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Business Law, Public Responsibility, and Ethics Commons

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Full-Text Articles in Business Law, Public Responsibility, and Ethics

Socially Responsible Firms, Allen Ferrell, Hao Liang, Luc Renneboog Dec 2016

Socially Responsible Firms, Allen Ferrell, Hao Liang, Luc Renneboog

Research Collection Lee Kong Chian School Of Business

In the corporate finance tradition, starting with Berle and Means (1932), corporations should generally be run to maximize shareholder value. The agency view of corporate social responsibility (CSR) considers CSR an agency problem and a waste of corporate resources. Given our identification strategy by means of an instrumental variable approach, we find that well-governed firms that suffer less from agency concerns (less cash abundance, positive pay-for-performance, small control wedge, strong minority protection) engage more in CSR. We also find that a positive relation exists between CSR and value and that CSR attenuates the negative relation between managerial entrenchment and value.


Earnings Manipulation: A Report By Robert Lavine On The Business Ethics Research Of Kenneth Rosenzweig And Marilyn Fischer, Kenneth Yale Rosenzweig, Marilyn Fischer Sep 2016

Earnings Manipulation: A Report By Robert Lavine On The Business Ethics Research Of Kenneth Rosenzweig And Marilyn Fischer, Kenneth Yale Rosenzweig, Marilyn Fischer

Marilyn Fischer

This column by Robert LaVine in the Chartered Accountants Journal of New Zealand reports on the research of University of Dayton professors Kenneth Rosenzweig and Marilyn Fischer, "Is Managing Earnings Ethically Acceptable? Surveys Show Age and Seniority Affect Attitudes on Earnings Management," >>> published in the journal Management Accounting.


Is Managing Earnings Ethically Acceptable? Surveys Show Age And Seniority Affect Attitudes On Earnings Management, Kenneth Yale Rosenzweig, Marilyn Fischer Sep 2016

Is Managing Earnings Ethically Acceptable? Surveys Show Age And Seniority Affect Attitudes On Earnings Management, Kenneth Yale Rosenzweig, Marilyn Fischer

Marilyn Fischer

Is managing earnings through accounting methods ethically acceptable? That's the question we recently asked a sample group of management accountants. The response to the survey was enlightening. Our survey was designed as a follow-up and extension of the research done by Bruns and Merchant and published in Management Accounting in August 1990. They found that managers disagreed considerably on whether earnings management is ethically acceptable. They also found that in general the respondents thought manipulating earnings via operating decisions was more ethically acceptable than manipulation by accounting methods. Bruns and Merchant were disturbed by these findings. They were concerned ...


Report Earnings Accurately, Kenneth Yale Rosenzweig, Marilyn Fischer Sep 2016

Report Earnings Accurately, Kenneth Yale Rosenzweig, Marilyn Fischer

Marilyn Fischer

As authors of the March article, “Is Managing Earnings Ethically Acceptable?,” we wish to thank Alfred M. King for his letter in the April issue questioning some of the contentions in our article. In a time when corruption seems to be rampant in many aspects of our national life, it is important for accountants to discuss openly what are their ethical responsibilities, and what are the limits to those responsibilities. The credibility of accounting numbers is vital to our success as a profession and as individual accountants. There will be no demand for accounting service if accounting information is not ...


How Corporate Culture Impacts Unethical Distortion Of Financial Numbers, Joseph F. Castellano, Kenneth Y. Rosenzweig, Harper A. Roehm Sep 2016

How Corporate Culture Impacts Unethical Distortion Of Financial Numbers, Joseph F. Castellano, Kenneth Y. Rosenzweig, Harper A. Roehm

Joseph Castellano

The recent accounting scandals have highlighted the critical role that investor confidence in the accuracy and lack of distortion of accounting data plays in the health of capital markets and, indeed, the whole economy. The legal and moral culpability of top-level company managers (as well as auditors) is an issue that will be addressed by the nation in the coming months. Whether or not legal sanctions are imposed on managers, it would be well to examine some of the reasons managers may feel compelled to distort accounting numbers as well as engage in other actions that damage the interests of ...


The Abcs Of Communicating Results, Deborah S. Archambeault, Morgen Rose Sep 2016

The Abcs Of Communicating Results, Deborah S. Archambeault, Morgen Rose

Deborah Archambeault

Communicating results is an integral part of the internal auditor's job, and The IIA's International Standards for the Professional Practice of Internal Auditing recognizes its importance by specifying in Standard 2420 that communications should be "accurate, objective, clear, concise, constructive, complete, and timely." In its 2009 survey. The Biggest Internal Audit Challenges in the Next Five Years, Protiviti, a global consulting firm, ranked communication with management and the audit committee as one of the biggest challenges facing internal auditing through 2012. Their subsequent 2010 Internal Audit Capabilities and Needs Survey identified presentation skills as the top "need to ...


