جزیره حسابداری - پایان نامه خارجی 2
تاريخ : 87/03/18 | 14:11 | نویسنده : آرش نژادی

151)pain locus of control and quality of life index scores in chronic pain patients: A pilot study

by Keck, Sherry Denise Andrews, M.S.N., The University of North Carolina at Greensboro, 2006, 43 pages; AAT 1439670

Abstract (Summary)

Pain is a universal experience and the most common reason individuals seek medical treatment, accounting to more than 70 million physician visits per year in the United States (Schnall, 2003). It is estimated that pain prevalence is high and that 70 million Americans will experience some for of pain annually (Gatchel & Weisberg, 2000). It is further estimated that 50 million Americans suffer from chronic pain (Marx, 2004). Chronic pain can have a negative impact on the perceived quality of life (QOL) of chronic pain sufferers. Pain locus of control (PLOC) is an appraisal style shown to influence coping in chronic pain patients. The purpose of this descriptive pilot study was to examine differences in PLOC dimensions in chronic pain patients and to assess their perceived QOL. Results of this study show differences in PLOC and QOL as well as difficulty with recruitment.

152)riparian land-use impacts on stream bank soil and phosphorus losses from grazed pastures

by Tufekcioglu, Mustafa, M.S., Iowa State University, 2006, 78 pages; AAT 1439895

Abstract (Summary)

An emerging challenge in watershed-scale research is to quantify the extent of sediment contributed to receiving waters from stream banks versus overland flow from critical source areas, and to develop management strategies to reduce stream bank erosion. The objective of this research was to compare the amounts of sediment and phosphorus loss from critical stream bank source areas to receiving waters via overland flow and stream bank erosion from riparian grazed pasture under different stocking densities (cow-calf pair ha -1 ). Rainfall simulations were used to calculate sediment and P loads from overland flow from stream-side livestock loafing and access points and lengths of stream banks not directly impacted by livestock (defined as control areas) in central, northeast, and southeast Iowa. Water samples from runoff were analyzed for suspended sediment and total phosphorus. Soil bulk density and moisture samples were also collected around rainfall simulation plots to evaluate differences in compaction between grazing practices. Stream bank erosion rates on these pasture sites were also observed over two years using the erosion pin method. Eroded stream bank length, height and soil bulk density and total soil phosphorus concentration were used to calculate total phosphorus and soil loss via stream bank erosion.

Within 15 m wide strips located on both side of the stream, livestock access paths and loafing areas together accounted for only 2.7% of the total source areas, their suspended sediment and total P contributions to streams accounted for up to 72% (86 kg ha -1 ), and 55% (78 g ha -1 ) of total sediment and phosphorus, respectively. Control areas of the riparian source areas contributed high levels of total P in surface runoff accounting for 45% (64 g ha -1 ) of total P loads. In some cases, significant correlations were found between stocking vi densities and soil bulk density and sediment and total phosphorus loss indicating that use of low stocking density can reduce total phosphorus and sediment loss from surface runoff.

Sediment and phosphorus loss via stream bank erosion did not reveal significant differences among the examined grazing practices. However, a highly correlated parallel relationship was found between the precipitation rates and erosion rates in given pasture sites suggesting that precipitation is one of the major controlling factors of stream bank erosion. Besides precipitation impact, lower stream bank soil bulk density significantly increased soil loss.

Results of this study would suggest that regardless of stocking densities the highly attractive nature of riparian areas within pastures results in significant contributions of sediment and total P to channel waters and the only was to effectively reduce that impact is to exclude direct access of livestock to the channel unless it is carefully armoured.

154)earnings volatility, cash flow volatility and informed trading

by Jayaraman, Sudarshan, Ph.D., The University of North Carolina at Chapel Hill, 2007, 67 pages; AAT 3272683

Abstract (Summary)

I examine whether earnings that are smoother or more volatile than cash flows provide or garble information. Consistent with theories that predict more informed trading when public information is less informative, I find that bid-ask spreads and the probability of informed trading are higher both when earnings are smoother than cash flows and also when earnings are more volatile than cash flows. Additional tests suggest that managers' discretionary choices that lead to smoother or more volatile earnings than cash flows, on average, garble information. However, I find that informed trading is attenuated in settings in which theory suggests that discretionary smoothing or volatizing of earnings is likely to be informative.

