Accounting Commons^™

Because I Care: The Effect Of Value Congruence And Compensation Scheme On Target Setting In Social Mission Organizations, Wioleta Olczak, Tyler F. Thomas, Dimitri Yatsenko

Accounting Faculty Research and Publications

Many organizations, including for-profit firms, seek to support a social mission. This study experimentally examines how superiors' value congruence and compensation scheme affect superiors' target-setting decisions in social mission organizations. We predict and find that more value-congruent superiors set higher targets for their subordinates than less value-congruent superiors to motivate

their subordinates to advance the organization's social mission. We also find that superiors set higher targets for their subordinates when compensated with performance-based pay rather than a fixed wage. We highlight the importance of superiors' value congruence with the organization's social initiatives and compensation scheme on their target-setting decisions. Organizations …

Is More Always Better? An Experimental Examination Of The Effects Of Feedback Frequency, Narcissistic Oversensitivity, And Growth Mindset On Performance Accuracy, Joseph A. Johnson, Khim Kelly, Wioleta Olczak

Accounting Faculty Research and Publications

The provision of more frequent feedback to employees is increasing, although prior research has found mixed results as to the effect of increased feedback frequency on employee performance. Narcissism research identifies narcissistic oversensitivity as a key narcissistic subdimension that may result in particularly strong responses to performance feedback. We predict and find in an experiment that increased performance feedback frequency has a more negative impact on the performance accuracy of individuals with higher levels of narcissistic oversensitivity and that this negative interactive effect of feedback frequency and narcissistic oversensitivity is mitigated by the priming of a growth mindset. These results …

The Effect Of Narcissism And Contract Frame On Employee Performance In The Presence Of An Ex Ante Target, Theresa Libby, Wioleta Olczak

Accounting Faculty Research and Publications

Incentive contracts containing ex ante targets are prevalent in organizations. Although prior research indicates that contract frame has no significant impact on employee performance when an ex ante target is assigned, we provide a more nuanced view by examining the role of narcissism in this relationship. Results indicate when an ex ante target is assigned, less narcissistic employees perform better than more narcissistic employees regardless of contract frame. In addition, target difficulty plays a role. When narcissism is lower, employees working under a less difficult target perform better than those working under a more difficult target, but there is no …

Identical Ratios: A Red Flag Of Ratio Management, Qianhua Ling, Andrea Alston Roberts

Accounting Faculty Research and Publications

This paper identifies a helpful red flag stakeholders can use to detect whether a nonprofit has managed its financial information. This red flag is reporting an identical program ratio—that is, the nonprofit organization reports the exact same ratio in multiple years—while reporting a large change in total spending. We find nonprofits are more likely to report identical program ratios when resource providers rely on ratios; pay is determined, at least in part, by performance; and the potential for regulatory interference is high. This paper also identifies the cost allocation techniques and the specific expenses nonprofits likely manage. We find most …

Accounting Aspects Of Appraisals, Raymond A. Weber

Bachelors’ Theses

The purpose of this thesis is to explain the application of appraisals to the following specific accounting problems: 1. The Establishment of Plant Accounts 2.The Determination of Invested Capital 3. The Distribution of Departmental Investment

It is important to keep accurate property records in every line of industry; yet property accounts are subject to many inaccuracies, and their correct maintenance offers many perplexing problems to the accountant. This thesis is, therefore, an attempt to point out some of the more common errors which creep into property records, and to show how appraisals may be applied to correct these errors. Particular …

Circular Economy To The Rescue? The U.S. Corporate Disclosure Response To The Plastic Crisis, Wioleta Olczak, Dennis M. Patten, Hyemi Shin

Accounting Faculty Research and Publications

Media attention to the world’s growing plastic crisis exploded in 2018, almost certainly increasing social exposures for companies heavily involved in the material’s manufacture or use. Relying on arguments from media agenda setting theory (Brown & Deegan, 1998), we explore how a sample of large U.S. plastic manufacturers and users responded to the crisis in their standalone CSR reports, with particular emphasis on their use of circular economy terminology to frame that response. Circular economy ideas have been gaining traction with governmental units, non-governmental organisations, and academic researchers, and like the plastic crisis, are seeing substantially increased coverage in media …

