Yearly Archives: 2012

Accounting

Negative Special Items and Future Earnings: Expense Transfer or Real Improvements?

William M. Cready, Thomas J. Lopez, and Craig A. Sisneros
The Accounting Review, Vol. 87, Issue 4, pp. 1165–1195

Burgstahler et al. (2002) investigate the implications of special items for future earnings and report that firms use negative special items to accelerate the recognition of future expenses into the current period. That is, negative special items serve as an ‘‘inter-period transfer’’ device. We extend their analysis and find that earnings increase in post-special item quarters beyond the four quarters considered in Burgstahler et al. (2002). In particular, we find that future earnings increase over the subsequent 16 quarters by more than 130 percent of the reported negative special item. The earnings increases are greater for restructuring charges than for asset write-downs or goodwill impairment charges. Such patterns suggest that negative special items also signal real future performance improvements (i.e., performance improvement hypothesis) in addition to inter-period expense transfer (i.e., inter-period transfer hypothesis). Moreover, the real improvement effect appears to be driven by restructuring charges, the most prevalent type of special item.

Finance, Sustainability

Do Shareholder Proposals Affect Corporate Climate Change Reporting and Policies?

Byrd, John and Cooperman, Elizabeth
International Review of Accounting, Banking & Finance, Volume 4 Issue 2, pp. 100-126

This study examines the effect of shareholder proxy proposals on climate change issues, using a sample of climate change resolutions submitted to U.S. corporations during 2007 to 2009. We test the hypothesis that shareholder climate-change proposals are effective in getting firms to engage in future actions. We examine differences in future actions based on company responses including: (1) SEC exclusion; (2) negotiation and withdrawal; and (3) proxy proposals voted on, and the percentage of vote received on proposal measures. We find evidence of future actions taken for climate change in response to resolutions, although actions can be relatively minor compared to proposal requests. Future actions occur more often for proposals with negotiated withdrawals. For proposals taken to vote, action occurs more often with a shareholder vote of 20 percent or higher. Extractive industry firms are also shown to be more reluctant to engage in climate change actions versus firms in non-extractive industries.

Management

Academic decathletes: Insights from the metaphor and an exemplar

Sarah Kovoor-Misra
Journal of Management Inquiry,Vol. 21 Issue 3, Pages: 279-286
Business school professors are facing increasing pressure to excel in diverse academic roles that require different knowledge and skills. The multiplicity and diversity of roles evoke the image of the professor as an academic decathlete. In this article, the author explores the metaphor of the academic decathlete through conversations with Professor Tom Lee who has been successful in multiple academic roles. The interview sheds light on the dimensions and capacities of an academic decathlete and various strategies that can be used as academics seek to perform at high levels of excellence in a range of roles.

Information Systems

An experimental comparison of real and artificial deception using a deception generation model

Yanjuan Yang and Michael V. Mannino
Decision Support Systems, Vol 53 Issue 3, June, 2012, Pages 543-553

To develop a data mining approach for a deception application, data collection costs can be prohibitive because both deceptive data and truthful data are necessary to be collected. To reduce data collection costs, artificially generated deception data can be used, but the impact of using artificially generated deception data is not well understood. To study the relationship between artificial and real deception, this paper presents an experimental comparison using a novel deception generation model. The deception and truth data were collected from financial aid applications, a document centric area with limited resources for verification. The data collection provided a unique data set containing truth, natural deception, and boosted deception. To simulate deception, the Application Deception Model was developed to generate artificial deception in different deception scenarios. To study differences between artificial and real deception, an experiment was performed using deception level and data generation method as factors and directed distance and outlier score as outcome variables. Our results provided evidence of a reasonable similarity between artificial and real deception, suggesting the possibility of using artificially generated deception to reduce the costs associated with obtaining training data.

Business Analytics

Tuning Parameter Selection in High‐Dimensional Penalized Likelihood

Yingying Fan and Cheng Yong Tang
Journal of the Royal Statistical Society, In Press

Determining how to appropriately select the tuning parameter is essential in penalized likelihood methods for high-dimensional data analysis. We examine this problem in the setting of penalized likelihood methods for generalized linear models, where the dimensionality of covariates p is allowed to increase exponentially with the sample size n. We propose to select the tuning parameter by optimizing the generalized information criterion (GIC) with an appropriate model complexity penalty. To ensure that we consistently identify the true model, a range for the model complexity penalty is identified in GIC. We find that this model complexity penalty should diverge at the rate of some power of log p depending on the tail probability behavior of the response variables. This reveals that using the AIC or BIC to select the tuning parameter may not be adequate for consistently identifying the true model. Based on our theoretical study, we propose a uniform choice of the model complexity penalty and show that the proposed approach consistently identifies the true model among candidate models with asymptotic probability one. We justify the performance of the proposed procedure by numerical simulations and a gene expression data analysis.

