Business Commons^™

A Simple Approach To Better Distinguish Real Earnings Manipulation From Strategy Changes, Theodore E. Christensen, Adrienna Huffman, Melissa F. Lewis-Western, Kristen Valentine

Faculty Publications

Researchers typically infer real earnings management when a firm’s operating and investing activities differ from industry norms. A significant problem with classifying deviations from industry averages as myopic earnings management is that companies can change their operating and investing decisions for strategic business reasons rather than to mislead stakeholders. Using principal components analysis, we systematically evaluate existing measures and develop a comprehensive real activities measure to better capture earnings manipulation. Our measure reflects (i) deviations from industry averages across multiple activities and (ii) other signals of manipulation. This approach is promising because, although there are many sources of abnormal activities, …

Students Coming Prepared To Class? A Review Of The Literature With A Call To Research, Melissa P. Larson, Jace Linnell

Faculty Publications

In this literature review, we show that little attention has been given to pre-class learning in a flipped classroom setting. To support learning, a flipped classroom shifts the learning of basic content from a classroom setting to a pre-class setting, thereby freeing up time within class for more active learning activities. Active learning activities support student-centered learning as peers collaborate with deep application of pre-class learning concepts. Thus, higher-order skills of critical thinking and lifelong learning, which are valued in the accounting education curriculum and profession, can be developed through a flipped classroom pedagogy. However, if pre-class learning is not …

The Impact Of Managerial Discretion In Revenue Recognition: A Reexamination*, Linda A. Myers, Roy Schmardebeck, Timothy Seidel, Michael D. Stuart

Faculty Publications

Although the FASB and IASB conceptual frameworks identify relevance and faithful representation as the fundamental qualitative characteristics of useful information, prior research suggests that revenue recognition accounting standards that restrict managerial discretion resulted in improved faithful representation but reduced relevance. We use the adoption of Accounting Standards Update (ASU) 2009-13 and ASU 2009-14 to examine the effects of increased managerial discretion to accelerate revenue recognition in multiple-deliverable arrangements; that is, transactions where vendors sell multiple products or services that are delivered at different points in time. We find that increased discretion results in an increase in the relevance of reported …

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 …

Double Trouble? Irs’S Attention To Financial Accounting Restatements, Zackery D. Fox, Ryan Wilson

Faculty Publications

We examine whether the Internal Revenue Service (IRS) uses public information to obtain qualitative signals regarding the quality of firms’ financial information or management integrity. Using the procurement of public information as a proxy for IRS attention, we test whether public signals of poor information quality (restatements) lead to an increase in IRS attention. To begin, we document that the IRS is both more likely and quicker to acquire public filings announcing a restatement than any other filing of the firm. Furthermore, we examine instances in which the IRS is more likely to learn of a restatement and find an …

Sending Children To Camp: An Analysis Of Decision-Making By Family Income, Dan Richmond, Camilla Hodge, Jim Sibthorp

Faculty Publications

Objectives: This study sought to (a) identify the factors most salient to parents when sending their child to summer camp, (b) examine family members’ roles in the camp decision-making process, and (c) compare both by income and other family contextual factors in a sample of parents with a child who enrolled and participated in a summer camp experience.

Methods: Survey data were collected from a total of 354 families that included families from high, middle, and lower incomes. Surveys collected data on parental developmental goals for their child, factors related to camp–child and camp–family fit, and the level of involvement …

Free Public Lands Admission For Children And Spillovers In Family Recreation, Jocelyn S. Wikle, Camilla Hodge

Faculty Publications

This study evaluated the Every Kid in a Park program to understand recreation and the contextual interaction between family resources, race, and recreation costs in families with young children. Using a large, nationally representative data sample from the American Time Use Survey (N = 5,119), we analyzed changes over time in recreation patterns of different socioeconomic groups before and after the initiation of the Every Kid in a Park program of the United States National Park Service. We found that free admission corresponded with overall increased frequency of hiking with a child for individuals in affected households. Changes in hiking …

Parent–Child Leisure And Parent Affect: The Role Of Family Structure, Camilla Hodge, Jocelyn Wikle

Faculty Publications

This study evaluates differences in parent–child leisure and parent affect across single- and two-parent families. The Ecology of Family Experiences framework suggests contextual factors such as family structure and the novelty of the activity environment contribute to heterogeneity in how parents experience leisure, partly because constraints may differ across family structures. Using a large, nationally representative data sample of parents from the American Time Use Survey (N = 78,353), this study shows single-parents experience leisure deficits compared to other parents, and leisure deficits are greatest in home-based leisure. Additionally, using a subsample (N = 16,214), we found that at-home leisure …

Where Have All The Children Gone? A Review Of The Presence Of Children Under 6 Years In Leisure Publication Outlets, Rachel A. Mcgovern, Ericka J. Olschewski, Camilla Hodge