Perception Of Internal Controls Helps Explain Whistleblowing, Andrea M. Scheetz, Tonya D.W. Smalls, Joseph Wall, Aaron B. Wilson

Accounting Faculty Research and Publications

The nonprofit sector may suffer financially from inconsistency in regulations and polices surrounding internal control implementation. To address this issue, our study explores how perceived internal control strength differs between nonprofit and for-profit organizations. Furthermore, we examine three components of the Committee of Sponsoring Organization framework to determine which components might significantly influence whistleblowing for nonprofit organizations. As expected, all three components appear to significantly influence whistleblowing for those in for-profit organizations. For those in nonprofit organizations, the perception of control activities and monitoring activities significantly mediates the relationship between organization type and whistleblowing intentions. Finally, the data indicate that …

The Foreign Corrupt Practices Act: How Investors Respond When Violation Severity And Corresponding Penalty (Mis)Match, Wioleta Olczak

Accounting Faculty Research and Publications

The Foreign Corrupt Practices Act (FCPA) has become a major focus for corporations, the Securities and Exchange Commission (SEC), and the Department of Justice (DOJ), as indicated by the dramatic increase in the number of FCPA enforcement actions and the level of civil and criminal penalties. Prior regulatory practice shows that the SEC and the DOJ struggle not only to evaluate the severity of a company's FCPA violation, but also to establish the penalty amount. Given the difficulty in assessing penalties, the severity of a company's FCPA violation at times appears mismatched with the size of the penalty. Leveraging signaling …

Toward An Understanding Of Year-Over-Year Changes In Municipal Management Discussion And Analysis Disclosures, Kevin Rich, Brent L. Roberts, Joseph Wall, Jean X. Zhang

Accounting Faculty Research and Publications

Using a unique setting in which the standard setter (the Governmental Accounting Standards Board) provides guidance on the content of Management Discussion and Analysis (MD&A) disclosures, we investigate the determinants of content changes in municipal government MD&A. We do so in terms of economic changes, turnover, and regulatory characteristics. We use a sample of 1142 municipal MD&A disclosures from fiscal year 2011 to 2015 to calculate a difference score based on the degree to which municipal MD&As change from the previous year. Our empirical analysis highlights that MD&A content changes vary directly with changes in the unemployment rate, fund balance …

Linguistic Tone Of Management Discussion And Analysis Disclosures And The Municipal Debt Market, Kevin T. Rich, Brent L. Roberts, Jean X. Zhang

Accounting Faculty Research and Publications

Purpose

As the management discussion and analysis (MD&A) section contains discretionary narrative disclosures regarding a government's yearly financial changes and status, the authors investigate several municipal debt market consequences of linguistic tone within these disclosures.

Design/methodology/approach

The authors textually analyze municipal MD&As with Linguistic Inquiry and Word Count (LIWC) software and develop narrative tone measures based on existing financial-specific dictionaries. Using a final sample of 446 municipal bond issuances from 2012 to 2016, the authors modify the current bond regression models to examine the association between MD&A disclosure tone and future bond interest costs or rating disagreements.

Findings

This study’s …

Determinants And Consequences Of Internal Audit Functions Within Colleges And Universities, Steven Desimone, Kevin Rich

Accounting Faculty Research and Publications

Purpose

The purpose of this paper is to identify factors associated with the presence and use of internal audit functions (IAFs) at US colleges and universities, as well as their relationship with financial reporting quality and federal grant outcomes.

Design/methodology/approach

Using a combination of publicly available and manually collected data, this paper uses a two-stage model to examine both the factors associated with the use of IAFs within US institutions of higher education and the consequences therein.

