Supporting Management Decisions with Ex ante Accounting Information

2002 ◽  
Vol 20 (1) ◽  
pp. 82-94 ◽  
Author(s):  
Marc Wouters ◽  
Peter Verdaasdonk
Keyword(s):  
Accounting Information ◽  
Management Decisions ◽  
Ex Ante

An Object-Oriented Model for Ex Ante Accounting Information

2003 ◽  
Vol 17 (1) ◽  
pp. 43-61 ◽  
Author(s):  
Peter Verdaasdonk
Keyword(s):  
Operations Management ◽  
Accounting Information ◽  
Object Oriented ◽  
Data Models ◽  
Management Decisions ◽  
Accounting Data ◽  
Alternative Future ◽  
Ex Ante ◽  
Behavioral Aspects

Present accounting data models such as the Resource-Event-Agent (REA) model merely focus on the modeling of static accounting phenomena. In this paper, it is argued that these models are not able to provide relevant ex ante accounting data for operations management decisions. These decisions require dynamic descriptions of the consequences of alternative future courses of actions and the resulting events. Therefore, a new object-oriented model is presented that enables the use of ex ante accounting data for this purpose. In comparison to the REA model, the object-oriented model presented in this paper includes new static aspects as “recipes,” “potential contracts,” and “reservations,” together with behavioral aspects expressed as theoretical scripts for the retrieval of relevant accounting data.

Debt Covenants and Accounting Manipulation

2021 ◽  
Author(s):  
Volker Laux
Keyword(s):  
Firm Value ◽  
Accounting Information ◽  
Debt Covenants ◽  
Control Rights ◽  
Ex Ante ◽  
Per Se

This paper studies the effects of allocating control rights to lenders via debt covenants when managers can sometimes misreport the accounting information on which the covenants are based. When contract renegotiation is exogenously prohibited, including a covenant in the contract is ex ante optimal because it increases both the probability that poor projects are liquidated and the manager's effort incentive. When the parties can renegotiate the contract, the results can flip: Granting the lender more control can lead to less frequent liquidations of low-quality projects and lower managerial effort incentives and thereby reduce the manager's ex ante payoff. The key behind these results is not the manager's incentive to misreport per se but her desire to take subsequent actions that conceal the misreporting. The model generates predictions regarding the determinants of accounting-based covenants, and the effects of covenants on misreporting, managerial effort, the frequency of liquidations, and firm value.

scholarly journals CAN ACCOUNTING INFORMATION ACT AS A PROXY FOR EX ANTE UNCERTAINTY IN INITIAL PUBLIC OFFERINGS?

2003 ◽  
Vol 5 (2) ◽  
pp. 249 ◽  
Author(s):  
Tatang Ary Gumanti
Keyword(s):  
Empirical Evidence ◽  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Accounting Information ◽  
Firm Risk ◽  
Public Offerings ◽  
Accounting Numbers ◽  
Ex Ante ◽  
Value Of Firm ◽  
Public Offering

This paper reviews and summarizes previous works and the rationale for the proposition that accounting information is in fact value relevant in the determination of an initial public offering IPO).Theoretical and empirical evidence has indicated that certain accounting measures can he used as proxies for total firm risk, that is, they could determine the riskiness of a corporation. The literature also advocates that accounting information is relevant in determining the value and thus the riskiness of a corporation through the use of accounting analysis. Since most of the information available in the prospectus is accounting information, it is arguable that this information represents a potential source for assessing the issuing firm. Some scholars have also advocated the possibility of using accounting information in assessing the value of firm making an IPO. Numerous papers have provided analytical and empirical evidence of the association between accounting numbers and the value of IPOs. The conclusion generally comes to show that information in the prospectus is value relevant concerning the IPO. The paper shows that it is indeed an arguable to use accounting information in the valuation of an IPO. Accordingly, it is an empirical issue whether accounting information has the property in explaining the ex-ante uncertainty of an IPO.

scholarly journals KEY ACCOUNTING PROBLEMS RELATED TO THE STRATEGIES OF INTERNATIONAL TRANSFER PRICING IN MODERN GLOBALLY OPERATING COMPANIES

2019 ◽  
Vol 30 (1) ◽  
pp. 115-119
Author(s):  
Diana Petrova
Keyword(s):  
Information Needs ◽  
Transfer Pricing ◽  
Rapid Development ◽  
Objective Assessment ◽  
Accounting Information ◽  
Business Environment ◽  
Management Decisions ◽  
Global Business ◽  
Transfer Prices ◽  
Sound Management