Standard Costing Variances: Potential Red Flags Of Fraud?, Cecily A. Raiborn, Janet B. Butler, Lucian Zelazny Sep 2016

Standard Costing Variances: Potential Red Flags Of Fraud?, Cecily A. Raiborn, Janet B. Butler, Lucian Zelazny

Lucian Zelazny

This article focuses on how standard cost variances can be used in detecting potential fraudulent activities. Each primary type of variance (material, labor, and overhead) is addressed with a discussion of possible inappropriate causal factors. Additionally, internal controls, graphic techniques, and other methods that can be implemented to combat fraud are provided.


Socially Responsible Firms, Allen Ferrell, Hao Liang, Luc Renneboog Aug 2016

Socially Responsible Firms, Allen Ferrell, Hao Liang, Luc Renneboog

Research Collection Lee Kong Chian School Of Business

In the corporate finance tradition starting with Berle & Means (1923), corporations should generally be run so as to maximize shareholder value. The agency view of corporate social responsibility (CSR) considers CSR as an agency problem and a waste of corporate resources. Given our identification strategy by means of an IV approach, we find that well-governed firms who suffer less from agency concerns (less cash abundance, positive pay-for-performance, small control wedge, strong minority protection) engage more in CSR. We also find a positive relation between CSR and value and that CSR attenuates the negative relation between managerial entrenchment and value.


Governance And Post-Repurchase Performance, Gary Caton, Choo Yong, Jeremy Goh, Yen Teik Lee, Scott Linn Aug 2016

Governance And Post-Repurchase Performance, Gary Caton, Choo Yong, Jeremy Goh, Yen Teik Lee, Scott Linn

Research Collection Lee Kong Chian School Of Business

Payout policies based on share repurchase programs provide greater flexibility than do those based on cash dividends. We develop and test an empirical model in which strongly governed companies outperform weakly governed companies after announcing share repurchase programs. Our findings include positive associations between strong governance and both post-announcement adjusted operating performance and abnormal stock returns. The results are robust to sample selection bias, different sample criteria, governance measurement, and various control variables. In addition, governance strength is associated with larger post-announcement changes in CEO incentive compensation and merger and acquisition activity, both of which we argue are consistent with ...


The Impact Of Ceo Long-Term Equity-Based Compensation Incentives On Economic Growth In Collectivist Versus Individualist Countries, Cynthia J. Campbell, Rosita P. Chang, Jack C. Dejong Jr., Robert Doktor, Lars Oxelheim, Trond Randoy Jul 2016

The Impact Of Ceo Long-Term Equity-Based Compensation Incentives On Economic Growth In Collectivist Versus Individualist Countries, Cynthia J. Campbell, Rosita P. Chang, Jack C. Dejong Jr., Robert Doktor, Lars Oxelheim, Trond Randoy

Finance Publication

This study examines the impact of the prevalence of long-term equity-based chief executive officer (CEO) compensation incentives on GDP growth, and we address the moderating role of individualist versus collectivist cultures on this relationship. We argue that long-term incentives given to CEOs in some firms may convey to other CEOs that they too may be able to receive such incentives and rewards if they emulate the incentivized and rewarded CEOs. In a longitudinal study across 22 nations over a 5-year period, we find that the higher proportion of CEOs in a country are awarded long-term equity-based incentive compensation, the greater ...


Internal Governance And Real Earnings Management, Qiang Cheng, Jimmy Lee, Terry J. Shevlin Jul 2016

Internal Governance And Real Earnings Management, Qiang Cheng, Jimmy Lee, Terry J. Shevlin

Research Collection School Of Accountancy

We examine whether internal governance affects the extent of real earnings management in U.S. corporations. Internal governance refers to the process through which key subordinate executives provide checks and balances in the organization and affect corporate decisions. Using the number of years to retirement to capture key subordinate executives’ horizon incentives and using their compensation relative to CEO compensation to capture their influence within the firm, we find that the extent of real earnings management decreases with key subordinate executives’ horizon and influence. The results are robust to alternative measures of internal governance and to various approaches used to ...


The Influence Of Ethical Leadership On Managerial Performance: Mediating Effects Of Mindfulness And Corporate Social Responsibility, John Joseph Williams, Alfred E. Seaman Jun 2016

The Influence Of Ethical Leadership On Managerial Performance: Mediating Effects Of Mindfulness And Corporate Social Responsibility, John Joseph Williams, Alfred E. Seaman

Research Collection School Of Accountancy

In a continuing world of corporate misdeeds and unscrupulous decision making, much of the management and academic literatures points to the incomplete knowledge of the consequences of ethics leadership. One of the bastions of ethics gatekeeping in the firm is the CFO but remarkably scant information can be found on their perceptions concerning ethics leadership. This study addresses this void by examining mindfulness and corporate social responsibility (CSR) initiatives as new mediating linkages in comprehending the influence of ethics leadership on managerial performance. Findings reveal that ethical leadership is positively associated with CSR initiatives which, in turn, operate to enhance ...


