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Accounting is essential to the functioning of the economy and, indeed, society in general. Accounting is the means by which we monitor our governments, our corporations, and our non-profit organizations. For business firms, so much the focus in business schools, accounting not only monitors the managers, but also informs the investors in these firms of the potential payoffs, the risk to those payoffs, and the consequent valuations. This “financial accounting,” determines the allocation of investment to its most efficient use in the economy and promotes well-functioning capital markets with transparent pricing. “Managerial accounting,” the accounting to managers rather than about managers, promotes decision making and efficiency within the firm.
The research endeavor of the Accounting Division thus focuses on the question: What is “good” accounting and how is it distinguished from “bad” accounting? To what extent is corporate accounting promulgated by the regulators—the Financial Accounting Standards Board and the Securities and Exchange Commission in the United States and the International Accounting Standards Board internationally—up to the mark? Coupled with this question is the issue of financial analysis: How should users—investors, analysts, managers, and other regulators—process accounting information to get insights? If the accounting mandated by the accounting regulators frustrates them, what alternative accounting solves the problem?
The research of the Division thus focuses on both the design of financial analysis and prescriptions for “better” accounting that enhances such analysis. Much of the research is catalogued in academic research journals. But, our Center for Excellence in Accounting and Security Analysis (CEASA) also takes that research to practice in White Papers and Occasional Papers that offer policy prescriptions. You might visit the website at http://www8.gsb.columbia.edu/ceasa.
Columbia Business School has a reputation as the leading school in value investing, going back as far as the days of Benjamin Graham, the so-called father of fundamental analysis. Fundamental investing involves the analysis of accounting numbers, so the Accounting Division is very much aligned with this activity, in research, teaching, and bringing research to practice. “Price is what you pay, Value is what you get” is very much part of our mantra. We thus engage with the Heilbrunn Center for Graham & Dodd Investing in the School. Our teaching electives in the MBA program have this focus, in courses titled Fundamental Analysis and Earnings Quality, Fundamental Analysis for Investors, Managers, and Entrepreneurs, Financial Statement Analysis and Valuation, and Accounting for Value, for example, along with courses on financial modeling. Our Masters of Science in Accounting and Fundamental Analysis is a unique specialty masters’ program bringing accounting analysis to fundamental analysis.
Regular faculty research seminars, an active PhD program, and outreach activities to practitioners and regulators stimulate our inquiry into the absorbing questions of accounting. I am so happy to be associated with a distinguished senior faculty, an energetic junior faculty, and dedicated PhD students in the pursuit of the answers.
Since 1981, the Accounting Division at Columbia Business School has hosted the annual Burton Conference in honor of Professor Sandy Burton who served as the Chief Accountant at the SEC, the Deputy Mayor of Finance in New York and as the dean of Columbia Business School. Prof. Burton earned considerable respect for attempting to bridge the gap between accounting practice and academia. In keeping with that spirit, the conference aims to assemble an accomplished group of scholars and practitioners to discuss new research findings, ideas, methodologies and trends. The 2019 Burton Conference was a special one. It featured a Friday morning session devoted to celebrating the work of Trevor S. Harris, James A. Ohlson, and Stephen H. Penman. As part of that celebration, the three honorees made short presentations. Their presentations can be viewed below:
James L. Dohr Professor of Accounting and Chair, Accounting Division
February 25, 2020