Thomas Carnes - Academia.edu (original) (raw)

Papers by Thomas Carnes

Asia Pacific Journal of Accounting Economics, May 29, 2012

We examine whether the incremental information content of cash flows from operations (earnings) i... more We examine whether the incremental information content of cash flows from operations (earnings) increases when earnings (cash flows) are transitory in Thailand's emerging capital market. Prior research for developed capital markets (e.g. the United States and Japan) has found cash flows play a more important role in explaining security returns when earnings are transitory. The Stock Exchange of Thailand (“SET”)

Review of Quantitative Finance and Accounting

Discontinued operations, special items, or extraordinary items typically are nonrecurring items i... more Discontinued operations, special items, or extraordinary items typically are nonrecurring items in ®rms' income statements. As such, prior research has theorized that these items are of minimal relevance to market valuation of the ®rm, since they are transitory in nature. Moreover, anecdotal evidence in the ®nancial press is supportive of this notion. We examine ®rms that report either single or multiple occurrences of such items over a rolling six-year period between 1977 and 1996 and ®nd in both cases that such items are value-relevant. When multiple occurrences are not partitioned by type (discontinued operations, special items, or extraordinary items), the more recent such event in the series has a negative effect upon market value of equity, whether it has had a positive or negative effect upon net income. This is consistent with at least two possible explanations, multiple occurrences of such items indicate ®rms in ®nancial dif®culty, or multiple occurrences indicate ®rms whose managers have engaged in repeated attempts at earnings management, and that the most recent attempt is being devalued by the market. We ®nd patterns of discretionary accruals consistent with managers engaging in upward earnings management prior to multiple write-downs using special items. We also ®nd that ®rms with multiple write-downs are more likely to go into liquidation or bankruptcy within the next ®ve years. We ®nd that single occurrences also are value-relevant and are positively correlated with market values. Tests on the sample when partitioned by type lead to similar results, though signs of the effects upon net income change in some instances.

Asia-Pacific Journal of Accounting & Economics, 2002

Journal of International Accounting Research, 2011

, appropriately structures the book so that it is useful to the large majority of introductory ac... more , appropriately structures the book so that it is useful to the large majority of introductory accounting students who will not be accounting majors. Indeed, he challenges these students to consider carefully whether modern accounting, in light of the financial turmoil that began in 2007, is meeting the needs of users of accounting information. He writes in the preface, "I believe that you have a responsibility to evaluate critically every concept you are about to learn. And I also believe that you have a responsibility to use these concepts to evaluate critically every business decision, every company, every senior manager, and every board member you encounter in your careers. I want you to decide for yourself, as your understanding of financial accounting matures, whether you think that the accounting profession is doing its job." By issuing such a challenge to his readers, the author is of course issuing a challenge to himself. If he expects students to analyze accounting so critically, he must provide them with the tools to do so, and he must stimulate their thinking along such lines. I believe he largely succeeds in this task. I have taught introductory accounting for almost 20 years, and as I read this book, I found myself continually noting particularly felicitous phrasing that I could use to crystallize concepts for my students. Professor Monger has a flair for precise, clear explanations. I also found, time and again, flow charts that I could adapt for use in my course. My primary concern with the text is its focus on IFRS, which limits its usefulness for potential U.S. adopters. Given the current pace and status of IFRS convergence with U.S. GAAP, some of the accounting standards in the book will not be appropriate for U.S. courses for at least a few years. A few obvious examples include the revaluation reserve that affects owners' equity and the complete omission of Last-In, First-Out inventory valuation. Other phrases are uncommon in the U.S., such as "scrip issue" instead of stock dividend and "diminishing balance" instead of declining balance depreciation ͑though the latter phrase is mentioned in passing͒. I do not believe these issues affect the usefulness of the text for non-U.S. users. Indeed, I do not believe they have much effect on the usefulness of the text for U.S. students who do not intend to be accounting majors. However, unless this text is paired with an IFRS-based intermediate accounting text, accounting majors in the U.S. may find the different terminology and standards confusing. The text is divided into five parts and 13 chapters. For the most part, these chapters are the ones found in any introductory text, with two significant exceptions ͑Chapters 6 and 13, discussed below͒. Part I, which includes three chapters, provides students with a general understanding of financial reports. Chapter 1, "The Financial Accounting Reporting System," answers the most basic questions: What is accounting, what are the financial statements, and what is GAAP? Chapter 2, "Accounting Standards and Ethics," explains how IFRS

