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A retraction is presented for the article "Relationship Incentives and the Optimistic/Pessimistic Pattern in Analysts' Forecasts" published on December 17, 2007 in Wiley Online Library.

A retraction of the article "Recognition v. Disclosure, Auditor Tolerance for Misstatement, and the Reliability of Stock-Compensation and Lease Information" is presented.

A retraction is presented to the article "Analysts' Reactions to Earnings Preannouncement Strategies" published on December 17, 2002 in Wiley Online Library.

This article focuses on the contributions of Professor Nicholas Dopuch to credible financial reporting research at the University of Illinois in Champaign, Illinois, during the 1960s. Some of Dopuch's contributions include bringing about significant changes in accounting, regulation, practice, and scholarship. The article also explains that Dopuch was one of the leading proponents behind the idea that research in accounting should test conjectures and subject claims to refutation. A historical overview of accounting scholarship is also presented, which focuses on the environmental and research technology changes that have occurred from the 1960s to the 1990s.

The article discusses the reaction of analysts to qualitative warnings of adverse earnings in the United States. The article attempts to reconcile analysts' more negative forecast revisions and the apparently conflicting anecdotal evidence that suggests more positive responses to firms that warn. It is suggested in the article that two possible causes for negative reactions to warnings are; market particpants' believing that warning firms may cause a more permanent earnings decline, and an overreaction may occur.

This article presents findings of the authors study designed to determine whether results of prior studies of the determinants of audit expertise generalize to measures of actual performance. The authors provide an overview of previous studies of the determinants of audit expertise. The study showed that at the staff level, auditors with superior performance evaluations were distinguished by their technical knowledge while seniors with superior performance evaluations were distinguished by both technical knowledge and problem-solving abilities. The study also indicated that significant learning of tacit managerial knowledge occurs between the experienced staff and senior levels. The authors conclude that the results of the study have practical implications for the education and selection of entry-level auditors, as well as performance evaluation and retention/promotion decisions.

The article focuses on the likelihood of the effect of differential availability of information prices on laboratory financial markets. The authors explain the effect of differential availability on closing market prices and the impact of information availability on individual estimates of value. The article also provides evidence of under-reactions to non-earning financial statement information and discusses this impact. The authors state that earnings numbers are more widely reported than other annual report details and not all investors have the ability or incentive to analyze other annual report information.

This article presents a study on the impact of incentive bonuses on performance and accounting judgment decisions. The authors contend that understanding this interaction will yield insight on the cognitive processes underlying performance and the efficacy of incentives. To verify they conducted a cognitive experiment with auditing students on their ability to learn and retrieve knowledge. The study indicates that the affect of incentives depends on the ability of the decision maker and the difficulty of the job tasks instead of simply the type and size of bonus offered.

The article presents an exploration into the influence of professional experience in the structuring and the content of auditor decisions. Organizational practices concerning the higher trust put in more senior auditors are examined, seeking to identify correlative data on ability and knowledge differences of individual analysts. The authors' hypothesize a model through cognitive psychology, wherein experienced auditors are more capable of recognizing common statement errors due to increased exposure and therefore posses a stronger grasp of interpretive judgment towards the data presented.

This paper has two goals. The first is to develop a formal approach for examining how the auditor's memory store interacts with current audit evidence to determine judgment. The failure of less systematic efforts to examine these issues suggests the need for more formality and structure. The second goal is to use the approach to predict and demonstrate the judgmental effect of a specific knowledge difference in an abstract setting. The conflicting and inconclusive results of prior studies indicate the nontrivial nature of this task, even in an abstract setting. This study should be viewed as the first in a sequence of research, which will move from the artificial toward the realistic, leading to demonstrations of how knowledge differences allow experts to perform important auditing tasks that novices cannot. As a result, this initial study, by itself, is not designed to allow direct implications for audit practice to be drawn. [ABSTRACT FROM AUTHOR]

