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Commerce 4AF3 Accounting Theory Fall 2013 Course Outline Accounting and Financial Management Services DeGroote School of Business McMaster University
COURSE OBJECTIVES
This course is designed to give an overview of topics relevant to current accounting theory, research, standard setting and practice through relevant readings and by detailed examination of various accounting models.
COURSE ELEMENTS
Credit Value: Avenue: Participation: Evidence-Based: 3 Yes Yes Yes Leadership: Numeracy: Innovation: Experiential: Yes Yes Yes No Global View: Written Skill: Group Work: Final Exam: Yes Yes Yes Yes IT Skill: Ethics: Oral Skill: Guest Speaker: No Yes Yes No
COURSE DESCRIPTION
This course is about accounting, not how to account. Accounting students have been exposed to the methodology and practice of accounting need to critically examine the broader implications of financial accounting for the fair and efficient working of our economy. The objective is to give the students an understanding of current financial accounting and reporting environment, taking into account the diverse interests of both external users and management. Various professional and conceptual topics will integrate research from Accounting, Finance, and Economic journals. The journals used will be from both the academic and professional literatures. To accomplish these implied objectives, a combination of class formats will be used including lectures, the trading floor, seminars, case analysis and expert guest lecturers. Lectures will be used to develop the foundation: the accounting process and accounting models considered alternatives to GAAP. Seminars will be led by the course participants, usually in groups of three or four members, to present and develop topics related to accounting theory and the accounting environment. Case study will be used to link the research topics and develop linkages from the theoretical to the practical.
LEARNING OUTCOMES
Upon completion of this course, students will be able to complete the following key tasks: Analyze the advantages/disadvantages of the various accounting models; Assess business health/performance as implied by the various accounting models; Conduct an assessment of a given situation from a political economy perspective; Begin to understand the many perspectives from which accounting can be studied.
EVALUATION
Exam: We will have one comprehensive in-class examination on 9th week (November 7). The exact scope and format of this examination will be announced later. Students will form group consist of 4 students to complete three group projects. Group Seminar Project: Each group will prepare material and lead a designated seminar of assigned paper from selected topics (paper will be assigned once groups are formed). This seminar is to consider and introduce a broad spectrum of material for class discussion. Included in the seminar project will be (1) a presentation (15%), and (2) a discussion and question period (5%). The total time for seminar 2
presentation and discussion is to be a maximum of 40 minutes. All group members are expected to participate in the delivery and discussion of materials of the assigned paper. All students not presenting on a given date should be prepared to participate in classroom discussion of the topic. Research in Motion Case Report: The due date for this report is 4th Class (September 26). Analyst Report Project: Each group will select and analyze a Canadian firm (the firm must be identified by the end of third class). Each group will complete an analyst report in which a trading recommendation must be made (in terms of buy, sell, or hold) and information and analysis used to input this decision must also included. Students will submit the report and make a short presentation (no more than 10 minutes) in the 12th class (November 28). Class Participation: Name cards are used to help give credit for your participation. You must have a name card with your full first and last name clearly written and displayed in front of you for every class. Participation in discussion aids in assimilation of concepts and is an essential part of your professional development. Classes are more interesting and intellectually stimulating if there is participation from everyone. In order for you to gain maximum benefit from discussions, it is essential that you complete assigned text material and/or readings in advance, as well as attempt assigned problems. Therefore class participation marks will be awarded on the basis of each students contribution to discussions, and relevant questions and comments during lectures. Class participation is not equivalent to class attendance. Specifically, students who fail to participate in case discussions will receive a class participation mark of zero, regardless of regular class attendance (a separate component). Students unable to attend class should inform the instructor before class of the conflict.
