Browsing Working Papers (AA/ACC) by Year Published
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Rohde, Carsten (Frederiksberg, 2011)[More information][Less information]
Abstract: Budgets and budget control has been known since the early 19th century1. However the use of budget control was until the beginning of the 1920ies in US primarily related to governmental units and states and to a minor extent to business units in practice. At that time James McKinsey describes budgetary control as involving the following2: 1. The statement of the plans of all the departments of the business for a certain period of time in the form of estimates 2. The coordination of these estimates into a well-balanced program for the business as a whole. 3. The preparation of reports showing a comparison between the actual and the estimated performance, and the revision of the original plans when these reports show that such a revision is necessary. As can be seen from the statement budgetary control includes at the same time a planning and coordination mechanism for actions and performance ex ante as well as a control mechanism ex post through a comparison between estimated and actual plans and performance. URI: http://hdl.handle.net/10398/8373 Files in this item: 1
Carsten_Rohde_Budgeting_Beyond.pdf (1.122Mb) -
Rohde, Carsten; Rossing, Christian Plesner (Frederiksberg, 2011)[More information][Less information]
Abstract: When an enterprise is divided into smaller organizational units, each with its own results accountability, the question arises how to manage and measure the efficiency and profitability of such units. A task which is complicated when organizational units in the same enterprise or enterprise group trade internally as the units have to decide what prices should be paid for such inter-unit transfers. One important challenge is to uncover the consequences that different transfer prices have on the willingness in the organizational units to coordinate activities and trade internally. At the same time the determination of transfer price will affect the size of the profit or loss in the organizational units and thus have an impact on the evaluation of managers‟ performance. In some instances the determination of transfer prices may lead to a disagreement between coordination of the organizational units and overall profitability of the enterprise on the one hand and measurement of profitability and managers‟ performance in the units on the other. This chapter addresses these issues. URI: http://hdl.handle.net/10398/8374 Files in this item: 1
Carsten_Rohde_Transfer_Pricing.pdf (1.661Mb) -
Plenborg, Thomas; Petersen, Christian; Gabrielsen, Gorm; Banghøj, Jesper (Frederiksberg, 2009)[More information][Less information]
Abstract: We examine what determines executive compensation in privately held firms. Our study is motivated by the fact that most studies in this area rely on data from publicly traded firms. Further, the few studies that are based on data from privately held firms only examine a limited number of determinants of executive compensation. Our findings indicate that the pay to performance relation is weak. Board size and ownership concentration are the only corporate governance characteristics that explain variations in executive compensation. Executive characteristics like skills, title and educational attainment all explain variations in executive compensation. Contrary to our expectations we do not find a stronger pay to performance relation in firms with better designed bonus plans. URI: http://hdl.handle.net/10398/7958 Files in this item: 1
WP_2009-01[1].pdf (271.1Kb) -
Erfaringer fra praksisPlenborg, Thomas; Ravnkilde Nielsen, Thomas Tang; Jensen, Morten; Banghøj, Jesper (Frederiksberg, 2009)[More information][Less information]
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en introduktionPlenborg, Thomas; Knudsen, Hans Jørgen; Bang Christensen, Tinus (Frederiksberg, 2009)[More information][Less information]
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en introduktionPlenborg, Thomas; Knudsen, Hans Jørgen; Bang Christensen, Tinus (Frederiksberg, 2009)[More information][Less information]
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Poulsen, Thorbjørn; Plenborg, Thomas; Rohde, Carsten (Frederiksberg, 2009)[More information][Less information]
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fordele ved at lave købesumsfordeling tidligt i processen.Madsen, Anders C.; Erhardi, Jacob; Plenborg, Thomas (Frederiksberg, 2009)[More information][Less information]
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Belyst ved investorer og analytikeres holdningerPlenborg, Thomas; Holm, Jakob Wagner; Banghøj, Jesper; Østrup, Jens (Frederiksberg, 2009)[More information][Less information]
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Petersen, Christian; Plenborg, Thomas (København, 2008)[More information][Less information]
Abstract: This study focuses on methodological errors that arise when firm valuation is carried out in practice. Violation of assumptions underlying the valuation models are examples of methodological errors. We analyze valuation spreadsheets from five Danish financial institutions (i.e., stockbrokers and corporate finance departments) in order to trace if firm valuation models are properly applied. We conclude the following: (i) Methodological errors often cause valuation models to generate estimates that differ significantly from the theoretically correct value; and (ii) Firm value estimates were biased due to a variety of methodological errors. The implications of those errors may be significant. Investors are exposed to poor recommendations. Financial institutions such as investment bankers and stockbrokers may be exposed to bad reputation and lawsuits. Accounting firms that do not carry out firm valuation correctly (for example in testing goodwill for impairment) also run the risk of litigations. URI: http://hdl.handle.net/10398/6746 Files in this item: 1
