James A. DiGabriele

An Empirical Investigation of the Relevant Skills of Forensic Accountants

The author investigated whether views of the relevant skills of forensic accountants differ among forensic accounting practitioners, accounting academics, and users of forensic accounting services....

The Sarbanes-Oxley Act and the Private Company Discount: An Empirical Investigation

While criticism of the Sarbanes-Oxley Act of 2002 (SOX) typically focuses on its negative impact on small public companies, this study uses acquisition data to empirically investigate whether the Sarbanes-Oxley Act impacts the value of private firms. This study presents strong evidence that the private firm discount was greater post-SOX. The evidence represents support for the argument that SOX has been more detrimental for private companies than for public companies.

Topics and Methods in Forensic Accounting Research

Purpose - – The purposes of this paper are to highlight those topics of forensic accounting that have received little or no attention in the forensic accounting research that has been published in forensic accounting research journals; discover what research methods have been most commonly used; and identify research methods that have been infrequently used. Design/methodology/approach - – This is a descriptive research study that explores the topics and methods used in forensic accounting research published in forensic accounting journals. Findings - – Fraud and quantitative methods make up the largest percentage of topics and research methods published in forensic accounting journals. Research limitations/implications - – Limited to forensic accounting journals. Results suggest forensic accounting researchers are using mimetic topics and methods of accounting research. The absence of diversity in forensic accounting research topics and methods has the potential to compromise the overall contribution of forensic accounting research. Practical implications - – This paper identifies gaps in topics and research methods in forensic accounting research to encourage research in diverse topics using diverse methods that will be valuable to forensic accountants. Originality/value - – This original research is the first to survey and classify research published in forensic accounting journals according to topic and method.

To Have and to Hold: An Empirical Investigation of Preferences for Valuation Methods of Closely Held Companies in the Matrimonial Court

This study investigates if preferences for valuation methods exist in the matrimonial courts. The results illustrate that there are systematic trends in court preferences for specific valuation methods in matrimonial court. The trends presented in the current study provide an empirical basis for litigants, attorneys and experts making decisions regarding which valuation method or methods to consider in matrimonial courts. Furthermore, individuals involved in selecting the valuation method or methods to be proposed to the court should focus on specific factors such as industry type and the specifics of the individual case in addition to current economic staples such as inflation.

The Insignificance of Auditor Selection in the Valuation of Private Companies Within the Public Acquisition Market

Previous research has set a firm position on quality and credibility of accounting information in the audit markets. Firth and Smith (1992), Firth and Liau-Tan (1998) and DeFranco et al. (2010) observed that brand name auditors provide higher assurance and credibility to the audited financial statements of companies with little or no trading history. However, in light of this reputable research, the established view from major professional accounting groups is that audits are the same regardless of the audit firm implying auditing homogeneity (Niskanen et al., 2010). The results from this analysis indicated that the price of a privately held company did not vary as a function of the audit firm performing the audit. Two analyses were performed comparing private companies audited by the largest ten accounting firms vs. all others, and Big 5(4) firms opposed to the remaining.

The Application of a Predictive S Corporation Premium Model and the Behavioral Considerations in Acquisitions of Private Corporations

The valuation of S Corporations has been a source of great controversy since the beginning of the recent decade when the US Tax Court ruled in Gross v. Commissioner that the net income of S Corporations should not be tax-affected in the valuation process. The benefit of removing a level of taxation has been translated by the Tax Court as an inherent increase in value for S Corporations regardless of transaction specific conditions that may or may not warrant a valuation premium. This paper addresses the issue of when an S Corporation premium exists though the application of a moderated multiple regression model developed by this author in prior research using actual transaction data. The objective of this paper is to introduce the application of the model in various transaction specific conditions when valuing S Corporations.

Do Court Preferences for Valuation Approaches of Closely Held Companies Vary by Industry

This study investigates whether the valuation approaches for closely held companies preferred by courts vary by industry type. Our difference of means tests find that income valuation approaches are preferred by courts over either asset or market approaches for cases involving the valuation of manufacturing companies, while market valuation approaches are preferred for cases involving the valuation of holding companies. We do not find any significant differences between companies categorized as tangible and intangible. Our multivariate tests further indicate that income approaches are approximately five times more likely to be preferred for manufacturing companies than other types of companies.

The Pancake Palace: A Case Study in Business Interruption from the Defense Side

This case demonstrates the difficulties that can occur in business interruption cases when the insured is represented by a public adjuster. The Pancake Palace, a restaurant established for approximately thirty five years, suffered a business interruption due to a fire that completely destroyed the building housing their establishment. The maze created by the public adjuster submitting the claim to the insurance company, clearly exhibits the need for a special set of skills that include persistence, creativity, curiosity, common business sense and, deductive reasoning. Upon completion of this case, the reader should have an increased awareness of the techniques required when resolving business interruption claims of this nature.