Accounting Commons^™

Top Management Team Functional Diversity And Firm Performance: A Mediation Analysis, Tsung Hsuan Yang

Accounting Dissertations

In my dissertation, I study whether the top management team (TMT) between-member and within-member functional diversities affect firm performance. Between-member functional diversity, known as Dominant Functional Diversity (DFD), refers to the heterogeneity of functional experts on a TMT, and within-member functional diversity, known as Intrapersonal Functional Diversity (IFD), refers to the aggregate functional breadth of TMT members. My analysis indicates that IFD is positively and significantly associated with firm performance. The relationship between DFD and firm performance is also positive but not statistically significant. In the second analysis, I perform a mediation analysis to explore plausible mechanisms through which TMT …

Earnings Management Strategy Of Pension Plan Changing Firms, Wei Chen

Accounting Dissertations

This study investigates the earnings management strategy of defined benefit pension plan changing firms. I provide the evidence that managers engage in cash conservation activities and real earnings management in response to the changes in funding status and pension income through the manipulation of pension assumptions before and after pension freezing. These results suggest that earnings management through pension assumptions affects the normal operations of the firm through real activities during the defined benefit plan pension freezing. I also provide evidence that pension termination firms exhibit a lower level of discretionary accruals after the termination, suggesting the downsizing of a …

The Timing Of Insider Trading And Management Forecast Credibility, Xiaozhe Gu

Accounting Dissertations

In this paper, I study how past insider trading patterns affect management forecast credibility. I first hypothesize and find that, due to litigation concerns, executives are unlikely to use a “pump-and-dump” strategy to maximize trading profits. Instead, they issue more accurate and conservative management earnings forecasts before insider sales. I then document that insider sales after forecasts have signaling content. Specifically, firms where a higher fraction of insider sales occurs shortly after the forecast enjoy higher forecast credibility in the future. This effect is more pronounced when firms are difficult to value and less pronounced when firms show traces of …

Core Concepts In Management Accounting, Alan J. Richardson

Odette School of Business Publications

This is a hyperlinked text designed for introductory or advanced students. It can also be used by design consultants to guide the development of a management accounting system based on a set of diagnostic questions. The text covers product costing, performance evaluation, and strategic accounting. Depending on your level of current knowledge, some sections of the text that are not relevant to you will be hidden. Design consultants will have access to all aspects of the text. You can pre-specify your level of expertise, or the text will record your progress and open new material as your skill grows. The …

Top Legal Executives And Mergers And Acquisitions Process And Outcomes, Suye Wang

Accounting Dissertations

The role of a firm’s in-house top legal executives has become more prominent in recent years due to regulatory changes, increasing litigation, and growing risk and liability in the corporate world. Top legal executives act as trusted advisers to top management and board of directors in strategic decision-making. In this dissertation, I develop a measure of top legal executive influence in the acquiring firm and examine whether the top legal executive’s influence is associated with mergers and acquisitions (M&A) process and outcomes. I find that top legal executive influence is associated with shorter public process length (deal announcement to deal …

The Impact Of Fresh Eyes: How A Change In The Engagement Team Impacts The Reporting Of Internal Control Material Weaknesses, Hannah Elizabeth Richards

Accounting Dissertations

Regulators have repeatedly debated mandatory auditor rotation. Proponents emphasize the benefits that a new auditor brings, specifically, improved independence and a fresh perspective, leading to higher quality audits. However, opponents argue that changing auditors is costly and impedes audit quality. The United States currently requires audit partner rotation, but it is not clear that partner change alone significantly impacts audit outcomes. In this dissertation, I provide evidence that the fresh perspective brought about by changes in the engagement team improves the detection and reporting of internal control material weaknesses (ICMW) after controlling for the likelihood of the existence of ICMW. …

The Effect Of Investor Sentiment On Earnings Management, Lin Chen

Accounting Dissertations

The association between investor sentiment and corporate reporting decisions/outcomes has been recently examined in the accounting and finance literature. As an important outcome of corporate reporting decisions, earnings management (EM) may be affected by investor sentiment. In this dissertation, I examine two research questions. The first is whether investor sentiment is associated with the propensity of firms’ engaging in the two primary forms of EM: accrual earnings management (AEM) and real earnings management (REM). The second question is whether firms’ internal governance strength and external audit quality would moderate the association between investor sentiment and AEM as well as REM. …

