- Professor
- Associate Professor
- Arel, Barbara Ph.D.
- Bonifield, Carolyn M Ph.D.
- Cats-Baril, William L. Ph.D.
- Dempsey, Stephen J. Ph.D.
- Hughes, Susan B. Ph.D.
- Jones, David A. Ph.D.
- Lucas, Marilyn T. Ph.D.
- Novak, David Ph.D.
- Parke, E. Lauck Ph.D.
- Tomas III, Michael J. Ph.D.
- Vanden Bergh, Richard G. Ph.D.
- Zhang, Chun Ph.D.
- Assistant Professor
- Lecturer/Sr Lecturer
- Lecturer (Part Time)
- Faculty Emeritus
- Averyt, William F. Ph.D.
- Battelle, Peter E. M.B.A.
- Brandenburg, Richard G. Ph.D.
- Gatti, James F. Ph.D.
- Gurdon, Michael A. Ph.D.
- Jesse, Richard R. Ph.D.
- Kraushaar, James M. Ph.D.
- Laber, Gene Ph.D.
- Savitt, Ronald Ph.D.
- Severance, Malcolm Ph.D.
- Shirland, Larry E. Ph.D.
- Tashman, Len J. Ph.D.
Stephen J. Dempsey, Ph.D. Associate Professor
Contact Information
Office: 306 Kalkin
Phone: 656-8322
E-Mail: stephen.dempsey@uvm.edu
Office Hours: TR 12:00-1:30 pm or by appointment
Prior to joining the UVM faculty in the Fall of 1987, Dr. Dempsey taught at Virginia Tech (1982-85) and The College of William and Mary (1985-87). He earned his bachelor's from Binghamton University (Summa Cum Laude) and Master of Accountancy and Ph.D. degrees from Virginia Tech. The recipient of a numerous academic honors and teaching awards, he has done extensive consulting work for several national and regional firms, including the U.S. Postal Service, General Dynamics, IBM and Ben & Jerry's. Dr. Dempsey's primary teaching interests cover all areas of financial and managerial accounting.
His research has been published in The Accounting Review, the Journal of Business Finance and Accounting, the Journal of Financial Statement Analysis, the Journal of Accounting Education, the Quarterly Journal of Business and Economics, and the Journal of Financial Research.
Suggested topics for comment:
The interpretation of accounting rules, practices and their impact on financial resource allocations; stock market reaction to news releases; financial performance measures.
Affiliations:
American Accounting Association; CFA Institute; Vermont Security Analysts Society (Board Member)
Courses Currently Taught by Stephen Dempsey:
Publication History
Journal Article, Academic Journal
- Dempsey, S. J.; Harrison, D. M.; Luchtenberg, K. F.; Seiler, M. J. - "Contingent Choice Behavioral Models in the Presence of Information Uncertainty" (Refereed)
- Journal of Real Estate Portfolio Management
- 2010 - v. 16, pp. 289-299
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Abstract: Recent literature suggests that enhancing the quantity and/or quality of corporate disclosures may influence the non-diversifiable component of information risk for the firm, and hence, have non-trivial valuation implications. We propose a framework that argues a firm's disclosure level balances the potential cost of capital benefits from selective revelation and the disutility of distress, which in turn is a function of the potential costs of obfuscation. The REIT industry provides an experimentally appropriate backdrop for our position due to its generally heavy reliance on external financing and thus its heightened market exposure to priced information risk. Using three potential measures of the opacity of a REIT's annual report: the Flesch-Kincaid Grade Level, the Flesch Reading Ease Score, and the number of words contained in the report, we propose that capital constrained firms, particularly those with growth ambitions, should be uniquely sensitive to the transparency of their corporate disclosures as opacity materially influences the firm's cost of capital.
