Off Balance Sheet Arrangements Measurement Phase 2

Hello again,

When we last left off, I was tasked with reading academic papers in order to find a proper measure of transparency that I would be able to use in the next stage of my work. This seemed like it would be a fairly easy assignment. However, I found that the number of papers discussing transparency in the context of off balance sheet arrangements was much smaller than I had originally hoped. Though I was able to more broadly look at papers on just transparency, eventually only one had the kind of measures that might work for my project.

Before my meeting with professors Smith and Irving, I had prepared my notes on what I thought would be the best measures for us to integrate into the ones that we would be creating. However, when I got to Miller that morning, things took a surprising turn.

We started by discussing the data collection process for the quantitative amounts associated with the four categories of Off Balance Sheet Arrangements discussed in the Management Discussion and Analysis section of the annual report. While I had previously been presented with a spreadsheet that merely needed to be modified as I went through the first step of the data collection process, I was now building one from scratch with my professors. This gave me a great deal of flexibility later when I found that I needed more columns to describe the types of data I was finding I needed to collect.

As we began to discuss what we wanted to get from the data we had previously collected and began to create the database, we found that we were also including measures of transparency in the database. By the end of our meeting, we had a work in progress database and had no need to discuss my readings for more than a few minutes. My next task was to test the database by using it to collect data from a few companies.

In doing so, I found myself continually expanding the database. I needed more and more categories to describe what I was collecting. Very few companies used the same terminology for what they were doing even when what they were describing was the exact same thing. Eventually, it came time for another meeting, and it was decided that we needed to streamline the database.

I have just started working with the new, streamlined database. I will fill you all in on how the collection process goes in my next update. I will also talk about how we decided to construct this new database.

Until next time,