Business Commons^™

Constructions Of Citizenship Among Multinational Corporations, Gail L. Markle

Faculty and Research Publications

Using social contract theory as a foundation I examined the ways in which four multinational corporations use disclosures of corporate social responsibility to present themselves as good corporate citizens. Several factors influence a corporation’s use of CSR: size of the corporation, public visibility, personal commitment of high ranking executives, location of manufacturing operations, and types of stakeholders. There is a significant difference in the responsibilities and obligations Proctor & Gamble, Kimberly-Clark, and Colgate-Palmolive ascribe to themselves as corporate citizens compared to those of SC Johnson. I attribute this difference to one of stakeholder accountability, specifically public shareholders. The three publicly …

The Ability To Change Or The Willingness To Change: Stakeholder Interpretation Of Adversity, S. Napshin, D. Decarolis

Faculty and Research Publications

Firms often face adverse environmental events which have the potential to destroy the value the firm has created. This study focuses on the occurrence of adverse events. In particular, we address the research question of what organizational and managerial characteristics impact shareholder interpretation of the severity of the adverse event. Building on insights from the resource based and upper echelon theories, we propose that bundles of firm capabilities and top management team composition signal to shareholders the ability of the firm to handle the adverse event and to engage in strategic change. We test our model in the biotechnology industry, …

Decision Support Systems For Strategic Dispute Resolution, Anurag Agarwal, Sridhar Ramamoorti, Vaidyanathan Jayaraman

Faculty and Research Publications

Disputes and lawsuits are quite common in business and are often a source of significant liabilities. We conjecture that measurement challenges and lack of adequate analysis tools have greatly inhibited the ability of the General Counsel's offices in selecting the best mode for the resolution (i.e. litigation vs. out-of-court settlement) of business conflicts and disputes. Easily quantified direct costs (e.g., out-of-pocket expenses related to pursuing and defending against litigation) tend to be considered, whereas the more difficult-to-quantify indirect risks and costs (e.g., damaged relationships with customers and potential alliance partners, including reputational harm) which may be quite significant, tend to …

Intangible Investments And The Pricing Of Corporate Sga Expenses, Rongbing Huang, Gim S. Seow, Joe S. Shangguan

Faculty and Research Publications

This study examined whether the market fully prices the reported Selling, General, and Administrative (SGA) expenses when this item includes an intangible investment component. For a sample of intangible investment-intensive firms, we showed that their SGA expenses benefit future operating performances. Evidence suggests some degree of market inefficiency in the pricing of SGA expenses and the intangible investment component. Furthermore, the financial analysts do not appear to appreciate fully the future benefits of the component in their earnings forecasts. Finally, the pertinent disclosures in firms’ annual reports are so inadequate as to attenuate the market mispricing, suggesting a significant room …

Comprehensive Income Reporting: Fasb Decides Location Matters, Dennis Chambers

Faculty and Research Publications

The article reports on Accounting Standards Update (ASU) 2011-05 issued by the Financial Accounting Services Board (FASB) in June 2011. It states that the standard requires all companies to report comprehensive income and components either in one continuous statement or in two separate, but consecutive, net income and other comprehensive income statements.In both cases, companies must reportedly now report in an income statement-type location for total comprehensive income.

Information Technology In The Undergraduate Accounting Curriculum, Dana Hermanson, Mary C. Hill, Daniel M. Ivancevich

Faculty and Research Publications

This study examines the extent to which undergraduate accounting programs are integrating information technology (IT) across the curriculum. Based on responses from nearly 70 accounting programs, respondents believe that integrating IT into the curriculum is important, but (1) few departments have an IT policy, (2) coverage of general IT topics is minor to moderate, and (3) student usage of computer applications is fairly low. The main technical barriers to IT integration are inadequate lab personnel and continual changes in technology.

End-User Computing Applications, Mary C. Hill, W. Alan Barnes

Faculty and Research Publications

Businesses today rely on the work being done by staff using personal computers. The proliferation of personal computers has led to widespread implementation of end-user computing applications. As their name implies, end-user applications are designed, implemented, and controlled by users rather than by IT professionals. End-user applications can be risky for organizations, both with respect to management decision making and to financial reporting. For public companies, the risk involved in these applications has been increased by the requirements of the Sarbanes-Oxley Act of 2002, which call for management to document end-to-end financial operations and internal control structures. This article review …

Is There A Link Between Money Illusion And Homeowners' Expectations Of Housing Prices?, Lucy F. Ackert, Bryan K. Church, Narayanan Jayaraman

Faculty and Research Publications

Money illusion is a behavioral bias in which a person thinks in terms of nominal rather than real values. This article reports homeowners' responses to a survey designed to measure the extent of money illusion as well as homeowners' expectations regarding home valuations. Our survey respondents suffer from money illusion, yet they have reasonable expectations of home prices. Our analysis did not identify any unique individual characteristic that correlates with homeowners' choices and suggests that the relationship between money illusion and mispricing is subtle and multifaceted.