Faculty Publications

We conducted a focused search of nine pre-determined leisure journals to (1) determine the prevalence and scope of research on children younger than 6 years (i.e., young children) published in leisure- focused outlets, (2) describe study designs and research methods used to study this age group, (3) tabulate definitions of child leisure, and (4) provide an overview of the studies’ findings. Overall, findings indicate a marked absence of young children from leisure research. Only 28 articles in almost half a century of leisure journal publications met inclusion criteria. Eight studies focused on children as the subject or participant, five articles …

The Transformative Tourism Learning Model, Jill Bueddefeld, Mat D. Duerden

Faculty Publications

This conceptual paper addresses gaps in transformative learning and tourism literature. We argue for a more complete integration of Transformative Learning Theory within tourism literature, in order to better understand tourism learning as both a process and a product. The Transformative Tourism Learning Model is proposed as a framework for understanding how to intentionally plan and design tourism learning experiences with specific learning processes and outcomes in mind. This paper offers a synthesis of transformative literature within tourism contexts and the proposes the Transformative Tourism Learning Model to provide researchers and practitioners with a guiding framework in both the design …

Experience Design And The Origins And Aims Of Leisure Studies: Shifting The Focus From Context To Experience, Mat D. Duerden

Faculty Publications

This article, adapted from the 2019 Butler Lecture at the NRPA National Research session, provides an overview of the origins, development, and potential future trajectory of the field of leisure research. Economic and societal trends of the last few decades may signal the need for the field to intentionally transition its focus on leisure as a context to leisure as an experience. More specifically the field needs to actively consider how insights gained from 60 years of research on leisure experiences can be applied to contexts beyond leisure. To illustrate the possibility of such a shift, lessons learned from transitioning …

Leisure, Eudaimonic Behavior, Physical Activity And Well-Being Of Older Adults, Jungsu Ryu, Jinmoo Heo, Gary Ellis, Mark A. Widmer

Faculty Publications

This study explored how different types of daily experiences (leisure activity, eudaimonic behaviors) and select habits and dispositions (neuroticism, dispositional depression, physical activity level), are related to situational well-being (situational depression, immediate positive affect) among older adults from a community center. Six hundred thirty-eight situational experience sampling observations were provided by 19 participants ranging in age from 59 to 81 years (M¼68.68, SD¼7.17). Each participant was signaled on five randomly selected occasions each day for seven consecutive days. Upon receiving a signal, participants completed questionnaires measuring their activity participation and situational well-being at the time of the signal. Significant predictors …

An Fmri Investigation Of The Neurocognitive Processing Of Measures And Strategic Objectives, Paul Black, C. Brock Kirwan, Thomas Meservy, William B. Tayler, Jeffrey O. Williams

Faculty Publications

A central feature of most organizations is the use of measures to represent key elements of performance across multiple strategic objectives. Prior research has demonstrated a tendency for individuals to treat these measures as though they are the higher-order strategic objectives the measures were intended to represent, as opposed to imperfect representations of those strategic objectives—a phenomenon labeled surrogation. We employ an experiment to further understand this phenomenon. In this study, we capture neural activation when processing measures and when processing strategic objectives. We find that differences in brain activity when processing measures and strategic objectives are similar to the …

Personalized Priority Policies In Call Centers Using Past Customer Interaction Information, Brett A. Hathaway, Seyed Morteza Emadi, Vinayak Deshpande

Faculty Publications

Companies are increasingly personalizing their product or service offerings based on their customers' history of interactions to increase revenue or improve customer service. In this paper we show how call centers can improve customer service by implementing personalized priority policies. Under personalized priority policies, managers use customer contact history to predict individual-level caller abandonment and redialing behavior and prioritize them based on these predictions to improve operational performance. We provide a framework for how companies can use individual-level customer history data to capture the idiosyncratic preferences and beliefs that impact caller abandonment and redialing behavior, and quantify the improvements to …

Earnings Virality*, Brett Campbell, Michael S. Drake, Jacob Thornock, Brady Twedt

Faculty Publications

We examine the determinants and market consequences associated with earnings announcements going viral on social media, a phenomenon we label “earnings virality.” Using a comprehensive panel of historical Twitter data, we find that the typical earnings announcement receives relatively little social media coverage, but others go viral on social media, quickly reaching the feeds of millions of people. We find that viral earnings announcements generally have Twitter content that is more extreme in tone and contains less unique content. Further, earnings virality is positively associated with revenue surprises, investor recognition, retail investor ownership, and retail investor trading around the announcement. …

Brokerage House Ipos And Analyst Forecast Quality, Mark Bradshaw, Michael S. Drake, Joseph Pacelli, Brady Twedt