155)accounting for context and lifetime factors: A new approach for evaluating regression testing techniques

by Do, Hyunsook, Ph.D., The University of Nebraska - Lincoln, 2007, 192 pages; AAT 3250075

Abstract (Summary)

Regression testing is an expensive testing process performed on modified software to provide confidence that the software behaves correctly, and that modifications have not impaired its quality. Regression testing is widely used in industry; however, it is often performed inadequately. As a result, software quality and reliability can decrease over the software's lifetime.

To address this problem, researchers have spent a great deal of effort creating and studying various methodologies for improving the cost-effectiveness of regression testing. To compare and assess such methodologies, researchers relied initially on analytical approaches. More recently, however, focus has shifted to empirical studies. Empirical studies of regression testing techniques have greatly expanded our understanding of techniques and the factors that affect them, but to date, these studies have also suffered from several limitations which limit the extent to which their results may generalize to practice. (1) Most studies have considered only a few context factors (characteristics of the environment or engineering processes that may affect technique performance). (2) Prior studies have calculated costs and benefits using a "snapshot" view in which results are considered strictly per system version; this approach, however, ignores the fact that methodologies may exhibit different cost-benefit tradeoffs when assessed across entire system lifetimes than when assessed relative to individual versions. (3) Previous studies have largely ignored cost-benefit tradeoffs, relying on comparisons strictly in terms of simple benefit and cost factors, using cost-benefit models that are naive in their handling of important revenue and cost components, or using metrics that render comparisons across specific types of techniques impossible.

Limitations such as these make it difficult or impossible to accurately compare and assess regression testing methodologies relative to practical software engineering contexts. Moreover, they can lead researchers and practitioners to inaccurate conclusions about the relative cost-effectiveness of techniques in practice, or the suitability of particular techniques to particular engineering processes.

This dissertation addresses these limitations. First, we surveyed the state of the art of empirical studies of regression testing techniques and identified problems with evaluation methods and processes, and problems related to infrastructure required for empirical studies. Second, we developed infrastructure to support empirical studies of regression testing considering a wide variety of software artifacts. Third, using the infrastructure developed in the second step, we conducted several initial empirical studies on regression testing techniques. Fourth, we developed a cost-benefit model to assess the cost-effectiveness of regression testing techniques considering system lifetime and context factors. Finally we conducted an empirical study, assessing regression testing techniques using these cost-benefit models.

Through our work, we provide several important advantages for practitioners and researchers. For practitioners, we provide new practical understanding of regression test techniques. For researchers, we provide a new cost-benefit model that can be used to compare and empirically evaluate regression testing techniques, and that accounts for testing context and system lifetime factors. We identify problems involving infrastructure, and provide infrastructure that can help researchers conduct various controlled experiments considering a wide variety of software artifacts. Finally, we provide better understanding of empirical methodologies that can be used by other researchers to make further progress in this area.

156)accounting for student voice within critical communication pedagogy: An ethnomethodological exploration of student perceptions and expectations

by Zoffel, Nicholas Alexis, Ph.D., Bowling Green State University, 2007, 219 pages; AAT 3262331

Abstract (Summary)

This study, through critical communication pedagogy and an ethnomethodological lens, explores the ways in which student identity is produced through ranges of power, voice, and agency. From student voice, participants share how they understand, see, describe, struggle, succeed, and develop their identities, both individually and as part of an academic community. Further, participants' dialogue illuminates how the intersection of communication and education identity is undertheorized as a socially constitutive act upon the body.

