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- Creators: Arizona State University
- Creators: Hillegeist, Stephen
Description
"Generating an astounding $110.7 billion annually in domestic revenue alone [1], the world of accounting is one deceptively lacking automation of its most business-critical processes. While accounting tools do exist for the common person, especially when it is time to pay their taxes, such innovations scarcely exist for many larger industrial tasks. Exceedingly common business events, such as Business Combinations, are surprisingly manual tasks despite their $1.1 trillion valuation in 2020 [2]. This work presents the twin accounting solutions TurboGAAP and TurboIFRS: an unprecedented leap into these murky waters in an attempt to automate and streamline these gigantic accounting tasks once entrusted only to teams of experienced accountants.
A first-to-market approach to a trillion-dollar problem, TurboGAAP and TurboIFRS are the answers for years of demands from the accounting sector that established corporations have never solved."
ContributorsCapuano, Bailey Kellen (Co-author) / Preston, Michael (Co-author) / Kuhler, Madison (Co-author) / Chen, Yinong (Thesis director) / Hunt, Neil (Committee member) / Computer Science and Engineering Program (Contributor, Contributor) / Barrett, The Honors College (Contributor)
Created2021-05
Description
Generating an astounding $110.7 billion annually in domestic revenue alone [1], the world of accounting is one deceptively lacking automation of its most business-critical processes. While accounting tools do exist for the common person, especially when it is time to pay their taxes, such innovations scarcely exist for many larger industrial tasks. Exceedingly common business events, such as Business Combinations, are surprisingly manual tasks despite their $1.1 trillion valuation in 2020 [2]. This work presents the twin accounting solutions TurboGAAP and TurboIFRS: an unprecedented leap into these murky waters in an attempt to automate and streamline these gigantic accounting tasks once entrusted only to teams of experienced accountants.
A first-to-market approach to a trillion-dollar problem, TurboGAAP and TurboIFRS are the answers for years of demands from the accounting sector that established corporations have never solved.
ContributorsPreston, Michael Ernest (Co-author) / Capuano, Bailey (Co-author) / Kuhler, Madison (Co-author) / Chen, Yinong (Thesis director) / Hunt, Neil (Committee member) / Computer Science and Engineering Program (Contributor) / Barrett, The Honors College (Contributor)
Created2021-05
Description
Responding to the allegedly biased research reports issued by large investment banks, the Global Research Analyst Settlement and related regulations went to great lengths to weaken the conflicts of interest faced by investment bank analysts. In this paper, I investigate the effects of these changes on small and large investor confidence and on trading profitability. Specifically, I examine abnormal trading volumes generated by small and large investors in response to security analyst recommendations and the resulting abnormal market returns generated. I find an overall increase in investor confidence in the post-regulation period relative to the pre-regulation period consistent with a reduction in existing conflicts of interest. The change in confidence observed is particularly striking for small traders. I also find that small trader profitability has increased in the post-regulation period relative to the pre-regulation period whereas that for large traders has decreased. These results are consistent with the Securities and Exchange Commission's primary mission to protect small investors and maintain the integrity of the securities markets.
ContributorsDong, Xiaobo (Author) / Mikhail, Michael (Thesis advisor) / Hwang, Yuhchang (Committee member) / Hugon, Artur J (Committee member) / Arizona State University (Publisher)
Created2011
Description
In this study, I examine the extent to which firms rely on relative performance evaluation (RPE) when setting executive compensation. In particular, I examine whether firms use information about peer performance to determine compensation at the end of the year, i.e. after both firm and peer performance are observed. I find that RPE is most pronounced for firms that allow little or no scope for ex post subjective adjustments to annual bonuses. Conversely, firms that rely mainly on subjectivity in determining bonus exhibit little use of RPE. These findings suggest that information about peer performance is not used at the end of the year. Instead, peer performance seems to be incorporated in performance targets at the beginning of the year, at least among firms primarily using objective performance measurements. In addition, I provide new evidence on the determinants of the use of subjectivity.
ContributorsTsui, Stephanie (Author) / Matejka, Michal (Thesis advisor) / Hwang, Yuhchang (Committee member) / Kaplan, Steven (Committee member) / Arizona State University (Publisher)
Created2013
Description
In this paper, I investigate whether participation in employee stock option exchange programs contains private information about future stock returns. High participation in employee stock option exchange programs is associated with negative future abnormal returns over the ensuing 12-month period. This association is moderated by the transparency of the firm's information environment: high institutional ownership and high financial statement informativeness weaken the negative relation between participation and abnormal returns. Controlling for transparency of the firms' information environment, the association between participation and future returns arises primarily from firms that allow the CEO to participate.
