A comment on "Accounting Method Choice in the Software Industry"
Article Abstract:
The economic consequences of the early adoption of Statement of Financial Accounting Standard (SFAS) No. 86 by 53 software companies were interpreted by Mark Trombley (MT) in his 1989 study. Using positive accounting theory, MT tested two hypotheses concerning an auditor effect and a company size effect. Based on causal theory, MT made an inference that auditor preferences influenced client decisions and that the auditor lobbying positions were not dictated by client preferences. MT also imports major significance to Coopers & Lybrand's supporting of the capitalization requirements of the Exposure Draft (ED) of SFAS No. 86, citing the auditor effect as a large-firm effect. An analysis of auditing firms providing positions on the ED indicates that MT's auditor effect is probably a client effect and that the observed effect is probably a small-firm rather than a large-firm effect.
Publication Name: Accounting Review
Subject: Business, general
ISSN: 0001-4826
Year: 1990
User Contributions:
Comment about this article or add new information about this topic:
A reply to "A Comment on 'Accounting Method Choice in the Software Industry'"
Article Abstract:
P F. Williams, K.B. Frazier, and A. J. McKee, Jr.'s 1990 examination of Mark Trombley's 1989 study of the economic consequences of the early adoption of Statement of Financial Accounting Standard (SFAS) No. 86 used a different sample of firms in attempting to replicate Trombley's findings. Williams et al. reported a strong relationship between a client's decision to adopt SFAS No. 86 early and the firm's auditor's lobbying position, and report that the size of the firm does not significantly effect the early adoption of SFAS No. 86, a finding that differs from Trombley. The difference in results from size are not necessarily inconsistent with Trombley's results and interpretation, and the difference in size effect is caused by an underrepresentation of small firms in the Williams et. al sample.
Publication Name: Accounting Review
Subject: Business, general
ISSN: 0001-4826
Year: 1990
User Contributions:
Comment about this article or add new information about this topic:
Accounting method choice in the software industry: characteristics of firms electing early adoption of SFAS No. 86
Article Abstract:
Research examines accounting method choice among software companies and especially the characteristics of firms opting for early adoption of the Statement of Financial Accounting Standards Number 86 (SFAS 86). Data was collected from 14 software companies that elected early SFAS 86 adoption and 39 companies that did not. Results show that early SFAS 86 adoption is associated with auditors who expressed support for SFAS 86 when it was still an exposure draft. Early SFAS 86 adoption is associated with small firms, as well.
Publication Name: Accounting Review
Subject: Business, general
ISSN: 0001-4826
Year: 1989
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: Complementarity of prior accounting information: the case of stock dividend announcements. Economic sufficiency and statistical sufficiency in the aggregation of accounting signals
- Abstracts: Lotus Development will offer discounts on software to competitors' customers. Lotus will unveil spreadsheet package, dubbed 1-2-3/G, as soon as next week
- Abstracts: Where is cost management going? Cost management beyond the boundaries of the firm
- Abstracts: AT&T is trying hard to get a major role in multimedia future. NCR seeks aid from holders to fight AT&T
- Abstracts: Baby Bells grow up: they await a key ruling before resuming their lobbying effort to win freedom from Judge Greene's control