Specifically, this study consisted of four focus group interviews with a diverse set of undergraduate students, within and outside the discipline of Communication Studies. The participants in this study spoke to the construction of an educational identity as a process that is comprised of maintaining institutional realties, understanding how they, as students make and negotiate educational and social choices, and then demonstrate a sense of belonging through their actions. Participants' conversations foreground individuals' education actions as constitutive acts that serve to move them toward recognition that student identity is an act of performative possibility. This recognition allows students to either create a space for them to feel in control of developing their identities, their sense of practical accomplishments in their daily actions (i.e., communicating, decision-making, and reasoning), or having that identity assigned to them due to institutional constraints. Because participants' expectations are built on the perception that individuals choose to comply with or resist institutional moments, they were very critical of students who neglect the ways in which individuals' actions (or inactions) help to continually create and reify the educational struggles they are defining themselves against.

Most intriguing is the empirical evidence that shows participants are far more aware of how critical discourse can create relationships between individuals and educational institutions, and how those same dialogues can hinder those relationships from ever coming into being. Furthermore, participants made it very clear that they are not apathetic to their educational situation; they are not judgmental dopes. As students, they make decisions that demonstrate their choices and inform a process that makes them part of very particular educational and social communities. Participants also expressed that there is an untapped desire to take a more active role in their educational development, if provided the opportunity without feeling like their education would be put in jeopardy. With participants viewing education as an extension of the self, the scholarship of communication and education and critical communication pedagogy scholars now have new context to explore and deconstruct structures of power and privilege that serve to maintain the status quo, while working with students during that process.

157)barriers to advancement: Perspectives from behavioral economics, negotiation, and gender analysis

by Greig, Fiona Elizabeth, Ph.D., Harvard University, 2007, 128 pages; AAT 3265174

Abstract (Summary)

This dissertation examines three barriers to advancement and whether those barriers are gendered: social norms that results in low trust, the social costs to claiming value, and the propensity not to negotiate for one's advancement.

In Essay 1, joint with Iris Bohnet, we examine the norms of reciprocity that apply in a reciprocal-exchange economy. In our one-shot investment game in a Nairobi slum, people adhered to the norm of "balanced reciprocity," which obligates quid-pro-quo returns for any level of trust. The norm is gendered, with people more likely to comply when confronted with women rather than men, and differs from "conditional reciprocity," prevalent in developed countries, according to which greater trust is rewarded with proportionally larger returns. Balanced reciprocity produces lower levels of trust and gains from trade than conditional reciprocity.

Essay 2 employs economic experiments to explore the social costs of claiming less value in distributive negotiations. I use a reverse dictator game, a "Taking" game, to measure value claiming behavior and an Investment game to measure the social costs of claiming value in terms of trust offered to Takers. I find that there are social costs to claiming value, and that male Trustors impose higher social costs than female Trustors. Consequently, Takers maximize their payoffs by claiming less value vis-à-vis a male counterpart. Social costs pose a greater barrier for women because they reduce how much value they claim in the presence of social costs but men do not.

In Essay 3 I explore the role propensity to negotiate plays in career advancement. In a major investment bank in the United States I observe that women are underrepresented at senior levels after accounting for productivity related variables. Using a behavioral measure of propensity to negotiate, I find that women have a lower propensity to negotiate than men, and employees with a propensity to negotiate advance over 17 months more quickly. Women enter the firm at lower titles and advance more slowly than men, both of which account for the under-representation of women in senior positions. I conclude that gender differences in propensity to negotiate partially explain why women are on a "slow elevator" to the top.

158)capital mobility and current account adjustments

by Bulut, Levent, Ph.D., University of Houston, 2007, 92 pages; AAT 3261568

Abstract (Summary)

This paper empirically analyzes the capital mobility and current account balances. The role of net external debts on the small size current account balances and the global market discipline of the sovereign borrowers are analyzed to empirically establish a connection between capital mobility and current account adjustments.

The first study empirically investigates the effect of net external debt holdings on the size of medium-term current account balances. It utilizes an approach where net external debt holdings behave like a "shadow interest rate" in affecting the current account imbalances. This paper has four major findings: First, in a simple accounting framework, net external debt holdings have a significant dampening effect on medium-term current account imbalances: an increase in the net external debt holdings by ten percent of GDP improves medium-term current account balances by one percent of GDP. Second, net external debt holdings affect current account imbalances through their effect on domestic investment and government expenditures. Private consumption, on the other hand, isn't affected by net external debt holdings. Third, across the country groups, it is found that OECD countries differ from developing countries in current account adjustments as government expenditures deteriorate more in developing countries than in OECD countries across the sample period. And finally, net external debt holdings temper current account imbalances more during 1980s than 1990s.

