Business Commons^™

The Influence Of Management’S Internal Audit Experience On Earnings Management, Matthew Ege, Timothy Seidel, Mikhail Sterin, David A. Wood

Faculty Publications

We examine whether firms with managers that have prior internal audit experience are less likely to manage earnings. This examination is important because the internal audit function is uniquely positioned to provide experiences that could influence future managerial behavior, including limiting the potential negative repercussions of earnings management. We find that firms with managers that have internal audit experience are associated with lower real earnings management but not accruals-based earnings management. Effects are strongest when managers with internal audit experience have greater power or currently hold financial roles, or when there are a greater number of managers with internal audit …

A Framework For Using Robotic Process Automation For Audit Tasks, Marc Eulerich, Justin Pawlowski, Nathan J. Waddoups, David A. Wood

Faculty Publications

The ability to automate tasks and processes using robotic process automation (RPA)—or the development of bots—is receiving significant attention in accounting. Auditors often struggle to know what tasks to automate and how to prioritize bot development. Drawing upon sociotechnical systems theory and using a design science methodology, we develop and validate a three-step evaluation framework to assist auditors as they decide what activities to automate. We validate this framework using interviews, surveys of experienced internal and external auditors, and two case studies. By developing and validating our framework through the lens of sociotechnical systems theory, we also provide several insights …

Evidence On Internal Audit Quality From Transitioning To Remote Audits Because Of Covid-19, Marc Eulerich, Martin Wagener, David A. Wood

Faculty Publications

As in-person audits were banned by governments and by company policies due to the COVID-19 pandemic, internal auditors had to transition to remote audits to perform their work. Based on survey responses of internal auditors who have conducted both remote and in-person audits, we find that internal auditors perceive no difference in the efficiency and effectiveness of and stakeholders’ reliance on results from remote and in-person audits when considering all responses. However, we also find that perceived efficiency and effectiveness increase the more experience internal auditors have with remote audits. Supplemental analyses show that support from the auditee, but not …

Publication Benchmarking Data Based On Faculty Promoted At The Top 200 Worldwide Accounting Research Institutions, Jared S. Moon, Scott L. Summers, Nathan J. Waddoups, David A. Wood

Faculty Publications

The primary purpose of this paper is to update and extend past promotion benchmarking studies. We update prior benchmarking studies by providing publication benchmarking data for faculty promoted between 2013 and 2019, inclusive. We extend prior benchmarking studies by evaluating a larger number of institutions (the top 200 worldwide accounting institutions), using a more global journal list, and providing sensitivity analyses between journal lists. We group institutions based on rankings and report a possible minimum publication hurdle for each group in each journal category. In addition, we provide data on the mix, or percentage, of publications in each journal category …

Social Media Analysts And Sell‑Side Analyst Research, Michael S. Drake, James R. Moon Jr., Brady J. Twedt, James D. Warren

Faculty Publications

We examine how research posted by “social media analysts” (SMAs)—individuals posting equity research online via social media investment platforms—is related to research subsequently produced by professional sell-side equity analysts. Using data from Seeking Alpha, we find that the market reaction to sell-side analyst research is substantially reduced when the analyst research is preceded by the report of an SMA, and that this is particularly true of sell-side analysts’ earnings forecasts. We further find that this effect is more pronounced when SMA reports contain more decision-useful language, are produced by SMAs with greater expertise, and relate to firms with greater retail …

Fool Me Once, Shame On You; Fool Me Twice, Shame On Me: The Long-Term Impact Of Arthur Andersen’S Demise On Partners’ Audit Quality*, Feng Guo, Ling Lei Lisic, Jeffrey Pittman, Timothy Seidel, Mi Zhou, Ying Zhou

Faculty Publications

Although recent evidence suggests that individual audit partners explain a substantial portion of the variation in audit quality proxies, much less is known about what determines an audit partner’s quality. Psychology and behavioral economics theories hold that an individual’s experiences can have enduring impacts on subsequent behavior. We examine whether auditors’ direct exposure to Arthur Andersen’s collapse has a long-term impact on the quality of their audits. Our evidence implies that audit partners who directly experienced Andersen’s demise impose stricter monitoring evident in their clients exhibiting a lower propensity for misstatements and small profits, and paying higher audit fees. Importantly, …

You Can't Get There From Here: The Influence Of An Audit Partner's Prior Non-Public Accounting Experience On Audit Outcomes*, Ling Lei Lisic, Jeffrey Pittman, Timothy Seidel, Aleksandra "Ally" B. Zimmerman

