Open Access. Powered by Scholars. Published by Universities.®
- Discipline
-
- Business Administration, Management, and Operations (117)
- Business and Corporate Communications (115)
- Entrepreneurial and Small Business Operations (113)
- Management Information Systems (10)
- Social and Behavioral Sciences (10)
-
- Physical Sciences and Mathematics (9)
- Computer Sciences (8)
- Human Resources Management (8)
- Business Law, Public Responsibility, and Ethics (6)
- Psychology (6)
- Finance and Financial Management (5)
- Business Intelligence (4)
- Education (4)
- International Business (4)
- Nonprofit Administration and Management (4)
- Operations and Supply Chain Management (4)
- Organizational Behavior and Theory (4)
- Technology and Innovation (4)
- Communication (3)
- Economics (3)
- Engineering (3)
- Law (3)
- Marketing (3)
- Medicine and Health Sciences (3)
- Political Science (3)
- Sociology (3)
- Adult and Continuing Education (2)
- Advertising and Promotion Management (2)
- Keyword
-
- Audit quality (15)
- Internal audit (14)
- Business (10)
- Earnings management (9)
- GAAP (9)
-
- Auditing (8)
- Corporate governance (8)
- Disclosure (8)
- Financial reporting (8)
- Textual analysis (8)
- Accounting (7)
- Auditors (7)
- Ethics (7)
- Financial reporting quality (7)
- Internal controls (7)
- Management (7)
- Automation (6)
- Information acquisition (6)
- Innovation (6)
- Tax avoidance (6)
- Accounting research topical areas (5)
- Artificial intelligence (5)
- Audit committee (5)
- ChatGPT (5)
- Culture (5)
- Design science (5)
- EDGAR (5)
- Internal audit function (5)
- Management training ground (5)
- Real earnings management (5)
- Publication Year
- Publication
- Publication Type
Articles 391 - 420 of 479
Full-Text Articles in Accounting
Establishing A Foundation For The Testing And Evaluation Of Effective Scenario Elicitation Tools, Benjamin Dunford, Dr. Douglas Dean
Establishing A Foundation For The Testing And Evaluation Of Effective Scenario Elicitation Tools, Benjamin Dunford, Dr. Douglas Dean
Journal of Undergraduate Research
In system development, no other phase is as fraught with difficulties as determining what exactly the system “should do” for a proposed project. These difficulties arise through a divergence in how the end user envisions the system should operate and how the analyst or developer perceives the user would like the system to operate. The search for a common language that both analyst and end user could use to effectively communicate what a system “should do”, or the system requirements, gave rise to the use of scenarios. Scenarios are textual narratives of how the system should operate in a given …
Stock Price Reactions To Announcements Of U.S. Gaap/Ifrs Convergence, Lorien Stice, Dr. Ted Christensen
Stock Price Reactions To Announcements Of U.S. Gaap/Ifrs Convergence, Lorien Stice, Dr. Ted Christensen
Journal of Undergraduate Research
This research investigates investors’ perceptions of the expected impact of adopting international accounting standards on U.S. companies. Since these rules differ from current U.S. standards, some speculate that the costs to convert companies’ reporting systems to conform to international standards will have significantly negative effects on their profitability. My project explores stock price reactions to SEC announcements which indicate an increased or decreased probability that U.S. firms will soon be required to switch to International Financial Reporting Standards (IFRS). I hypothesize that expected conversion costs will be higher for companies that are not already operating in foreign countries because more …
The Effect Of Internal Control And Framing On Employee Process Improvement Suggestions, Scott Emett, Dr. David Wood
The Effect Of Internal Control And Framing On Employee Process Improvement Suggestions, Scott Emett, Dr. David Wood
Journal of Undergraduate Research
After a few months of developing my original ORCA proposal topic entitled “The Effect of Internal Control and Framing on Employee Process Improvement Suggestions”, I learned an invaluable lesson about academic research: many promising research ideas do not turn out to be as promising from a research perspective as originally thought. After running into several problems with the experimental operationalization of this research idea as well as problems with the theoretical contributions that the project would make, my mentor and I decided to abandon this research idea and pursue other research ideas that seemed more promising. Over the past year, …
Audit Quality And Subsidiary Audits, Jeremiah Bentley, Dr. Steven Glover
Audit Quality And Subsidiary Audits, Jeremiah Bentley, Dr. Steven Glover
Journal of Undergraduate Research