The second study provides evidence that global markets discipline the sovereign borrowers of the developing countries through the country risk premium. The difficulties of testing the market discipline in the developing countries are remedied by the utilization of the IMF's disaggregated Government Finance Statistics data, and the World Bank's Global Development Finance data. By following the OECD methodology, the structural budget balances are estimated for each country. Then the effect on the structural budget balances of the country risk premium are estimated by instrumenting the real cost of borrowing by several variables such as openness, demographic variables and real GDP per capita growth. The fixed effect panel regressions show that increases in country default risk premium improve the primary structural balances.

159)competitive strategy, voluntary environmental disclosure strategy, and voluntary environmental disclosure quality

by Ling, Qianhua, Ph.D., Oklahoma State University, 2007, 165 pages; AAT 3274661

Abstract (Summary)

Scope and method of study. Concerns exist that companies make voluntary environmental disclosures (VED) primarily to enhance their public image. In response to the concerns, this study examines whether a company's competitive strategy is an important factor in the VED decision, and also in the quality of VED. This study focuses on a highly polluting industry, the chemical industry, and adopts various measurement methods and econometric specifications for the examination.

Findings and conclusions. Using VED about 2004 environmental performance, this study finds that companies emphasizing investment in brand image are likely to voluntarily provide more environmental information than companies that do not emphasize this strategy. Companies emphasizing investment in R&D are likely to make more voluntary disclosures about actual environmental performance than companies that do not emphasize the strategy.

This study also finds that company competitive strategies affect the association between VED and environmental performance differently. If the environmental performance measure has implications for sustainability, the association between VED and environmental performance is the same or more negative for companies emphasizing investment in brand image relative to other companies. If the environmental performance measure has implications for environmental liabilities, the association between VED and environmental performance is adjusted, so these companies' VED are less likely to relate to poor environmental performance. For companies emphasizing investment in R&D, the tendency of VED to be linked to poor environmental performance is ameliorated. The association between VED and environmental performance is stronger for R&D companies compared to other companies. This association is also stronger if the environmental performance measure has implications for sustainability than if the environmental performance measure has implications for environmental liabilities.

160)corporate governance, investment activity and future excess returns

by Fisher, Lance Mati, Ph.D., The University of Arizona, 2007, 79 pages; AAT 3254703

Abstract (Summary)

In this dissertation, I investigate whether corporate governance affects the negative association between investment and future excess returns. Shareholders are concerned with the effectiveness of the firm's governance regime as a tool to reduce agency costs. In the absence of strong control over firm assets, managers may choose to invest in value-decreasing projects. The probability that managers select value-decreasing projects is an increasing (decreasing) function in investment activity (governance regime). At the time of investment, the capital market prices expected returns to the investment activity conditioned on the governance regime in place. This study examines future risk-adjusted returns to investment activities conditioned on low and high governance regimes. If the market correctly prices the governance environment and the expected returns to expenditures at time t, there should be no future risk-adjusted returns to either governance or expenditure information. I find that for firms with low external monitoring, and separately, for firms with high shareholder rights, lower (higher) investment activity results in positive (negative) future risk-adjusted returns. Implementing a trading strategy which holds low investment firms and shorts high investment firms results in 7.1% and 5.6% annual risk-adjusted returns when conditioned on low institutional holdings and high shareholder right, respectively. This study also provides preliminary evidence that outside blockholder and activist ownership is effective in mitigating the negative association between investment activity and future excess returns through the shareholder rights mechanism. Finally, I provide evidence that the diversification discount associated with multi-segment firms is generally invariant to investment activity levels.

