Digital Commons Network^™

Are Internal Audits Associated With Reductions In Perceived Risk?, Joseph V. Carcello, Marc Eulerich, Adi Masli, David A. Wood

Faculty Publications

We examine whether internal auditing provides value to organizations by reducing risk. We compare the changes in risks between audited business units and matched non-audited units within the same company. This design allows us to isolate the importance of an internal audit while holding constant changes in risk due to the organization and time period. Based on ratings from the heads of audited and non-audited units, we find that managers of audited units perceive a greater decline in risk as well as a greater increase in performance compared to managers of non-audited units. We also find that companies that have …

Earnings Announcement Delays And Implications For The Auditor-Client Relationship, Kimball Chapman, Michael S. Drake, Joseph Schroeder, Timothy Seidel

Faculty Publications

We examine whether delays in the expected release of annual earnings have implications for the future auditor-client relationship. Managers have strong incentives to release earnings on schedule and auditors play an important role in helping their clients avoid costly earnings announcement delays. We find an increased likelihood of subsequent auditor-client realignments after earnings announcement delays. We further find that clients changing auditors realign with audit firms that better meet their earnings announcement timing demands without any evidence of a significant compromise to the reliability of the financial statement numbers in the earnings announcement. Our results help inform regulatory concerns about …

The Demand For Public Information By Local And Nonlocal Investors: Evidence From Investor-Level Data*, Travis Dyer

Faculty Publications

I examine the demand for public information by local and nonlocal investors. Using novel data on institutional investors' requests for financial information from the SEC, I document that investors acquire approximately 20% more financial information for their local investments. This pattern holds after controlling for investors’ 13(f) portfolio holdings. I further demonstrate that this pattern is concentrated in stocks eliciting behavioral biases as well as among investors with strong company relationships. Consistent with public information acquisition being more beneficial to local investors, I find that local investors exhibit both enhanced timeliness in acquiring public information and superior portfolio trading decisions …

The Effect Of New Accounting Standards On The Performance Of Quantitative Investors*, Travis Dyer, Nicholas Guest, Jia Yin (Elisha) Yu

Faculty Publications

Quantitative investing relies on stable data generating processes and limited human involvement, which could create lower flexibility in the face of changing economic conditions. In this study, we examine quantitative investors’ ability to navigate a common and material change to the financial data generating process: new accounting standards. We find that returns of quantitative mutual funds temporarily decrease following the implementation of standards that change the definition of key accounting variables. The lower performance we document is relative to more traditional “discretionary” funds that rely heavily on human skill and judgment to make day-to-day investment decisions. Our result is predictably …

Factors Affecting The Outcomes Of Legal Claims Against Auditors, Karen D. De Meyst, D. Jordan Lowe, Mark E. Peecher, Jeffrey Pickerd, Andrew Reffett

Faculty Publications

Maksymov, Pickerd, Lowe, Peecher, and Reffett (2020b) draw insights based on interviews with 27 prominent audit litigation attorneys about the factors affecting the initiation of legal claims against auditors and how such factors affect settlement outcomes. We summarize their key findings and discuss important implications for audit practitioners. Specifically, we focus on the key factors that affect plaintiff attorneys’ willingness to pursue legal claims against auditors, including the merits of the claim, size of alleged economic damages, auditors’ ability to pay, and the expected cost to pursue the claim. We also discuss the reasons why most audit disputes settle (as …

Accruals Earnings Management Proxies: Prudent Business Decisions Or Earnings Manipulation?, Theodore E. Christensen, Adrienna Huffman, Melissa F. Lewis-Western, Rachel Scott

Faculty Publications

Over the last 5 years, the top accounting journals have published 388 articles that incorporate an empirical proxy for accruals-based earnings management. Researchers use these proxies to measure diverse managerial activities that represent fundamentally different constructs (from beneficial earnings management at one end of the spectrum to earnings manipulation at the other). We present a simple framework that defines the specific construct of “earnings manipulation” and places it within the context of the broader concept of “earnings management.” At the construct level, one distinguishing characteristic of earnings manipulation is that accruals reversals cause future earnings to be lower than earnings …