Audit Committees Oversight Of Information Technology Risk, Linda M. Hadden, Dana Hermanson, F. Todd Dezoort

Faculty and Research Publications

This exploratory study examines the role of the audit committee in overseeing information technology (IT) risk. We address the degree of audit committee oversight of specific IT risks, as well as factors associated with variations in audit committee IT oversight. Based on responses from 39 audit committee members, we found (1) little audit committee emphasis on oversight of IT risks, (2) audit committees involved with IT oversight focus on more traditional risks (e.g., monitoring), while very little attention is devoted to IT acquisition and implementation, and (3) the amount of IT oversight is positively associated with the responding members auditing …

Short-Term Study Abroad: An Exploratory View Of Business Student Outcomes, Susan Carley, Randy Stuart, M. P. Daily

Faculty and Research Publications

Acknowledging the importance of fostering global perspectives in students, business educators stress the role that international study plays in increasing interpersonal skills, and broadening knowledge of global business practices. Traditionally offered as semester- or year-long programs, today's programs are more often short-term in nature, raising questions about student outcomes of abbreviated tours. This longitudinal study of students who participated over a nine-year period examines the benefits and limitations of short-term tours. Results suggest that schools of business give careful consideration to desired student outcomes, learning objectives and how these might best be accomplished if delivered in a compressed time frame.

The Foreign Corrupt Practices Act: Insights For Internal Auditors, Audrey A. Gramling, Dana R. Hermanson, Heather M. Hermanson

Faculty and Research Publications

Douglas Faggioli, president and CEO of Nature's Sunshine Products (NSP) made the above remarks as he accepted, on behalf of NSP, a 2004 "100 Best Corporate Citizens" award from Business Ethics magazine. NSP received the award two years in a row. Less than two years later, NSP would discover a bribery scheme in its Brazil operations that would expose it to Securities and Exchange Commission (SEC) enforcement under the Foreign Corrupt Practices Act (FCPA). Faggioli and the company's CFO, Craig Huff, along with NSP, would be plaintiffs in a class action lawsuit, and the SEC would fine each officer $25,000. …

Exploring Touch As A Positive Workplace Behavior, Bryan Fuller, Marcia J. Simmering, Laura E. Marler, Susie S. Cox, Rebecca J. Bennett, Robin A. Cheramie

Faculty and Research Publications

Whereas most research has focused on the negative aspects of touch in the workplace (i.e. sexual harassment), this study focuses upon the positive use of touch. In an effort to explain individual differences in the use of workplace touch, three sequential studies are used to introduce the concepts of workplace touch self-efficacy and workplace touch initiation anxiety. In Study 1 we develop scales to assess the constructs. Study 2 provides an initial examination of the construct validity of the measures developed in Study 1. Results of Study 3 indicate that supervisor reports of touch self-efficacy and physiological touch anxiety are …

Goodwill Non-Impairments, Dennis Chambers, Catherine Finger

Faculty and Research Publications

The article discusses the use of goodwill non-impairment by companies to manage their earnings. The effect of Statement of Financial Accounting Standards (SFAS) 142 on goodwill-related earnings management is described. A table shows the results of related the working papers "Earnings Management By Avoiding or Reducing Goodwill Impairments," by Dennis Chambers, "Evidence on the Use of Unverifiable Estimates in Required Goodwill Impairment," by Karthik Ramanna and Ross L. Watts, and "Has Goodwill Accounting Gone Bad?," by Kevin K. Li and Richard G. Sloan.

Audit Quality And Accrual Persistence: Evidence From The Pre- And Post-Sarbanes-Oxley Periods, Dennis Chambers, Jeff L. Payne

Faculty and Research Publications

Purpose – The purpose of this paper is two-fold: first, to examine whether the quality of accruals, as measured by accrual persistence, improved in the post-Sarbanes-Oxley (SOX) period, and second, to examine the degree to which SOX-related improvement in accrual persistence varies across companies depending on the degree of their auditor's independence.

Design/methodology/approach – The paper compares accrual persistence in the pre- and post-SOX periods to test the first question. Then, partitioning on relative client importance as a measure of auditor independence, the paper compares the SOX-based improvement for clients of low and high independence audit firms.

Findings – The …

Big 4 Auditor Affiliation And Accruals Quality In Bangladesh, M. Humayun Kabir, Divesh Sharma, Md Ainul Islam, Amiros Salat

Faculty and Research Publications

Purpose – Bangladesh is an emerging economy and international audit firms operate there through affiliated local audit firms. The Bangladesh audit market can be characterized as an intensely competitive small audit market with relatively poor demand for high-audit quality. In addition, Bangladesh has a relatively small and under developed but growing capital market that is characterized by poor corporate regulation and weak investor protection. The purpose of this paper is to examine the association between Big 4 affiliated auditors and accruals quality in Bangladesh.

Design/methodology/approach – Following prior literature, this paper uses both absolute discretionary accruals and signed discretionary accruals …