Accounting

Management control systems dilemma: Reconciling sustainability with information overload

Bruce R Neumann, Eric Cauvin, Michael L Roberts
Advances in Management Accounting, Volume 20, pp. 1-28.

In the growing debate about designing new management control systems (MCS) to include stakeholder values, there has been little discussion about information overload. Stakeholder advocates call for including more environmental and related social disclosures but do not consider how information overload might impair the use and interpretation of corporate performance measures. As we know, shareholders and boards of directors are most concerned with market data such as earnings per share, dividend rates and market value growth. In this chapter we assert that management control system designers must consider information overload before expanding MCS to include social and nonfinancial disclosures.

Management

Before Identity: The Emergence of New Organizational Forms

C. Marlene Fiol and Elaine Romanelli
Organization Science, May/June 2012 vol. 23 no. 3 597-611

The evolution of new organizational forms has attracted growing theoretical and empirical attention, but little research has considered the microsocial processes that promote the emergence of groups of quasi-similar organizations that sometimes evolve into new organizational forms. Drawing from social psychological and sociological theories of identity formation, we explain processes of individual identification and collective identity development that precede and promote the formation of similar clusters, which audiences can then recognize and distinguish from established organizational populations and other emerging similarity clusters.

Information Systems

Comparing Semi-Automated Clustering Methods for Persona Development

Brickey, J.; Walczak, S.; and Burgess, T.
IEEE Transactions on Software Engineering, Vol 38 , Issue: 3, Page(s): 537 – 546

Current and future information systems require a better understanding of the interactions between users and systems in order to improve system use, and ultimately, success. The use of personas as design tools is becoming more widespread as researchers and practitioners discover its benefits. This paper presents an empirical study comparing the performance of existing qualitative and quantitative clustering techniques for the task of identifying personas and grouping system users into those personas. A method based on Factor (Principal Components) Analysis performs better than two other methods which use Latent Semantic Analysis and Cluster Analysis as measured by similarity to expert manually defined clusters.

Finance

Are two heads better than one? Evidence from the thrift crisis

John Byrd, Donald R. Fraser, D. Scott Lee, and Semih Tartaroglu
Journal of Banking & Finance, Volume 36, Issue 4, pp. 957–967

We employ a natural experiment from the 1980s, predating the ubiquitous clamor for independence influenced corporate governance structures, to examine which governance mechanisms are associated with firm survival and failure. We find that thrifts were more likely to survive the thrift crisis when their CEO also chaired the firm’s board of directors. On average, chair-holding CEOs undertook less aggressive lending policies than their counterparts who did not chair their boards. Consequently, taxpayer interests were protected by thrifts that bestowed both leadership posts to one person. This is an important policy issue, because taxpayers become the residual claimants for depository institutions that fail as a result of managers adopting risky strategies to exploit underpriced deposit insurance. Our findings corroborate recent evidence that manager-dominated firms resist shareholder pressure to adopt riskier investment strategies to exploit underpriced deposit insurance.

Entrepreneurship, Information Systems

Information Technology and Intangible Output: The Impact of IT Investment on Innovation Productivity

Landon Kleis, Paul Chwelos, Ronald V. Ramirez, and Iain Cockburn
Information Systems Research, Vol. 23 Issue 1, March 2012, pp. 42–59

Prior research concerning IT business value has established a link between firm-level IT investment and tangible returns like output productivity. Research also suggests that IT is vital to intermediate processes like those that produce intangible output. Among these, IT’s use in innovation and knowledge creation processes are perhaps the most critical to a firm’s long-term success. However, little is known about the relationship between IT, knowledge creation, and innovation output. In this study, we contribute to the literature by comprehensively examining IT’s contribution to innovation production across multiple contexts, using a quality-based measure of innovation output. Analyzing a panel of large U.S. manufacturing firms between 1987 and 1997, we find a 10% increase in IT input is associated with a 1.7% increase in innovation output for a given level of innovation-related spending. This relationship
between IT, R&D and innovation production is robust across multiple econometric methodologies and found to be particularly strong in the mid to late 1990s, a period of rapid technological innovation. Our results also demonstrate the importance of IT in creating value at an intermediate stage of production, in this case, through improved innovation productivity. However, R&D and its related intangible factors (skill, knowledge, etc.) appear to play a more crucial role in the creation of breakthrough innovations.