“I Can Do Things Because I Feel Valuable”: Authentic Project Experiences And How They Matter To Instructional Design Students, Jason K. Mcdonald, Amy A. Rogers

Faculty Publications

This paper examines how authentic project experiences matter to instructional design students. We explored this through a single case study of an instructional design student (referred to as Abby) who participated as a member of an educational simulation design team at a university in the western United States. Our data consisted of interviews with Abby that we analyzed to understand how she depicted her participation in this authentic project. In general, Abby found her project involvement to open up both possibilities and constraints. Early in her involvement, when she encountered limitations she did not expect, those constraints showed up as …

Being Needed, Cared For, And Present: Belonging And Disability In The Seventh-Day Adventist Church In North America, Shannon M. Trecartin, Mikelle Wile, Terrance P. Trecartin, Petr Činčala

Faculty Publications

Many Christian churches seek to be places of belonging, yet present barriers to inclusion. The present research focuses on disability and belonging in members of the Seventh-day Adventist (SDA) Church in North America. Data from the SDA Global Church Survey (2017–2018) were used to measure attendance, perceived care, and sense of being needed. Results: Differences in attendance, leadership, and “feeling cared for” were observed. The findings of this study suggest that the SDA Church has had both successes and room for growth in terms of creating opportunities for belonging among people with disabilities. Implications for other denominations are also discussed.

The Year Of Hope, Andrea Luxton

Faculty Publications

No abstract provided.

Seventh-Day Adventists And Abolitionist Petitions, Kevin M. Burton

Faculty Publications

No abstract provided.

The Covid-19 Vaccine Race: Intellectual Property, Collaoration(S), Nationalism And Misinformation, Ana Santos Rutschman

Faculty Publications

The COVID-19 pandemic has brought a national and global vaccine race. This Article examines the race with respect to contemporary frameworks for biopharmaceutical research and development. Specifically, this Article focuses on the effect of patents, pre-production agreements, public-private partnerships, and vaccine misinformation. This Article analyzes lessons learned from the COVID-19 pandemic, advocates for promoting vaccine affordability and equity, and suggests modifications to existing preparedness frameworks to prepare for upcoming outbreaks of infectious disease.

Power Sector Carbon Reduction: An Evaluation Of Policies For North, Kate Konschnik, Martin Ross, Jonas J. Monast, Jennifer Weiss, Gennelle Wilson

Faculty Publications

The North Carolina power sector is poised for transition. Economics have driven big changes on the grid, making cleaner options for electricity generation cost competitive with traditional resources. North Carolina clean energy policies have further enabled the shift into renewable resources. Building on this momentum, Duke Energy Corporation and our state’s rural electric cooperatives have set ambitious climate goals, including “net zero” carbon emissions by 2050.

Well-designed policies can accelerate pollution reduction, make change more affordable for state residents and business, and stimulate job growth. For this reason, the North Carolina Clean Energy Plan (CEP)—developed pursuant to Governor Cooper’s Executive …

Risky Education, Osamudia James

Faculty Publications

No abstract provided.

The Political Economy Of Pandemic Pods, Osamudia James

Faculty Publications

No abstract provided.

Leadership... From A To Z, Anne Klinefelter

Faculty Publications

No abstract provided.

When Therapy Goes Public: Copyright Gatekeepers And Sharing Therapeutic Artifacts On Social Media, Amanda Reid, Pablo Miño

Faculty Publications

No abstract provided.

