A Tribute to Professor Victor Bernard

Accounting Professor Vic Bernard in his office in April 1994

Members of the business school community were shocked to learn of the news of the sudden death of accounting professor Vic Bernard by cardiac arrest this past Tuesday, November 13. He was 42 years old. Bernard suffered a cardiac arrest after a mid-day run, and never regained consciousness.

Bernard received his Ph.D. degree from the University of Illinois in 1982 and joined the UMBS shortly thereafter. He received a full professorship with tenure in 1988. During his thirteen year tenure at Michigan he taught both BBAs and MBAs interested in developing skills or pursuing careers in accounting or finance.

The following article consists of excerpts from a professor profile written by Nicole DuPont which originally ran in the April 4, 1994 edition of the Monroe Street Journal.


In many ways, Professor Vic Bernard had the undergraduate experience about which most people can only dream. As a political science major at Ohio State University, Bernard missed his share of classes. In fact, he held his dormitory's record for skipping the greatest number of classes while staying on the dean's list. But Bernard had a good excuse. Instead of focusing on his academics, Bernard was "chasing women and demonstrating against the war."

An Early Mentor

Things changed, however, when Bernard met an accounting professor named Tom Burns. Calling Bernard into his office, Burns presented a course plan to him, one that would lead him into a career in accounting. With that course plan, Bernard became a member of a select group, who were hand-picked and mentored by Burns as future accountants and professors of accounting. Today, Bernard still credits Burns as the person who inspired him to enter the teaching profession.

Under Burns' tutelage, Bernard earned his bachelor's degree from Ohio State and immediately entered a master's program at the University of Illinois. With a master's degree, Bernard went to work for a public accounting firm, Arthur Young. Although he enjoyed public accounting, his heart was never far from academia. "It was already decided. I knew I wanted to teach." With a few years of work experience, Bernard returned to Illinois to pursue his doctorate. Upon graduation in 1982, he accepted a position as an assistant professor at Michigan.

With a few exceptions, once at Michigan, Bernard stayed. During the 1985-86 school year, Bernard was a visiting assistant professor at University of Chicago. His time there he believes was essential to his "developing a set of research tools," which assisted in his career. After a few years as an associate professor, in 1988, Bernard earned tenure and was named the Price Waterhouse Professor of Accounting. During the 1990-91 school year, Bernard once again left the Michigan campus - this time for the ivy-covered buildings of Harvard University. As the Marvin Bower Fellow at Harvard, Bernard observed the school's relationships with corporations. "Harvard is similar to Michigan in its outreach to the business community. It has a different view of scholarly activity than I saw at Chicago." Upon returning to Michigan, Bernard's responsibilities increased, when he was named the Director of the Paton Accounting Center.

An Inventory of Research

While at Michigan, Bernard's research has focused on stock price behavior, the effect of accounting numbers on stock price behavior and, more recently, market efficiency. By looking at anomalies in stock price behavior, Bernard attempts to demonstrate or explain how these anomalies might fit within an efficient market. As part of the scope of his work, he examines the research techniques utilized to produce these anomalies. When he is unable to find research design flaws or explanations for the anomalies, he becomes increasingly convinced that the market is not efficient. "Although I've written six or seven papers on anomalies to the market efficiency theory, the subject is still difficult. The theory is a basic, underlying assumption."

Prior to tearing down the assumption on which most MBAs base their knowledge of finance, Bernard studied the United States thrift crisis with three other Michigan professors, Roger Kormendi, Ted Snyder, and Craig Pirrong. In their study and subsequent testimony, Bernard and his co-authors were the first to state that the government's cost estimate of the thrift bail-out was too conservative. Although under pressure to adhere to the government's "numbers," Professors Bernard and Kormendi testified that the costs of the crisis were greater than initially anticipated by the federal government.

For Bcrnard, testifying in front of Congress was "very exciting," but a little nerve wracking. He explained, "Congressman Leach of Iowa raised a question to me. When he didn't like my response, he launched into me. I could hear my heart pumping." Despite the anxiety, Bernard found his work for Congress very satisfying. "It was more than just an academic exercise," he commented. "You had the feeling that your work would matter. And it was fun to be involved in a process that impacts people's thinking. For me, it put a new light on things.

With the variety of findings from his research, Bernard notices that he incorporates them into his teaching in an indirect ways. Although he does not actively present his research findings to his classes, he acknowledges that he takes a different tack now than [he] would have five years ago." He explained, "There really is not a topic that I teach that has not been affected by my research."

Currently, Bernard's research focuses on financial statement analysis. Stating that analysis of financial statements is "more an art than science," Bernard is starting to investigate how these statements are analyzed. Although still in the early stages of research, he is looking for a stronger link between the organization's behav ior and its financial statements.

Current Assets

Along with his research, Bernard lists a number of other achievements throughout his career. In defining achievements, he comment ed, "I look back on things and see how big a charge I got out of them personally." He listed both his work on market efficiency and his work on thrift institutions as particularly grati fying. He added, "I would say that one of my greatest achievements is climbing Mount Kilimanjaro."

Another achievement for Bernard is teaching his financial statement analysis cou rse. He finds teaching the course very difficult because "you have to bring a lot of things together: corporate strategy, finance and

accounting." Teaching the course is further complicated by the need to ensure that students "not just understand the underlying theory, but have a good notion of what takes place in practice." Bernard explained, "The course brings together information that is not found in any book, but is based on experience."

Scholarly Advice

In offering advice to business students, Bernard suggested two principles. First, when investigating a business, students should examine through what means and with what strategy the firm creates value. Once the strategy is uncovered, then the key measures of success are known, providing an evaluation of the firm's ability.

Second, students should remember that financial statements are the product of two things: managers' own honest belief of the status of the business and management discretion or manipulation. Bernard explained "Knowing where the flexibility [in financial statements] lies can infer what a manager's best guesses are."


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