Management

A theoretical model and analysis of the effect of self-regulation on attrition from voluntary online training

Traci Sitzmann
Learning and Individual Differences, Vol. 22, Issue 1, Pages 46–54

A theoretical model is presented that examines self-regulatory processes and trainee characteristics as predictors of attrition from voluntary online training in order to determine who is at risk of dropping out and the processes that occur during training that determine when they are at risk of dropping out. Attrition increased following declines in trainees’ commitment to training and self-efficacy. Trainees lower in conscientiousness were more vulnerable to dropping out than those higher in conscientiousness, and this effect was fully mediated by self-regulatory processes. Conscientiousness also moderated the effects of commitment and self-efficacy on attrition—a high level of conscientiousness provided a buffer against dropping out when trainees’ commitment and self-efficacy declined during training. The number of hours that trainees worked per week moderated the effort/attrition relationship; spending extra time reviewing increased attrition for trainees who worked longer hours and decreased attrition for trainees who worked shorter hours.

Finance

Intraday price discovery and volatility transmission in stock index and stock index futures markets: Evidence from China

Jian Yang, Zihui Yang, and Yinggang Zhou
Journal of Futures Markets, Vol. 32, Issue 2, pages 99–121
Using high-frequency data, this study investigates intraday price discovery and volatility transmission between the Chinese stock index and the newly established stock index futures markets in China. Although the Chinese stock index started a sharp decline immediately after the stock index futures were introduced, the cash market is found to play a more dominant role in the price discovery process. The new stock index futures market does not function well in its price discovery performance at its infancy stage, apparently due to high barriers to entry into this emerging futures market. Based on a newly proposed theoretically consistent asymmetric GARCH model, the results uncover strong bidirectional dependence in the intraday volatility of both markets.

Information Systems

Methodological triangulation using neural networks for business research

Steven Walczak
Advances in Artificial Neural Systems, January 2012, # 1

Artificial neural network (ANN) modeling methods are becoming more widely used as both a research and application paradigm across a much wider variety of business, medical, engineering, and social science disciplines. The combination or triangulation of ANN methods with more traditional methods can facilitate the development of high-quality research models and also improve output performance for real world applications. Prior methodological triangulation that utilizes ANNs is reviewed and a new triangulation of ANNs with structural equation modeling and cluster analysis for predicting an individual’s computer self-efficacy (CSE) is shown to empirically analyze the effect of methodological triangulation, at least for this specific information systems research case. A new construct, engagement, is identified as a necessary component of CSE models and the subsequent triangulated ANN models are able to achieve an 84% CSE group prediction accuracy.

Entrepreneurship

The University of Colorado certificate program in bioinnovation and entrepreneurship: an interdisciplinary, cross-campus model

Madhavan Parthasarathy, David Forlani, Arlen Meyers
Journal of Commercial Biotechnology, Vol. 18 Issue 1, January 2012, pp. 70-78.

In keeping with an emerging literature on the role of business education in the
development of entrepreneurially-intentioned biotechnologists, this paper describes the actions and experiences of an entrepreneurship program that began in the late 1990’s. Along the way it illustrates how a business-centric approach can shift the budding entrepreneur’s perspective from a product to a market orientation when considering an innovation’s commercialization. While the developmental timeline and specific stages of …

Business Analytics

A computational study on the quadratic knapsack problem with multiple constraints

Haibo Wang, Gary Kochenberger and Fred Glover
Computers & Operations Research, Vol. 39, Issue 1, Pages 3–11

The quadratic knapsack problem (QKP) has been the subject of considerable research in recent years. Despite notable advances in special purpose solution methodologies for QKP, this problem class remains very difficult to solve. With the exception of special cases, the state-of-the-art is limited to addressing problems of a few hundred variables and a single knapsack constraint.