wp_2008-03.pdf (229.2Kb) -
Jeppesen, Kim K. (København, 2008)[More information][Less information]
Abstract: This paper examines recent attempts to professionalize Danish public sector auditing by the establishment of a certification of public sector auditors known in Danish as Certificeret Offentlig Revisor (COR). The establishment of the COR-certification has led to a dispute over the public sector auditing jurisdiction between a coalition of public sector auditors and the professional bodies of the private sector auditors. The paper outlines the process that led to the decision to create the COR-certification, analyse the COR coalition’s attempt to build a network of support for its jurisdictional claim of expertise, and discusses the general implications of the case for the ongoing attempt to create a European certification of public sector auditors. *) Paper presented at the 5th EIASM International Conference on Accounting, Auditing & Management in Public Sector Reforms, Amsterdam September 3-5, 2008 URI: http://hdl.handle.net/10398/6745 Files in this item: 1
wp_2008-01.pdf (105.0Kb) -
Banghøj, Jesper; Petersen, Christian; Plenborg, Thomas (København, 2008)[More information][Less information]
Abstract: We examine what determines executive compensation in privately held firms. Our study is motivated by the fact that most studies in this area rely on data from publicly traded firms. Further, the few studies that are based on data from privately held firms only examine a limited number of determinants of executive compensation. Previous studies also assume that the quality of compensation contracts is identical across executives. Based on unique data from our survey we create a quality index on each executive’s bonus plan. We conjecture that the pay to performance relation is stronger for better designed bonus plans. URI: http://hdl.handle.net/10398/6751 Files in this item: 1
wp_2008-02.pdf (167.1Kb) -
Petersen, Christian; Plenborg, Thomas (København, 2007)[More information][Less information]
Abstract: Adopting a survey approach, our study examines how firms implement impairment test of goodwill. We focus on how firms define and measure the recoverable amount of CGU. The survey includes 58 completed questionnaires representing 73% of the firms on the Copenhagen Stock Exchange that recognise goodwill in the balance sheet. Our survey generally supports that a common practice on impairment tests of goodwill has not yet been established. Based on our analysis it is difficult to determine whether this simply reflects that firms adopt an approach suited to their organisational and economic structures or if it exposes that firms are uncertain as how to apply a standard. The analysis also reveals that some of the methods used when defining a CGU are not in compliance with IAS 36. In addition, we find inconsistencies in the way that firms estimate the recoverable amount. Our analysis should be of interest to a number of parties including firms, financial advisors, auditors, standard setters and users of financial statements. Impairment tests, IAS 36, compliance, goodwill, value in use, valuation techniques. URI: http://hdl.handle.net/10398/6744 Files in this item: 1
wp_2007-02.pdf (371.8Kb) -
Petersen, Christian; Plenborg, Thomas (København, 2007)[More information][Less information]
Abstract: Bonus plans have become a popular tool for compensating managers and employees. While other accounting studies on bonus plans typically focus on earnings management, for example by examining the association between cash bonuses and stock returns or the incentive for management to manage earnings, our study discusses specific issues that are relevant in designing and understanding bonus plans based on financial performance measures. Bonus contracts should be designed so they align the interest of management and owners. In practice, this is far more difficult than it sounds. We discuss issues that require special attention in preparing bonus contracts: Choice of performance measure(s), accounting issues, link between performance and bonus, and bonus threshold. Our study should be of interest to managers, compensation committees, investors and others interested in bonus plans. A proper bonus plan is essential to ascertain that management compensation is closely linked to management’s ability to create value. URI: http://hdl.handle.net/10398/6740 Files in this item: 1
wp_2007-05.pdf (99.26Kb) -
Petersen, Christian; Plenborg, Thomas (København, 2007)[More information][Less information]
Abstract: ’Growth’ as a concept is often not very well understood. Growth may be measured in a variety of ways (e.g., growth in turnover, earnings, earnings per share, assets, and shareholders equity). Investors and other capital providers generally find it attractive to invest in ‘growth firms.’ For instance, earnings per share (EPS) figures are widely published and used by investors. An increase in EPS is seen as a signal of improved profitability. Likewise, growth in earnings measures such as EBIT, EBITA, EBITDA etc. seem to indicate that firms are value creating. Our paper discusses if and under what conditions growth in accounting variables (accounting numbers and financial ratios) is value creating. We find that growth in one-periodic earnings measures does not necessarily create wealth for shareholders. Only growth in economic income is value creating. Our analysis also provide evidence that users of accounting information should be aware of the quality of growth and distinguish between growth based on transitory vs. permanent components of earnings. Our analysis finally documents that growth in earnings per share or return on equity caused by share repurchases has no economic significance. URI: http://hdl.handle.net/10398/6750 Files in this item: 1
wp_2007-03.pdf (319.1Kb) -
Banghøj, Jesper; Plenborg, Thomas (København, 2007)[More information][Less information]
