For copies of papers in the GSB Research Paper series, go to https://gsbapps.stanford.edu/researchpapers/
Accounting
Cost of Reducing CO2 Emissions Could Plunge
The financial impact of regulating coal-fired power plants that produce carbon dioxide emissions under a cap-and-trade system will be much less than previously projected according to research by Stanford Business School Professor Stefan Reichelstein and doctoral student Ozge Islegen.
Stanford Business School Research Underpins SEC Scrutiny of Scheduled Insider Trades
In the wake of alleged misconduct by executives at Countrywide Savings, Novatel, and Qwest, research by Stanford accounting professor Alan Jagolinzer may be prompting the Securities and Exchange Commission to rethink rules that permit scheduled trading by insiders.
How Good Are Commercial Corporate Governance Ratings?
A study by Stanford law and business faculty members casts strong doubt upon the value and validity of the ratings of governance advisory firms that compile indexes to evaluate the effectiveness of a publicly held company’s governance practices. “Everyone would agree that corporate governance is a good thing,” said Business School Professor David Larcker, “but can you measure it without even talking to the companies being rated?”
Understanding the Linkage Between ROI and the Economic Rate of Return
What does return on investment really mean? A new tool gives investors and
managers help decoding the true economic profitability of a business based on
reported accounting metrics. (January 2007)
Despite Uproar, European Investors Favor Global Accounting Standards
International accounting standards, designed to globally align corporate
accounting practices, raised quite a stir when the European Union ordered
publicly-traded firms to adopt them. Now researchers say European investors
generally responded positively to the idea of replacing country-specific
accounting rules with these new standards. (October 2006)
Excessive Executive Pay Makes Headlines, But So What?
The business press loves to expose stories of excessive executive
compensation. Professor David Larcker says the media may single out egregious
cases, but the unflattering publicity doesn't seem to make any difference in how
firms pay those top executives. (April 2008 )
Financial Statements Are Still Valuable Tools for Predicting Bankruptcy
Despite growing public skepticism over how useful financial statements are in providing information to investors, researchers at Stanford's
Graduate School of Business have found that the value of financial ratios for
predicting bankruptcy has not declined significantly over time. (November 2005)
Nonfinancial Data Can Predict Future Profitability
Looking at customer relationship metrics in conjunction with other
financial measurements can forecast a financial profitability number for the
coming year 15 percent closer to the actual figure, says accounting Professor
Madhav Rajan. (November 2005)
The
Bond-Rating System Isn't Broken, Say Researchers
Just days before WorldCom went bankrupt, Moody's rated the firm's
stock "investment grade." This does not mean the current
bond-rating system isn't working, say researchers. The rating was
appropriate for Moody's specialized institutional clientele. (April 2005)
Smart Startups Don't Wait to Set Up Accounting Systems
A new study finds that young companies that acted quickly to institute formal
accounting systems, such as operation budgets, cash budgets, and financial
monitoring systems, had higher growth rates in terms of revenues and head count
than their peers. (February 2005)
Use
Weighted Averages to Determine Transfer Pricing
Transfer pricing, determining how to price goods shipped between related
companies often in different countries, has long been debated by
accountants and managers. Researchers now say that using weighted averages
to determine prices can solve the dilemma. (October 2004)
Measuring Executive Accountability
Shareholders are demanding incentives to force executives to focus on
creating corporate value. This trend may mean that managers are less willing to engage in projects that increase value way down the line, value
that isn't measured—and therefore rewarded—now. (May 2002)
Following Analysts Advice Can Pay off
A study of accuracy and bias among securities analysts finds they are good at identifying mispriced stocks.
Where they really add value is in analyzing small and medium sized
companies where the market is slow to digest information. (March 1999)
Safe Harbor Law Boosts Corporate Disclosure
The so-called Safe Harbor Law, designed to protected executives who
provide projections about their firm's behavior, has increase both the
frequency of forecasts and the average number of forecasts issued.
(May 1998)
The Trouble with Good News
The securities research analysts who advise your broker on the best stock
market picks may not be trying to mislead you deliberately, but beware
of their rosy attitudes. Research has turned up evidence that equity analysts'
earnings forecasts are persistently overoptimistic. (June 1997)
Accounting for Toxic Cleanup
Corporations have long argued about how their books should reflect
liabilities for Superfund Site cleanups. Two researchers say that
investors are already discounting stocks known to have these liabilities.
Providing more factual information could ultimately benefit stock prices. (February 1996)