Faculty Publications

We examine the importance of audit partners' prior non-public accounting experience (hereafter, “industry experience”) to audit outcomes. We conducted 20 (nine) semi-structured interviews of audit partners with (without) industry experience. These interviews shed light on industry-experienced partners’ career path choices, perceptions of the challenges and benefits stemming from industry experience, and perceptions of how this experience influences their current audit work. Grounded in theory and the results of these interviews, we empirically examine using a unique hand-collected dataset whether audit partners with industry experience conduct higher quality and more efficient audits. Our evidence implies that industry experience is associated with …

Tax Boycotts, H. Scott Asay, Jacob Thornock, Jeffrey L. Hoopes, Jaron H. Wilde

Faculty Publications

To what extent do consumers boycott in response to corporate tax activities? Anecdotes suggest potential consumer backlash is a meaningful deterrent to corporate tax planning, and the tax literature has developed expectations that these boycotts happen. But empirical evidence on their existence and impact is limited. We undertake a comprehensive study to examine how consumers’ purchase behavior relates to corporate tax activities, triangulating across several designs, samples, and measures. First, we survey a representative sample of U.S. consumers to examine the reported relationship between corporate tax planning and consumer behavior; we find that consumers report that precisely zero have ever …

The Impact Of The Covid-19 Pandemic On Corporate Financial Fragility In The Vietnamese Manufacturing Industry, Trang Nguyen

Honors Theses

In the past decades, under the government’s export-led growth strategy, the Vietnamese manufacturing sector – the backbone of the whole Vietnamese economy – has established a deep tie with the international market and the reliance on foreign buyers has fueled the growth of this sector before COVID-19. However, during the pandemic, when the global market contracted at -3.5 percent and demand slumped globally, this existing growth model and the manufacturing sector’s reliance on foreign buyers induced significant risks to this sector from both the demand and supply side. Using the firm-level data on 41 manufacturing exporting companies from the Vietstock …

Do Managers Learn From Analyst Participation In Conference Calls?, Amanda Aw Zhi Xin Yong, Young Jun Cho, Holly I. Yang

Research Collection School Of Accountancy

While research finds that conference calls are informative to the market and analysts, they can also be informative to managers as analysts’ questions can provide a feedback effect. Using a sample of conference call transcripts from 2002 to 2018, we find that greater analyst participation, as measured by the number of words spoken by analysts relative to the number of words spoken by managers during conference calls, is associated with higher accuracy in managers’ subsequent earnings forecasts. Cross-sectional tests show that this positive association is more pronounced when managers use more uncertain words in conference calls, when analysts use a …

Tax Implications Of The Infrastructure Investment And Jobs Act, Michelle Freeman

ETSU Faculty Works

On Nov. 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act into law. The purpose of this legislation is evident in its name as it encompasses funding for “roads, bridges, railroads, airports, public transportation, access to broadband internet, and clean water” (Stradling, 2021). The revenue to support the $1.2 trillion Act will mainly result from “repurposing COVID-19 relief funds and unused unemployment benefits, delaying a Medicare rebate, and enacting stronger cryptocurrency reporting requirements" (Stradling, 2021). Although there are few provisions in this Act that will affect the average taxpayer, there are some that tax preparers should note.

Exploring The Significance Of Digital Skills Training For Accountants, Limin Zhu

Walden Dissertations and Doctoral Studies

Accounting firm leaders face a challenge with employees who lack digital skills. Employees without relevant digital skills put the accounting firm at a competitive disadvantage. Grounded in human capital theory, the purpose of this qualitative multiple case study was to explore strategies regional accounting firm leaders used to help employees improve digital skills. Data were collected from six semistructured interviews with partners, directors, and managers with three years or more of experience who participated in the training and professional development process at four regional accounting firms in the Houston, Texas area. The review of company documents and company website postings …

Three Essays On The Impacts Of Tax Planning And Earnings Management On The Informativeness Of Taxable Income, Book Income, And Cash Flows From Operations, Yong Qiang Chen

Theses and Dissertations (Comprehensive)

This dissertation comprises three independent but highly related essays that investigate the effects of tax planning and/or earnings management. The first essay investigates how high tax planning and/or aggressive earnings management affect the relative and incremental value-relevant information of taxable income, book income, and cash flows from operations (CFO). Regarding the effects of tax planning, first, I postulate and show that high tax planning reduces the relative and incremental information of taxable income to CFO. Second, high tax planning increases the relative and incremental information of CFO to the combined information set of taxable income and book income. Third, high …

Developing Talent Through Work-Integrated Learning, Poh Sun Seow, Gary Pan

Research Collection School Of Accountancy

No abstract provided.

