Bridging the GAAP

Bridging the GAAP: Recent Advances in Finance and Accounting lies at the intersection of the two disciplines. The readings in this volume bridge the gap between finance and accounting by looking at diverse topics in accounting and finance and by providing interesting points of view regarding their interface. Most of the chapters concentrate on the topic of fair value accounting and on the extent to which accounting numbers mirror the financial situation of the firm. This book combines new developments in the areas of theoretical and empirical finance and accounting, and emphasizes the convergence of these two disciplines to better serve researchers, investors and the general public. The papers contained in this volume will help scholars, practitioners and investors better understand the similarities and differences between these two important fields of study.

Contents:

• On the Relationship between Accounting and Finance:

  • Paths to Valuation, Asset Pricing, and Practical Investing: Can Accounting and Finance Approaches Be Reconciled? (Stephen Penman)
  • The Risk-Return (Bowman) Paradox and Accounting Measurements (Ivan Brick, Oded Palmon and Itzhak Venezia)
  • Accounting Values versus Market Values and Earnings Management in Banks (Dan Galai, Eyal Sulganik and Zvi Wiener)

• Assessing Asset Values through Financial or Market Prices:

  • Baseball and the Art of Fair Value: Do Managers or the Prediction Markets Make Better Predictions? (Orly Sade and Emanuel Zur)
  • Assessing Inventory Management and Capacity Requirements Using Financial Reports (Joshua Livnat and Stephen G Ryan)

• On the National Accounting and Monetary Policy:

  • A Balance Sheet Approach for Sovereign Debt (Dan Galai, Yoram Landskroner, Alon Raviv and Zvi Wiener)
  • The Trade-off between Monetary and Financial Stability: Some Lessons from the 2007–08 Crisis for Emerging Economies (Meir Sokoler, Yoram Landskroner and Emanuel Barnea)

• Incentives in Firms and Their Effects on Decisions:

  • Bilateral Incentive Problems and the Form of Start-Up Financing (Stanley Baiman, Sasson Bar-Yosef and Bharat Sarath)
  • Time to Wait–Time to Invest: The Case of Trade Order Executions by Specialists on the NYSE (Sasson Bar-Yosef and Annalisa Prencipe)

• On the Capital Structure of Firms:

  • The Optimal Term Structure of Debt Maturity (Melissa Maisch and Fernando Zapatero)
  • Unanticipated Growth, Tobin's Q, and Leverage (Varouj A Aivazian, Jeffrey L Callen and David S Gelb)

Readership: Graduates and researchers, and professionals such as analysts, CPAs and board directors.
Key Features:

• offers a unique approach in combining recent advances in the two closely related fields
• provides future directions of development in these two fields, with suggestions on how and where they may converge
• emphasizes the interaction between fair value accounting, market prices and the traditional accounting approaches, creating a unique opportunity to view the same assets and decisions from two different points of view — the pure market approach versus the reporting approach