Issues in Accounting Education, 1999

Journal of International Financial …, 2006

In this study, we describe determinants of accuracy/bias of analysts' forecasts in 13 economies o... more In this study, we describe determinants of accuracy/bias of analysts' forecasts in 13 economies of the Asian-Pacific region. Examination of the accuracy of analysts' earnings forecasts allows us to judge how accounting systems and macroeconomic distinctions in this region affect earnings predictability. As many investors rely on analysts' earnings forecasts instead of producing their own, the growth of international investment means forecasts in non-US markets will become increasingly important to investors worldwide. Using a sample of firms with data available on Global Vantage and I/B/E/S International, we find that the analysts on average have a pessimistic bias in Asian-Pacific markets. We examine whether macroeconomic factors explain part of the difference in the size of analyst forecast errors, using the global competitiveness rankings of the World Economic Forum (WEF). We expect that those nations which are more open to foreign trade and investment and are ranked more highly by the WEF in its Global Competitiveness Index will also have more accurate analyst forecasts, as increased global competitiveness demands greater integration into the world economy, and such integration should lead to more transparent financial statements and more accurate earnings forecasts. Our findings are consistent with this prediction. We also find that countries with low book-tax conformity have more accurate earnings forecasts. We gratefully acknowledge the contribution of I/B/E/S International Inc. for providing earnings per share forecast data, available through the International Brokers Estimate System. Those data have been provided as part of a broad academic program to encourage earnings expectation research. We thank workshop participants at the Batten Institute conference on Valuation in Emerging Markets, the 2000 International Institute of Forecasters Conference, the Central States Accounting Workshop, the Oklahoma State University regional accounting research workshop, and the University of Arkansas for their helpful comments. Ervin Black also gratefully acknowledges the financial support received from the Global Management Center at Brigham Young University.

Journal of Accounting and …, 2004

Both debt covenants and federal monitoring restrict banks' discretion. We examine whether banks s... more Both debt covenants and federal monitoring restrict banks' discretion. We examine whether banks substituted monitoring for covenants by investigating debt issues of 105 banks between 1979 and 1984, a period when monitoring increased. We hypothesize that bank shareholders take advantage of the intersection between debt covenants and regulatory monitoring to reduce agency costs. We find a decrease in the number of debt issues containing such covenants and the total debt subject to such covenants. We find no such decrease during the same period for a sample of non-banking firms, or for banks during a subsequent period.

We provide evidence that corporate reputation has value relevance, as measured by its ability to ... more We provide evidence that corporate reputation has value relevance, as measured by its ability to explain the ®rm's market value of equity at the end of the ®scal period. Corporate reputation is assessed using a summary measure from the Fortune survey of`America's most admired companies.' The Fortune measure serves as a proxy for intangible assets, such as internally generated goodwill, customer service, and intellectual capital. We demonstrate that this summary measure of non-®nancial information adds to market value, even after controlling for the ®nancial performance`halo' eects on the Fortune ratings.

Managerial Finance

Purpose The purpose of this paper is to compare simple dynamic withdrawal strategies with the sta... more Purpose The purpose of this paper is to compare simple dynamic withdrawal strategies with the static withdrawal method, examining not only failure rates and ending wealth but also spending. All withdrawal strategies are adjusted for the Internal Revenue Service’s (IRS) required minimum distribution (RMD). In addition, this study investigates the use of small company stocks (SCS) in place of large company stocks (LCS). Results indicate SCS portfolios are superior to large. When returns are poor, some dynamic strategies will not ensure income for life. This study demonstrates that the simplest dynamic strategy is superior to two popular dynamic strategies. Design/methodology/approach Using historical overlapping periods, different withdrawal strategies are examined. Previous studies focused on failure rates and ending wealth. As discussed in Milevsky (2016) different statistical distributions can have similar tail properties (prob of failure) but dissimilar risk and return profile. Th...

Academy of Accounting and Financial Studies Journal, Sep 1, 2006

Ssrn Electronic Journal, Mar 1, 1999

Page 1. THE MARKET VALUATION OF FIRM REPUTATION ERVIN L. BLACK* THOMAS A. CARNES* VERNON J. RICHA... more Page 1. THE MARKET VALUATION OF FIRM REPUTATION ERVIN L. BLACK* THOMAS A. CARNES* VERNON J. RICHARDSON** April 1999 *Assistant Professors, Department of Accounting, University of Arkansas, Fayetteville ...

International Journal of Forecasting

Firms that adopt just-in-time (JIT) inventory practices do so in order to realize cost savings an... more Firms that adopt just-in-time (JIT) inventory practices do so in order to realize cost savings and improve product quality, but an unexpected benefit to such firms could be a more predictable earnings stream. We examine the relationship between implementation of just-in-time inventory practices and the predictability of future quarterly earnings for a matched-pair sample of 82 firms, half of which

Managerial Finance, 2010

Purpose -Most investors' retirement portfolios have inter-period cash inflows. The standard timew... more Purpose -Most investors' retirement portfolios have inter-period cash inflows. The standard timeweighted mean return (or geometric mean return) is generally used to report returns on investors' retirement portfolios. The purpose of this paper is to examine the standard time-weighted mean return and point out additional deficiencies in the time-weighted mean in this situation, which have not been addressed in the literature. Design/methodology/approach -The paper provides examples that point out additional deficiencies that arise using geometric mean returns as estimates of an individual investor's performance.