161)disclosure decisions and search costs in the mutual fund industry

by Liang, Xinghua, Ph.D., University of Toronto (Canada), 2007, 93 pages; AAT NR28024

Abstract (Summary)

This thesis examines empirically the relationship between voluntary disclosures and investor search costs, and the concomitant effect of disclosure on the flow of funds to mutual funds. We examine the frequency and timeliness of the portfolio disclosures of a sample of retail S&P 500 Index Funds. We also build a disclosure index based on the amount of voluntary disclosures of their index tracking strategies in the 2003 annual prospectuses of a sample of fifty-two S&P 500 index funds. Our results show that mutual funds provide more information voluntarily when investor search costs are high, after controlling for their demand for information. This finding makes the case for the role of search costs in investors' information acquisition, which has not been previously documented in the empirical disclosure literature.

Consistent with the prior literature, we find support for the impact of investors' demand for information on fund disclosure. Funds disclose information more frequently and in a more timely fashion when return volatility is high. Using the disclosure index as the measure of voluntary disclosure, we find that funds disclose more about their strategies, including stock selection strategies, when their absolute tracking errors are high.

We also examine endogenously the costs and benefits associated with mutual fund managers' voluntary disclosure decisions. We find that funds disclose less information when the proprietary costs of the voluntary disclosure are high. However, we did not find capital market benefits to voluntarily disclosing funds, perhaps because the information contents of portfolio and indexing strategy disclosures are not fully recognized by retail fund investors. One possible explanation for funds disclosing voluntarily, despite the lack of capital market benefits, is to lower litigation risks as suggested by disclosure literature. By outlining specific descriptions of their indexing strategy, funds protect themselves from potential attacks based on their management.

153)discretion in bonus plans

by Ederhof, Merle, Ph.D., Stanford University, 2007, 73 pages; AAT 3267501

Abstract (Summary)

This dissertation examines discretionary bonus payments by firms to senior-level executives. First, I investigate when discretionary bonus payments may occur in an optimal incentive contract using an analytical model. The primary hypothesis based on the model developed in this dissertation is that discretionary bonus payments occur when the outcome of the objective performance measure is either low or high, but not when the outcome of the objective measure falls in the medium range. The prediction regarding the occurrence of discretionary bonus payments is obtained in a conventional agency theory model. Second, I analyze the relationship between discretionary bonus payments and managerial power theory. Managerial power theory yields the prediction that there is a positive relationship between the occurrence of discretionary bonus payments and executive power.

I empirically test the two predictions using a sample collected from public sources. The data is collected by taking advantage of the recently updated SEC regulation regarding disclosure requirements in Forms 8-K.

In testing the hypotheses, I find evidence supporting the prediction from the model developed in the dissertation but only limited support for the prediction based on managerial power theory. In particular, discretionary bonus payments occur significantly more often and are higher when the objective performance falls in the tails of the distribution. Conversely, the results provide limited support for the hypothesis that there is a positive relationship between discretionary bonuses and the power of the executives in the companies.

162)e-business and ERP: From determinants, to integration, to value realization

by Hsu, Pei-Fang, Ph.D., University of California, Irvine, 2007, 116 pages; AAT 3269622

Abstract (Summary)

This dissertation focuses on two information technologies that build the foundation of a digitally extended enterprise: e-Business technologies and Enterprise Resource Planning (ERP) systems. It consists of three inter-related chapters to investigate the determinants of the two technologies, the integration effect between the two technologies, and lastly, the value realization process of the two technologies.

In Chapter 1, building on diffusion of innovation theory, we develop an integrated model incorporating eight determinants identified separately in prior studies in an effort to understand their relative influence on e-business use. Using a sample of 294 firms, the analysis demonstrates that trading partners' pressure is the most important driver of diversity of e-business use, while government pressure emerges as the strongest factor when volume of e-business is being investigated.

In Chapter 2, we investigate the complementary effect between ERP and e-business technologies, and the impact of such effect on firm performance based on Resource Based View. Using firm performance accounting data with self-reported survey data of 150 U.S. firms, we provide empirical evidence that the complementary effect between ERP and e-business technologies in creating business value is stronger than the main effects of ERP or e-business technologies alone. We further find that the complementary use of these IT resources to build system and business process integration capabilities can extract the most complementarity value for firms.