Postmaterialism And Corporate Tax Avoidance, Yujia Cui, Jiwei Wang, Kangtao Ye

Research Collection School Of Accountancy

This paper explores how postmaterialism culture influences corporate tax avoidance behavior. Using a proprietary dataset of China tax audits, we find that firms owned by investors from countries with higher postmaterialism values are less likely to engage in tax avoidance behavior in China. In addition, we find some evidence that the negative association between postmaterialism and tax avoidance is more pronounced when tax enforcement is stronger, indicating that national culture and formal institutions act as complements. To check the external validity of our main results, we further use a cross-country sample from 21 countries over 22 years. The evidence from …

Codification Of Statements On Standards For Attestation Engagements, As Of January 2012, Numbers 1 To 17, American Institute Of Certified Public Accountants (Aicpa)

AICPA Professional Standards

No abstract provided.

Financial Capacity And The Demand For Audit Quality, Chee Yeow Lim, Gerald J. Lobo, Pingui Rao, Heng Yue

Research Collection School Of Accountancy

Prior research documents that financial capacity could be positively or negatively associated with the demand for audit quality. We re-examine this relation using changes in local real estate prices as exogenous shocks to corporate financial capacity. Using auditor size, auditor industry specialisation, and auditor fees as measures of audit quality, we find robust evidence that an increase (decrease) in financial capacity significantly reduces (increases) the demand for audit quality, and that this relation is more pronounced when firms are more financially constrained, when external monitoring by institutional investors and financial analysts is weaker, and when there is more negative news …

Audit Adjustments Matter: What They Reveal About Companies' Financial Reporting, Themin Suwardy, Chu Yeong Lim

Research Collection School Of Accountancy

This study investigates the characteristics, nature and extent of proposed audit adjustments to the financial statements of listed companies in Singapore. Data was gathered from the 2018 to 2020 financial statements of 412 companies, along with views of close to 280 audit committee chairs and heads of finance (or similar designations) on the effectiveness of their companies’ finance function.

Editor's Note, Marites Tiongco

DLSU Business & Economics Review

No abstract provided.

Grey Directors On Philippine Corporate Boards, Ailyn A. Shi, Evan Lance C. Li Liao, Angelo A. Unite, Michael J. Sullivan

DLSU Business & Economics Review

Independent directors on a firm’s board are theorized to enhance corporate governance by mitigating agency conflicts. However, some independent directors, referred to as grey directors, have prior relationships with managers that may hamper this role. Using data for Philippine firms, we construct a measure that categorizes independent directors as truly independent or grey, based on the 12 criteria used to define board independence as stipulated in the 2017 Philippine Corporate Governance Code. This measure is used to examine which firms are more likely to appoint grey directors and how the presence of grey directors affects firm performance. Consistent with agency …

Does Capital Adequacy Affect Bank Performance? A Comparative Study Of Select Public And Private Sector Banks In India, Shakeeb Mohammad Mir, Farooq Ahmad Shah

DLSU Business & Economics Review

Purpose – The purpose of this paper is to investigate the relationship between capital adequacy (CA) and the performance of select public and private sector banks and thereby to attain an insight of whether the capital adequacy maintenance affects bank performance differently or not based on their nature of concern.

Design/methodology/approach – The study utilized a balanced panel data set using bank level data of 37 banks indexed at Bombay stock exchange (BSE) across public and private sector for the period of 10 years (2009-2018). The study takes 370 observation into consideration (i.e.,37 banks over time frame of 10 years). …

An Experimental Study: Audit Quality Importance On Selecting A Public Accountant Firm (Paf), Ruth Samantha Hamzah, Efva Octavina Donata Gozali, -- Patmawati

DLSU Business & Economics Review

The study aims to emphasize the importance of knowledge of audit quality on Public Accountant Firm (PAF) selection for a company by employing a 2x1 factorial design between-subject. To achieve this goal, we identified differences between the experimental and control groups. The experimental group was given knowledge of audit quality, whereas the control group had no treatment during the process selection of PAF. There were 10 indicators used in term of audit quality, namely audit workload, business expertise, audit turnover, audit hours, result of employee satisfaction surveys, partner compensation, result of client satisfaction surveys, PCAOB inspection results, restatements on audit …

A Theoretical Approach In Explaining The Impact Of Remittances On The Macroeconomy: Evidence From An Overlapping Generations Model For The Philippines, John Paolo R. Rivera

DLSU Business & Economics Review

Despite the constraints posed by the coronavirus pandemic on the global movement of migrant workers, cash remittance inflows remained to be a significant component of the Philippine economy. It still comprises a significant proportion of the economy’s gross domestic product and exceeds the influx of overseas development assistance and foreign direct investments. On top of the various empirical studies discussing the effects of remittances on the macroeconomy, I took the theoretical approach in explicating its impact on the macroeconomy. Through a micro-founded macro-model overlapping generations model, I trace the effects of remittances on the path of steady-state aggregate income, capital …

Small Area Estimates Of Poverty In Region Iii, Caesar B. Cororaton, Arlene B. Inocencio, Alellie B. Sobreviñas, Emmanuel Dc. Barnedo