Blockholder Heterogeneity And Corporate Textual Disclosure Quality, Xiaoxiao Yu

Accounting Dissertations

This study investigates whether and how different types of blockholders affect a firm’s textual disclosure quality. Using a hand-collected blockholder-firm panel sample from 2011 to 2016, I find that, on average, both the aggregate blockholder ownership and the total number of blockholders are negatively associated with the readability of firms’ 10-K reports, after controlling for the numerical quality of earnings. When blockholders are categorized into different groups based on their filing choices and their affiliations with management, I find that firms with greater number of unaffiliated 13D filers write more readable 10-K reports while firms with both greater number and …

An Empirical Test Of Learning In Management Earnings Forecasts, Yuan Shi

Accounting Dissertations

My dissertation examines whether managers issuing earnings guidance learn from the forecast errors in prior earnings guidance issued by them. Using data on quarterly earnings forecasts issued by managers during the period from 2001 to 2016, I find results that are consistent with managers learning from their previous forecast errors to improve their forecast accuracy. However, the intensity of the managers' reactions to previous forecast errors is asymmetric. Consistent with prior literature that emphasizes the importance of meeting or beating forecasts for managers, certain managers that miss their own forecasts tend to be conservative enough in their future forecasts to …

Five Types Of Interest Expense, Three Sets Of New Rules, Larry Witner, Tim Krumwiede

Accounting Department Faculty Journal Articles

Individual taxpayers are subject to different rules for deducting different types of interest expense. The five primary types of interest for individual taxpayers are student loan interest, qualified residence indebtedness interest, investment interest, business interest, and personal interest. The law known as the Tax Cuts and Jobs Act temporarily introduced new rules for years after 2017 for qualified residence indebtedness interest, investment interest, and business interest. For 2018 through 2025, the acquisition indebtedness limit on the qualified residence indebtedness deduction has been lowered to $750,000 for loans incurred after Dec. 15, 2017, and the separate deduction for home-equity indebtedness has …

Portfolio Liquidity And Share Turnover Of Closed-End Mutual Funds, Charles P. Cullinan, Xiaochuan Zheng, Elena Precourt

Accounting Department Faculty Journal Articles

We examine the relationship between the liquidity of the portfolios of closed-end mutual funds and the share turnover of closed-end funds' shares. We find that the portfolio liquidity/share turnover relationship is contingent upon the nature of the funds' shareholders. For funds with mainly smaller shareholders, there is a negative relationship between portfolio liquidity and share turnover, suggesting that smaller investors are more likely to hold shares of these funds to avoid the transaction costs associated with trading. However, as more institutional investors hold fund shares, portfolio liquidity is positively associated with share turnover.

Firm-Specific Information Environment And Analyst Forecast, Wei Hsu

Accounting Dissertations

I examine how firm-specific private and public information affect analyst forecast revisions. I find that when managers easily beat (struggle to meet) the consensus forecasts in the previous quarter, financial analysts revise their earnings forecasts upward (downward). The revision magnitudes are higher when there is more private information. Similarly, I find that when managers provide upward (downward) earnings guidance, analysts revise their forecasts upward (downward) more when there is more private information. In contrast, the revision magnitudes are lower when there is more public information. Additionally, I find that the magnitudes of analysts’ downward revisions increase with private information prior …

Does Ifrs Adoption Affect Analyst Forecast Behavior? Evidence From Foreign Private Issuers In The United States, Xiaoxiao Song

Accounting Dissertations

The globalization of business and finance has led to the adoption of International Financial Reporting Standards (IFRS) in more than 100 countries, and numerous studies have examined the consequences of IFRS adoption in these countries. Currently, however, U.S. domestic issuers are not required to use IFRS in preparing their financial statements, which makes the study of potential IFRS adoption effects on U.S. domestic issuers difficult. My dissertation uses a unique sample of foreign private issuers that are cross listed in the U.S. and are allowed to use IFRS for their financial statements, so that I can investigate the effect of …

Executive Compensation, Corporate Tax Aggressiveness And Financial Reporting Aggressiveness: Evidence From Sfas 123r, Bonnie R. Quillin

Accounting Dissertations

Using a variety of research methods, prior empirical research finds that executive compensation influences the behavior of managers, particularly with decisions involving risk. These studies show that, when executive compensation is more sensitive to stock price volatility, firms implement riskier investment and financial policies and take more aggressive positions in financial and tax reporting. The sensitivity of executive compensation to stock price volatility is largely due to stock option compensation. Prior studies provide evidence that companies reduced the stock option grants to executives following the introduction of the Statement of Financial Accounting Standard 123R – Share-Based Payment (SFAS 123R). The …

Cash Flow Training And Improved Microfinance Outcomes, Marc J. Epstein, Kristi Yuthas

