Hauptseminar Unternehmensanalyse und Bewertung (B.Sc.) · Modul “Markt-und finanzorientierte ......

Hauptseminar Unternehmensanalyse und Bewertung (B.Sc.)Seminar in Financial Statement Analysis and Valuation

Modul “Markt- und finanzorientierte Betriebswirtschaftslehre”

WS 2014/2015

Prof. Dr. Thorsten SellhornInstitut für Rechnungswesen und Wirtschaftsprüfung

Prof. Dr. Thorsten Sellhorn(instructor)Ludwigstr. 28 RG, Zi. 418Email: [email protected].: +49 89 2180 6264

Xiaomin Lin, M.Sc.(teaching assistant)Ludwigstr. 28 RG, Zi. 418A Email: [email protected].: +49 89 2180 3769

Harm Schütt, Ph.D.(teaching assistant)Ludwigstr. 28 RG, Zi. 423Email: [email protected].: +49 89 2180 6326

Dirk Stauder, M.Sc.(teaching assistant)Ludwigstr. 28 RG, Zi. 421 Email: [email protected].: +49 89 2180 6204

Dipl.-WiWi. Christian Stier(teaching assistant)Ludwigstr. 28 RG, Zi. 417Email: [email protected].: +49 89 2180 3362

Claudia Haimerl(administrative assistant)Ludwigstr. 28 RG, Zi. 419Email: [email protected].: +49 89 2180 6323

Please do not hesitate to get in touch!

Team

# 2WS 2014/15Hauptseminar Unternehmensanalyse und Bewertung

• Online

http://www.rwp.bwl.uni-muenchen.de

• On campusInstitut für Rechnungswesen und WirtschaftsprüfungFakultät für BetriebswirtschaftLudwig-Maximilians-Universität MünchenLudwigstr. 28 Rückgebäude (RG) – 4. Etage80539 MünchenGermany


How to find us?

http://www.rwp.bwl.uni-muenchen.de/

Who is doing what?

Katharina Hombach, M.Sc.(wiss. Mitarbeiterin)

Ludwigstr. 28 RG, Zi. 420Email: [email protected].: +49 89 2180 6308

Haushaltsplanung & Datenbanken

Xiaomin Lin, M.Sc.(wiss. Mitarbeiterin)

Ludwigstr. 28 RG, Zi. 418a Email: [email protected].: +49 89 2180 3769

Betreuung Hilfskräfte

Dipl.-WiWi. Christian Stier(wiss. Mitarbeiter)

Ludwigstr. 28 RG, Zi. 417 Email: [email protected].: +49 89 2180 3363

IT-Beauftragter

Dirk Stauder, M.Sc.(wiss. Mitarbeiter)


Auslandsanrechnungen und Prüfungsfragen

Allgemeines und Empfehlungsschreiben

Claudia Haimerl(Sekretariat)


Literatur, Bibliothek

Sandra Bauer(Nichtwissenschaftliche Mitarbeiterin)


1. Introduction

2. Research in Accounting

3. Topics and Supervisors

4. Thesis Writing

5. Evaluation Criteria

6. Introduction to the search for literature (Dr. Antje

Michel)


Agenda

• To practice research work and scientific writing in a field that interests you, thus preparing you for your Bachelor thesis

• „§ 14 Bachelorarbeit

– (…) (2) Die Bachelorarbeit soll zeigen, dass die oder der Studierende in der Lage ist, innerhalb einer vorgegebenen Frist (Abs. 7) ein Problem aus ihrem oder seinem Fach selbständig nach wissenschaftlichen Methoden zu bearbeiten.“

(BSc. Prüfungsordnung 2008)

• Dealing with time and space restrictions / project management

• Presenting and discussing in front of an audience# 6WS 2014/15Hauptseminar Unternehmensanalyse und Bewertung

Learning objectives


Learning objectives (cont’d)

• Project requirements (see seminar announcement)• Project proposal / sketch after about 1 week