International and national accounting standard setters have spent significant amounts of time discussing and making rules about the consolidation of company’s financial statements (ASB 2009; PCAOB 2008, 2010; IAASB 2007; FASB 2010). One of the focuses of these discussions is how auditors should respond to the consolidation process when performing group audits (Glover et al. 2008). A group audit is an audit performed on an entity with multiple locations or components, with separately audited financial information included in consolidated or group financial statements (Glover et al. 2008). While previous research has examined how the consolidation process affects the financial statement …
Effect Of Fraud Risk Assessments On Auditors’ Evidence Evaluation, Jace Garrett, Dr. Doug Prawitt
Effect Of Fraud Risk Assessments On Auditors’ Evidence Evaluation, Jace Garrett, Dr. Doug Prawitt
Journal of Undergraduate Research
My original project idea was to research how supervisors’ views affect subordinates’ judgments in an audit setting. While this was a good idea, my mentor and I came up with another research idea that seemed even more interesting. Since fraud has been a hot topic in accounting research, we thought our idea was particularly timely. The idea we had was to research the effect of preliminary fraud risk assessments on auditors’ evaluation of evidence. We believe that making the preliminary fraud risk assessments creates a bias when auditors later evaluate evidence. Specifically, we believe that when auditors assess the likelihood …
Social Norms And Internal Controls: When Tone From The Bottom Matters, Jeffrey Pickerd, Dr. Scott Summers
Social Norms And Internal Controls: When Tone From The Bottom Matters, Jeffrey Pickerd, Dr. Scott Summers
Journal of Undergraduate Research
The control environment–the actions, policies, and beliefs of an organization–is an important part of the COSO Framework and helps to encourage individuals to follow internal controls. Current accounting literature has extensively examined the influence of the CEOs and other top executives and their ability to influence the control environment to create a culture of compliance with internal controls. However, no research has been to done to see whether or not peers and colleagues influence the control environment.
Recruiting Internal Auditors: The Effects Of Using The Internal Audit Function As A Management Training Ground And Performing Consulting Services, Matthew Stripliper, Dr. David Wood
Recruiting Internal Auditors: The Effects Of Using The Internal Audit Function As A Management Training Ground And Performing Consulting Services, Matthew Stripliper, Dr. David Wood
Journal of Undergraduate Research
A critical component of high quality corporate governance is attracting well-qualified job candidates into the internal audit function (IAF). Yet, IAFs face significant challenges in hiring a sufficient number of qualified professionals to perform their worki. Given this challenge, it is important to understand factors that can affect the ability of the IAF to attract a large pool of talent2. Therefore, the purpose of this research was to investigate three specific questions: (1) To what extent are job applicants deterred by negative stereotypes of working in internal auditing?; (2) How do different job structure factors, namely using the …
Sec Comment Letters: Investors’ Response To Accounting Disclosure Scrutiny, Kurt Gee, Dr. Jeffrey Wilks
Sec Comment Letters: Investors’ Response To Accounting Disclosure Scrutiny, Kurt Gee, Dr. Jeffrey Wilks
Journal of Undergraduate Research
This project gave me a wonderful opportunity to experience the research process first-hand. The purpose of our study was to assess how investors in corporations respond to oversight by the Securities and Exchange Commission (SEC) into the corporations’ accounting and disclosure practices.
Towards An Understanding Of The Role Of Standard Setters In Standard Setting, Abigail Allen, Karthik Ramanna
Towards An Understanding Of The Role Of Standard Setters In Standard Setting, Abigail Allen, Karthik Ramanna
Faculty Publications
We investigate the effect of standard setters in standard setting. We examine how certain professional and political characteristics of FASB members and SEC commissioners predict the accounting ‘‘reliability’’ and ‘‘relevance’’ of proposed standards. Notably, we find FASB members with backgrounds in financial services are more likely to propose standards that decrease ‘‘reliability’’ and increase ‘‘relevance,’’ partly due to their tendency to propose fair-value methods. We find opposite results for FASB members affiliated with the Democratic Party, although only when excluding financial services background as an independent variable. Jackknife procedures show that results are robust to omitting any individual standard setter.