Business Faculty Publications and Presentations

Despite its promise as a powerful tool for alleviating poverty, research suggests that microfinance has had only a modest impact on development. Misallocation of funds by clients has been implicated as a major impediment to microfinance success. In this study, clients received training on how to track (but not manage) their cash flows during the first two meetings of the microfinance loan cycle. Examination of weekly cash flow shows that clients immediately invested the majority of their funds into the businesses and carefully managed revenues and expenditures to maintain sufficient food and other household expenditures throughout the loan cycle. It …

Analyst Coverage And Stock Price Crash Risk, I-Fang Lee Yvonne

Accounting Dissertations

In this study, I investigate the impact of analyst coverage changes on firms’ subsequent firm-specific crash risk. Using a sample of 24,228 firm-year observations from 2000 to 2013, I show that changes in analyst coverage are negatively associated with changes in one-year-ahead crash risk. This result is consistent with analysts’ information gathering activities and analyses limiting bad news hoarding behavior, and is generally inconsistent with analyst pressure leading to more bad news hoarding by managers. Moreover, I find the negative association between coverage changes and changes in subsequent crash risk to be more pronounced when the coverage change is attributable …

Capital Market Reactions To Ifrs In The United States: Evidence From Foreign Private Issuers, Jennifer Yardley

Accounting Dissertations

The rise of International Financial Reporting Standards (IFRS) as a contender to be the single globally-accepted set of accounting standards has been accompanied by a wealth of research studying the consequences of IFRS adoption. However, prior research does little to address the potential effects of and market sentiment toward the use of IFRS rather than U.S. GAAP in the United States. This study fills this gap by examining the accounting standard choices of foreign private issuers in the United States. In addition to identifying the factors that are associated with a firm's accounting standard choice in the U.S., this study …

The Interactions Between Real Earnings Management And Short Selling Activity, Yu Zhang

Accounting Dissertations

This study builds on two streams of literature that recently draw the attention of researchers: real earnings management (REM) and short selling. Graham et al. (2005) reports that managers choose REM over accounting methods to manage earnings. The survey results suggest that REM is likely to be more prevalent than accrual-based earnings management, and should deserve more attention from academic research. Short selling has become a big concern to researchers due to the recent financial crisis and the combat against naked short sales. I empirically test how short sellers trade on firms' REM information, and whether short selling activity can …

Tax Receivable Agreements In Initial Public Offerings: An Analysis Of The Innovation Incorporated In Ipo Agreements, Amy Foshee Holmes

Accounting Dissertations

A Tax Receivable Agreement (TRA) is a binding commitment between a newly public firm and the firm's founders to include a tax-sharing arrangement, obligating the IPO firm to make annual cash payments to the pre-IPO owners. The opportunity for shared tax benefits arises when the pre-IPO owners sell equity and achieve a step-up in basis of assets for the IPO firm. The newly created tax assets and the prior existing tax assets can offset future taxable income at ordinary corporate tax rates. This tax-sharing arrangement will typically provide for payments of 85 percent of the tax savings. This type of …

The Moderating Effect Of Perceived Ethical Leadership On Reduced Audit Quality Behaviors, Kimberly J. Webb

Accounting Dissertations

As auditors perform the audit, they are faced with many decisions that ultimately affect the quality of the audit and can lead to the issuance of an improper audit opinion such as accepting weak management explanations without corroborating evidence, superficial review of client documentation, premature sign off of audit procedures, or underreporting of time spent on audit task. In this study, I investigate the impact of the perceived ethical leadership (EL) of the audit supervisor upon the auditor's propensity to engage in reduced audit quality (RAQ) acts. This question is of particular interest considering the renewed focus placed upon audit …

Real Earnings Management, Habitually Meeting/Closely Beating Analysts' Forecasts, And Firms' Long-Term Economic Performance, Fanghong Jiao

Accounting Dissertations

Real earnings management (REM) has gained more attention due to its more extensive application than that before the enactment of Sarbanes-Oxley Act (SOX). Analysts' earnings forecast is an important benchmark for both the investors and the managers. Gunny (2010) finds that the signaling of future prospects overcomes the possibility of opportunism in firms that occasionally use REM to meet/closely beat benchmarks. However, the effect of repeatedly using REM to meet/beat earnings benchmarks has not been explored. This paper examines the long-term economic performance (Tobin's Q) of firms that utilize REM to habitually meet/closely beat analysts' earnings forecasts (HabitMBE). The results …

Agency Costs, Ceo Compensation, And Leasing Activities, Linying Zhou

Accounting Dissertations

Various elements in firms' capital structures have been documented to be associated with conflicts of interests among shareholders, creditors, and managers. In this paper, I hypothesize that the use of leases affects manager incentives and mitigates the conflicts of interests between shareholders and bondholders. I test this hypothesis by examining whether leasing shares in the capital structure are associated with CEO pay-performance sensitivity. My results show that a firm's leasing share is positively associated with its CEO's pay-performance sensitivity, suggesting that leasing activities reduce the agency cost of debt financing. My results remain robust after controlling for recognized mechanisms of …

