AES Summer School in Theory and Empirical Research (8/5/19-8/8/19)

The Accounting and Economics Society is pleased to announce the 2nd summer school on Theory and Empirical Research, which will take place at the Rady School of management, UCSD, from Monday 8/5/19 to Thursday 8/8/19. The objective of the summer school is to teach accounting theory and methods to incorporate theory in empirical research, in a manner that is self-contained for researchers from various backgrounds. The sessions are designed for researchers with or without prior experience in the methods. We invite faculty members at any level as well as graduate students.

Jon Glover (Columbia) and H. Sapra (Chicago) will be the resident scholars for the lectures and will cover the theory part; additional courses on theory-based estimation will be assured by I. Marinovic (Stanford), J. Bertomeu (UCSD), Y. Xiao (Duke) and F. Zhou (Wharton).

The event is part of a week-long event at UCSD, and will be followed by the yearly conference of the Junior Accounting Theory Conference on Friday 8/9/19 and Saturday 8/10/19, as well as an optional class trip on Sunday 8/11/19. Note that, this year, the annual meeting of the AAA will be in San Francisco, a short flight from San Diego (1.5h), with regular sessions starting on 8/12/19.

The course requires separate registration from the Junior Theory Conference. UCSD and the AES have agreed to provide facilities for the event and expenses for speakers, but we ask for a modest contribution of $199 for breakfast and lunches.

Space is limited, so we kindly ask you to submit an application by completing the form online before 3/15/2019. You will receive a response no later than 4/1/2019. The form can be accessed at

If you have any questions, please do not hesitate to contact one of the organizers on the website.

We look forward to seeing you in San Diego!


Rady School of Management

University of California San Diego

9500 Gilman Drive, La Jolla

CA 92093

Logistics and Accommodation

San Diego is about 1h30 to 2h from LA, and a short flight from San Francisco. It is also a great location for families during the summer.

We have a block of rooms reserved at a discounted rate at Estancia La Jolla Hotel & Spa, which is at walking distance from the school. We also recommend the Grande Colonial in La Jolla cove, which is a short 5 minute Uber/Lyft drive to the Rady School and is a more active area with cafes and restaurants. A third option great for families is the La Jolla Shores Beach and Tennis Club, also a 5 minute drive to Rady and walking distance to the La Jolla Shores beach area.

Please contact Adrienne ( to coordinate room sharing. We will also have a limited number of individual student rooms via UCSD. More information will be posted about this option but you can review existing programs here.

Tentative Program

Monday, Aug. 5th: Theory of Contracts

8:30-10:30: Agency Theory

In this section, we will review basics of being ‘in the know’ in agency theory, as well as various complexities that can arise, including the first-order approach, the first-best solution in certain unbounded problems and classic results in this literature. We will also discuss how to set up an agency problem with binary problems and within the risk-neutral limited-liability context.

10:30-11:00: Afternoon break

11:00-1:00: Relational Contracts

This session will explore dynamic incentives in the form of relational contracts, that is, non-contractual arrangements that can either discipline agents or induce collusion. We will explore together how to set up a problem with relational contracts, as well as standard frameworks in this literature. We will also review how relational contracts are likely to manifests in the empirical record.

1:00-2:00: Lunch Break

2:00-3:30: Topics: Conservatism and Contracting

This session will explore interactions between asymmetries in measurement and the stewardship role of accounting. The research provides an agency-theoretic foundation to common practices that emphasize early recognition of losses, with models that can identify the factors that increase or decrease the desirability of conservatism.

3:45-5:00: Paper Session 1

5:30-6:00: Hike to Black’s Beach (Ho Chi Minh Trail)

Short (30 min.) hike, walking distance from Rady, ends at beautiful Black Beach.

Important: bring regular or walking shoes, since it can be slippery and there may be wet areas.

Tuesday, Aug. 6th: Real Effects

8:30-10:30: The Disciplinary Role of Mandatory Reports

This session will examine the role of accounting information in environments in which the outsiders are less informed than management and investments may be used to signal private information. We will examine how additional accounting information helps alleviate the inefficiencies caused by investment signaling, and discuss the economic trade-offs implied by the theory.

10:30-11:00: Afternoon break

11:00-1:00: Imprecision in Accounting Measurements and Economic Consequences

This session extends the prior session by investigating information about particular line items in financial statement. We will illustrate how more information about line items relating to particular decisions will endogenously distort the decision.

1:00-2:00: Lunch Break

2:00-3:30: Transparency in Financial Reporting. What are the economic trade-offs?

This session will synthetize the broad sets of trade-offs in the real effects research, offering some organizing principles about the trade-offs creating value for transparency or value for imprecision. Recent applications to fair value and bank accounting will also be considered.

3:45-5:00: Paper Session 2.

5:30-sunset: Surf, drinks and Body Board, Pacific Beach

Hip area of San Diego, Sunset on the pier, Drinks and Dinner for anyone interested.

Wednesday, Aug. 7th: Dynamics

8:30-10:30: Dynamic Programming, Theory

In this session, we will review the basic principles of setting up a Bellman Equation using classic problems in the literature. We will examine classes of problems that can be represented using dynamic programming, and discuss tools to establish theoretical properties of the Bellman equation, including convergence and convexity. We will also discuss various applications in the context of investment, contracting and disclosure.

10:30-11:00: Break

11:00-1:00: Dynamic Programming, Computation

This session will introduce students to discretizing a dynamic programming problem, and computing value functions and optimal policies. We will review two classes of methods, policy function iteration and value function iteration. We will also discuss alternative methods to accelerate execution via interpolation.

1:00-2:00: Lunch Break

2:00-3:30: Continuous-time optimization

Many dynamic programming admit a closed-form representation when solved in continuous-time. This session will introduce the basic methods of stochastic optimization, including preliminary results such as Ito’s lemma and Pontryagin’s maximum principle. The session will offer as example the solution of the continuous-time dynamic investment problem.

3:45-5:00: Paper session 3

6:30-sunset: Hike to Cowles Mountain

Easy hike (families welcome), beautiful views of San Diego.

Thursday, Aug. 8th: Estimation Methods

8:30-10:30: Generalized/Simulated Method of Moments, maximum likelihood

This session will focus on a brief presentation of generalized and simulated method of moments, as well as maximum likelihood. We will provide an overview of the two methods, as well as computation of standard errors with each method. We will also discuss how these methods can be programmed using standard computational packages, as well as preferred practices in coding.

10:30-11:00: Morning Break

11:00-1:00: Conditional Choice Probabilities: Theory and Computation

This session will introduce students to methods that do not involve numerically computing a value function, with an emphasis on conditional choice probabilities (CCP). We will show how these methods can yield much faster and simpler estimation procedures, and allow researchers to estimate richer models. The session will also involve an implementation of CCP with commonly used statistical software.

1:00-2:00: Lunch Break

2:00-3:30: Directed Study groups

This session will involve groups of 10 in break sessions, with a TA, to solve simple problem sets involving a continuous optimization. Each group will be chaperoned with a TA, with a focus on solving problems interactively. After the session, detailed solutions will be provided.

3:45 -5:00: Paper session 4

7:30-9:00: San Diego Theater OB Playhouse, sign-up in advance.