Managers’ Discretionary Adjustments: The Influence Of Uncontrollable Events And Compensation Interdependence, Jasmijn C. Bol, Gary Hecht, Steven D. Smith
Managers’ Discretionary Adjustments: The Influence Of Uncontrollable Events And Compensation Interdependence, Jasmijn C. Bol, Gary Hecht, Steven D. Smith
Faculty Publications
Discretionary bonus adjustments allow managers to restore the alignment of employee effort and compensation when bonus amounts are based on noisy objective performance measures. The implications of discretionary adjustments for employees' future efforts and fairness perceptions present important trade-offs for managers to consider. Adjustments may be used to motivate different types of effort in future periods, but may also create perceptions of unfairness among employees who are not affected by negative events. This study examines the joint influence of the likelihood of future negative uncontrollable events and compensation interdependence (i.e., the extent to which one employee's compensation influences others' compensation) …
A Descriptive Study Of Factors Associated With The Internal Audit Function Having An Impact: Comparisons Between Organizations In A Developed And An Emerging Economy, Audrey A. Gramling, Irem Nuhoglu, David A. Wood
A Descriptive Study Of Factors Associated With The Internal Audit Function Having An Impact: Comparisons Between Organizations In A Developed And An Emerging Economy, Audrey A. Gramling, Irem Nuhoglu, David A. Wood
Faculty Publications
An internal audit function (IAF) should positively impact financial reporting and governance, and add value to its organization. We provide evidence on IAF factors (i.e., characteristics, activities, work areas) associated with these types of impact and whether these factors, and their influence on various impacts, differ between a developed and an emerging economy (i.e., US, Turkey). Factors positively associated with financial reporting in the US are assurance activities, control work, and competence; in Turkey, significant factors are governance work and competence. For governance, we find that the factors positively associated with it in the US include assurance activities, governance work, …
Acquirer Valuation And Acquisition Decisions: Identifying Mispricing Using Short Interest, Itzhak Ben-David, Michael S. Drake, Darren T. Roulstone
Acquirer Valuation And Acquisition Decisions: Identifying Mispricing Using Short Interest, Itzhak Ben-David, Michael S. Drake, Darren T. Roulstone
Faculty Publications
We use short interest as an investor-based measure of over/undervaluation that distinguishes between the misvaluation and Q-theories of mergers. Using this measure, we find that misvaluation is a strong determinant of merger decision making. Firms in the top quintile of short interest are 54% more likely to engage in stock acquisitions and 22% less likely to engage in cash acquisitions. Stock (but not cash) acquirers have higher short interest than their targets. Overall, our results suggest that the previously documented underperformance of stock acquirers and the overperformance of cash acquirers can be explained by misvaluation, as captured by short interest.
Factors Associated With Price Reactions And Analysts’ Forecast Revisions Around Sec Filings, Theodore E. Christensen, William G. Heninger, Earl K. Stice
Factors Associated With Price Reactions And Analysts’ Forecast Revisions Around Sec Filings, Theodore E. Christensen, William G. Heninger, Earl K. Stice
Faculty Publications
We investigate the extent to which rapid accessibility of financial reports filed electronically through the Securities and Exchange Commission’s EDGAR system has affected the ability of investors and security analysts to use accounting data in pricing decisions and forecasting. Consistent with prior research, we find evidence confirming that stock price reactions to SEC filings are significant in the EDGAR period but not the pre-EDGAR period. We also find significant revisions in analysts’ one-quarter-ahead earnings forecasts around SEC filings dates in both the pre-EDGAR and EDGAR periods. The price and forecast revision evidence indicates that financial analysts have used SEC filings …
Exploring The Role Delaware Plays As A Domestic Tax Haven, Scott D. Dyreng, Bradley P. Lindsey, Jacob Thornock
Exploring The Role Delaware Plays As A Domestic Tax Haven, Scott D. Dyreng, Bradley P. Lindsey, Jacob Thornock
Faculty Publications
We examine whether Delaware is a domestic tax haven. We find that taxes play an economically important role in determining whether U.S. firms locate subsidiaries in Delaware and that a Delaware-based state tax avoidance strategy lowers state effective tax rates by between 0.7 and 1.1 percentage points, on average. The tax savings represent a 15–24% decrease in the state income tax burden and translate to an increase in net income of 1.04–1.47%. However, we find that the tax benefits of Delaware tax strategies are diminishing over time in response to initiatives by state governments to limit multistate tax avoidance.