ContributorsMakridis, Vanessa Radick (Author) / Matejka, Michal (Thesis advisor) / Hwang, Yuhchang (Committee member) / Kaplan, Steven E (Committee member) / Arizona State University (Publisher)
Created2013
Description
The Balanced Scorecard (BSC) is a strategic planning and management system that causally links actions and subsequent financial and nonfinancial outcomes. The primary goal of the BSC is to motivate actions that are congruent with the organization's long-term strategy. A secondary purpose of the BSC is to facilitate the performance evaluation of managers charged with advancing the corporate strategy. To serve this second purpose the BSC must include a time dimension. Specifically, the strategic plan must recognize time lags between actions taken, lead outcomes (often nonfinancial in nature) and lagged outcomes (usually financial success measures). If an evaluator is not provided with timeline information a subordinate may be evaluated based on inappropriate performance metrics; that is, a subordinate may be held accountable for an outcome beyond the subordinate's time span of control. This study evaluates the effect on performance evaluations and bonus allocations when evaluators are provided (or not provided) with a strategy implementation timeline. This issue has not been previously examined in the literature. This study also examines the moderating effect of experience, management buy-in to the corporate strategy, and affect on performance evaluations and bonus allocations. Results from an experiment conducted with evening MBA students show that inclusion of a strategy implementation timeline leads to more normatively correct performance evaluations, but only for experienced participants. Higher levels of both positive and negative affect were found to result in choice avoidance behavior. Buy-in to the corporate strategy was not found to have an effect.
ContributorsBartlett, Geoffrey (Author) / Reckers, Philip M.J. (Thesis advisor) / Lowe, D. Jordan (Committee member) / Hwang, Yuhchang (Committee member) / Arizona State University (Publisher)
Created2012
Description
I examine the degree to which stockholders' aggregate gain/loss frame of reference in the equity of a given firm affects their response to the firm's quarterly earnings announcements. Contrary to predictions from rational expectations models of trade (Shackelford and Verrecchia 2002), I find that abnormal trading volume around earnings announcements is larger (smaller) when stockholders are in an aggregate unrealized capital gain (loss) position. This relation is stronger among seller-initiated trades and weaker in December, consistent with the cognitive bias referred to as the disposition effect (Shefrin and Statman 1985). Sensitivity analysis reveals that the relation is stronger among less sophisticated investors and for firms with weaker information environments, consistent with the behavioral explanation. I also present evidence on the consequences of this disposition effect. First, stockholders' aggregate unrealized capital gain position moderates the degree to which information-related determinants of trade (e.g. unexpected earnings, firm size, and forecast dispersion) affect abnormal announcement-window trading volume. Second, stockholders' aggregate unrealized capital gains position is associated with announcement-window abnormal returns, consistent with the disposition effect reducing the market's ability to efficiently incorporate earnings news into price.
ContributorsWeisbrod, Eric (Author) / Hillegeist, Stephen (Thesis advisor) / Kaplan, Steven (Committee member) / Mikhail, Michael (Committee member) / Arizona State University (Publisher)
Created2012
Description
Existing literature consistently documents a relationship between book-tax differences and future financial performance. Specifically, large book-tax differences are associated with lower earnings persistence. I contend that one reason the tax information contained in financial statements is informative about future earnings is that the relationship between book income and taxable income captures information about a firm's life cycle stage. Using a life cycle measure from the literature, I use fundamental analysis to group firm-year observations into life cycle stages and document a link between book-tax differences and firm life cycle. I build on prior studies that find a relation between earnings persistence and book-tax differences, and earnings persistence and firm life cycle. I find that after controlling for firm life cycle stage, the association between large positive book-tax differences and lower earnings persistence does not hold. My results offer an economic theory based explanation for the relation between book-tax differences and earnings persistence as an alternative explanation to findings in prior research.
ContributorsDrake, Katharine D (Author) / Mikhail, Michael (Thesis advisor) / Brown, Jennifer (Committee member) / Martin, Melissa (Committee member) / Arizona State University (Publisher)
Created2012
Description
When managers provide earnings guidance, analysts normally respond within a short time frame with their own earnings forecasts. Within this setting, I investigate whether financial analysts use publicly available information to adjust for predictable error in management guidance and, if so, the explanation for such inefficiency. I provide evidence that analysts do not fully adjust for predictable guidance error when revising forecasts. The analyst inefficiency is attributed to analysts' attempts to advance relationship with the managers, analysts' compensation not tie to forecast accuracy, and their forecasting ability. Finally, the stock market acts as if it does not fully realize that analysts respond inefficiently to the guidance, introducing mispricing. This mispricing is not fully corrected upon earnings announcement.
ContributorsLin, Kuan-Chen (Author) / Mikhail, Michael (Thesis advisor) / Hillegeist, Stephen (Committee member) / Hugon, Jean (Committee member) / Arizona State University (Publisher)
Created2012
Description
Companies commonly offer temporary price discounts to stimulate product demand. Despite the considerable impact that such promotional strategies have on performance, firms disclose limited information regarding the extent to which they provide discounts. In this study, I evaluate whether market participants understand the implications of current period couponing activity – a special case of price discounts – for future performance. Using a sample of public manufacturers, I use transaction-level data to construct a firm-level measure of couponing activity and find that earnings are less persistent when generated with heavy reliance on couponing. Further, greater couponing in the current quarter increases analyst optimism for future periods, leading to an increased likelihood that the firm misses analyst expectations in the subsequent period (which results in predictably negative earnings announcement returns). Collectively, my findings highlight how market participants’ forecasting and trading decisions can benefit from information regarding price discounting.
ContributorsSnow, Mason C. (Author) / Call, Andrew C (Thesis advisor) / Lamoreaux, Phillip T (Committee member) / White, Roger M (Committee member) / Arizona State University (Publisher)
Created2022