Divestitures, Emilie R. Feldman, Patia J. Mcgrath May 2016

Divestitures, Emilie R. Feldman, Patia J. Mcgrath

Management Papers

This article provides an introduction to divestitures and the research streams that examine these deals. Divestitures are defined as the removal of one or more of a company’s lines of business via selloff or spinoff. In this article, we describe how research on divestitures has evolved in the finance and strategy literatures, and we explain how to design and conduct empirical research studies on this topic. We also discuss the implications of divestitures for organization design, and outline some directions for future research in this domain.


The Downside Of The Network Ties Between Ceo/Cfos And Auditors Through External Directorships: Evidence From Auditor Selection And Subsequent Audit Quality, Jaeyoon Yu, Byungjin Kwak, Myung Seok Park, Yoonseok Zang May 2016

The Downside Of The Network Ties Between Ceo/Cfos And Auditors Through External Directorships: Evidence From Auditor Selection And Subsequent Audit Quality, Jaeyoon Yu, Byungjin Kwak, Myung Seok Park, Yoonseok Zang

Research Collection School Of Accountancy

This study examines whether the professional ties of Chief Executive Officers/Chief Financial Officers (CEO/CFOs) to auditors through external directorships affect auditor selection and subsequent audit quality. Professional ties to auditors arise when the CEO/CFO of a firm (referred to as the home firm) serves as an outside director of another firm that hires an auditor (a connected auditor). Using a sample of firms with auditor switches over the period 2003-2012, we find that home firms are more likely to appoint connected auditors. Furthermore, utilizing a difference-in-differences approach, we find that home firms appointing connected auditors experience a ...


Nol Poison Pills: Using Corporate Law For Tax Purposes, Sarah J. Webber, Karie Davis-Nozemack Mar 2016

Nol Poison Pills: Using Corporate Law For Tax Purposes, Sarah J. Webber, Karie Davis-Nozemack

Sarah J Webber

Hundreds of thousands of corporations report net operating loss (NOL) carryovers every year.1 Corporations, with the benefit of NOL rules, may turn disappointing losses into favorable tax results. During economic recovery, corporations are in better position to fully utilize the benefits of NOLs generated in prior years. NOL usage is not without peril, however. Corporations should carefully monitor corporate ownership changes to ensure that NOLs are not lost to the NOL trafficking rules. Under the NOL trafficking rules, excessive shareholder turnover triggers substantial NOL limitations. Unfortunately, corporations are not in control of their shareholder turnover, and therefore not in ...


What The Sarbanes-Oxley Act Does Not Include: An Examination Of The Importance Of Audit Firm Rotation, Audit Firm Credibility And Tone At The Top, Nicole Damaschi Jan 2016

What The Sarbanes-Oxley Act Does Not Include: An Examination Of The Importance Of Audit Firm Rotation, Audit Firm Credibility And Tone At The Top, Nicole Damaschi

Honors Theses

This thesis is an examination of the Sarbanes-Oxley Act (SOX) that was passed in response to a wave of accounting frauds, including Enron and WorldCom. Paul Sarbanes and Michael Oxley established SOX in an attempt to restore investors' confidence in the financial statements of publicly traded companies. However, there are critical elements of financial reporting that it fails to address, like audit firm rotation, audit firm credibility and management's tone at the top. Mandatory audit firm rotation and credible audit firms are believed to result in high-quality audits while management's tone at the top is reflected through the ...


Taxation As It Relates To Politics, Small Business & Corporate America, Elizabeth Assaf, Rebecca Wuorio Jan 2016

Taxation As It Relates To Politics, Small Business & Corporate America, Elizabeth Assaf, Rebecca Wuorio

Honors Theses and Capstones

No abstract provided.


Keynote Address, Regulating Corporate Governance In The Public Interest: The Case Of Systemic Risk, Steven L. Schwarcz Jan 2016

Keynote Address, Regulating Corporate Governance In The Public Interest: The Case Of Systemic Risk, Steven L. Schwarcz

Faculty Scholarship

There’s long been a debate whether corporate governance law should require some duty to the public. The accepted wisdom is not to require such a duty—that corporate profit maximization provides jobs and other public benefits that exceed any harm. This is especially true, the argument goes, because imposing specific regulatory requirements and making certain actions illegal or tortious can mitigate the harm without unduly impairing corporate wealth production. Whether that is true in other contexts, this paper—delivered as the keynote address at the June 2016 National Business Law Scholars Conference at The University of Chicago Law School ...