IMBA财政会计1

IMBAFinancialAccounting•Instructor:GuohuaJiang(姜国华）UniversityofCalifornia,Berkeley(加州大学伯克利分校)田长霖，陈省身，李远哲，赵元任，张爱玲,钱颖一。。。MostrecentNobelPrizewinners:DanielMcFadden(2000),GeorgeAckerlof(2001)Whata“great”timeforaccounting?•Orisn’tit?Accounts:angelsordevils?Youmayhatethem,butyouhavetohavethem•2002,theyearofaccounting•Enron,Worldcom,GeorgeW.Bush,DickCheney•Blameaccountingonanything,frominvestorlossestoSaddamHusseinhidingnuclearweapon•Butwestaycool!TimeMagazine:PersonsoftheYear2002:Whistleblowers•CynthiaCopperofWorldcom•ColleenRowleyofFBI•SherronWatkinsofEnronWhenyouthinkofaccountants,whatimagecomesuptoyourmind?•TheFatherofAccounting-LucaPacioli(1445-1517)•Hewroteafamousmathematicsbook•Inonechapterheinventeddouble-entryaccountingsystem•HetaughtLeonardoDaVinciperspectiveandproportionality.Theknowledgewasusedtopaint“theLastSupper”DowJonesIndustrialAverage1930-2002DJIA,NASDAQ1990-200202000400060008000100001200014000BacktoSquareOne:DJIA1998-2002750080008500900095001000010500110001150012000Dot.comorDot.bomb-NASDAQ1998-2002010002000300040005000TheThreeMajorStockExchanges0500010000150002000025000NYSEAMEXNASDAQUS#oflistedfFirmsMarketCap.BillionsTheRegulatorofU.S.StockMarket•SEC,theSecuritiesandExchangeCommission••ArthurLevitt,commissioner,1993-2000intheClintonadministration•NumbersGameSpeech,1998ThecurrentSECcommissionersWhoissueAmericanAccountingStandards•FASB:FinancialAccountingStandardsBoardSetupin1973toreplaceAccountingPrincipleBoard(APB)Anindependent,privateorganizationStandardsissuedrecognizedbySEC•GAAP:GenerallyAcceptedAccountingStandards7conceptstatements(principles)e.g.,No.7(February2000)Usingcashflowinformationandpresentvalueinaccountingmeasurements148statementsofstandards(rules)e.g.,No.1(December1973)DisclosureofforeigncurrencytranslationinformationInternationalAccountingStandardsInternationalAccountingStandardsCommittee(IASC)BasedatLondonIndependentandprivatelyfundedMeanttodesignasetofworldlyacceptedaccountingstandardsMr.ShupingFengfromChineseAccountingStandardCommitteeserveasanadvisoryboardmember“BigFour”InternationalAccountingFirms•ErnstYoung(worldwiderevenue2002:$10.1billions,4.3billionsintheU.S.)•PriceWaterhouseCoopers•Deloitte&Touche•KPMG•ArthurAnderson(oops!)AuditorOpinions•Unqualified“Unqualified”opinionisactuallygoodopinion,confused?Iwas.•Qualified•Disclaimerofopinion•AdverseopinionGeneralElectric2001AnnualReport(10K)Theusersofaccountingandeconomicconsequenceofaccountingdecisions•Equityinvestors•Creditors•Government•Customer•Suppliers•LaborunionInvestingMottoTwofriendswenthuntinginthejungle.Allofasudden,abearjumpedoutofnowhereandcameafterthem.A:Run!B:No,itishopeless,wewon’toverrunabear.A:ButIdonothavetorunfasterthanthebear.Ionlyneedtorunfasterthanyou!FinancialAccountingandTaxAccounting•TaxaccountingisdesignedbyIRS,InternalRevenueService•Majordifferenceinrevenuerecognitionandexpenserecognition•Taxaccountingcanembedgovernment’seconomicpoliciesGoalsofthiscourse•Howtoreadfinancialstatement•Howtointerpretfinancialstatement•Whatinferencestodrawfromfinancialstatement•Howtobaseeconomicdecisionsontheinformationinfinancialstatement•Alanguagetocommunicateinbusinesscommunity•TomakefriendsSyllabus•Afinancialstatementuser’sperspective•Emphasizetwoissues:EarningsManagementandvaluation•Frequentmini-caseanalysis•Onebigcaseanalysis,individuallyoringroups•Newsarticleswillbetestedinfinalexam•ExpecttoreadALOT!EarningsManagement:Rao,Teoh,Wong,ReviewofAccountingStudies,1998Earningsrestatements–MinWu,HKUSTAccounting-basedValuation•Whoaremypeers?Earningsmultiples,book-valuemultiples,salesmultiples•EVA®,Economicvalueadded,Residualincomevaluation(RIV),Edward,Bell,OhlsonModel(EBO)•Inoneword,Sharevalue=f(earnings,bookvalue,dividend,cashflow,etc.)Accounting-basedValuation-2•Ultimately,wedovaluationtoearnhigherreturnsonstocktrading.•Wegetanintrinsicvaluenumber,compareittoprevailingstockprice,ifourvalueestimateishigherthanprice,webuy;otherwisewesell.•FrankelandLee,JournalofFinance,1999Togetpapersmentioned,fromaPKUcomputer,goto•January22,2003,aftermarketclosed,AT&T(stocksymbolT)announced:Revenuefor4thquartershrankto$9.3billionfrom10.2billioninthe4thquarterofpreviousyearLossfromcontinuingoperationswidenedto$611millionfrom$216million.Howimportantisaccountinginformation?(Finance.yahoo.com)Howimportantisaccountinginformation?•IntheweekendbeforeMonday,Feb.3,2003,Mattel(MAT)announcedfourthquarterresults:•Revenueincreasedfromthefourthquarterayearearlierby6.9%to$1.56billion.•Netincomeincreasedby35%to$186.1million.•Earningspershare(EPS)increasedto42centsfrom31cents.Howimportantisaccountinginformation?(Finance.yahoo.com)ValueInvesting•WarrenBuffett()Accountingconceptsandprinciples•Entityconcept•Reliabilityprinciple(objectivityprinciple)•Costprinciple•Going-concernconcept•Stable-of-monetary-unitconcept•Conservatismprinciple•Accrualaccoun