Research Lab

We review accounting principles related to the reporting of marketing activities and evaluate their implications for marketing research and practice. Based on our review, we argue that current accounting practices contribute significantly to the declining influence of marketing within organizations and the rise of myopic management. Financial reports misrepresent marketing contribution and impede its fair assessment. Changes to current marketing accounting practices are needed. Balance sheet recognition of all marketing-related intangibles emerged as the prevailing proposed solution.

Campbell et al. (2001) document that firms' stock returns have become more volatile in the U.S. since 1960. We hypothesize and find that deteriorating earnings quality is associated with higher idiosyncratic return volatility over 1962–2001.

Standard valuation models forecast cash flows or earnings, add a growth rate, and discount the cash flows to their present value with a discount rate that typically reflects the cost of capital. But as the author argues, projecting the long-term growth rate is essentially speculative; and along with uncertainty about the growth rate, analysts generally do not have a good grasp of the discount rate either.

Blight findings have functioned as a cornerstone for condemnation since the great urban decline of the mid-twentieth century prompted governments at all levels throughout the country to intervene in the real estate market. Elements of blight, and then the term itself, became a basis for this intervention. But the use of blight as a basis for takings has become increasingly controversial as its application has migrated from slum clearance to urban renewal, then to economic development projects, and on to revenue-enhancing projects.

This case introduces students to GM’s partnership with Toyota in the NUMMI joint venture in order to analyze the challenges GM might face in implementing this approach more broadly. Students consider the evolution of lean operations and its various elements. The case focuses on the Toyota Production System, its benefits and related flexibility. What are the potential implications of the analysis for GM’s production strategy and profitability?

Accounting for Value teaches investors and analysts how to handle accounting in evaluating equity investments. The book's novel approach shows that valuation and accounting are much the same: valuation is actually a matter of accounting for value.

Some event managers and ticket resellers offer call options under which a customer can pay a small amount now for the guaranteed option to attend a future sporting event by paying an additional amount later. We consider the case of <em>tournament options</em> in which the identity of the two teams playing in a tournament final such as the Super Bowl or the World Cup final are unknown at the time that options are sold.

This study investigates the information content of variation analysis—that is, analysis of year-over-year changes in the components of operating profit. Using industry level data, we find that the effects on profitability of changes in the prices of output products and costs of intermediate inputs are more persistent than the effects of changes in output volume, labor cost, labor productivity, and intermediate input productivity. We further show that this information is priced by investors.