Findings

Results indicate that institutions with larger enrollments and endowments, those that receive public funding and those that have an audit committee are …

Professional Skepticism: Practitioners’ Perceptions And Training Practices, Jodi L. Gissel

Accounting Faculty Research and Publications

While regulators criticize auditors for lacking appropriate professional skepticism (SEC, 2010, 2013; PCAOB, 2012), auditing standards lack a clear, consistent definition (Nelson, 2009; Hurtt, Brown-Liburd, Earley, & Krishnamoorthy, 2013), leaving application of professional skepticism “open to interpretation” (Glover & Prawitt, 2013, p. 2). If individual auditors view professional skepticism as open to interpretation (i.e., subjective), auditors may believe they are appropriately applying standards on professional skepticism based on their individual interpretations. However, if regulators apply a different definition of professional skepticism when reviewing auditors’ work, this may help explain ongoing criticisms from regulators stating auditors lack appropriate professional skepticism. The …

The Future Of Employee Collective Action Waivers, Douglas O. Smith

Accounting Faculty Research and Publications

No abstract provided.

Cryptocurrencies Are Taxable And Not Free From Fraud, Joseph Wall, D. Larry Crumbley, Lewis B. Kilbourne, Caleb Blair

Accounting Faculty Research and Publications

In this report, the authors discuss cryptocurrencies — especially bitcoin — and argue that because the IRS lists them as property, they are taxable, and because they are not as anonymous as once thought, they are not free from fraud.

Cryptocurrencies are digital assets used as a medium of exchange, but they are not really coins. They can be sent electronically from one entity to another almost anywhere in the world with an internet connection. There are many cryptocurrencies in the market, including bitcoin, ethereum, ethereum classic, litecoin, nem, dash, iota, bitshares, monero, neo, and ripple. Many of the cryptocurrency …

Measuring Eq Of Chinese Accounting Students, Michael D. Akers, Don E. Giacomino, Sin Li, Joseph Wall

Accounting Faculty Research and Publications

While prior literature has examined the EQ of accounting students and Chinese business student limited research has examined both. This paper examines the self-reported emotional intelligence scores of accounting majors, undergraduate and graduate, at a Chinese university and compares these scores with their parents’ assessment. Our findings suggest that Chinese accounting students have high EQ. Further, the parents’ perceptions of EQ is significant in the determination of the EQ score. This finding is consistent with Goleman’s (1998) comments and has implications for any organization that uses an emotional intelligence instrument as part of the evaluation process.

Statutory Interpretation After Hively: Where Will The Seventh Circuit Go?, Douglas O. Smith

Accounting Faculty Research and Publications

Fifty years ago, when Title VII was passed, no one thought that sexual orientation discrimination was unlawful sex discrimination. The Seventh Circuit’s decision to re-interpret Title VII challenges traditional approaches to statutory interpretation that should put Seventh Circuit litigants on notice of future uncertainty.

A Case Of Fixed Asset Accounting: Initial And Subsequent Measurement, Jodi L. Gissel

Accounting Faculty Research and Publications

This instructional case integrates multiple accounting concepts relating to fixed asset acquisition and subsequent measurement. You must apply accounting knowledge, professional judgment, and critical thinking skills to evaluate fixed assets and make recommendations. You must also analyze differences between fixed asset accounting under US generally accepted accounting principles and IFRS. As a student, you generally understand basic application of asset cost computation that simply recognizes the amount of cash paid for acquiring the asset. However, determining asset cost becomes challenging when you encounter more complex situations. You must consider initial measurement issues relating to a land purchase (demolition of existing …

The Adoption And Use Of The Hirschman–Herfindahl Index In Nonprofit Research: Does Revenue Diversification Measurement Matter?, Grace L. Chikoto, Qianhua Ling, Daniel G. Neely

Accounting Faculty Research and Publications

Since its introduction by Tuckman and Chang, the Hirschman–Herfindahl Index (HHI) has been widely adopted into the nonprofit literature as a precise measure of revenue concentration. This widespread adoption has been characterized by diverse composition, with the HHI’s calculation being largely determined by the nature of the available data and the degree to which it contained disaggregated measures of revenue. Using the NCCS 990 Digitized Data, we perform an acid test on whether different HHI measures yield significantly different results. Four measures of revenue concentration—an aggregated measure based on three revenue streams, an aggregated measure separating government grants from other …