• Thesis

• Presentation

• Secondary presentation (Korreferat)• Active participation in all seminar presentations

• Format requirements• See document „Formerfordernisse“ (http://www.rwp.bwl.uni-muen-

chen.de/lehre/info_pruef/formerfordernisse/formerfordernisse.pdf)

• Information on module• 6 ECTS for the module „Markt- und finanzorientierte

Betriebswirtschaftslehre“ (PO Bachelor 2008)


Requirements

http://www.rwp.bwl.uni-muenchen.de/lehre/info_pruef/formerfordernisse/formerfordernisse.pdf

• Recommended textbookTheisen, M. R.: Wissenschaftliches Arbeiten: Erfolgreich bei Bachelor-und Masterarbeit, 16. Aufl., München 2013.


Course materials

Datum/Zeit Raum Veranstaltung/Tätigkeit

Fr., 01.08.2014, 12.00 Uhr Ende der Frist zur Anmeldung am Seminar

Fr., 15.08.2014 Zu- bzw. Absage zur Aufnahme zum Seminar durch den Lehrstuhl

Di., 19.08.2014 Verbindlich Zu- bzw. Absagen zum Seminar durch die Studierenden

Mo., 13.10.2014, 08.00-12.00 Uhr (c.t.)

Ludwigstraße 29/III, Raum-Nr. 309

Themenvergabe und verbindlicheVorbesprechung zur Hausarbeit

Di., 25.11.2014, 12.00 Uhr Abgabe der Arbeit

Mo., 01.12.2014, 10.00-12.00 Uhr (c.t.)

Ludwigstraße 29/III, Raum-Nr. 309

Verbindliche Vorbesprechung zur Präsentation

Do./Fr., 11/12.12.2014, 08.00-18.00 Uhr (s.t.)

Edmund-Rumpler-Strasse 9, A 119

Präsentationen


Course structure

1. Introduction



4. Thesis Writing



Michel)


Agenda

„A number of authors describe accounting researchers as ‚parasites‘ who prey on the work of others to generate their findings. …

accounting researchers have little theory of their own (they rely on economics, finance, psychology, sociology and organizational behaviour as their major sources);

they have no methods of their own (they are all adapted from the natural and social sciences) …“

(Malcolm Smith, Research methods in accounting, 2003, S. 1)


Characterizing accounting research

Normative

• Statements containing ‚should‘, ‚ought to‘

• ‚A priori‘ theorization

• Value judgments based on predefined criteria

• Examples

• How should profit be measured?

• Should goodwill be amortized?

• Should firms reward managers based on

shareholder value?

• Should their be explicit accounting choices?

• Is the new IFRS X a good standard?

Positive

• Try to understand what ‚is‘, and ‚why‘ it is so

• Empirical observation and statistical testing

• Hesitant to make value judgments

• Examples

• Do earnings announcements affect stock

prices?

• Which firm record impairments of goodwill?

• What explains managers‘ accounting choices?

• Why do firms publish integrated reports?

• How did the new IFRS X affect Y?

Ball and Brown (2014: FN 15 p. 16): "An analogy that might help explain the relation between the two propositions is given by motor industry R&D. It was as if academics were saying ‚we have not collected dataon whether or how consumers use cars as they currently are designed, but we know a priori that these cars are useless and all cars henceforth should be redesigned as sixteen wheel trucks.‘ Suppose the data reveal consumers actually find cars to be useful, as in fact they are. That result does not necessarily imply social welfare would not be improved if cars were radically redesigned as sixteen wheelers, but it does cast some doubt on the reasoning behind the conclusion that welfare would be improved.„ (emphasis added)


Basic research questions

Categories used by the European Accounting Association

empirical theoretical Otherempirical archival

(database)non-empirical –

analytical other

empirical archival (archive) non-empirical – theory

empirical experimentempirical field study/

case studyempirical survey


Research methods in accounting

Categories used by the European Accounting Association (adapted)