Can Short Restrictions Actually Increase Informed Short Selling?, Adam C. Kolasinski, Adam Reed, Jacob Thornock
Can Short Restrictions Actually Increase Informed Short Selling?, Adam C. Kolasinski, Adam Reed, Jacob Thornock
Faculty Publications
We use the 2008 short selling regulations to test whether short sale restrictions can increase informed short selling. For the preborrow requirement, we find more negative price reactions to short interest announcements though no reliable increase in the price impact of short sales volume. For the stocks with banned short sales, we find an increase in the price impact of short sale volume though no reliable change in the price reaction to short interest announcements. Both restrictions, however, are associated with increased informed trading. Our results suggest that short restrictions will not reduce informed short selling and may actually result …
The Effects Of Dividend Taxation On Short Selling And Market Quality, Jacob Thornock
The Effects Of Dividend Taxation On Short Selling And Market Quality, Jacob Thornock
Faculty Publications
This study examines the effects of dividend taxation on the primary parties involved in a short sale: the lender of the stock and the short seller. For stock lenders, dividend taxation is associated with a decrease in the supply of shortable shares and an increase in equity lending fees around the dividend record date. For short sellers, potential reimbursement costs are associated with a significant decrease in short volume before the ex-dividend date followed by a significant increase after the ex-date. Prior research shows that short selling improves price efficiency and formation. Hence, because of the negative effects of taxation …
Enhancing Auditor Professional Skepticism: The Professional Skepticism Continuum, Steven M. Glover, Douglas F. Prawitt
Enhancing Auditor Professional Skepticism: The Professional Skepticism Continuum, Steven M. Glover, Douglas F. Prawitt
Faculty Publications
The Standards Working Group (SWG) of the Global Public Policy Committee of the six largest global accounting networks is committed to improving the quality of financial statement audits and as such has a keen interest in advancing the understanding and application of professional skepticism. The SWG accordingly commissioned leading academics to produce this thought leadership paper. The purpose of the paper is to facilitate an ongoing discussion between the profession, standard setters, regulators, investors, audit committees, and other interested stakeholders. While the SWG believes this paper accomplishes that objective, not all of the views expressed in this paper necessarily represent …
Lease Transaction Structuring, Earnings Management, And Management Credibility, Susan D. Krische, Paula R. Sanders, Steven D. Smith
Lease Transaction Structuring, Earnings Management, And Management Credibility, Susan D. Krische, Paula R. Sanders, Steven D. Smith
Faculty Publications
Despite recent regulatory concerns regarding off-balance sheet financing, and concerns about lease accounting in particular, relatively little is known about how financial statement users view lease transaction structuring compared to other forms of earnings management. We examine sell-side financial statement analysts’ views on lease transaction structuring and its impact on their assessments of management credibility. Although operating leases often act as the prototypical example of transaction structuring, survey responses suggest that lease structuring and related voluntary reconciliations do not raise the same concerns for analysts as do other earnings management activities (which lower analysts’ perceptions of management credibility). Our findings …
Investor Information Demand: Evidence From Google Searches Around Earnings Announcements, Michael S. Drake, Darren T. Roulstone, Jacob Thornock
Investor Information Demand: Evidence From Google Searches Around Earnings Announcements, Michael S. Drake, Darren T. Roulstone, Jacob Thornock
Faculty Publications
The objective of this study is to investigate factors that influence investor information demand around earnings announcements and to provide insights into how variation in information demand impacts the capital market response to earnings. The Internet is one channel through which public information is disseminated to investors and we propose that one way that investors express their demand for public information is via Google searches. We find that abnormal Google search increases about two weeks prior to the earnings announcement, spikes markedly at the announcement, and continues at high levels for a period after the announcement. This finding suggests that …
A Re-Examination Of Analysts’ Superiority Over Time-Series Forecasts Of Annual Earnings, Mark T. Bradshaw, Michael S. Drake, James N. Myers, Linda A. Myers
A Re-Examination Of Analysts’ Superiority Over Time-Series Forecasts Of Annual Earnings, Mark T. Bradshaw, Michael S. Drake, James N. Myers, Linda A. Myers
Faculty Publications