In this paper we provide a comparison of quadratic and linear representations of QKP based on test problems with multiple knapsack constraints and up to eight hundred variables. For the linear representations, three standard linearizations are investigated. Both the quadratic and linear models are solved by standard branch-and-cut optimizers available via CPLEX. Our results show that the linear models perform well on small problem instances but for larger problems the quadratic model outperforms the linear models tested both in terms of solution quality and solution time by a wide margin. Moreover, our results demonstrate that QKP instances larger than those previously addressed in the literature as well as instances with multiple constraints can be successfully and efficiently solved by branch and cut methodologies.

Marketing

The Eyes Have It: How a Car’s Face Influences Consumer Categorization and Evaluation of Product Line Extensions

Susan M. Keaveney, Andreas Herrmann,
Rene Befurt, and Jan R. Landwehr
Psychology and Marketing Vol. 29, Issue 1, pages 36–51

This research focuses on a previously unexamined risk associated with the widely used new product development strategy of line extensions. Specifically, it explores consumer reactions when line extensions become too visually similar and examines both short-term and longer term strategies for solving the problem. Examined in the context of consumer durables, specifically, automobiles, the results show that consumers who make categorization mistakes when trying to distinguish between two visually similar product lines have more negative attitudes not only toward the product but also toward the parent brand. The results of Study 1 confirm that providing a design vocabulary that articulates the car’s design features is effective in reducing consumer’s categorization mistakes. In addition, results of Study 2 indicate that changes to the car’s “eyes” (headlights) are more effective than changes to the car’s “mouth” (grille) in helping consumers to differentiate among cars in the line.

Accounting

Lessons learned: advantages and disadvantages of mixed method research

Mary A. Malina, Hanne S.O. Nørreklit, and Frank H. Selto
Qualitative Research in Accounting & Management, Vol. 8 Iss: 1, pp.59 – 71

Purpose – The purpose of this paper is first, to discuss the theoretical assumptions, qualities, problems and myopia of the dominating quantitative and qualitative approaches; second, to describe the methodological lessons that the authors learned while conducting a series of longitudinal studies on the use and usefulness of a specialized balanced scorecard; and third, to encourage researchers to actually use multiple methods and sources of data to address the very many accounting phenomena that are not fully understood.

Design/methodology/approach – This paper is an opinion piece based on the authors’ experience conducting a series of longitudinal mixed method studies.

Findings – The authors suggest that in many studies, using a mixed method approach provides the best opportunity for addressing research questions.

Originality/value – This paper provides encouragement to those who may wish to bridge the authors’ ideological gaps and to those who are actively trying to do so.

Management

When is ignorance bliss? The effects of inaccurate self-assessments of knowledge on learning and attrition

Traci Sitzmann and Stefanie K. Johnson
Organizational Behavior and Human Decision Processes, Vol. 117, Issue 1, Pages 192–207

Two studies were conducted to examine the implications of inaccurate self-appraisals in online training. Self-assessment of knowledge moderated the effects of trainees’ performance on subsequent performance and attrition. Performance was highest after uniformly positive ratings (i.e., high self-assessment and high performance), followed by underestimation, overestimation, and uniformly negative ratings, respectively. Attrition was lowest after uniformly positive ratings, followed by underestimation, uniformly negative ratings, and overestimation, respectively. Effort had a more positive effect on performance following low than high self-assessments and this interaction fully mediated the self-assessment/performance interaction on subsequent performance. Commitment had a more negative effect on subsequent attrition following low than high self-assessments and this interaction fully mediated the self-assessment/performance interaction on subsequent attrition. Finally, trainee conscientiousness affected their behavior when their performance and self-assessments were inconsistent—overestimating and underestimating performance increased attrition more for trainees low in conscientiousness and impaired performance more for trainees high in conscientiousness.

Information Systems

Audience gatekeeping in the Twitter service: An investigation of tweets about the 2009 Gaza conflict

K Hazel Kwon, Onook Oh, Manish Agrawal, H Raghav Rao
AIS Transactions on Human-Computer Interaction,Vol. 4, Issue 4, Pages: 212-229.

Twitter is a social news service in which information is selected and distributed by individual members of the tweet audience. While communication literature has studied traditional news media and the propagation of information, to our knowledge there have been no studies of the new social media and their impacts on the propagation of news during extreme event situations. This exploration attempts to build an understanding of how preexisting hyperlink structures on the Web and different types of information channels …
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