NOTE: The use of a McMaster standard calculator is allowed during examinations in this course. See McMaster calculator policy at the following URL: 3
http://www.mcmaster.ca/policy/Students-AcademicStudies/examinationindex.html
Conversion
At the end of the course your overall percentage grade will be converted to your letter grade in accordance with the following conversion scheme. LETTER GRADE A+ A AB+ B BPERCENT 90 - 100 85 - 89 80 - 84 77 - 79 73 - 76 70 - 72 LETTER GRADE C+ C CD+ D DF PERCENT 67 - 69 63 - 66 60 - 62 57 - 59 53 - 56 50 - 52 00 - 49
ACADEMIC DISHONESTY
It is the students responsibility to understand what constitutes academic dishonesty. Please refer to the University Senate Academic Integrity Policy at the following URL: http://www.mcmaster.ca/policy/Students-AcademicStudies/AcademicIntegrity.pdf This policy describes the responsibilities, procedures, and guidelines for students and faculty should a case of academic dishonesty arise. Academic dishonesty is defined as to knowingly act or fail to act in a way that results or could result in unearned academic credit or advantage. Please refer to the policy for a list of examples. The policy also provides faculty with procedures to follow in cases of academic dishonesty as well as general guidelines for penalties. For further information related to the policy, please refer to the Office of Academic Integrity at: http://www.mcmaster.ca/academicintegrity
a) For absences from classes lasting up to five (5) days Students must use the MSAF (McMaster Student Absence Form). This is an on-line, selfreporting tool, for which submission of medical or other types of supporting documentation is normally not required. Students may use this tool to submit a maximum of one (1) request for relief of missed academic work per term as long as the weighting of the component is worth 29% of the final grade or less. Students must follow up with their course instructors regarding the nature of the relief within two days of submitting the form. Failure to do so may negate the opportunity for relief. It is the prerogative of the instructor of the course to determine the appropriate relief for missed term work in his/her course. If the value of the component is worth 30% or more, students must report to the APO to discuss their situation and will be required to provide appropriate supporting documentation. b) For absences from classes lasting more than five (5) days Students cannot use the MSAF. They MUST report to the APO to discuss their situation and will be required to provide appropriate supporting documentation. Students who wish to submit more than one request for relief of missed academic work per term cannot use the MSAF. They must report to the APO and discuss their situation with an academic advisor. They will be required to provide supporting documentation and possibly meet with the Manager. The MSAF cannot be used during any final examination period.
Students unable to write a mid-term at the posted exam time due to the following reasons: religious; work-related (for part-time students only); representing university at an academic or varsity athletic event; conflicts between two overlapping scheduled mid-term exams; or other extenuating circumstances, have the option of applying for special exam arrangements. Please see the DeGroote Missed Course Work Policy for a list of conflicts that qualify for academic accommodation http://ug.degroote.mcmaster.ca/forms-and-resources/missed-course-work-policy/ Such requests must be made to the Academic Programs Office at least ten (10) working days before the scheduled exam along with acceptable documentation. Instructors cannot themselves allow students to unofficially write make-up exams/tests. Adjudication of the request must be handled by the Academic Programs Office. If a mid-term exam is missed without a valid reason, students will receive a grade of zero (0) for that component.
COURSE SCHEDULE
READING ASSIGNMENT
Stott, Chapters 1 and 2
Agency theory, Moral Hazard Positive Accounting Theory Corporate Governance Information Asymmetry, Corporate Disclosure, and the Capital Markets: A Review of Empirical Disclosure Literature. Ball and Brown. JAR, 1968. Earnings Surprises, Abnormal Returns, Earnings Forecast. Rim Case Report Due The Information Approach to Decision Usefulness. The Measurement Approach to Decision Usefulness. Seminar Project Presentation: Papers 1, 2 and 3
Stott, Chapter 10
Class 4 September 26
Scott Chapter 4
Class 5 October 3
Scott, Chapter 6 and 11 1. Schipper. Accounting Horizons, 1989. 2. Schipper and Vincent. Accounting 3. Horizons. 2003. John Hand. AR, 1989.
Class 6 October 10
The Information Approach to Decision Usefulness. The Measurement Approach to Decision Usefulness. Seminar Project Presentation: Papers 4, 5 and 6.
Scott Chapters 6 and 10 4. Sweeney. JAE, 1994. 5. Healy. JAE, 1985. 6. Han and Wang. AR, 1998.
WEEK
Class 7 October 17
READING ASSIGNMENT
Scott Chapters 8 and 9 7. Abarbanell & Bushee, AR, 1998 8. Healy and Palepu, Accounting Horizons, 1993. 9. Nichols and Wahlen. Accounting Horizons. 2004. Scott Chapters 11 10. Kasznik and McEwen. AR, 1995. 11. Murphy & Zimmerman. JAE, 1992. 12. Baber, Kang and Kumar. JAE, 1998
Class 8 October 24
Compensation and Performance Evaluation Seminar Project Presentation Seminar Project Presentation: Papers 10, 11 and 12.
Exam
Valuation Models
Valuation Notes
Valuation Notes