Syllabus: Topics on Research Keio University, Tokyo

Course: Topics on Accounting Research Instructor: Shyam Sunder http://www.som.yale.edu/faculty/sunder/ Email: [email protected] Cell Phone: To be arranged

Dates: Wednesdays and Fridays between January 7, 2011 and February 23, 2011 on January 7, 19, 21, 28, February 2, 4, 16, 18, and 23 (total of 9 Days with two 90-minutes classes on each day). We shall not meet on January 12, 14, 26, February 9, and 11.

Meeting times: (Wednesday and Fridays) 13:00-16:15 Room for meeting: Collaboration Complex Building 4th Floor, Lecture Room 4

Readings: 1. Shyam Sunder. 1997. Theory of Accounting and Control. Cincinnati, OH: Southwest Publishing (Cengage Learning). This book is also available in Japanese translation: Yamaji Hidetoshi, Suzuki Kazumi, Matsumoto Yoshinao, and Kajiwara Akira, Kaikei To Kontororu No Riron: Keiyaku Riron Ni Motozuku Kaikeigaku Nyumon, (Tokyo: Keiso Shobo Publishing Company, 1998. ISBN 4-326-50146-4). 2. Articles listed in the schedule. 3. Lecture notes to be provided from time to time.

Instructor: Shyam Sunder is James L. Frank Professor of Accounting, and Finance at Yale School of Management. He was educated in India (engineering) and U.S. (M.S. and PhD in industrial administration at Carnegie Mellon University). He is a world renowned scholar for his work in accounting theory and , having written about 175 articles and many books (including five in Japanese or about Japan). He has served on faculties of the , , and Carnegie Mellon University. He has also served as visiting faculty at the Indian Institute of Management, Ahmedabad, California Institute of Technology, University of British Columbia, University of Arizona, Northwestern University, Kobe University, Universitat Pompeu Fabra, London School of Economics, and Great Lakes Institute of Management, and has lectured at several hundred universities in various parts of the world including Japan. He is a former president of the American Accounting Association, and a Distinguished Fellow of the Center for Study of Science and Technology Policy, Bangalore, India.

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Grading: Those who take the class for credit will be assessed on the basis of their term paper (75 percent, see below) and insightful and active contributions to class discussion (25 percent). There will be no exams.

Preparation: Members of the class are expected to have completed careful reading of the assigned material before meeting of each class. We shall use most of the class time for discussion. For a fruitful discussion and learning experience, it is essential that the members of the class have already read the assigned materials, so they can comment on it, and ask questions about it. If you have not spent at least TWO HOURS carefully reading the assigned material before the class, you may not be well-prepared for the class, and may not be able to learn as much as possible.

Objectives: The objective of the course is to gain an understanding of (1) role of accounting as an operating mechanism for organizations; (2) role of various individual and groups such as employees, customers, managers, and shareholders in the accounting system; (3) role of accounting in capital, labor and product markets; (4) development and choice of accounting systems; (5) roles of standards and social norms in financial reporting; (6) differences in accounting and control systems for private good and public good producing organization; (7) linkages between financial reporting and the global financial crisis; institutions of financial reporting; (8) national and global institutions of financial reporting; and (9) making of accounting policy. Readings are assigned only as stimulus to encourage independent thinking about alternative ways of looking at various aspects of accounting, and its role in business and management, and to explore important and interesting research issues in accounting. This list of topics should give you a good idea of what we shall cover. We may make changes depending on the specific interests of the members of the class.

Usage of Emails and PC Environment: Most of the communications between the students and instructor will take place through email and most class assignment, including the preparation of presentation materials will have to be computer-generated.

Term Paper MBA students taking the class for credit will be asked to select an important problem of financial reporting or auditing policy, and analyze it from the point of view of various members of society. For example, suppose you choose to address the following question: What are the consequences of the Government of Japan requiring or not requiring all public corporations in Japan to prepare their reports using International Financial Reporting Standards (IFRS)? If you choose one of these questions, you could analyze the effect such a policy on shareholders, employees, senior managers, auditors, regulators, tax collectors and economic well-being of Japan.

2 Similarly, any PhD students taking the class for credit will also be asked to select an important problem of financial reporting or audit policy, and present their analysis as well as the relevant evidence to support their analysis.

I shall meet the members of the class to discuss the possibilities for topics of their term papers. Please make an appointment to see me for this purpose after the first meeting of the class.

SCHEDULE (The pace and timing of study themes are subject to change. Additional readings will be provided as the lectures proceed.) January 7, 19, 21, 28, February 2, 4, 16, 18, and 23

Week 1: January 7; Role of accounting as an operating mechanism for organizations Readings: Sunder (1997), chapters 1 and 2 (pp. 3-31)

Week 2: January 19; Contracting for managerial skills, accounting decisions, and management of income Readings: Sunder (1997) Chapters 3, 4, and 5 (pp. 35-63)

Week 3: January 21; Investors, stock markets, and accounting Readings: Sunder (1997) Chapters 6 and 7 (pp. 83-111)

Week 4: January 28; Auditing; conventions and classification Readings: Sunder (1997) Chapters 8 and 9 (pp. 113-145)

Week 5: February 2; Decision criteria, standards, and social norms Readings: Sunder (1997) Chapter 10 and 11 (pp. 147-173)

Week 6: February 4; Government, law and accounting; accounting for public good organizations Readings: Sunder (1997) Chapters 12 and 13 (pp. 175-200)

Week 7: February 16; Financial reporting and the global financial crisis Sunder, S. "Riding the Accounting Train:From Crisis to Crisis in eighty Years." http://www.som.yale.edu/faculty/Sunder/Research/Accounting%20and%20Control/Presentations%20and% 20Working%20Papers/Lehigh23April2010/AccountingTraintoCrisisLehighApril232010.ppt. More readings to be assigned.

Week 8: February 18: National and Global Institutions of Financial Reporting 1. Dye, Ronald A. and Shyam Sunder. “Why Not Allow the FASB and IASB Standards to Compete in the U.S.?” Accounting Horizons 15, no. 3 (September 2001): 257-71. http://www.som.yale.edu/faculty/Sunder/Research/Accounting%20and%20Control/Published%20Articles/ 97.Why%20Not%20Allow%20FASB%20and%20IASB/WhyNotFASB.StandardsDyeSS.AH.2001.pdf. 2. Sunder, Shyam. “Adverse Effects of Accounting Uniformity on Practice, Education, and Research.” Journal of Accounting and Public Policy Vol. 29, Issue 2, March-April

3 2010, pp99-114. http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6VBG-4XSSV36- 1&_user=483692&_coverDate=04%2F30%2F2010&_rdoc=1&_fmt=high&_orig=search&_sort=d&_doca nchor=&view=c&_acct=C000022720&_version=1&_urlVersion=0&_userid=483692&md5=b893247cf06 24fc9a7da0233e01792f4 . More readings to be assigned.

Week 9: February 23; Making of accounting policy Sunder, S. "Research for Accounting Policy." http://www.som.yale.edu/faculty/Sunder/Research/Accounting%20and%20Control/Presentations%20and% 20Working%20Papers/IMO-HBS-10- 11Jun2010/Research%20for%20Accounting%20PolicyHarvard2010.ppt More readings to be assigned.

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