In Chapter 3, we try to shed light on the ERP value paradox and implementation dilemma. We propose an integrated model to investigate with which organizational resources, through which implementation approaches, and under what environmental conditions, the investment in ERP systems may bring firms competitive advantages. Using a sample of 150 ERP adopters, we found that organizational resources play a more important role than IT resources in generating business integration capability. IT resources and organizational resources may not directly provide firms with competitive advantage. Instead, business integration capability plays a mediating role through which business achieves competitive advantage. Furthermore, with appropriate implementation approaches that fit firms' characteristics, the impacts of ERP systems may be amplified, while under a competitive environment, the impacts of ERP systems may be moderated.

163)efficient markets within the context of market anomalies: The case of Monday returns

by Valentine, Randall, Ph.D., Mississippi State University, 2007, 85 pages; AAT 3255957

Abstract (Summary)

Since 1988, the literature stream has documented Monday returns for large cap stocks to be both positive and significant. The predominant methodology used in the research stream used to test the day of the week effect has been OLS with dummy variables to test if Monday has negative returns when compared with the other four days of the week. However, there is a problem with using dummy variables only. By failing to account for other factors, such as dividend announcements, volume, fortnight, market cap, news, January returns, and the bid-ask spread, this created a bias of omitted variables that could have compromised results. This bias can be eliminated by using a multivariate OLS model. Thus, the application of this method was to be used with equations that are only theoretically related.

There were four main findings of this paper. First, no Monday Effect existed for the 1995 through 2004 time period. Second, Monday returns were insignificant during the 1995 through 2000 time period, contradicting results from previous studies (Keim 2005, Gu 2004 et al.). Third, in the period post 9/11/2001 (October 2001 through 2004) Monday returns reversed, becoming negative and significant. Fourth, Monday returns were no longer significant with the addition of explanatory variables in the post 9/11/2001 period.

164)environmentally induced costs of urbanization in small island states: The case of the Republic of the Marshall Islands

by McClennen, Caleb, Ph.D., Fletcher School of Law and Diplomacy (Tufts University), 2007, 144 pages; AAT 3262890

Abstract (Summary)

Rapid urbanization of Pacific Small Island States(SIS), resulting primarily from centralized foreign aid has been accompanied by growing environmental costs of deteriorating water quality, inadequate human, animal and solid waste disposal, limited natural resources and increasingly hazardous coastal dwelling. This research identifies and accounts for the environmental costs of urbanization and development in a particular Pacific SIS---the Republic of the Marshall Islands(RMI), in an effort to test whether environmental degradation and associated costs have an empirical basis upon which to partially explain lagging development of many SIS.

Utilizing a geo-referenced survey instrument of nearly 10,000 individuals, the relationship between environmentally induced illnesses and socio-economic factors has been calculated using both econometric probit regression and propensity score matching techniques. The water-born and sanitation component of Environmental Burden of Disease(EBD) at a national level was then recalculated using the resulting model. Lastly the cost of lost ecosystem services in the largest urban center of the RMI, Majuro Atoll, have been estimated using a replacement cost methodology for water, sewage disposal, coastal protection, food, and energy costs. Results confirm that urban residents are indeed paying an urban "morbidity" penalty in the form of diarrhea rates double those found in rural areas. With increased proximity to urban environmental hazards such as waste dumps and unsanitary waste storage sites, diarrhea rate are 3.0 to 4.0 times higher than more distant observations. EBD rates for water-borne illness were revised upwards to 35 Disability Adjusted Life Years (DALY) per 1000 for children under the age of five years old, a level 50% higher than the World Health Organization estimated for the Pacific with urban incidence rates twice that of rural areas, accounting for over 80% of the national EBD. Finally, replacement costs for ecosystem services in the urban center accounted for over a third of local contribution to GDP, at $20 Million. The results demonstrate that the environmental consequences of the current urbanization process are empirically manifested in negative health effects and absorbed replacement costs currently burdening the Republic of the Marshall Islands.