Abstract: We explore the impact of stock pay and stock holdings on the pay to performance sensitivity in Denmark. Our research is motivated by the fact that most non-UK/US studies ignore stock based pay and stock holdings when measuring the pay to performance sensitivity. Further, most studies that explore the pay to performance relation apply the Black and Scholes approach assuming that the executive is both risk neutral due to hedge possibilities and well diversified. However, as pointed by Hall and Murphy (2002) executives are neither risk neutral nor well diversified. We adopt the certainty equivalence approach developed by Lambert et al (1991) to demonstrate that in a setting where executives are risk averse and undiversified there is a gap between the cost of granting stock options and the value, which executives receive from the same stock option program. Our findings indicate that the Danish level of pay is lower than in the UK and the US but more in line with the pay in other Scandinavian countries. Further, our results show that stock options are less frequently used to compensate Danish executives. On the other hand, stock ownership seems to be a more popular way to align the interests of the management and the shareholders than stock options. Furthermore, including stock holdings affect our four pay to performance sensitivity measures significantly. We also demonstrate that the pay to performance sensitivity is considerably lower than indicated by the Black and Scholes approach. Finally, the pay to performance sensitivity is on average smaller in Denmark than in the US. However, the pay to performance sensitivity seems similar in Denmark and the UK. URI: http://hdl.handle.net/10398/6741 Files in this item: 1
wp_2007-01.pdf (277.2Kb) -
an empirical analysisPetersen, Christian; Plenborg, Thomas (København, 2007)[More information][Less information]
Abstract: Fair value accounting has become predominant in accounting as a vast number of IAS/IFRS standards are based on fair value accounting, including IAS 36 Impairment of assets. Fair value accounting for goodwill is technically challenging, since market prices are not observable. Thus, valuation technologies must be applied in order to test goodwill for impairment. While prior research on goodwill has concentrated on either the (dis)advantages for each accounting procedure for goodwill or examined the value relevance of goodwill (amortization) and goodwill write-offs, little effort has been devoted to the technical problems in the implementation of IAS 36. However, recent research on the topic document that firms commit a variety of errors in applying IAS 36 (Petersen and Plenborg, 2007). We examine firm characteristics that might explain the frequency of errors that firms commit in applying impairment tests. Our findings suggest that at least two factors might explain why errors are present – the lack of an impairment manual and not involving employees with rigorous experience in firm valuation. Our research, which might be seen as the fist step toward guidelines in applying technically challenging accounting standards, should be of interest to firms, auditors and standard setters. URI: http://hdl.handle.net/10398/6749 Files in this item: 1
wp_2007-04.pdf (293.7Kb) -
Petersen, Christian; Plenborg, Thomas (København, 2006)[More information][Less information]
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Banghøj, Jesper; Plenborg, Thomas (København, 2006)[More information][Less information]
Abstract: This paper examines if the level of voluntary disclosure affects the association between current returns and future earnings. Economic theory suggests that firms might find it advantageous to provide additional pieces of information (i.e., voluntary disclosure) to investors and analysts (Verrecchia 1983). Our results indicate that more voluntary disclosure does not improve the association between current returns and future earnings; i.e. current returns do not reflect more future earnings news. This finding raises the question whether voluntary information in the annual report contains value relevant information about future earnings or if investors are simply not capable of incorporating voluntary information in the firm value estimates. Key words: Disclosure, future earnings, informativeness URI: http://hdl.handle.net/10398/6742 Files in this item: 1
artikel_udkast_010606.pdf (534.4Kb) -
Del 1Krogholt Hansen, Carsten; Petersen, Christian; Plenborg, Thomas (København, 2006)[More information][Less information]
Abstract: Danske børsnoterede virksomheder overgik til internationale regnskabsstandarder pr. 1. januar 2005. Der skal således ikke længere foretages åremålsamortisering af goodwill, der til gengæld afløses af værdiforringelsestest. Såfremt den bogførte værdi af goodwill er større end genindvindingsværdien, skal der ske nedskrivning. Som en konsekvens heraf er resultat af primær drift for virksomheder med goodwill på balancen forbedret. Eksempelvis er Carlsbergs resultat af primær drift forbedret med 976 mio. kr. i 2004 som følge overgang til værdiforringelsestest af goodwill. Implementeringen af IAS 36 (impairment of assets) og IFRS 3 (business combinations) har således haft ganske store regnskabsmæssige konsekvenser for de netop aflagte årsrapporter for 2005. I denne artikel undersøger vi via en spørgeskemaundersøgelse, hvorledes danske børsnoterede virksomheder, der har indregnet goodwill, gennemfører værdiforringelsestest. Vi fokuserer på de tekniske problemstillinger, der er forbundet med værdiforringelsestest. Eksempelvis undersøger vi, hvorledes de børsnoterede virksomheder fastlægger en CGU og hvordan de estimerer kapitalomkostninger og terminalværdien ved fastlæggelse af genindvindingsværdien. Derimod adresserer vi ikke, om de foretagne skøn vurderes rimelige. URI: http://hdl.handle.net/10398/6747 Files in this item: 1
rr_161106_del 1.pdf (153.8Kb)
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