This paper treats the role and significance of international transfer pricing in the activities of modern globally operating companies in the contemporary conditions of constantly increasing globalization of the world economic area. The main goals and tasks pursued by the mechanism of international transfer pricing in the hyper competitive, highly risky and dynamically changing global business environment are explained. The key accounting problems related to the processes of planning, analysis and control of specific strategies of international transfer pricing in the globally oriented companies are discussed. The rapid development of globalization processes in contemporary conditions determines the growth of the significance and application of international transfer pricing in the activities of modern globally operating companies. Increasing the degree of their economic integration and the amount of their intra-corporate exchange, as well as the increasing complexity of their international transactions, make international transfer pricing one of the most important and topical problem that is faced by these companies.The main goal pursued by the mechanism of international transfer pricing is to optimize activities and maximize overall profits for the company as a whole on a global basis. The accounting problems that may arise in connection with international transfer pricing in modern globally operating companies are in two main aspects:  problems in terms of information provision of the internal management processes that occur in the different subsidiaries and within the company as a whole;  problems in providing the necessary accounting information for the purpose of compiling the financial statements and satisfying the information needs of the interested external users. The accounting information system of globally operating companies should be able to meet the information needs of their distinctive uniform system of making decisions aimed at coordinating goals on a global basis, successfully implementing the global strategy and optimizing resources and results globally. The accounting must provide adequate information needed to make sound management decisions concerning the policy of international transfer pricing that is implemented, to control the implementation of these decisions and subsequently to assess and analyze the results. A key problem for globally operating companies is implementing such a policy of international transfer pricing that ensures optimal results for the company as a whole and at the same time successful practical implementation of the requirement for consistency of the goals of all units operating within the overall organizational structure. Considerable difficulties arise in the objective assessment of costs and benefits of the application of transfer prices in the implementation of numerous and diverse international operations between the different constituent structural units of the company and the making of sound management decisions based on this.

scholarly journals ACCOUNTING IN THE SYSTEM OF STRATEGIC MANAGEMENT BY AGRICULTURAL ENTERPRISE

2017 ◽  
pp. 280-285
Author(s):  
Vasyl' Tsaruk
Keyword(s):  
Strategic Management ◽  
Accounting Information ◽  
Business Environment ◽  
Economic Security ◽  
Economic Conditions ◽  
Accounting System ◽  
Management Decisions ◽  
Market Conditions ◽  
Agricultural Enterprises ◽  
Agricultural Enterprise

Introduction. Current economic conditions entities of Agrarian Business are characterized by instability and uncertainty. These conditions reduce the efficiency of economic activity. Agricultural enterprises can successfully manage in current business environment in case if an effective mechanism to control is constructed. It requires an adequate information security. In the information system of agricultural enterprise an accounting and analytical information plays a significant role. It is characterized in most of the cases by retrospective content. However, in the current economic conditions it is necessary to generate information not only about domestic economic conditions for agricultural enterprises, but also about a number of external factors. This information can only be obtained through strategically oriented accounting system. Purpose. The research aims to ground the necessity for developing a strategically oriented accounting system to improve management decisions in agricultural enterprises. Methods. The dialectical and systematic approaches to the study of accounting and analytical support of agricultural enterprises have been used. The abstract and logical method to justify the need to develop a strategically oriented accounting system in agricultural enterprises has been applied. Results. The accounting system is the system of information model of the system of the enterprise, which allows us to identify and process data about the facts of economic life and generate and provide information about them to users through a variety of types and formats of financial statements. With the changes in conditions of functioning of enterprises, changes of models and methods of management decisions an accounting system should be properly refined in order to meet the growing information needs of internal and external users of accounting information. As a result of the formation of market conditions there is a need to develop a proper system of accounting and analytical support implementation of the strategic objectives of the enterprise. System of strategic accounting serves as a unifying link in the information space of the enterprise. It allows integration of accounting information with data on the environment and information predictive nature. Only under such conditions accounting system can be fully implemented into the strategic management process. Perspectives. The system strategic accounting as a means of information support of management should provide an adaptation of the enterprise to the changes which occur in the environment, provide identification of critical situations, determine the main opportunities and threats and generally be a tool for maintaining economic security and sustainable development of the agricultural enterprises in dynamic market conditions.