Research topics in accounting

Accounting PhenomenonDeterminants Consequences

Empirical tests of theories about factors assumed to influence the phenomenon• IF questions• WHY questions

Description of an accounting phenomenon and any relevant legal requirements

Empirical tests of theories about the influence of the phenomenon on other phenomena• IF questions• WHY questions


Empirical accounting research: A closer look

Auditor GenderDeterminants Audit Quality

IFRS AdoptionDeterminants Cost of Capital

R&D CapitalizationEarnings Management Incentives

Predictive ability of earnings

Accounting-based bonus plans

Determinants Earnings Management


Empirical accounting research: Examples

1. Identifying a problem, a research questionExample: BilMoG created a firm-level choice to capitalize certain development expenditures→ How did firms implement it?

2. Derive testable hypotheses from theoryExample: Positive accounting theory suggests that firms manage their earnings to avoid the costs associated with violating debt covenants. Therefore, we expect that leverage is positively associated with the decision to capitalize, and with the amount capitalized.

3. Empirical hypothesis testsExample: (1) Collect leverage ratios and amounts capitalized

(2) Estimate a regression equation explaining the amountcapitalized by leverage (and any control variables)

→ Significant association found: Hypothesis cannot be rejected!


Generating new knowledge

• Identify and define the research problem

• Motivate why it is interesting and important

• Develop the conceptual and theoretical structure, including causal links and chains

• State the specific hypotheses to be tested

• Operationalize the theoretical constructs/variables and the relationships among them

• Construct the research design

• Implement this design by sampling and gathering data

• Analyze observations in order to test hypotheses

• Evaluate the results by applying the qualitative criteria, primarily internal and external validity

• Highlight the contribution made

• Consider and specify limitations and constraints

• Suggest areas for future research


„Scientific Method“ according to Abdel-Khalik/Ajinkya (1979)

Contribution

• Lack of sufficient incremental contribution to the accounting literature

• „What the paper shows is not interesting, innovative; has been shown before …“

• Imperative: Show something interesting!

Validity threat

• Concerns with the validity of the findings and resulting conclusions

• „The paper addresses a potentially important question, but I am not convinced that its conclusions are supported by the empirical results.“

• Imperative: Whatever you show, show it convincingly!

Trade-off: Sweeping, “interesting” conclusions using strong assumptions, OR “convincing” inferences under restrictive limitations.


Reasons for rejection of an (empirical) paper

Constructvalidity Construct

validity

Statisticalconclusion

validity

Internalvalidity

External validityrefers to theoverallcorrespondence between the conceptual and operational levels, i.e. generalizability. Source: Libby (1976)


A helpful framework

„Verificationist“ approach• Centers on „preferred“ causal explanation

• „Parental affection“ (Chamberlin 1890)

• “Incredible certitude” (Manski 2013)

• “Warfare” and “construction” analogies

• “Confirmation bias” (Wason 1960)

• Occupied with „selling“ a desired result (significant coefficient): „Astronomy“

• Uncertainty something to be avoided

• Examples

• IFRS adoption research: „IFRS adoption

affects variable Y“ („IFRS matters“)

• Müller et al. (2013): „Pricing discount on

disclosed FVs due to lower reliability“

• Consistent with Null hypothesis testing (significance testing)

• Requires strong assumptions

„Falsificationist“ approach• Considers range of plausible explanations

• Applies exclusion strategies (Wason 1960), e.g., „logical trees“ (Platt 1964)

• Occupied with understanding the phenomenon of interest, its determinants and consequences; scientific curiosity

• Uncertainty natural; to be openly reported

• Examples

• IFRS adoption research: „Variable Y

driven by a number of factors including

IFRS adoption“

• Müller et al. (2013): „Pricing discount on

disclosed FVs driven by a number of

factors including FV reliability“

• Consistent with reporting ranges of (bounds on) coefficients

• OK with weaker assumptions


The bigger picture: "Mindsets" in research

1. Introduction



4. Thesis Writing



Michel)


