Category: Finance

Cover your basis: Hedging real estate risk

Since the turn of the millennium, real estate has become one of the fastest growing investment sectors, not just in the United States but globally as well. But as much as we would like to think otherwise, there’s considerable risk involved in real estate investing. One way to ameliorate that risk is through hedging practices, according to Robert Edelstein, a real estate professor at the Haas School of Business at the University of California, Berkeley, and Anthony Sanders, the Bob Herberger Arizona Heritage Chair in Real Estate and Finance at the W. P. Carey School of Business.

Attitude adjustment: Judges’ views of auditors take a dive

The attitudes judges hold toward auditors have eroded since the accounting debacles of Enron, WorldCom and others earlier in the decade. Not only do judges have lesser views of auditors, they also have conflicting views with auditors. In fact, auditors see their roles and standards differently than those in both legal and business communities. That expectations gap is one of the problems facing auditors today, according to Philip Reckers, Marianne Jennings and Kurt Pany at the W. P. Carey School of Business.

Accrual intentions: Investors miss vital clues for smart stock buys

There are plenty of judgment calls associated with accrual accounting, giving managers some wiggle room in recognizing expenses and income. But can investors spot the wiggle? Do they identify and price that discretionary portion of earnings correctly? The W. P. Carey School’s Dahlia Robinson looked at the issue and discovered that most investors don’t. There’s opportunity here for investors with the savvy to take advantage of the price corrections that follow when earnings realities catch up with earnings-release hype. But Robinson questions whether there’s a regulatory imperative lurking in her findings, as well: "Maybe requiring some accrual information in the earnings announcement would be beneficial for the market."

Podcast: Tips for filing your 2006 tax return

With tax returns due on April 16, we get an extra day to file this year. In a recent interview, Professor Charles Christian, director of the School of Accountancy at the W. P. Carey School of Business, shared some information that individuals should consider as they prepare their 2006 personal income taxes. A well-known tax …

Getting out early: An analysis of market-making activity

Stock market analysts move markets, and not just because investors believe in the validity of their research and legitimacy of their opinions. In an important new study, Assistant Professors Jennifer L. Juergens and Laura Lindsey examined affiliated market-making activity around analyst recommendation changes and found a dramatic effect on trading activity for the issuing brokerage firms around both upgrades and downgrades.

Accounting cues bolster or bust restructuring efforts

Accounting practices can influence behavior that aids or thwarts organizational efforts to get the job done, according to research conducted by Casey Rowe, an assistant professor of accounting at the W. P. Carey School of Business. Traditional accounting systems reinforce departmental borders and impede restructuring because they promote competition at a time when cooperation, open communication, and cross-functional teamwork are needed. As organizations ebb and flow through periods of continuous and discontinuous change, accounting systems need to be changed to motivate competition or cooperation as appropriate.