DLSU Business & Economics Review

Official estimates of the Philippine Statistical Authority (PSA) poverty incidence prior to 2018 are reliable up to the regional level as these are consistent with the sampling domain of the data used for estimation. Below this level, the PSA poverty estimates are unreliable because of very large sampling errors. The high level of unreliability makes the estimates less useful for poverty policy targeting. This paper addresses this concern by combining the Family Income and Expenditure Survey (FIES) and the Census of Population and Housing (CPH) data and using an increasingly accepted technique for small area estimation (SAE). We estimate the …

A Light Purse Is A Heavy Curse: A Systematic Review, Evan Lau, Suzie Adee

DLSU Business & Economics Review

The high level and rising cost in living standard conditions are affecting the individual’s and household’s savings behavior vividly in their day to day life. The general concern arises when individuals fail to address their retirement planning, problem that might affect the next generation. The need to boost financial knowledge and nurture savings behavior are essential to financial planning for retirement well-being. This current research establishes the understanding of how financial literacy influences savings habits for retirement well-being. Systematic review analysis was conducted, traced and implemented on academic databases from the period of 2006 to 2021. A total of 280 …

The Mediating Effects Of Perceived Value Between The Relationship Of Social Media Marketing And Purchase Intention, Tyron W. Yap

DLSU Business & Economics Review

The objective of this study is to test the mediating role of the dimensions of perceived value—conditional, epistemic, monetary, social, convenience, and emotional—between the relationship of social media marketing and purchase intention, in online hotel booking sites. Partial least square structural equation modeling (PLS-SEM) was employed to test all 19 hypotheses. Results revealed that social media marketing positively and significantly influences the dimensions of perceived value, as well as purchase intention. Also, convenience value and conditional value are positively and significantly related to purchase intention. In terms of the mediating effects, it was found that both convenience value and conditional …

Impact Of Cooperative Membership On Technical Efficiency And Marketing Efficiency: The Case Of Dairy Buffalo Farmers In The Philippines, Ceptryl S. Mina, Agham C. Cuevas

DLSU Business & Economics Review

Collective action by smallholder farmers through cooperative membership is regarded as one of the approaches to overcome production and marketing inefficiencies. This study investigates the impact of cooperative membership on the technical efficiency (TE) and marketing efficiency (ME) of dairy buffalo farmers in the Philippines. A total of 351 (249 cooperative members and 102 non-cooperative members) randomly selected farmers from Regions II, III, IV-A, and VII were interviewed. Using cross-sectional farm household data of dairy buffalo farmers, technical and marketing efficiencies were estimated. Linear regression with endogenous treatment was performed to determine the impact of cooperative membership on the TE …

Are Emotionally Stable Employees More Ready To Change? The Moderating Role Of Emotional Stability On The Effect Of Organizational Culture Types On Individual Readiness For Change, Aktsar Hamdi Tsalits, Gugup Kismono, Luksi Visita, Dian Eka Mayasari

DLSU Business & Economics Review

Organizational culture is suggested as a significant predictor of individual readiness for change (IRFC). However, few studies examining the effect of organizational culture types on individual readiness for change showed inconsistent results. This study aims to fill the gap, specifically by testing the moderating effect of emotional stability on the effect of perceived organizational culture types (clan and adhocracy) on individual readiness for change. We obtained 264 responses from employees who worked at the SM Company, one of the companies in Indonesia that performed a change in the company. Results of moderated regression analysis on the collected data indicate support …

Forward-Looking Disclosures And Accounting Information In Equity Crowdfunding Firms, Evisa Bogdani

Theses and Dissertations--Accountancy

Forward-looking disclosures (FLDs) play a critical role in traditional capital markets. However, evidence of their usefulness in settings with weak information environments, little to no operating history, nonprofessional investors, and lighter regulation is limited. This study sheds light on this critical issue and finds that FLDs are useful disclosures for raising capital in equity crowdfunding (ECF), and the presence of accounting information enhances FLDs relevance. I find that firms disclosing more FLDs raise more capital and attract a greater number of investors. More investors contribute to firms that disclose more quantitative FLDs, especially when the disclosures are accompanied by reviewed …

An Experimental Investigation Of Auditors' Evidence Evaluation And Work Ownership In A Compartmentalized Test Of Details Setting, Christopher Pearson

Theses and Dissertations--Accountancy

Psychological ownership theory suggests that auditors are more likely to exert effort when they feel a sense of personal ownership of the audit. Ongoing trends towards a more compartmentalized and decentralized audit, however, may impair auditors’ work ownership by decreasing their interaction with work, as well as by discouraging engagement with work performed by colleagues. In two experiments, I test the effects of audit work compartmentalization, where I consider whether auditors’ evaluation of evidence is affected by the source of the sample to which evidence is related. Findings from my first experiment indicate lower performance when auditors evaluate evidence that …