May 17, 2007

Dr. Kate Mooney
Professor of Accounting
G. R. Herberger College of Business 367A
St. Cloud State University
St. Cloud MN 56301

Dear Kate,

I am sending my evaluations to you via email. I do not have Professor Datar’s email address so perhaps you can forward this evaluation to him.

I have carefully reviewed all the papers and nomination statements that you forwarded to me regarding choices for the AAA’s Notable Contribution to Accounting Literature Award in 2007.

Firstly I might note that I am terribly disappointed that the Screening Committee only filtered out obscure academic “accountics” journal articles containing advanced mathematical and statistical empirical analyses or analytical agency theory content. This perhaps has been the case for this award over the past 20 years since only this type of literature won the award over the past two decades. It’s beginning to look like a rigged game!

There have been other works published that I think are far more notable over the period covered than most of the submitted accountics research papers. For example, some of the really notable literature on XBRL seems to have been entirely overlooked by the Screening Committee, including various pieces by Charles Hoffman (who the AICPA claims is the “Father of XBRL”). There’s a cover story in a recent Journal Accountancy about Charlie. Also see the August 2005 edition of the Journal of Accountancy. Charlie is author of the books “XBRL Essentials”, a non-technical guide to XBRL and "Financial Reporting Using XBRL: IFRS and US GAAP Edition", a comprehensive guide to using XBRL in financial reporting. He was co-editor of the first XBRL taxonomy. He is played a major role in creating the taxonomy for financial reporting under International Financial Reporting Standards (IFRS-GP).

My point is that the works of Charles Hoffman between 2002 and 2006 are far more notable than any of the obscure works submitted by the Screening Committee (with the possible exception of the paper by Erik Lie).

The Screening Committee seems to have taken a very narrow view of what can be notable contributions to accounting literature. Over the past two decades, the Screening and/or Selection Committees seem to have ignored the broader scope of what can be “notable contributions” for this award. My reading of the criteria is much broader in scope according to the Call for Nominations at http://aaahq.org/awards/nominat3.htm

The Screening Committee for the Joint AICPA/AAA Notable Contributions to Accounting Literature Award invites nominations of outstanding articles, books, monographs, or other publications for consideration. Nominations from regular and irregular (e.g., AICPA-sponsored research studies or monographs) publications, as well as from nonaccounting publications, may be submitted as long as the nominated work is relevant to accounting. Both academic and practitioner nominations will be accepted.

Nominated items must have been published within the years 2002 to 2006. Each nomination must be accompanied by a brief supporting statement (no more than 150 words) summarizing reasons for the nomination that are consistent with the award selection criteria. These criteria include: uniqueness and potential magnitude of contribution to accounting education, practice and/or future accounting research; breadth of potential interest; originality and innovative content; clarity and organization of exposition; and soundness and appropriateness of methodology.

In my opinion the Screening Committee choices of papers that you sent me to evaluate are mainly of interest to a very small subset of accounting researchers. I doubt that any practitioners and the majority of the accounting educators around the world have ever had any interest in these papers (except for Erik Lie’s work). Over the past two decades it’s commencing to look like a rigged game for accountics researchers to pat themselves on the back --- http://www.trinity.edu/rjensen/395wpTAR/Web/TAR395wp.htm
The submitted papers in general to not make significant contributions to “accounting education or practice.”

If these papers were of “notable” importance to education and research there would’ve been some evidence of independent replication by other researchers. Not one of the submitted nominations mentions a single replication, although Erik Lie’s work is has received considerable independent verification in some other studies and in recent court cases and convictions of executives for options backdatings.

Lack of replications once again proves to me that empirical researchers in accounting are more interested in their tractors (models) than their harvests. Why should we ever give this Notable Contribution award to any research that has not been independently replicated?

The one exception this year that gets my only vote for the 2007 Award is Erik Lie’s 2005 paper published in Management Science. This is truly notable and has been replicated in various ways. He has received high praise and is probably the only business administration professor to ever be deemed one of the 100 most important people by Time Magazine:

University of Iowa finance professor Erik Lie has been named one of the world's most influential people by Time magazine....In the overall list, Lie is included with other notables that include Oprah Winfrey, George Clooney, Roger Federer, Tony Dungy, Nancy Pelosi, Hillary Clinton, John Roberts, Pope Benedict XVI, Al Gore, Elizabeth Edwards, Condolezza Rice and Chien-ming Wang. Lie was named to the list for his work in uncovering the stock options backdating scandal currently roiling corporate America.
Iowa City Press Citizen, May 3, 2007 --- Click Here

I’m not so much impressed by his being singled out with Oprah and other personalities better known in the media as I am impressed by the enormous impact his research had upon executive behavior, SEC enforcement, and litigation. His work is truly notable and stands head and shoulders above every other paper submitted by the screening committee.

Although the other papers submitted by the Screening Committee show high evidence of scholarship, the research itself is of dubious value due to lack of replication, missing variables in the model specifications, and unrealistic assumptions. Furthermore it would probably be impossible to replicate some of these studies. The Larcker and Meyer 2003 study is based upon proprietary data that cannot be accessed by other researchers. This also seems to be the case Matsumura and Shin 2006 study. Accounting researchers have not apparently seen a need to replicate the other papers submitted by the Screening Committee.

The Baiman and Rajan paper is a very distant second choice for me due to some clever analytics on incomplete contracts and incentive externalities that are very difficult to analyze. But the paper in my viewpoint has is of almost zero interest to the world of accountancy outside a very narrow band of agency theorists. Even they have not widely cited this paper. It is thus hardly worthy of the 2007 Notable Contributions Award.

My third choice and even more distant from my first choice is the Aboody, Barth, and Kasznik paper published in TAR in 2004. This is both a rigorous and a clever study of the relationship between share prices and expenses that are disclosed but not booked. However, the authors themselves question the importance of the study for standard setters.

But all of this pales in the presence of the body of literature written by Charles Hoffman over the past several years. Although Erik Lie’s work has had a spike of importance, the works of Charles Hoffman are far more notable in terms of a long-lasting betterment of financial reporting.

But given the limited choices submitted to me by the Screening Committee, I am forced to choose the paper written by Erik Lie.

Very truly yours,

Bob

Robert E. Jensen

Cc Shyam Sunder and Gary Previts