bodies need to ensure more transparency by closing loopholes and better enforcement of accounting standards. Boards of directors, especially the audit committees, need to be sure that a company is communicating the true economic reality of the financial transactions and financial position of the business entity. Off‐balance‐sheet financing is one of the most significant ways, among others, that the user of financial statements can be misled. It is time for regulatory bodies to eliminate overly rules‐based standards, clearly state the economic objective of each standard, and require firms to disclose the economic motivations for the accounting practices they adopt.

The value of the paper is that it studies the problems of the lack of transparency in financial reporting. It then suggests that if what is currently being done, (i.e. rules‐based accounting), is not working, then a new approach, principles‐based accounting needs to be implemented by the regulatory agencies. This paper provides an overview of the lack of financial statement transparency.

Over the past four decades, real values of farm real estate and the share of assets on farmers’ balance sheets attributed to farm real estate have increased. The purpose of this paper is to examine the factors that explain the concentration of the US agricultural balance sheet around a particular asset, farm real estate, and the extent to which the degree of asset concentration varies across United States Department of Agriculture production regions.

State-level data from 48 states and entropy-based inequality measures are used to examine changes in asset distributions (real estate vs non-real estate assets) both within and between regions over time.

The agricultural balance sheet is found to concentrate into real estate in the USA over the period 1960-2003 with the rate of concentration varying across production regions. In some regions, the concentration is mainly due to changes in real estate prices, while in other regions concentration is also driven by changes in real estate holdings or changes in total factor productivity.

This study formally estimates the degree to which the concentration of balance sheet items can be explained by the observed changes in farm real estate prices relative to observed changes in agricultural factor productivity or changes in farm real estate holdings. The computed regional differences in asset concentration and its main drivers have implications for changes in equity and solvency positions of farmers as well as agricultural lenders’ risk exposure.

The growing need for more relevant detail in financial statements proper to be produced annually, quarterly or monthly, and possibly continuously, translates into an urgent need for more advanced methods and tools for trend analysis. This paper takes a broader view at balance sheet analysis. We observe balance sheet items at the highest level of aggregation and compare them with the next level of detail. This exposes a multidimensional structure produced by all balance sheet items and their time points. This innovative approach to balance sheet analysis provides a new method to determine the relevance and materiality of accounting information. Instead of computing accounting ratios separately, we apply multivariate analysis as to explore the “data space” of the balance sheet of our example company: 3M. We study ten‐years of quarterly balance sheets and discuss some trends by comparing scatter plots with spectral map analysis – spectramap for short – and color coding to expose latent variables hidden in this data. We substantiate that we can explain the larger part of variance present in balance sheets in a more meaningful manner. This paper also seeks to corroborate the generality assumption that underlies the structure of the balance sheet. We strive to increase the usability of balance sheet data and underpin its explanatory power.

Considering the relationship between the central bank balance sheet and unconventional monetary policy after the 2008 financial crisis, it is crucial to see how the unconventional monetary policy, given near-zero interest rates, affects future stock market performance. This paper analyzes the impact of the Fed's balance sheet size on stock market performance.

To analyze the Fed's balance sheet size's long-term stock market implications, this paper uses the asset pricing framework of market return predictability such as Ordinary least squares (OLS) and Generalized method of moments (GMM) analysis.

Findings in this paper suggest that the Fed's balance sheet size, deflated by asset market wealth, presents evidence of return predictability during 1926–2015 that is robust against standard controls. These results can be explained through the redistribution of risk and the wealth channels of monetary policy transmission. The changing balance sheet size of a central bank (1) affects systemic risk, yields and expectations and (2) signals the future direction of monetary policy and thus economic outlook.

The main implication of these findings is that policymakers should avoid a severe imbalance between a central bank's balance sheet size and assets market wealth.

The empirical evidence in this paper documents a century-old relation between the Fed's balance sheet size and US stock market return using the Fed's balance sheet data for the last 100 years and stock market returns from the Center for research in security prices (CRSP) database.

If we cannot explain goodwill and potential goodwill in asset terms, they do not make sense. A partial explanation can be found in human assets or employee artefacts. A balance sheet model including employee artefacts is illustrated, and the consequences on the balance sheet and related financial key ratios are substantial. The inclusion of employee artefacts on the balance sheet (1) seems to make sense, (2) but it is still unclear if the inclusion will make organizations “better.” Even though the development of the balance sheet model is done in accordance with generally accepted accounting principles, it seems to (3) challenge the (elite) social order in organizations.

The purpose of this paper is to estimate empirically and by empirical means, the empirical effect of the balance sheet management at the zero lower bound on the interest rate on performance and financial variables.