In this experiment, a group of experienced auditors performed a diagnostic task related to one of their customary procedures—the detection of material financial statement errors through preliminary analytical review. Although the analytical review task used here abstracted from many of the complexities of an actual audit environment, it provided an opportunity to test three theoretical propositions concerning the knowledge structures of experienced auditors. These concerned how perceived frequency and recency of experience affected the accessibility in memory of potential financial statement errors, and how auditors organize financial statement errors in memory. Models of memory suggest that auditors should develop error prototypes and perceptions of their frequencies firsthand from personal experience, secondhand from the experiences of associates, and through formal training sessions where case materials emphasize certain types of accounting errors (see Waller and Felix [forthcoming]). Presumably, standardized audit procedures are also aimed primarily at more likely (and important) errors. The results of this experiment suggest that perceived error frequencies play a major role in the accessibility of error hypotheses in analytical review in that such error frequencies were closely associated with the frequency with which individual error hypotheses were generated. These results can be attributed to the relationship between frequency of experience and the strength, of associations in memory, and the fact that prototypes of frequency experienced errors are associated with more retrieval properties. [ABSTRACT FROM AUTHOR]

The article provides information on the use of U.S. Financial Accounting Standards Board qualitative characteristics in accounting policy choices. The financial accounting standard setting involves making choices among the alternative accounting methods. According to the author the Statement of Financial Accounting Concepts (SFAC) No. 2: Qualitative Characteristics of Accounting Information identifies and defines the qualitative characteristics of accounting information and asserts that they should be the basis for choosing among accounting methods. The author has tested the effectivity of the SFAC by assessing the operation of the qualitative characteristics, comprehensiveness of the qualitative characteristics and the minimum amount of overlap in meaning among the characteristics.

The article assesses the accounting implications of behavioral decision theory. The authors discuss the relationship between task structure, cognitive representations of tasks and human information-processing capabilities and the inconsistency between human decision and an optimal model. The authors state that they believe normative models are essential to accounting research and that a thorough understanding of the limitations of normative models is crucial. The importance of contextual variations in cognitive representation is also discussed.

The article refers to the evaluation of credit risk in commercial loan decisions and discusses uncertainty reporting, which can affect perceived risk. Studies on the effects of disclosing uncertainty in the footnotes of financial statements and bankers' perceptions of audit reports are discussed. Six stages in a heuristic model, which analyzes disclosures of uncertainty and is related to behavioral decision theory, include problem recognition and cue evaluation. Relationships among the effect of uncertainty, management quality, and the company's financial performance are mentioned, as well as the effect of adding the auditor's qualifications to footnote disclosures. A sample case is provided in the appendix.

The article reports on a comparison of bankers' and auditors' perceptions and rating of the message content in ten types of audit reports in the United States. Three individual differences scaling (INDSCAL) models were used to map perceptions of, individual differences between, and similarity in ratings by the two subject groups. The study mentions variations of scope limitations and uncertainty reports such as litigation and asset realization. Statistics are given for directional cosines of fitted vectors of adjective scales in subject space and for adjective phrases and scale endpoints. Statement on Auditing Standard No. 2 is mentioned. Auditors found more similarity in the client- and circumstance-imposed scope limitation reports.

This article evaluates alternative descriptive models of individual risk-taking behavior in business decisions based upon a review of experimental studies. The authors develop a classification scheme of alternative risky choice models. The models differ in the "risk" construct employed and the manner in which it is combined with other parameters. They also evaluate the evidence concerning the validity of those models as predictors of actual business decision behavior. Furthermore, the authors discuss the existence of individual and situational differences in risk-taking behavior and their importance in the choice between models and the generalizability of their conclusions to decisions made in group contexts.

The question addressed by Ashton is of great interest to accountants, and his approach to the topic is innovative. However, serious questions concerning the way in which the conceptual network was operationalized, coupled with methodology deficiencies, question whether any conclusions can be drawn from the results. The major problems relate to the presentation of the accounting change to the subjects, the manipulation of the moderating variables information and importance, and the method of measuring the change in the subject's decision process. Procedures for removing the confounding effects of these and other problems are presented. [ABSTRACT FROM AUTHOR]

The article presents research and discussion evaluating the predictive utility of accounting ratio information towards the likelihood of business failure. Multiple previous studies are cited wherein either accounting methods or their organizational reactions could be seen as adequate business indicators and a study is presented to combine the two factors into a single computation. The study utilized various levels of accounting ratios and measured the accuracy of loan officers' predictions, weighed against firm compliance with the decisions.