Table of Contents

Managing the Risk of Misleading Financial Metrics in Annual Reports: A First Step towards Providing Assurance over Management's Discussion

Dennis Caplan, State University of New York (SUNY) at Albany
Saurav K. Dutta, State University of New York (SUNY) at Albany


FINANCIAL ENGINEERING eJOURNAL

"Managing the Risk of Misleading Financial Metrics in Annual Reports: A First Step towards Providing Assurance over Management's Discussion" Free Download
Journal of Accounting Literature, Forthcoming

DENNIS CAPLAN, State University of New York (SUNY) at Albany
Email:
SAURAV K. DUTTA, State University of New York (SUNY) at Albany
Email:

Recent public policy initiatives seek greater transparency in financial reporting through an honest, balanced and thorough management discussion of company performance in the annual report. Management’s discussion invariably includes key performance indicators, such as financial ratios, relevant to external stakeholders. We model the impact of accounting estimates, assumptions, choices and errors on the risk of misleading financial ratios. This framework is illustrated through good and bad examples of financial reporting practices and by simulation of financial data of public companies. We provide a structured approach to inform policymakers, auditors and other stakeholders of the incremental financial reporting risk that accompanies current regulatory efforts.

^top

About this eJournal

This eJournal distributes working and accepted paper abstracts related to development and employment of quantitative techniques to further our understanding of financial markets, instruments, and strategies. The eJournal welcomes research with a focus on advancing the theory or practice of financial engineering in endowments, hedge funds, insurance firms, investment and commercial banks, pension funds, and personal financial and retirement planning. Topics of interest include, but are not limited to, econometric analysis of financial data, enterprise risk management, investment and consumption models, optimal portfolio, pricing and hedging of financial instruments, as well as innovative empirical studies, analytical models, and mathematical algorithms in credit, energy, fixed-income and other markets.

Submissions

To submit your research to SSRN, sign in to the SSRN User HeadQuarters, click the My Papers link on left menu and then the Start New Submission button at top of page.

Distribution Services

If your organization is interested in increasing readership for its research by starting a Research Paper Series, or sponsoring a Subject Matter eJournal, please email: RPS@SSRN.com

Distributed by

Management Research Network (MRN), a division of Social Science Electronic Publishing (SSEP) and Social Science Research Network (SSRN)

Directors

OPER SUBJECT MATTER EJOURNALS

MICHAEL C. JENSEN
Social Science Electronic Publishing (SSEP), Inc., Harvard Business School, National Bureau of Economic Research (NBER), European Corporate Governance Institute (ECGI)
Email: michael_jensen@ssrn.com

Please contact us at the above addresses with your comments, questions or suggestions for OPER-Sub.