The American Accounting Association's Financial Accounting Standards Committee is pleased to have an opportunity to express its views on the FASB's Call for Preliminary Views on its Conceptual Framework. We applaud the decision of the FASB to develop a Conceptual Framework and seek comments on...

We analyze the optimal behavior of an organization when its employees can manipulate the organization's accounting system to their private advantage. We find that the organization may benefit by helping its employees manipulate the system. This help can reduce the employees' private returns from...

A model of endogenous performance smoothing is presented and analyzed. A manager, or agent, labors across two periods, where output in each period is a Bernoulli process with an evident revenue recognition interpretation. Smoothing may be possible, and this possibility may be linked to the...

In this paper, we study a principal-agent problem in which (1) the manager has private information about, and control over, the mean and variance of his outputs; (2) the manager?s outputs consist of a sample of independently distributed cash flows, all having mean and variance determined by the...

Empirical research in the social sciences often proceeds in the following manner. First, the researcher formulates an hypothesis regarding a phenomenon of interest. Second, the researcher identifies the empirical predictions of competing hypotheses. Third, the researcher gathers relevant data,...

We study a multiproduct setting in which the underlying technology permits identification of economic subcost functions. We then explore the ability of various accounting procedures to produce relatively accurate marginal cost estimates. This ability varies with the underlying technology, as...

This paper addresses the issues that confront the FASB and IASB in developing a new conceptual framework document. First, we suggest characteristics that a conceptual framework ought to exhibit. Most of these suggestions are based on our critique of the existing framework and the FASB-IASB work...