by Taylor Bryant and Rachel Williams
The Richards College of Business held a brown bag lunch for faculty at noon on September 27, 2013. The event caught faculty up to speed on some of the research happening within the business world. The lunch was held in Adamson Hall 227.
Mark Wills, Bruce Bird and Mike Sinkey presented “Structuring a Bona-Fide Sale of Excess or Slow-Moving Inventory for Tax Purposes.” Their research addressed the discrepancy between tax laws and the generally accepted accounting principles (GAAP) accountants use to balance corporations’ books. While GAAP allows corporations to use the cost of their “excess” inventories for tax purposes, the tax laws disagree. The group found that many corporations, such as Volvo Cars of North America, were being forced to sell their excess inventory to a third party in order to receive any tax benefits for them.
Linxiao Liu discussed “Changes in the Role of Earnings in Compensation over the Past Three Decades.” The study examined the downward trend in the relation between account earnings and executive compensation during the past three decades. Liu’s results suggested that the decline in the role of accounting earnings in compensation could be attributed to changes in the economic environment rather than a decline in earnings quality.
Gary Braun, Christine Haynes and Mark Taylor summarized their study, “Principles-Based vs. Rules-Based Accounting Standards: The Effects of Client Proposed Accounting Treatment and Regulatory Enforcement on Auditor Judgments and Confidence.” Their research indicated that auditors were more likely to agree with their clients’ proposed accounting treatment when they used principles-based accounting standards. However, the auditors were more confident when they were able to rely on clearly defined rules.