Overvaluation And Stock Price Crashes: The Effects Of Earnings Management, Qunfeng Liao

Accounting Dissertations

Prior literature has shown that managers have incentives to opportunistically and selectively withhold bad news from investors because of career concerns, compensation contracts, litigation risks, earnings targets, and empire building. In their 2006 paper, Jin and Myers develop the “Bad News Hoarding” theory which suggests that when managers conceal bad news for extended periods of time, negative information is likely to get stockpiled within the firm. When managers’ incentives for hiding bad news collapse or when the accumulation of bad news reaches a critical threshold level, all of the hitherto undisclosed negative firm-specific shocks become public at once, resulting in …

An Exploration Of The Associations Among Corporate Sustainability Performance, Corporate Governance, And Corporate Financial Performance, Wenxiang Lu

Accounting Dissertations

This study examines the relationship between corporate governance and corporate sustainability performance (CSP), the relationship between corporate sustainability performance and corporate financial performance (CFP), and whether corporate governance moderates the CSP-CFP relationship. Corporate governance plays an important role in monitoring and counselling management's decision making including strategic sustainability investing. The study analyzes a sample of over 400 of the largest U.S. companies to examine corporate sustainability performance and corporate governance jointly. Four attributes of boards of directors are examined: board size, board independence, CEO duality, and female directors. The results show that all four board attributes are positively associated with …

The Role Of Individual Attributes In Earnings Management Intention Decisions, Janet R. Jones

Accounting Dissertations

Much research has been conducted, at the firm level, to investigate the market effect of earnings management. However, there is a gap in the literature on individual attributes that may help to explain earnings management decisions. Of the research at individual level research that is available the focus is primarily on the motives of the Chief Executive Officer or top executive teams and not the Chief Financial Officer (CFO). The limited research focusing on the CFO has produced conflicting results with regard to the motivations and decisions of the CFO to engage in earnings management, this conflict in findings stems …

Banking Standards - Submission From Professor Stella Fearnley (Bournemouth University) And Professor Shyam Sunder (Yale School Of Management) (S037), Shyam Sunder, Stella Fearnley

Shyam Sunder

Fundamental Signals, Future Earnings And Security Analysts' Efficient Use Of Fundamental Signals During 1991 Through 2008, Sherwood Lane Lambert

Accounting Dissertations

This dissertation builds upon one of the foundation articles in Fundamental Analysis, written by Abarbanell and Bushee [1997] (AB-97), that studied the relationship of fundamental signals (combinations of items reported in the financial statements) to future accounting earnings during 1983-1990. Guided by fundamental financial and managerial/cost accounting concepts, this study adds fundamental signals to the AB-97 earning-signals model. The added fundamental signals include proxies for operating leverage, market share, markup, and total manufacturing costs. A revised ("Experimental") long-term growth variable is introduced that allows for negative EPS (loss) values in the geometric mean growth rate computation. The expanded model is …

Social Exchange And Post-Employment Citizenship: Evidence From Public Accounting, David N. Herda

Accounting Dissertations

In this study I examine why some ex-employees more than others choose to benefit their former firm (post-employment citizenship). The study is based on social exchange theory and involves former employees of a Big Four accounting firm. Among individuals who left the firm voluntarily, post-employment citizenship was found to be predicted by a two-phase social exchange relationship between employees and the firm, and the two-phases, represented by during-employment perceived organizational support and during-employment organizational commitment, partially mediated the relationship between during-employment organizational fairness and post-employment citizenship. For layoff victims, I extend Brockner, Tyler, and Cooper-Schneider's (1992) research on the interaction …

The Internal Control Provisions Of Sarbanes-Oxley Act And Quality Of Interim Earnings, Lei Han

Accounting Dissertations

This study examines the change in the quality of interim earnings around the enactment of Sarbanes-Oxley Act (SOX) and whether the change differs between interim and annual earnings by focusing on the impact of internal control provisions. In particular, two hypotheses are tested in this study. First, the quality of interim earnings improves after the SOX. Second, the gap in earnings quality between annual and interim reporting decreases after the SOX. Prior research indicates that the quality of interim earnings is lower because managers have more discretion in interim reporting and interim earnings are only subject to review which involves …

Bank Account Module, Vijaya Krushna Varma Mr

VIJAYA KRUSHNA VARMA Mr

Bank account module is designed and developed by Varma for new banking system. This new bank account module will help banks to know their profits at any time. This module will halt non performing assets