We re-examine the widely held belief that analysts‟ earnings per share (EPS) forecasts are superior to random walk (RW) time-series forecasts. We investigate whether analysts‟ annual EPS forecasts are superior, and if so, under what conditions. Simple RW EPS forecasts are more accurate than analysts‟ forecasts over longer horizons, for smaller or younger firms, and when analysts forecast negative or large changes in EPS. We also compare the accuracy of a third forecast of longer-term earnings based on a naïve extrapolation of analysts‟ one-year-ahead forecasts. Surprisingly, this naïve extrapolation provides the most accurate estimate of long-term (two- and three-year-ahead) earnings. …
The Information Content Of Annual Earnings Announcements And Mandatory Adoption Of Ifrs, Wayne R. Landsman, Edward L. Maydew, Jacob Thornock
The Information Content Of Annual Earnings Announcements And Mandatory Adoption Of Ifrs, Wayne R. Landsman, Edward L. Maydew, Jacob Thornock
Faculty Publications
This study examines whether the information content of earnings announcements – abnormal return volatility and abnormal trading volume – increases in countries following mandatory IFRS adoption, and conditions and mechanisms through which increases occur. Findings suggest information content increased in 16 countries that mandated adoption of IFRS relative to 11 that maintained domestic accounting standards, although the effect of mandatory IFRS adoption depends on the strength of legal enforcement in the adopting country. Utilizing a path analysis methodology, we find evidence of three mechanisms through which IFRS adoption increases information content: reducing reporting lag, increasing analyst following, and increasing foreign …
Strategy Selection, Surrogation, And Strategic Performance Measurement Systems, Jongwoon Choi, Gary Hecht, William B. Tayler
Strategy Selection, Surrogation, And Strategic Performance Measurement Systems, Jongwoon Choi, Gary Hecht, William B. Tayler
Faculty Publications
Strategic performance measurement systems operationalize firm strategy with a set of performance measures. A consequence of such alignment is the tendency for managers to lose sight of the strategic construct(s) the measures are intended to represent, and subsequently act as though the measures are the constructs of interest, a phenomenon referred to as surrogation. We investigate how involvement in strategy selection affects managers’ propensity to exhibit surrogation. We predict and find that strategy selection reduces surrogation. Surprisingly, we do not find that engaging in strategy deliberation, a key process underlying strategy selection, reduces surrogation. Thus, managers’ involvement in the actual …
Internal Audit Outsourcing And The Risk Of Misleading Or Fraudulent Financial Reporting: Did Sarbanes-Oxley Get It Wrong?, Douglas F. Prawitt, Nathan Y. Sharp, David A. Wood
Internal Audit Outsourcing And The Risk Of Misleading Or Fraudulent Financial Reporting: Did Sarbanes-Oxley Get It Wrong?, Douglas F. Prawitt, Nathan Y. Sharp, David A. Wood
Faculty Publications
The Sarbanes-Oxley Act of 2002 (SOX) represents a far-reaching legislative attempt to improve the quality of financial reporting in the United States in response to the major accounting frauds of the late 1990s and early 2000s (Klein 2003). A significant change imposed by SOX was to prohibit the outsourcing of internal audit services to firms’ external auditors.1 Competing academic arguments suggest that this ban will either improve or worsen financial reporting quality. The knowledge spillover argument suggests that by both performing the external audit and providing nonaudit services, auditors improve overall audit quality through a deeper understanding of the client …
Publication Benchmarking Data Based On Faculty Promoted At The Top 75 Us Accounting Research Institutions, Steven M. Glover, Douglas F. Prawitt, Scott L. Summers, David A. Wood
Publication Benchmarking Data Based On Faculty Promoted At The Top 75 Us Accounting Research Institutions, Steven M. Glover, Douglas F. Prawitt, Scott L. Summers, David A. Wood
Faculty Publications
The primary purpose of this study is to update the Glover et al. (2006) publication benchmarking study by providing benchmarking statistics of faculty promoted to associate and/or full professor from 2004 to 2009. We also extend Glover et al. (2006) by examining new benchmarking metrics and by investigating publication productivity differences between studies. Our results indicate that, on average, faculty promoted from 2004 to 2009 had more publications in leading accounting journals at the time of promotion than faculty promoted from 1995 to 2003. We explore possible explanations for the increase in publication productivity. We find that increases in the …
The Effects Of Preventive And Detective Controls On Employee Performance And Motivation, Margaret H. Christ, Scott A. Emett, Scott L. Summers, David A. Wood
The Effects Of Preventive And Detective Controls On Employee Performance And Motivation, Margaret H. Christ, Scott A. Emett, Scott L. Summers, David A. Wood
Faculty Publications
We examine how two attributes of preventive and detective controls affect employee performance and employee motivation. Specifically, we examine how the extent to which controls (1) restrict employees’ autonomy, and (2) provide more or less timely feedback impacts employees’ performance and intrinsic motivation. These characteristics are the defining differences between preventive and detective controls in that preventive controls restrict employee autonomy relative to detective controls and preventive controls always provide immediate feedback; whereas, detective controls can provide either immediate feedback or delayed feedback. We conduct an experiment to examine how and why these two types of formal controls impact employees’ …