Agenda


Overview of topics

Topic Supervisor1) IFRS 15 Revenue from Contracts with Customers: Implications for financial

statement analysis and equity valuation Christian Stier

2) ‘Problem children’ in financial statement analysis: Dealing with pension liabilities, equity-accounted investments, and research and development expenditures

Christian Stier

3) Are non-financial indicators useful in improving forecasts of financial statements? Xiaomin Lin

4) A critical comparison of multiples and DCF methods for valuing listed firms Harm Schütt5) Is the Advanced DuPont model suitable for analyzing banks? – A critical

evaluation and alternatives Harm Schütt

6) The influence of the conservatism principle on the valuation process Harm Schütt7) Growth from leverage and its impact on firm value Harm Schütt8) Cost of capital in times of financial crisis: How does changing interest conditions

affect corporate valuation?Dirk Stauder

9) Valuation methods for intangible assets according to IFRS Dirk Stauder10) The usage of earnings management and its impact on the market value of a

companyDirk Stauder

11) Real estate valuation: An analysis of the valuation methods applied by real estate firms for the determination of investment property fair values

Christian Stier

12) Estimation of systematic risk using accounting-based and market-based beta –German evidence

Xiaomin Lin

1. Introduction



4. Thesis Writing



Michel)


Agenda

• Start early

• Allow yourself to get excited• Do not merely work on „a topic“ (maybe only because it was

assigned)

– „I work on the topic ‚audit quality‘“

• Find your own question within the topic – this will set you apart

– „Because I want to find out how researchers measure audit quality, and whether those measures are consistent with how practitioners think about audit quality

• Show why question is important/interesting (also to others); address

„so what“ question

– „So that I can help improve our understanding of audit quality and its determinants and effects“


Speaking from experience …

• Follow a plan

• Take pride (it is OK to be perfectionist, just this once)

• Support your claims

• Your supervisors are veterans in scientific work – ask them!


Speaking from experience … (cont’d)

• Get organized and structure your project from the beginning• Set yourself deadlines.

• When you are given the topic, start a sketch of the problem as you

understand it and keep revising it.

• Make sure you really understand what the project is about!

(Since you won‘t be familiar with the literature, you most likely

won‘t understand it at the beginning.)

• Every good seminar project rests on a solid understanding of the

relevant scientific literature.

• Come up with a good system to review papers.


A structured process

Der lange Link zwischen den Eigenkapitalanreizen des CEO und Gewinnmanipulation

Ein aktives Feld in der Accounting-Forschung ist die Frage nach den Einflussfaktoren (determinants) von Gewinnmanipulation.

• Armstrong, C. S., A. D. Jagolinzer, and D. F. Larcker [2010], "Chief executive officer equity incentives and accounting irregularities.“, Journal of Accounting Research 48 (2) : 225-271.

Testet die Hypothesen dass aktienbasierte Vergütung des Vorstandsvorsitzenden Anreize setzt, Gewinne zu manipulieren.

Wichtig für Prognosemodelle, um Gewinnmanipulationen frühzeitig zu erkennen.

Im Gegensatz zu vorhergehenden Studien finden Armstrong et al. (2010) keinen statistisch robusten Zusammenhang.

WS 2014/15Hauptseminar Unternehmensanalyse und Bewertung # 29

WS 2014/15Hauptseminar Unternehmensanalyse und Bewertung # 30

Der lange Link zwischen den Eigenkapitalanreizen des CEO und Gewinnmanipulation (cont‘d)

Gewinn-manipu-

lation

Eigen-kapital-anreize

Differenz Target –Aktueller

Profit

Erwartete Markt-

reaktion

Vertrags-form

Corporate Governance

Pr{Ent-deckung}

Art der Vergütung

Trans-parenz

?

Andere Einflüsse

CFO Anreize

1. What is the research question? • Why is it interesting?

2. What are the hypotheses • Do they make sense?

3. What does the paper add to previous research?

4. What data sources are used over what time periods?

5. What does the sample look like? • Are there sample selection issues?

6. What empirical tests are performed? • Do they test the paper’s hypotheses?

• Are the tests well-specified?

