Culverhouse School of Accountancy

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Browsing Culverhouse School of Accountancy by Subject "Finance"

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    An examination of analysts’ target price forecasts after accounting misstatements
    (University of Alabama Libraries, 2020) Street, Daniel Alan; Swanquist, Quinn; University of Alabama Tuscaloosa
    I investigate the magnitude, accuracy, and informativeness of analysts’ target price forecast revisions after material negative accounting misstatements. Although prior researchers find that analysts’ earnings forecasts decline after misstatements, the effects of misstatements upon analysts’ target price forecasts have not yet been investigated. Relative to analysts’ target price forecasts for control firms, I find that analysts decrease their target price forecasts more sharply for misstating firms. Although analysts’ target price forecast revisions are somewhat less accurate for misstating firms, I find that analysts’ target price forecast revisions for misstating firms remain informative to the stock market. Several misstatement and target price forecast characteristics (misstated account, misstatement intention, SEC investigation, and CEO turnover after misstatement) affect the average magnitude, accuracy, and informativeness of analysts’ target price forecast revisions. These findings inform investors regarding the extent to which they may effectively rely upon analysts’ target price forecasts after material negative accounting misstatements and contribute to our knowledge of the value relevance of historical accounting and future earnings expectations for sell-side analysts.
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    Opportunistic financial reporting and credit market participation in municipalities
    (University of Alabama Libraries, 2016) Beck, Amanda Wilson; Parsons, Linda M.; University of Alabama Tuscaloosa
    The concept of opportunistic financial reporting (OFR) is similar to earnings management in the corporate sector, but acknowledges several key differences in the governmental sector – most importantly, (a) most governmental revenues are not “earned” in the traditional sense, and (b) governments follow a unique reporting model, which utilizes both full accrual and modified accrual accounting, resulting in two separate sets of financial statements. In this study, I use a unique dataset of hand-collected financial data from over 200 Californian municipalities over a five-year period (2009-2013) to provide insight into three important aspects of OFR: motivation, methods, and materiality. With respect to motivation, I find that governments are incentivized to use OFR to pursue a breakeven income in both the full accrual and modified accrual financial statements, and that credit market participation significantly influences these activities. With respect to the methods of OFR, I find evidence that municipalities use discretion over accruals, make general fund transfers, and time asset sales opportunistically. With respect to materiality, I find evidence that municipalities are more likely to use OFR to fully avoid reporting a deficit when creditor scrutiny is high. My findings contribute to existing research that examines the association between credit market participation and accounting choices in governments. I also contribute to an emerging stream of research that examines managerial opportunism within the governmental reporting model.