Journal of Accounting and Economics 31 (2001) 255–307
Empirical research on accounting choice$
Thomas D. Fieldsa, Thomas Z. Lysb,*, Linda Vincentb
Graduate School of Business Administration, Harvard University, Boston, MA 02163, USA Kellogg Graduate School of Management, Northwestern University, Evanston, IL 60208, USA Received 21 January 2000; received in revised form 31 January 2001
Abstract We review research from the 1990s that examines the determinants and consequences of accounting choice, structuring our analysis around the three types of market imperfections that inﬂuence managers’ choices: agency costs, information asymmetries, and externalities aﬀecting non-contracting parties. We conclude that research in the 1990s made limited progress in expanding our understanding of accounting choice because of limitations in research design and a focus on replication rather than extension of current knowledge. We discuss opportunities for future research, recommending the exploration of the economic implications of accounting choice by addressing the three diﬀerent reasons why accounting matters. r 2001 Published by Elsevier Science B.V.
JEL classiﬁcation: M41 accounting Keywords: Capital markets; Accounting choice; Voluntary disclosure; Accounting judgments and estimates; Earnings manipulation
$ We are grateful for comments received from Ronald Dye, participants of the 2000 Journal of Accounting and Economics conference, the editors Ross Watts and Douglas Skinner, and the discussant Jennifer Francis. Financial support from the Accounting Research Center at the Kellogg Graduate School of Management, Northwestern University is gratefully acknowledged.
*Corresponding author. Tel.: +1-847-491-2673; fax: +1-847-467-1202. E-mail address: firstname.lastname@example.org (T.Z. Lys). 0165-4101/01/$ - see front matter r 2001 Published by Elsevier Science B.V. PII: S 0 1 6…...