- Dempsey, S. J.; Harrison, D. M.; Luchtenberg, K. F.; Seiler, M. J. - "Financial Opacity and Firm Performance: The Readability of REIT Annual Reports" (Refereed)
- Journal of Real Estate Finance and Economics
- 2010 - v. 45, no. 2, pp. 450-470
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Abstract: Drawing from the literature of corporate disclosure policy and information risk, the purpose of the current investigation is to examine the capital market pricing implications of firm disclosure opacity as measured by linguistic readability measures of their annual reports. Recent literature suggests that enhancing the quantity and/or quality of corporate disclosures may influence the non-diversifiable component of information risk for the firm, and hence, have non-trivial valuation implications. Because REITs are required to pay a high percentage of earnings out in the form of dividends, they remain heavily dependent upon the capital market to finance growth opportunities. Therefore, these firms serve as a natural laboratory for our empirical tests. The sample includes 214 REITS from 1994-2007. Two measures of firm opacity are utilized: the Flesch-Kincaid Grade Level and the natural logarithm of the word count of the firms??? annual reports. Our central hypothesis that greater transparency leads to greater excess returns is confirmed. This is the first study in real estate to use linguistic features to explain market performance.
- Dempsey, S. J. - "On the Benefits of a Mathematical Solutions Approach to Time Value of Money Instruction: Arguments and Evidence" (Refereed)
- Journal of Accounting Education
- 2003 - v. 21, no. 3, pp. 239-260
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Abstract: This paper proposes several educational benefits to be derived by abandoning the traditional textbook focus on time value of money (TVM) tables and requiring student-generated mathematical solutions to TVM problems. These include: (1) greater reinforcement and appreciation for the theoretical concepts underlying TVM analysis; (2) improved professional preparation for dealing with real-life TVM applications; and (3) a better backdrop from which to introduce more sophisticated TVM topics calling for a requisite mathematical understanding (e.g., effective interest rates and exponential growth between discrete interest periods). Comparative computational efficiency and learning effectiveness are empirically evaluated in an experiment on two groups of students: those who reinforced their learning using a mathematical approach and those who reinforced their learning using tables. Students that employed the mathematical approach scored significantly higher on a common achievement test and also completed the tests in significantly less time. A post-experimental attitudinal questionnaire revealed statistically significantly stronger student preferences for the mathematical approach.
- Dempsey, S. J.; zz-Gatti, J. F.; Grinnell, D. J.; Cats-Baril, W. L. - "The Use of Strategic Performance Variables as Leading Indicators in Financial Analysts' Forecasts" (Refereed)
- The Journal of Financial Statement Analysis
- 1997 - v. 2, no. Summer, 4, pp. 61-79
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Abstract: The emerging view among managers and academicians argues for an expanded reporting system to provide more comprehensive information about organizational performance, including internal strategic performance variables. Little systematically-gathered evidence is available, however, concerning the views of the analyst community on this matter. This paper reports the results of a survey of 420 senior investment officers, directors of research and financial analysts regarding the frequency of use, predictive value, and ease of acquisition of a variety of financial and non-financial performance measures. The patterns of use that emerge from the study paint a picture in which analysts go well beyond the traditional financial measures and use a broad range of strategic leading indicators to assess long-term organizational success. The results contribute to our understanding of (1) the extent to which analysts currently use or are interested in using various strategic performance variables in addition to traditional financial performance measures, (2) the linkage between the use of performance measures and their predictive value and ease of acquisition, and (3) the information gaps which currently exist between various measures predictive usefulness and external accessibility.
- Dempsey, S. J. - "Interim Earnings Management and the Fourth Quarter Good News Effect" (Refereed)
- Journal of Business Finance and Accounting
- 1994 - v. 21, no. 6, pp. 889-908
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Abstract: This paper presents evidence of a larger return reaction (variance) to fourth quarter announcements that induce contemporaneously positive returns. The results are consistent with: (i) audited annual announcements being marginally more informative for reports that corroborate previously unaudited interim good news claims, and (ii) the level of marginal informativeness being a decreasing function of interim auditor involvement (proxied by firm size). The good news effect is robust over time, and sensitivity analyses fail to support competing explanations for the effect attributable to report timing differences or comparatively noisy fourth quarter bad news reports.
- Dempsey, S. J. - "Dividend Policies in Practice: Is there an Industry Effect?"