Foxes In The Henhouse: An Exploratory Inquiry Into Financial Markets Fraud, Joseph Wall, Timothy J. Fogarty

Accounting Faculty Research and Publications

Conventional understandings of fraud are organized around the fraud triangle first developed in the 1950s by Cressey. This conceptual device remains central in our pedagogy and research on this especially timely topic. As long as fraud is imagined to be not much different than a stereotypical act by a single individual out of financial desperation and impulsiveness, the fraud triangle provides a reasonably powerful conceptual organization. However, when applied to abuses that occur in highly organized financial markets, its application takes on new meanings that push the boundaries of its usefulness. Using interviews with traders and other securities market participants, …

Audit Quality Indicators: Perceptions Of Junior-Level Auditors, Veena L. Brown, Jodi L. Gissel, Daniel Neely

Accounting Faculty Research and Publications

Purpose

In an effort to develop an audit quality (AQ) framework specific to the US audit market, the Public Company Accounting Oversight Board (PCAOB) recently issued a concept release proposing 28 audit quality indicators (AQIs) along three dimensions: audit professionals, audit process and audit results. Using AQIs initially proposed by the PCAOB, as well as AQIs suggested by prior literature, the authors solicit perceptions from junior-level (senior and staff) auditors to investigate the current state of practice along many of the AQIs relating to audit professionals and audit process.

Design/methodology/approach

In the study, 78 junior-level auditors responded to the survey. …

Negativity Bias In Investors’ Reactions To Board Of Directors’ Risk Oversight Disclosure, Ikseon Suh, Joseph Ugrin

Accounting Faculty Research and Publications

This study investigates how disclosure of the board of directors’ leadership and role in risk oversight (BODs oversight disclosure) influences investors’ judgments when information on risk exposures is disclosed. The theoretical lens through which we examine this issue involves negativity bias. Sixty-two stock market investors who engage in the evaluation and/or investment of stocks on a regular or professional basis participated in our study. Our results reveal that the addition of BODs oversight disclosure (positive information) does not carry significant weight on investor judgments (i.e., attractiveness and investment) when financial statement disclosures indicate a high level of operational and financial …

Using Archival Data Sources To Conduct Nonprofit Accounting Research, Nancy Chun Feng, Qianhua Ling, Daniel Neely, Andrea Alston Roberts

Accounting Faculty Research and Publications

Research in nonprofit accounting is steadily increasing as more data is available. In an effort to broaden the awareness of the data sources and ensure the quality of nonprofit research, we discuss archival data sources available to nonprofit researchers, data issues, and potential resolutions to those problems. Overall, our paper should raise awareness of data sources in the nonprofit area, increase production, and enhance the quality of nonprofit research.

A Profile Of Top Performers On The Uniform Cpa Exam, Michael D. Akers, Don E. Giacomino, Kelly Courtney, Olivia Johnson

Accounting Faculty Research and Publications

The Elijah Watt Sells Award, one of the most prestigious professional awards in the US, honors top performers on the Uniform CPA Examination. This article provides statistics by state and by gender of past award winners, from the first CPA exam in 1923 through the most recent available exam results for 2012. In addition, it presents a profile of the top performers based on the results of a survey administered by the authors to recent Sells Award winners. Specifically, the survey examined the recipient's educational level, the amount and type of preparation, and the impact of the award on the …

Narcissism In Public Accounting Firms, Michael D. Akers, Don E. Giacomino, Jill Weber

Accounting Faculty Research and Publications

Similar to other characteristics, narcissism is a personality trait that varies by individuals. While the management literature has examined narcissism, there is limited research of narcissism of professionals in public accounting firms. Using the Narcissistic Personality Inventory (NPI), we assess the level of narcissism in practitioners of public accounting firms by examining differences by gender, age, practice area and position. We also compare our results with a prior study that examined narcissism of accounting majors. Our findings show there are differences between accounting students and accounting professionals for certain traits and gender. We also find there are differences for professionals …