Faculty Publications

We examine how brokerage firm IPOs influence the research quality of sell-side analysts employed by the brokerage. Our main results focus on earnings forecast bias and absolute forecast errors as proxies for research quality. Using a staggered difference-in-differences analysis, we document significant decreases in forecast bias and absolute forecast error during the two-year period centered on the analysts’ brokerage house IPO. In additional analyses, we explore several potential explanations for the short-term benefits of brokerage house IPOs. We find some evidence that IPOs delay the departure of more talented analysts and that the effects are more concentrated among analysts and …

A Review Of Sensory Imagery For Consumer Psychology, Ryan S. Elder, Aradhna Krishna

Faculty Publications

his review of mental imagery research has the core objective of fostering more research on the topic of sensory imagery. The review is organized around a conceptual framework highlighting (a) how mental imagery is formed, (b) the elicitation and elaboration of mental imagery, (c) the multi-modal nature of sensory imagery, and (d) the consumer behavior consequences of mental imagery. This conceptual framework provides many new lenses through which researchers can view prior findings, and thereby motivates innovative new research ideas. Future research directions are provided in each section of the review, with additional unexplored opportunities presented in a final section

Do Privacy Assurances Work? A Study Of Truthfulness In Healthcare History Data Collection, Tamara M. Masters, Mark Keith, Rachel Hess, Jeffrey L. Jenkins

Faculty Publications

Patients often provide untruthful information about their health to avoid embarrassment, evade treatment, or prevent financial loss. Privacy disclosures (e.g. HIPAA) intended to dissuade privacy concerns may actually increase patient lying. We used new mouse trackingbased technology to detect lies through mouse movement (distance and time to response) and patient answer adjustment in an online controlled study of 611 potential patients, randomly assigned to one of six treatments. Treatments differed in the notices patients received before health information was requested, including notices about privacy, benefits of truthful disclosure, and risks of inaccurate disclosure. Increased time or distance of device mouse …

An Institutional Theory Perspective On Ehr Engagement: Mandates, Penalties, And Enforcement, Mark J. Keith, Elina Chun Stewart, Tevin Stewart, Mitchell Josephson, Bob Cash, Connor Bice

Faculty Publications

Electronic Health Record (EHR) systems are the predominant information system (IS) used by healthcare clinicians and have been the source of both great success and pain. User engagement with EHR systems is unique from traditional IS contexts in significant ways. Prior research explains EHR usage and success primarily on traditional technology acceptance research (i.e., TAM, UTAUT). However, these models assume that EHR engagement is no different from IS systems in general business domains. Yet, the healthcare context is far more regulated than most. Based on qualitative focus group sessions with a leading healthcare analytics firm (KLAS Research), we identify the …

Local Context And Post-Crisis Social Venture Creation, Sergey Anokhin, Todd Morgan, Lisa Jones Christensen, William Schulze

Faculty Publications

Research summary: We investigate the effects of local market and government failure on the creation of social ventures in the context of post-crisis recovery during the period following the dot-com crisis and ending before the housing bubble burst across all Ohio counties. Drawing on social embeddedness theory, we posit that social venture creation rates vary across local contexts and are higher in communities characterized by market and government failures. Longitudinal contextual data from 88 Ohio counties indicates that situations characterized by failures of both types are especially conducive to the creation of local social enterprises. We address the shortage of …

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 …

Ecology Of Family Experiences: Contextualizing Family Leisure For Human Development & Family Relations, Karen K. Melton, Camilla Hodge, Mat D. Duerden

Faculty Publications

All family leisure is not equal. Yet, little is known about the mechanisms linking different types of family leisure to different human development and family relations outcomes. The Ecology of Family Experiences (EFE) framework provides a sensitizing lens for the study of the conditions under which family leisure is beneficial to individuals and families. Specifically, the framework suggests three domains—Family, Activity, and Time—iteratively interact to generate different levels of individual and family outcomes (i.e., responses, meaning, and development). The EFE necessitates research built on ecologically valid study designs that incorporate innovative measurement approaches. Scholars using such approaches can increase the …

Optimal Illiquidity, John Beshears, James J. Choi, Christopher Clayton, Christopher Harris, David Laibson, Brigitte C. Madrian

Faculty Publications

We calculate the socially optimal level of illiquidity in an economy populated by households with taste shocks and present bias (Amador, Werning, and Angeletos 2006). The government chooses mandatory contributions to respective spending/ savings accounts, each with a different pre-retirement withdrawal penalty. Penalties collected by the government are redistributed through the tax system. When naive households have heterogeneous present bias, the social optimum is well approximated by a three-account system: (i) a completely liquid account, (ii) a completely illiquid account, and (iii) an account with an ≃ 10% early withdrawal penalty. In some ways this resembles the U.S. system, which …

Transformational It Leaders And Digital Innovation: The Moderating Effect Of Formal It Governance, Linda M. Pittenger, Nicholas Berente, James Gaskin