The paper has an empirical approach to examine whether the movement in the balance sheet has had a spillover effect on the performance and financial variable. The empirical method used is a “structural panel management,” being appropriate for the analysis. This has never been used in strategic and management development.

The paper presents the following interesting results: the balance sheet management explains a significant portion of the changes in performance and financial variable during the non-conventional strategy approach; the performance fundamentals as the development and the opening of the financial market deal with the heterogeneity of the business in relation to the responses of the balance sheet shocks; the positive advantage of the balance sheet management may not be profitable in context characterized by low liquidity, low exposure to global markets and low stability of performance fundamentals.

Based on a heterogeneous structural panel data management over a sample spanning the balance sheet management model, the author find some evidence of small cross-border effects on the decline of long-term bond yield, an increase in performance, an increase in the stock market prices, local currency appreciation and increase in credit growth. Yet, the quantile responses show that there is substantial heterogeneity in the Asia pacific business market responses to the governance’s shocks over all response periods. Accordingly, the effects vary across Asia pacific market and are time-varying, depending on their performance fundamentals, exposure to global markets and financial market depth. The balance sheet management on performance and financial variables could be an excellent reference for future researches and practices in Schools of Management and Finances.

The purpose of this study is to analyze the effect of off-balance sheet activities on the credit risk of African banks.

The theory about the relationship between off-balance sheet activities and bank risk was used to construct a conceptual model of the effect of off-balance sheet on credit risk in an African context. The accounting approach is chosen by collecting accounting data extracted from the annual reports of 24 private and conventional African banks during the period 2010–2019. Both statistical and empirical studies are conducted. The statistical study aims to give a description of sample banks in terms of off-balance sheet activities and key financial indicators. The empirical study has the goal of exploring the correlations between, on the one hand, credit risk and, on the other hand, off-balance sheet ratio and control variables (bank- and country-specific variables). This study is based on dynamic panels using the two-step generalized method of moments technique to estimate regressions between credit risk and the explanatory variables.

The statistical study reveals that sample banks use moderately off-balance sheet activities; most of them use essentially guarantees and letters of credit, have satisfactory financial indicators and are slightly exposed to credit risk. The empirical results from the two-step generalized method of moments technique disclose that off-balance sheet activities have an intensifying effect on the credit risk of African banks. However, the increasing effect can be minimized when African banks use moderately off-balance sheet activities.

Using judiciously off-balance sheet activities does not exacerbate the exposure of African banks to credit risk. Therefore, managers of African banks are recommended to maintain a moderate level of off-balance sheet activities, especially guarantees and letters of credit.

The findings of this study eliminate the opacity about the effect of off-balance sheet activities on credit risk. Moreover, this study fulfills the huge gap in the related literature by completing the scarcity of recent studies, considering all items of the off-balance sheet, focusing on the African context, describing off-balance sheet activities and financial indicators of sample banks due to a statistical study and estimating regressions of dynamic panels between credit risk and both bank-specific and country-specific variables due to a two-step generalized method of moments technique.

Barton and Simko argue that the balance sheet information would serve as a constraint on accrual‐based earnings management. This paper aims to extend their argument by examining whether the balance sheet constraint increases managers' propensity to use either downward forecast guidance or real earnings management as a substitute mechanism to avoid earnings surprises.

Following Barton and Simko, the paper uses the beginning balance of net operating assets relative to sales as a proxy for the balance sheet constraint. The argument is that because of the articulation between the income statement and the balance sheet, previous accounting choices that increase earnings will also increase net assets and therefore the level of net assets reflects the extent of previous accrual management. Models from Matsumoto and Bartov et al. are used to measure forecast guidance. Following Rochowdhury and Cohen et al., a firm's abnormal level of production costs and discretionary expenditures are used as proxies of real earnings management. The empirical analysis is conducted based on the 1996‐2006 annual data for a sample of nonfinancial, nonregulated firms.

The paper finds that firms with higher level of beginning net operating assets relative to sales are more likely to guide analysts' earnings forecasts downward, and more likely to engage in real earnings management in terms of abnormal increases in production costs and abnormal reductions in discretionary expenditures.

Overall, the paper's evidence suggests that managers turn to real earnings management or downward forecast guidance as a substitute mechanism to avoid negative earnings surprises when their ability to manipulate accruals upward is constrained by the extent to which net assets are already overstated in the balance sheet.

This study adds to prior literature that examines how managers trade off different mechanisms used to meet or beat analysts' earnings expectations. It also contributes to the extant literature by providing further insights on the role of balance sheet information in the process of managing earnings and/or earnings surprises.