- Quarterly Journal of Business and Economics
- 1993 - v. 32, no. Autumn 1993, pp. 3-13
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Abstract: While financial theory is unequivocal on the irrelevance of dividend policy in perfect capital markets, there is widespread recognition that payout policy in practice is controversial and not well understood. In the presence of taxes and transaction costs, the payment of a dividend by the firm is regarded as something of a puzzle. Nonetheless, most firms pay dividends. Brealey and Myers (1991, p. 918) list dividend policy as one of their "10 unresolved problems in finance." Brigham and Gapenski (1991, p. 549) describe it as "one of the most judgmental decisions that a manager must make," and Van Horne (1989, p. 344) claims that the "lack of firm footing for predicting the long-run effect of a specific dividend policy on valuation makes the dividend decision more difficult in many ways than either the investment or financing decisions."
- Dempsey, S. J.; Hunt, H.; Schroeder, N. - "Earnings Management and Corporate Ownership Structure: An Examination of Extraordinary Item Reporting" (Refereed)
- Journal of Business Finance and Accounting
- 1993 - v. 20, no. 4, pp. 479-500
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Abstract: This study examines the empirical relation between a three-way classification of corporate ownership structure and earnings management through the use of extraordinary item (EI) reporting. The EI reporting decisions examined are those made during 1960-1966, a time period when US reporting standards allowed considerable management discretion with respect to both the classification of EIs and their placement in the financial statements (i.e., income. versus retained earnings statement). Overall, the results provide strong support for income-increasing behavior by non-owner managers. Importantly, the results also suggest that the three-way ownership classification scheme used in this study is superior to the dichotomous owner-controlled/managercontrolled classification typically used in accounting studies
- Dempsey, S. J. - "Effects of Agency and Transactions Costs on Dividend Payout Ratios: Further Evidence of the Agency-Transactions Cost Hypothesis"
- Journal of Financial Research
- 1992 - no. Winter, pp. 317-321
- Dempsey, S. J. - "Predisclosure Information Search Incentives, Analyst Following, and Earnings Announcement Price Response"
- The Accounting Review
- 1989 - v. LXIV, no. 4, pp. 748-757
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Abstract: This paper investigates an exogenous proxy for predisclosure information, analyst following, and empirically contrasts its earnings announcement price response performance with the endogenous firm size factor. The theoretical motivation for the comparison rests on the premise that the analyst community formulates its preference ranking of firms to follow on the basis of a multivariate information search cost-benefit framework (i.e., incentive considerations in addition to size). The empirical results, based on 2,466 annual earnings announcements over 1976-1982, are consistent with this hypothesis. Regression analyses corroborate the firm size effect found in prior studies as well as a univariate analyst following effect. In a multiple regression model, however, analyst following continues to be incrementally significant while firm size does not. Further analysis demonstrates that thinly followed large firms have significantly larger price reaction than widely followed small firms. Both are supportive of a "non-size-related" analyst following effect.
Magazine/Trade Publication
- Dempsey, S. J. - "Invited editorial on stock market volatility"
- Vermont Business Magazine
- 1992
Conference Proceeding
Book, Scholarly-New
- Dempsey, S. J. - "Instructor's Resource Manual"
- Instructor's Manual to Accompany Intermediate Accounting - 6thEdition
- 1998 - no. 6,
,
- Dempsey, S. J. - "Resource Manual to Accompany Intermediate Accounting"
- McGraw Hill
- 1991 - pp. 511 pages
,
Research Report
- zz-Gatti, J. F.; Dempsey, S. J. - "Fixed Income Sectors: A Primer on the High-Yield Bond Market"
- Dwight Asset Management Company
- 2006
Other
- Dempsey, S. J. - "Profit Model for Post Offices: A Study of Income Measurement, Subunit Reporting and Managerial Incentives"
- Report to the Postmaster General of the United States
- 1996 - pp. 38 pages
- Dempsey, S. J. - "Interim Earnings Management and the Fourth-Quarter Good News Effect"
- Collected Abstracts of the American Accounting Association Northeast Region 1992 Annual Co
- 1992 - pp. April
- Dempsey, S. J. - "What Are Investors Saying?"
- Vermont Business Magazine
- 1992 - pp. 11-12