Faculty Publications

Does formal IT governance encourage innovation in the traditional domains of the IT function at the expense of new forms of “digital” innovation? We report on a study of 158 IT managers and leaders to understand the conditions under which transformational IT leadership can drive innovation in traditional forms of IT, as well as in the emerging “digital” domain. We find that highly formal IT governance practices can reduce ability of transformational IT managers and leaders to innovate in both domains, and this effect is greater for digital innovation. In stable cultures the moderation effect was strengthened, while insignificant in …

Determinants Of Capital Structure: An Expanded Assessment, Toshinori Fukui, Todd Mitton, Robert Schonlau

Faculty Publications

Using a standardized methodology, we empirically evaluate 55 proposed determinants of capital structure in terms of statistical significance, economic significance, and identification. We find that robust and economically important determinants of debt ratios are relatively few in number. Nevertheless, because each determinant relates to one of five market imperfections—taxes, distress costs, information asymmetry, agency costs, or supply frictions—we draw conclusions from the evidence as a whole regarding the explanatory power of different capital structure theories. We find greater support for pecking order theory and supply-related theories, with less support for traditional tradeoff theory and agency theory.

Embracing Brain And Behaviour: Designing Programs Of Complementary Neurophysiological And Behavioural Studies, C. Brock Kirwan, Anthony Vance, Jeffrey L. Jenkins, Bonnie Brinton Anderson

Faculty Publications

NeuroIS—the methods and knowledge of neuroscience applied to the information systems (IS) domain—has become an established research field within the IS discipline. A key advantage of NeuroIS is its ability to provide insights into human cognition beyond those obtained using behavioural techniques alone. Nevertheless, in neuroscience, there is renewed interest in examining behaviour together with neurophysiological methods to better inform our understanding of neural processes. In this research opinion article, we argue that in the field of NeuroIS, there is an opportunity for hybrid programs of study that combine neurophysiological and behavioural methods in a complementary manner. We outline four …

Developing The Experience Impact Scale: A Qualitative Study Using A Study Abroad And International Internship Program, Neil Lundberg, Peter Ward, Grant Lundberg, Brian Hill, Jennifer Brown, Ramon Zabriskie, Mat Duerden, Heather Ashby

Faculty Publications

Recent work has identified different experience types, including experience classifications of ordinary, memorable, meaningful, and transformative. This study further clarifies the experience typology through qualitative data analysis of each experience type. Data analysis identified that within each extraordinary experience type, additional subtypes were present. Experience types and subtypes were organized according to the experience typology continuum into a 10-item Experience Impact Scale (EIS), as no instrument to measure experience types or experience impact was available. An expert panel was used to determine the representativeness of the items in the EIS and to provide content-related evidence of validity. Discussion of the …

Digital Behavioral Biometrics And Privacy: Methods For Improving Business Processes Without Compromising Customer Privacy, Joseph S. Valacich, Jeffrey L. Jenkins, D. Čišić

Faculty Publications

To enable people to interact with online websites and systems, browsers capture a variety of events that occur on the page—such as how a person is moving the computer mouse, what a person clicks on, what a person types, and whether a person is scrolling. These events represent a user’s behavior on a page, referred to as the DOM or Document Object Model, and are recorded at a millisecond precision rate (e.g., the exact millisecond timestamp when a key goes down and when it comes back up). Research and practice alike have found that these behavioral events can provide powerful …

The Innovation And Reporting Consequences Of Financial Regulation For Young Life-Cycle Firms, Abigail Allen, Melissa F. Lewis-Western, Kristen Valentine

Faculty Publications

Firm life-cycle stage reflects a firm’s current strategic direction toward exploration independent of age or size. We provide evidence that young life-cycle firms are particularly vulnerable to negative innovation consequences from financial regulation but do not appear to experience any compensating financial reporting quality (FRQ) benefits. Using a generalized difference-indifferences design around Sarbanes Oxley Act of 2002 (SOX), we document a significant reduction in both research and development (R&D) spending and innovation outputs for young life-cycle stage firms after regulation. Declines in innovation manifest both from the diversion of scarce resources and from the imposition of an organizational culture mismatched …

Preparer Opposition And Strategic Implementation Of Governmental Accounting Standards: Evidence From Public Pension Accounting Reform, Abigail Allen, Reining C. Petacchi

Faculty Publications

Widely acknowledged as one of the most controversial standards in governmental accounting, GASB 67/68 radically altered both the recognition and measurement for defined benefit public pensions. The standards require the recognition of previously only disclosed unfunded pension liabilities and increase the magnitude of reported pension liabilities by requiring the partial incorporation of a market-based discount rate. While the recognition proposal was unaltered from its initial conception to the final standards, the discount rate proposal was significantly attenuated after the initial proposal met with unanimous preparer opposition. Accordingly, we examine what incentives drive preparer lobbying positions, whether such lobbying is aligned …