The information content of FAS 33 returns on equity

Article Abstract:

Data from 1980, 1981 and 1982 are used to analyze and compare returns on equity accounted for using historical cost methods and these same returns accounted for using the methodology prescribed by the Financial Accounting Standards Board's Statement No. 33. Constant dollar, net holding and current cost return calculations are also analyzed, and shown to have little relation to actual security valuation changes. Historical cost accounting methods are shown to increase the corporation's purchasing power, although they do not enable the corporation to understand changes in the cost of returns on equity as well as other accounting methods.

Investments

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Additional considerations when using the FASB data bank of changing price information

Article Abstract:

Errors contained within the computer data base compiled by the Financial Accounting Standards Board (FASB) with regard to data collection techniques used to disclose FASB 33 price information are analyzed and compared to similar errors existing on the Compustat and Value Line data bases. Most errors discussed involve data base users' failure to distinguish between historical cost disclosures and current cost disclosures in corporations' annual reports as summarized on the data bases. Errors and error rates are identified for 171 corporations' income reporting and depreciation disclosures for the period from 1979 to 1982.

Methods, Pricing, Depreciation, Cost accounting

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An examination of the market reactions associated with SFAS No. 8 and SFAS No. 52

Article Abstract:

The issue of market price reaction to the issuance of Statement of Financial Accounting Standards (SFAS) numbers 8 and 52 is re-examined, using standardized abnormal returns. Accounting methods employed before SFAS No. 8 may be related to the costs it imposed, so the method is determined and its effect on observed market reactions investigated. An overall negative reaction to SFAS No. 8 is shown, and a positive response to SFAS No. 52 is shown. The pre-SFAS No. 8 method of accounting for foreign currency translation is shown to be tied in mixed and unpredictable ways to market reactions to SFAS No. 8 and SFAS No. 52.

Foreign exchange

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