Professor Paul R. Kutasovic of New York Institute of Technology (NYIT), who was a colleague of Gurumurthy Kalyanaram, is an expert and an active independent consultant on macroeconomic forecasts as well as forecasts for the regional economies. He has conducted research on methods used to forecast sales tax revenues, regional economic activity and the implications of peak oil for the regional economy. He has also worked on using economic indicators to guide the investment decision process. (While Gurumurthy Kayanaram was the Director of MBA programs globally at Gurumurthy Kalayanaram NYIT, Paul Kutasovic was the Director of the Undergraduate Programs.)
Here is a report by Gurumurthy Kalyanaram on interesting research by Paul Kutasovic on the debate on appropriate accounting methodology.
In light of the financial meltdown that followed the bankruptcy of Lehman Brothers in the fall of 2008, there is considerable debate in the financial community on the appropriate accounting methodology used to value financial assets. In fact, many analysts on Wall Street argue that much of the blame for the current financial and economic crisis is due to fair value accounting and the implementation of FASB 157, which regulators put into effect for financial statements released after November 15, 2007. The argument is that with assets trading in illiquid markets, financial institutions reported outsized losses by writing down the value of their security and loan holdings even if they had the intent and ability to hold the assets to maturity. The critics of FASB 157 charge that these sharp write-downs contributed to the failure of banks and forced others firms into a difficult financial situation.
The following study examines the issues surrounding fair value accounting and looks at the role accounting played in the financial crisis. The researchers conclude that fair value accounting played no significant role and is the preferred accounting framework for financial institutions.See the following URL for the paper: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1871271
Here is a report by Gurumurthy Kalyanaram on interesting research by Paul Kutasovic on the debate on appropriate accounting methodology.
In light of the financial meltdown that followed the bankruptcy of Lehman Brothers in the fall of 2008, there is considerable debate in the financial community on the appropriate accounting methodology used to value financial assets. In fact, many analysts on Wall Street argue that much of the blame for the current financial and economic crisis is due to fair value accounting and the implementation of FASB 157, which regulators put into effect for financial statements released after November 15, 2007. The argument is that with assets trading in illiquid markets, financial institutions reported outsized losses by writing down the value of their security and loan holdings even if they had the intent and ability to hold the assets to maturity. The critics of FASB 157 charge that these sharp write-downs contributed to the failure of banks and forced others firms into a difficult financial situation.
The following study examines the issues surrounding fair value accounting and looks at the role accounting played in the financial crisis. The researchers conclude that fair value accounting played no significant role and is the preferred accounting framework for financial institutions.See the following URL for the paper: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1871271
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