Successful Effort Versus Full Cost Accounting: Accounting Choice and a Size-Based Misconception?

• In Event: SESSION 2D: Financial Accounting and Reporting

Abstract

Theoretically, size-based differences in associations between full cost (FC) and successful effort(SE) firms persist, where our expectation is that SE firms will be larger than FC firms. We provide a contemporary analysis of firm data using both 10-K disclosures and the Compustat database. We provide evidence that the historical size difference between FC versus SE adopters no longer exists. We also note that measures from the Compustat database that can be used in infer accounting method choice differ from those extracted directly from 10-K disclosures. Specifically, when using disclosures from 10-K forms, there is no significant difference in either the means or medians of FC vs. SE firms.

Authors

• Cristina Bailey, Texas Tech University

• Steve Buchheit, Texas Tech University

• William L Buslepp, Texas Tech University

• Gary Martin Fleischman, University of Wyoming