Financial reporting provides a window into the operational and financial workings of a company. However, translating this information into actionable insights is anything but straightforward. It requires an understanding of Generally Accepted Accounting Principles (GAAP), the quality of financial information, and the adjustments and analyses required to accurately measure and evaluate profitability, exposures, growth prospects, and value. This course is devoted to a systematic study of GAAP and earnings quality, utilizing many actual financial disclosures and cases of accounting abuses. The class also covers standard and not-so-standard financial analysis techniques, and incorporates insights from practitioner and academic research. The primary objective is to acquire a deep understanding of accounting information and how to intelligently use it in making investment, credit, and similar resource allocation decisions. Such knowledge is required of executives, consultants, bankers, analysts, investment managers, and other users of financial information.
The class consists of two parts:
First three class meetings – Review of the financial statements, basic GAAP, earnings quality, earnings management, and ratio analysis. The main objective of this part is to lay out the foundation for the advanced analysis in the second part.
Next nine class meetings – For each key line item from the financial statements, we will conduct an advanced level study of GAAP, earnings quality issues, red flags, and related analyses. We will also review the primary differences between International Financial Reporting Standards (IFRS) and US GAAP, and discuss many real world examples of financial disclosures and accounting abuses.
Ernst & Young Professor of Accounting & Finance
Professor Nissim earned his PhD in Accounting at the University of California, Berkeley, and joined Columbia Business School in 1997. He was granted tenure in 2005, and full professorship in 2007. He served as the Chair of the Accounting Division during the years 2006–2009 and 2014–2016.
Professor Nissim’s research is primarily in the areas of earnings quality, fundamental analysis, equity valuation, financial institutions...