scholarly journals Practical Value of Accounting Information in Cost Accounting

2021 ◽  
Vol 04 (05) ◽  
Author(s):  
Rakhmonali Rasulovich Obidov ◽  
Keyword(s):  
Accounting Information ◽  
Cost Accounting ◽  
Information Space ◽  
Management Decisions ◽  
Space Model ◽  
The Future

This article describes accounting information and its importance in enterprises in its clustered system. Currently, there is a need to control costs and revenues, to develop a single information space model for organizations and institutions. Management decisions made by managers in these organizations determine the future fate of the enterprise, which requires the proper organization of accounting.

scholarly journals Influence of Company Size on Accounting Information for Decision-Making of Management

2019 ◽  
Vol 65 (2) ◽  
pp. 11-20 ◽  
Author(s):  
Tatjana Horvat ◽  
Jožica Mojzer
Keyword(s):  
Decision Making ◽  
Contingency Table ◽  
Management Accounting ◽  
Accounting Information ◽  
Management Team ◽  
Company Size ◽  
Management Decisions ◽  
Chi Square ◽  
Chi Square Test ◽  
A Company

AbstractThe aim of this paper is to show the importance of accounting information for management, especially in medium-sized companies. Sampling was carried out according to the accidental principle, after which we selected 300 medium-sized and large companies. We used the questionnaire, which was standardized and implemented online. Two hypothesis were tested with a chi-square test and contingency table. In this study of Slovenian large and medium companies, we want to find out whether the size of the company has an impact on organizing a specific controlling service in a company and whether, in large companies, heads of accounting are more often members of management than in mediumsized enterprises. We discovered a bias between organizing a specific controlling department and the size of a company, and that large companies have more often organized a special controlling service than medium-sized enterprises. We also discovered the accounting officer’s membership in a company’s management team is not related to the size of a company. The results of the research could be used in controlling in medium-sized companies, where we suggest that management accounting in these companies is part of management decisions.

Timeliness and persistence of conservative earnings in an emerging market

2020 ◽  
Vol 18 (3) ◽  
pp. 483-503
Author(s):  
Afsheena P. ◽  
Shijin Santhakumar
Keyword(s):  
Stock Returns ◽  
Financial Reporting ◽  
Emerging Market ◽  
Accounting Information ◽  
Accounting Conservatism ◽  
Earnings Persistence ◽  
Content Type ◽  
Ex Post ◽  
Ex Ante ◽  
Reported Earnings

Purpose The asymmetric effect of conservatism on earnings and its other components serves as a contrivance to incorporate transparency and timeliness in financial reporting. This study aims to explore cash flow-return association, which provides insight into the accruals’ contribution that traverses through conservatism-earnings persistence liaison and its associated effects on stock returns. Design/methodology/approach The study used asymmetric timeliness (AT) model and two firm-year measures, namely, C-Score and conservatism ratio, to capture conservatism. The firm-year measures of conservatism, in addition to the AT measure, facilitate a better understanding of the persistence of reported earnings that branch out the study from the existing literature. Further, the study used panel regression analysis to evaluate the timeliness and persistence of earnings under the conservative approach with a sample of Indian corporate data from 2000 to 2017. Findings The findings of the study reveal that conservative earnings are less persistent and the accruals recognize bad news timelier than good news. The unfavorable change in earnings shows a lower earnings response coefficient in contrast to favorable earnings variations. However, the appropriate loss recognition nature of conservative reporting has little or no influence on stock returns in an emerging market such as India. Research limitations/implications Accounting conservatism is a captivating feature accounting information, especially pertinent to many decision-makers. Thus, the study has implications for the investors while evaluating the adverse and positive changes in accounting earnings; also, the results are helpful for the standard setters in ongoing debate related to accounting conservatism vs fair evaluation. The present study focuses exclusively on ex-post conservatism, while the ex post and ex ante conservatism are having a significant role in accounting practices. Future research on the differential effects of ex post and ex ante conservatism on accounting information in an emerging market, is worth promising. Originality/value The study reveals the first Indian evidence on accounting conservatism and earnings persistence relationship, which would bring a different dimension to investors’ perception in evaluating the characteristic variations of reported earnings. The findings add value to the accounting standard setters concerning the asymmetric verification as Indian Accounting standards are on the verge of convergence with International Financial Reporting Standards (IFRS).

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