Discussion of: Acquisition profitability and timely loss recognition by J. Francis and X. Martin

• 成果类型: Editorial Material
• 署名作者: Roychowdhury, Sugata
• 署名单位: Massachusetts Institute of Technology (MIT)
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2009.11.003
• 发表日期: 2010
• 关键词: ACCOUNTING CONSERVATISM; asymmetric timeliness; corporate governance; earnings

摘要

Francis and Martin (2009) test whether accounting conservatism induces managers to make better acquisition decisions. This discussion highlights three main issues. First, the hypothesized links between conservatism and future investments are potentially incomplete. In particular, the possibility that conservatism can have dysfunctional outcomes if acquisition decisions are based on anticipated earnings effects is ignored. Second, the evidence is insufficient to infer a causal relation between conservatism and acquisition profitability. Third, the hypothesis development fails to indicate whether timely loss recognition or the asymmetric timeliness of loss versus gain recognition is the more appropriate measure of conservatism given the context. (C) 2009 Published by Elsevier B.V.