University of Notre Dame - Intro

Mendoza College of Business Deans Report 2009-11

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Center for Accounting Research and Education Peter Easton Accounting for uncertainty In 2011, CARE and the Center for Excellence in Accounting and Security Analysis at Columbia University hosted a conference, "Accounting for Uncertainty and Risk: Investor, Management, and Policy Implications," in Palisades, N.Y. The event brought leading scholars together with industry professionals, including executives from Morgan Stanley, General Motors and the Financial Accounting Standards Board. Topics included the impact of fair-value accounting for uncertainty and risk during the most recent economic crisis. U.S. Army Major Hugh Jones described how the Army analyzes and copes with uncertainty and risk on the ground in the Middle East, Afghanistan and in other dangerous places. Many of the conference sessions were published in the spring 2011 edition of the Journal of Applied Corporate Finance. The feasibility of forecasting crises Could the worldwide financial crisis that began in 2008 have been foreseen? That was one of the questions 24 on the minds of attendees at the 2010 CARE conference, "Financial Statement Analysis and Valuation: Forecasting Firm and Industry Fundamentals," held in Coral Gables, Fla. The conference featured presenta- tions by experts from outside the accountancy profession discuss- ing how they forecast extreme events in their own fields, including climatology, human behavior and athletic performance. Keynote speaker Keith Sherin ('81), vice chairman and CFO of General Electric, discussed how GE, one of the world's largest companies, forecasts future conditions. Pacific Rim conference focuses on capital markets Issues in the turbulent capital markets of 2009 were the focus of a CARE conference in Singapore titled "Empirical Methods in Capital Markets-Based Accounting Research." The conference, held in conjunction with the National Uni- versity of Singapore, was CARE's first conference in the Pacific Rim. Director Peter D. Easton delivered a keynote address on research- design issues. Other presenters came from Stanford University, the National University of Singapore, Harvard Business School and the Hong Kong University of Science and Technology. New research sheds light on write-down rules, cost of capital CARE has funded two new research projects by junior faculty. Assistant Professor Stephannie Larocque, along with CARE director Peter Easton and University of Toronto Associate Professor Gus De Franco, has been examining how sell-side equity analysts estimate firms' cost of capital. The research, still in early stage, will investigate whether analysts' cost-of-capital estimates help predict future stock returns, and whether their estimates are more accurate than those of accounting and finance researchers. Assistant Professors Brad Badertscher and Jeff Burks, along with Peter Easton, looked at whether legally required write-down of assets related to banking accounts contributed to the financial crisis, as some have alleged. Their findings that the write-down did not contribute to the crisis will be reported in "A Convenient Scapegoat: Fair Value Accounting by Commercial Banks during the Financial Crisis," forthcoming in The Accounting Review.

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