Narcissism And Accounting Majors, Jill C. Brown, Michael D. Akers, Don E. Giacomino

Accounting Faculty Research and Publications

Narcissism is a personality trait that varies in individuals much like other characteristics. Accordingly, narcissism can positively or negatively impact the leadership style and career of business leaders. While personality research has examined the level of narcissism in college-aged students over the past 30 years, only recently has limited research examined narcissism in business students. Prior research has not examined accounting students. Using the Narcissistic Personality Inventory (NPI), we assess the level of narcissism in accounting students at a public and private institution in the Midwest. Our findings show accounting students have a lower level of narcissism than other business …

Charitable Ratings And Financial Reporting Quality: Evidence From The Human Service Sector, Qianhua Ling, Daniel G. Neely

Accounting Faculty Research and Publications

Prior research has shown that many donors utilize charity ratings for decisions and they give more to higher rated charities. Because ratings are partly or completely based on financial information, the financial reporting quality of highly rated charities is more critical to donors than that of the poorly rated ones. In this study, we examine whether the financial reporting quality of charities systematically varies with charitable ratings. Examining a sample of human service charities. we find that highly rated organizations are more likely to underreport fundraising expenses and overstate program ratios. Highly rated organizations appear to be exercising accounting discretion …

An Examination Of Personal Values And Value Systems Of Chinese And U.S. Business Students, Don E. Giacomino, Xin Li, Michael D. Akers

Accounting Faculty Research and Publications

Using the Rokeach Value Survey and the Musser and Orke typology this paper examines the personal values and value systems of business students in China and compares the results with the results of a recent study that used similar methodology to examine the values and value systems of U.S. students. The study also examines the differences in values and value systems of the Chinese students by gender and by major. While there are few differences for the Chinese students by gender, our findings show several differences in the rankings of values by the Chinese and U.S. students as well as …

Proposed Financial Statement Changes By The Fasb-Iasb: Reactions From Chinese Accounting Majors, Don E. Giacomino, Xin Li, Michael D. Akers

Accounting Faculty Research and Publications

Based on concerns regarding the usefulness of the current format of the financial statements to assist users in making decisions and as part of the convergence efforts of the IAS and GAAP, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) created a joint project (2004) on financial statement presentation which resulted in the publication of their joint Discussion Paper, Preliminary View on Financial Statement Presentation. Prior research has examined the response of academics, preparers (CPAs) and US accounting students (future preparers). This paper extends that research by examining the reaction of Chinese accounting students, future …

Implications Of Being A Highly Rated Organization: Evidence From Four-Star Rated Nonprofits, Qianhua Ling, Daniel G. Neely

Accounting Faculty Research and Publications

This study examines a group of nonprofits rated four stars by Charity Navigator. The purpose is to determine whether this select group of charities exhibits characteristics associated with top charitable organizations, or whether the four-star rating achieved is limited to the more narrow financial metrics employed in the methodology utilized by Charity Navigator. This study finds that organizations rated four stars by Charity Navigator show a lower level of excess cash holdings, report a lower level of compensation expenses and exhibit lower sensitivity of compensation to performance. Financially, these organizations are less vulnerable than their lower rated peers. The results …

Ex Ante Severance Agreements And Timely Disclosures Of Bad News, Qianhua Ling

Accounting Faculty Research and Publications

This study explores the puzzle of CEO severance agreements by examining the association between the existence of ex ante severance agreements and the timeliness of bad news disclosures. Classifying severance agreements by type and the way boards grant them, this article documents a positive association between the timeliness of bad news disclosures and the existence of an ex ante single-trigger severance agreement, especially when it is granted alone. This association remains positive in the CEO’s last year of tenure where performance is poor. Further analyses show that this association is stronger among CEOs with a high-variable pay structure than among …