An Auditing Imperative For Automated Hiring, Ifeoma Ajunwa

Faculty Publications

The goal of this Article is neither to argue against or for the use of automated decision-making in employment, nor is it to examine whether automated hiring systems are better than humans at making hiring decisions. For antidiscrimination law, the efficacy of any particular hiring system is a secondary concern to ensuring that any such system does not unlawfully discriminate against protected categories. Therefore, the aim is to suggest collaborative regulatory regimes for automated hiring systems that will ensure that any benefits of automated hiring are not negated by (un)intended outcomes, such as unlawful discrimination on the basis of protected …

The Fantasy Of The Unchaste Mentality, Tara N. Summerville, Kevin Bennardo

Faculty Publications

For the past forty years, North Carolina’s rape-shield legislation has served as a laboratory of experimentation. Like the rape-shield legislation of every state, it generally prevents the admission of complaining witnesses’ past sexual history in sexual assault prosecutions. However, North Carolina’s rape-shield rule contains a unique exception not found elsewhere in the country. The exception, which we label the “fantasy exception,” permits the admission of a complaining witness’s past sexual behavior when it is offered as the basis of expert psychological or psychiatric opinion that the complainant fantasized or invented the charged assault.

This Article is the first to rigorously …

Diversity From The Perspective Of Corporate Boards And Lawyer Disciplinary Boards, Lissa L. Broome, John M. Conley

Faculty Publications

This Article addresses the organizing question of this symposium—whether diversifying state medical boards (SMBs) would improve their effectiveness in disciplining doctors—by drawing on the comparable experiences of corporate boards of directors and lawyer disciplinary boards. Reexamining our own qualitative study of corporate board diversity conducted several years ago, we find that almost of all of the arguments for board diversity raised in the business literature or our own interviews also tend to support diversity on SMBs. Reviewing the legal profession’s experience with the diversity question on lawyer disciplinary boards, we find that many of these arguments have also been recognized, …

Forum Selection Clauses, Non-Signatories, And Personal Jurisdiction, John F. Coyle, Robin J. Effron

Faculty Publications

Who is bound by a forum selection clause? At first glance, the answer to this question may seem obvious. It is black letter law that a person cannot be bound to an agreement without her consent. In recent years, however, courts have not followed this rule with respect to forum selection clauses. Instead, they routinely enforce these clauses against individuals who never signed the contract containing the clause. Courts justify this practice on the grounds that it promotes litigation efficiency by bringing all of the litigants together in the chosen forum. There are, however, problems with enforcing forum selection clauses …

Cruise Contracts, Public Policy, And Foreign Forum Selection Clauses, John F. Coyle

Faculty Publications

A cruise ship contract is the prototypical contract of adhesion. The passenger is presented with the contract on a take-it-or-leave-it basis. If she refuses to sign, the ship sails without her. To ensure that cruise companies do not draft one-sided contracts that are unfair to passengers, Congress has enacted a number of statutes that regulate these agreements. One such statute is 46 U.S.C. § 30509. This law stipulates that any contract provision that limits the liability of the cruise company for personal injury or death is void as against public policy if the ship stops at a U.S. port.

In …

Enforcing Outbound Forum Selection Clauses In State Court, John F. Coyle, Katherine Richardson

Faculty Publications

Forum selection clauses are a staple of modern business law. Parties agree, ex ante, on where they can sue one another and then rely on the courts to enforce these agreements. Although the number of contracts containing forum selection clauses has skyrocketed in recent years, there is a dearth of empirical information about enforcement practice at the state level. Are there any states that refuse to enforce them? How frequently are they enforced? Under what circumstances, if any, will these clauses be deemed unenforceable? The existing literature provides few answers to these questions.

This Article aims to fill that gap. …

The Sovereign Shield, Kate Sablosky Elengold, Jonathan D. Glater

Faculty Publications

As the federal government has come to rely increasingly on private companies to perform government functions, more businesses are testing the power of the resulting contractual relationships to shield themselves from liability, regulation, and oversight. Such nongovernmental entities seek the benefit of what we call the federal government’s sovereign shield by exploiting three doctrines: preemption, derivative sovereign immunity, and intergovernmental immunity. Because these contractors provide services supporting every conceivable government action, allowing them to act with impunity puts citizens at risk across myriad aspects of their lives.