Has The Regulation Of Pro Forma Reporting In The Us Changed Investors’ Perceptions Of Pro Forma Earnings Disclosures?, Dirk E. Black, Ervin L. Black, Theodore E. Christensen, William G. Heninger
Has The Regulation Of Pro Forma Reporting In The Us Changed Investors’ Perceptions Of Pro Forma Earnings Disclosures?, Dirk E. Black, Ervin L. Black, Theodore E. Christensen, William G. Heninger
Faculty Publications
We explore whether investors’ perceptions of pro forma earnings numbers have changed following the regulation of pro forma reporting imposed by the Sarbanes-Oxley Act of 2002 (SOX). First, we find that investors appear to pay more attention to pro forma earnings disclosures in the post-SOX period, consistent with the notion that they perceive that regulation generally renders these disclosures more credible. Second, the results indicate that investors discount aggressive pro forma earnings reports in both periods. However, they appear to discount at least some potentially misleading pro forma earnings disclosures more in the post- SOX period. Finally, our results imply …
A Perspective On The Joint Iasb/Fasb Exposure Draft On Accounting For Leases, Yuri Biondi, Robert Bloomfield, Jonathan C. Glover, Karim Jamal, James A. Ohlson, Stephen H. Penman, Eiko Tsujiyama, T. Jeffrey Wilks
A Perspective On The Joint Iasb/Fasb Exposure Draft On Accounting For Leases, Yuri Biondi, Robert Bloomfield, Jonathan C. Glover, Karim Jamal, James A. Ohlson, Stephen H. Penman, Eiko Tsujiyama, T. Jeffrey Wilks
Faculty Publications
The International Accounting Standards Board (IASB) and The Financial Accounting Standards Board (FASB) recently issued a joint exposure draft on accounting for leases. This exposure draft seeks to shift lease accounting from an “ownership” model to a “right-to-use” model. Under the current ownership model, leases can be reported on balance sheet (finance leases) if certain tests are met, or off balance sheet (operating leases) if those tests are not met. The new model seeks to report all leases on the balance sheet based on the present value of lease obligations without any bright line tests, and no sharp on or …
Should Investors Follow The Prophets Or The Bears? Evidence On The Use Of Public Information By Analysts And Short Sellers, Michael S. Drake, Lynn Rees, Edward P. Swanson
Should Investors Follow The Prophets Or The Bears? Evidence On The Use Of Public Information By Analysts And Short Sellers, Michael S. Drake, Lynn Rees, Edward P. Swanson
Faculty Publications
We investigate whether short sellers and analysts differ in their use of information that is predictive of future returns. We find that open short interest is significantly associated in the expected direction with all eleven variables examined. In contrast, analysts tend to positively recommend stocks with high growth, high accruals, and low book-to-market ratios, despite these variables having a negative association with future returns. We then investigate the profitability of using short interest in trading. We find abnormal returns (1.11 percent per month) from a zero-investment strategy that (1) shorts firms with highly favorable analyst recommendations (buy signal) but high …
Lost In Translation: The Effects Of Incentive Compensation On Strategy Surrogation, Jongwoon Choi, Gary Hecht, William B. Tayler
Lost In Translation: The Effects Of Incentive Compensation On Strategy Surrogation, Jongwoon Choi, Gary Hecht, William B. Tayler
Faculty Publications
To facilitate managers’ decision-making, firms develop strategic performance measurement systems that translate strategy into performance measures. Ideally, managers see measures for what they are: imperfect proxies for intangible strategic constructs. However, managers may fail to fully appreciate the fact that measures are merely representations of the strategic constructs, and act as though the measures were the construct of interest – a phenomenon we label surrogation. In this paper, we investigate whether and how the use of strategically-linked performance measures for compensation purposes affects managers’ propensity to exhibit surrogation. In accordance with the attribute substitution framework (Kahneman and Frederick 2002), we …
Short Interest As A Signal Of Audit Risk, Cory A. Cassell, Michael S. Drake, Stephanie J. Rasmussen
Short Interest As A Signal Of Audit Risk, Cory A. Cassell, Michael S. Drake, Stephanie J. Rasmussen
Faculty Publications
Motivated by evidence from the empirical accounting and finance literatures suggesting that short sellers target firms with suspect financial reporting, we investigate whether short interest provides a signal of the degree of audit risk. We find a positive association between audit fees and short interest (total shares sold short scaled by total shares outstanding) after controlling for other determinants of audit fees. This finding suggests that short interest is an indicator of audit risk that reflects information not captured by traditional client risk measures. We also find an increase in the magnitude of the association between audit fees and short …