In August, Dr. Daniel Paik, assistant professor of accounting, and Cathy Shi, ’17, a business student majoring in accounting and math with a concentration in finance, presented their paper, “Extraordinary Items – A Century of Searching for a Workable Method of Reporting,” at the American Accounting Association (AAA)’s annual meeting in Chicago, Ill. 

Their partnership began when Shi took the Intermediate Accounting I class with Paik during her sophomore year. “Cathy developed such an interest in the material that we decided to do collaborative research in the spring,” Paik shared. “To determine our research topic, we reviewed a great deal of accounting literature. After narrowing our options down to a few interest areas, we chose the elimination of extraordinary items from income statements.” An extraordinary item is defined as an item that is unusual and infrequent. Earlier this year, the Financial Accounting Standards Board (FASB) ruled to remove these from income statements going forward so as to simplify the reporting process.

After completing a comprehensive literature review on the topic, the pair collected financial data from Compustat, a widely used database containing financial information on companies around the world. Shi shared, “We analyzed companies’ accounting data from 2001 to 2013. After the data collection, we conducted an industry analysis by reading the annual reports of 81 companies for the period of 2008 through 2013 and identified reasons behind companies’ reporting of extraordinary items. We compiled the initial findings into a paper and submitted it to the AAA annual meeting. We were very excited to learn we’d been chosen to present our research during the faculty-student collaborations in accounting session at the conference.” 

Once the paper was accepted, Paik and Shi invited Joe Ben Hoyle, associate professor of accounting, to be a co-author in order to further expand their research. “Professor Hoyle provided excellent suggestions for extending and strengthening our research. We went on to analyze accounting standards from as early as 1917 when extraordinary items first began to appear on income statements, which added a great deal of context to the recent decision to eliminate them,” he said. Additionally, they read numerous accounting journals as well as letters to the FASB commenting on the decision and the organization’s meeting minutes to gain further insight into the elimination of the items. Currently, Paik, Shi and Hoyle are compiling their findings into a revised paper for submission to a journal.

Shi looked back on her year doing collaborative research with Dr. Paik. “I really appreciated the opportunity to work so closely with a faculty member as an undergraduate student. The research experience differs significantly from the classroom experience because it’s much more independent. We are responsible for providing thoughtful and data-driven responses to new questions. Professor Paik is dedicated, patient and enthusiastic. Whenever I had questions about research and process, he not only provided in-depth answers but also extended his responses to include his own experiences as a doctoral student. His teachings provided a great deal of context to everything I’ve learned.” 

She added, “Professor Hoyle added a lot of value to our work as well. He is curious about the reasons behind accounting standards and rules, and he really helped to further our research scope. This experience was invaluable to my education and future.”

Paik concluded, “Working with Cathy was a wonderful experience. She is a hard worker, and her diligence and attention to detail strengthened the value of our research and, ultimately, our paper. She plans to become a certified public accountant (CPA) following graduation, and with her focus and growing knowledge base, I know she will have a very successful career."

Photo: Shi, Professor Phil Rohrbach and Paik at the AAA annual meeting.