This Article untangles the doctrines that extend the sovereign shield to private actors …

The End Of School Policing, Barbara A. Fedders

Faculty Publications

Police officers have become permanent fixtures in public schools. The sharp increase in the number of school police officers over the last twenty years has generated a substantial body of critical legal scholarship. Critics question whether police make students safer. They argue that any safety benefits must be weighed against the significant role the police play in perpetuating a school-to-prison pipeline that funnels Black and Brown students and students with disabilities out of schools and into courts, jails, and prisons. In suggesting remedies for this problem, commentators have proposed several regulatory fixes. These include changes to the standards for evaluating …

Corporate And Securities Law Impact On Social Responsibility And Corporate Purpose, Thomas Lee Hazen

Faculty Publications

The role of social responsibility in corporate governance has been the subject of debate for nearly ninety years. That debate has been reframed over the decades. Several recent events have resulted in increased focus on corporate so-cial responsibility, especially with respect to publicly held corporations. This Ar-ticle explores the law’s two different paths for impacting social responsibility. The current iteration of the corporate responsibility movement has implications for both state law chartering of corporations and federal securities regulation. This Article analyzes the ways in which stated purpose clauses in a corporation’s articles of incorporation may be useful in addressing social …

No Amendment? No Problem: Judges, "Informal Amendment," And The Evolution Of Constitutional Meaning In The Federal Democracies Of Australia, Canada, India, And The United States, John V. Orth, John Gava, Arvind P. Bhanu, Paul T. Babie

Faculty Publications

This article considers the way in which judges play a significant role in developing the meaning of a constitution through the exercise of interpretive choices that have the effect of “informally amending” the text. We demonstrate this by examining four written federal democratic constitutions: those of the United States, the first written federal democratic constitution; India, the federal constitution of the largest democracy on earth; and the constitutions of Canada and Australia, both federal and democratic, but emerging from the English unwritten tradition. We divide our consideration of these constitutions into two ideal types, identified by Bruce Ackerman: the “revolutionary” …

Unlawfully-Issued Sovereign Debt, W. Mark C. Weidemaier, Mitu Gulati

Faculty Publications

In 2016, its economy in shambles and looking to defer payment on its debts, the Venezuelan government of Nicolás Maduro proposed a multi-billion dollar debt swap to holders of bonds issued by the government’s crown jewel, state-owned oil company Petroleós de Venezuela S.A. (PDVSA). A new government now challenges that bond issuance, arguing that it was unlawful under Venezuelan law. Bondholders counter that this does not matter, that PDVSA freed itself of any borrowing limits by agreeing to a choice-oflaw clause designating New York law.

The dispute over the PDVSA 2020 bonds implicates a common problem. Sovereign nations borrow under …

You Can Call Me Al: Regulating How Candidates' Names Appear On Ballots, Peter Nemerovski

Faculty Publications

In electoral politics, names matter. Studies and anecdotal evidence show that candidates whose names suggest a certain ethnic heritage— for example, an Irish-sounding surname in Chicago, or a Hispanic name in South Florida—outperform candidates without such names, and that “American-sounding” names and names with positive connotations can give candidates a leg up. Therefore, candidates for public office often seek to run under the name they regard as most electorally advantageous. Election boards, secretaries of state, and ultimately courts are often called upon to decide whether a particular candidate can run for office under a particular name.

This Article looks at …

There Was Nothing “Neutral” About Executive Order 9066, Eric L. Muller

Faculty Publications

No abstract provided.

Taxing Nudges, Kathleen Delaney Thomas

Faculty Publications

Governments are increasingly turning to behavioral economics to inform policy design in areas like health care, the environment, and financial decision-making. Research shows that small behavioral interventions, referred to as “nudges,” often produce significant responses at a low cost. The theory behind nudges is that, rather than mandating certain behaviors or providing costly economic subsidies, modest initiatives may “nudge” individuals to choose desirable outcomes by appealing to their behavioral preferences. For example, automatically enrolling workers into savings plans as a default, rather than requiring them to actively sign up, has dramatically increased enrollment in such plans. Similarly, allowing individuals to …