Course Schedule

The three main topics covered in this course include:

  • Accrual Accounting and Financial Ratios
  • Performance Evaluation and Managerial Incentives
  • Economic Analysis of Accounting Metrics

 

Day One and Two: Accrual Accounting and Financial Ratios

  • Penman, S. Financial Statement Analysis and Security Valuation, McGraw Hill, 2006, Chapter 16.
  • Fisher, F. and J. McGowan, “On the Misuse of Accounting Rates of Return to Infer Monopoly Profits,” American Economic Review, 1983, 96(2), 82-97
  • Stark, A. “Estimating Economic Performance from Accounting Data - A Review and Synthesis,” The British Accounting Review, 2004, 36, 321-343.
  • Rajan, M., Reichelstein, S. and M. Soliman "Conservatism, Growth and Return on Investment,” Review of Accounting Studies, 2007, 12, 325-370
  • Danielson, M. and E. Press, “Accounting Returns Revisited: Evidence of their Usefulness in Estimating Economic Returns,” Review of Accounting Studies, 2003, 8, 493-530.

Day Two and Three: Performance Evaluation and Managerial Incentives

  • Young and O’Byrne, Chapters 1-6 in, EVA and Value Based Management: A Practical Guide, McGraw Hill, 2000.
  • Rogerson, W. “Inter-temporal Cost Allocation and Managerial Investment Incentives: A Theory Explaining the Use of Economic Value Added as a Performance Measure”, Journal of Political Economy, 1997, 105, 770-795.
  • Balachandran, S. "How Does Residual Income Affect Investment? The Role of Prior Performance Measures", Management Science, 2005, 51(7), 1032-1045.
  • Dutta, S. and S. Reichelstein, "Accrual Accounting for Performance Measurement", Review of Accounting Studies, 2005, 10, 527-552.
  • Rogerson, W. “Inter-temporal Cost Allocation and Investment Decisions,” Working paper, Northwestern University, 2008.

Day Four: Economic Analysis of Accounting Metrics

  • Fisher, F. “On the Misuse of the Profit-Sales Ratio to Infer Monopoly Power,” RAND Journal of Economics, 1987, 18, 384-396.
  • Rajan, M. and S. Reichelstein, “The Economic Relevance of Historical Cost,” Working paper, Graduate School of Business, Stanford University, 2008.
  • Biglaiser, G. and M. Riordan, “Dynamics of Price Regulation,” RAND Journal of Economics, 2000, 31, 744-767.
  • Rogerson, W. “On the Relationship Between Historic, Forward-Looking Cost and Long Run Marginal Cost,” Working paper, Northwestern University, 2005.
  • Friedl, G. “Ursachen und Loesung des Unterinvestitionsproblems bei einer kostenbasierten Preisregulierung,” Die Betriebswirtschaft, 2007, 67, 335-348.