• What is the power of the tests?# 31WS 2014/15Hauptseminar Unternehmensanalyse und Bewertung

Summarizing the literature

7. What are the main empirical findings? • Do they support the author's hypotheses?

• Are there any problems with the tests?

• Could they have done better tests?

• Are there alternative explanations for the results?

• How do they distinguish their results from the alternative

explanations?

8. What extensions or incremental research questions could be addressed?


Summarizing the literature (cont’d)

• Understanding what has been done before is key.

• Don‘t just read. Always try to fit a paper in the broader picture that you are trying to form.

• At some point you need to stop reading and start writing. The sooner the better.

• Take your understanding of the bigger picture and present the problem. • The better you understand the minutiae of your problem, the better

your answers will be.

• Reason your answers!

• Don‘t hand in the first draft. Leave time for several revision loops.


Writing

1. Introduction



4. Thesis Writing



Michel)


Agenda

• We are looking for evidence of independent scientific work and ‘spirit of research’

• Qualitative criteria• Diligence and effort

• Clarity and focus

• Reasoning

• Intellectual honesty and open-mindedness

• Creativity, curiosity and ‚drive‘

• Form is a symptom of content


Being successful in this seminar

• Clearly defined research question

• Clear and consistent structure

• Appropriate use of academic expressions

• Correct citation of the literature

• Compliance with the formal requirements• Form is a symptom of content

• See the document „Formerfordernisse“ http://www.rwp.bwl.uni-

muenchen.de/lehre/info_pruef/formerfordernisse/formerfordernisse

.pdf


General evaluation criteria

http://www.rwp.bwl.uni-muenchen.de/lehre/info_pruef/formerfordernisse/formerfordernisse.pdf

Empirical analysis• Appropriate research design (research setting, model)

• Thorough and transparent data collection and data management

• Appropriate depiction of the results using tables and graphs

• Correct economic/statistical interpretation of results (e.g. association v causation)

Critical evaluation (Kritische Würdigung)• Clear definition of the criterion against which you are evaluating, and

its origin


Main criteria for different research approaches

Literature review• Thorough identification of the relevant studies

• Organization around ideas, not the sources themselves (avoid just listing your sources and describing them in detail one at a time)

• See, for example, Needleman IG (2002) A guide to systematic reviews. J Clin Periodontol 2002; 29 (Suppl. 3): 6-9.

• See your supervisor for further guidance literature.


Main criteria for different research approaches (cont’d)

Abdel-Rhalik, A. and Ajinkya, B. (1979) Empirical research in accounting: A methodological viewpoint, American Accounting Association.

Ball, R. and Brown, P. R. (2014) Ball and Brown (1968): A Retrospective, The Accounting Review, 89(1), pp. 1-26.

Chamberlin, T. C. (1890) The method of multiple working hypotheses, Science, 15, pp. 92-96.

Libby, R. (1976) Discussion of cognitive changes induced by accounting changes: Experimental evidence on the functional fixation hypothesis, Journal of Accounting Research Supplement, 14, pp. 18-24.

Manski, C. F. (2013) Identification of treatment response with social interactions, The Econometrics Journal, 16(1), pp. 1-23.

Müller, M. A., Riedl, E. J. and Sellhorn, T. (2013) Recognition versus Disclosure of Fair Values, Working Paper.

Platt, J. R. (1964) Strong Inference, Science, 146(3624), pp. 347-354.

Smith, M. (2003) Research methods in accounting, Sage Publications.

Wason, P. C. (1960) On the failure to eliminate hypotheses in a conceptual task, Quarterly Journal of Experimental Psychology, 12(3), pp. 129-140.


References

Enjoy working on your papers!


1. Introduction



4. Thesis Writing



Michel)


Agenda

Hauptseminar Unternehmensanalyse und Bewertung (B.Sc.) · Modul “Markt-und finanzorientierte ......

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