165)essays on inference in weakly identified models in macroeconomics and finance

by Ma, Jun, Ph.D., University of Washington, 2007, 98 pages; AAT 3265373

Abstract (Summary)

This dissertation is concerned with the implications of weak identification in macroeconomics and finance: the risks of making spurious inferences, strategies for valid inference, and their economic implications. In the first essay I show that the standard estimation and t -test in the GARCH(1,1) model are spurious when the GARCH effect is weakly identified, implying strong and significant persistence of volatility when in fact there is little. This spurious inference is partly attributed to the severely under-estimated standard error for the estimated GARCH effect. A strategy for valid inference is suggested and seems to give robust results for this case. In my second essay I derive an analytical asymptotic variance matrix for the GARCH(1,1) Maximum Likelihood Estimator and show that the Zero-Information-Limit Condition (ZILC) of Nelson and Startz (2007) holds, accounting for spuriously large t -statistics. In the third essay I propose a general approach to valid inference in weakly identified models based on a common linear approximation and show that this general test strategy succeeds in obtaining a correct size in the presence of weak identification. In the fourth essay I apply this valid test to evaluate a recent resolution of the equity premium puzzle based on a high level of persistence in consumption growth. My results find little empirical evidence in support of this resolution.

166)estimation risk and earnings-based CEO cash pay

by Mangen, Claudine, Ph.D., University of Rochester, 2007, 128 pages; AAT 3263990

Abstract (Summary)

This thesis re-examines the role of risk in earnings-based CEO cash pay. The executive compensation literature shows that the sensitivity of CEO cash pay to earnings falls with risk resulting from noise in earnings. This literature assumes that the parameters of the distribution of noise in earnings are known when earnings-based CEO cash pay is set. In reality, this assumption is unlikely to hold. This thesis therefore investigates the more general case where the parameters of the distribution of noise in earnings are not known, and there is estimation risk.

Chapter 1 presents a principal-agent model of how estimation risk affects earnings-based CEO cash pay. In the model, the CEO and the compensation committee learn rationally over time about the parameters of the distribution of noise in earnings, using past earnings noise observations. When the record of past earnings noise observations is shorter, there is less learning, and estimation risk is higher. The model shows that higher estimation risk leads to a lower weight on earnings.

Chapter 2 presents an empirical analysis of how estimation risk impacts earnings-based CEO cash pay. Using two different proxies for estimation risk, this thesis finds support for its prediction from its model in Chapter 1. The evidence indicates that when estimation risk is high, the weight on earnings is up to 87% lower than when estimation risk is low, after controlling for other sources of risk already examined in the literature. This finding is subject to the caveat that the two estimation risk proxies may capture sources of risk other than estimation risk, if these other sources of risk are not adequately controlled for. Furthermore, Chapter 2 analyzes how estimation risk affects performance measures other than earnings, such as subjective and non-financial performance measures. The evidence indicates that firms shift the weight onto subjective performance measures when estimation risk is high. Firms appear to mitigate the impact of estimation risk by moving towards subjective performance measures, which allow them to evaluate CEO performance ex post after having observed earnings.

Chapter 3 examines some particularities of earnings-based CEO cash pay, such as performance standards and bonus bounds. It shows that even when performance standards and bonus bounds are accounted for, estimation risk continues to affect the sensitivity of CEO cash pay to earnings. Other sensitivity tests are performed and show that the results hold.

167)financial constraints and firms' cash policies

by Luo, Mi Meg, D.B.A., The University of Utah, 2007, 90 pages; AAT 3266410

Abstract (Summary)

My dissertation consists of two essays: (1) "A Bright Side of Financial Constraints in Cash Management;" (2) "Financial Constraints, Equity Financing and Cash Management." The first essay examines how financial constraints affect the agency costs of carrying cash. I hypothesize that constrained managers should have less incentive to waste cash in inefficient projects as compared to unconstrained managers. This proposition suggests that financial constraints play a disciplinary role in cash dissipation. Consistent with my hypothesis, I find unconstrained firms' cash spending tend to be more inefficient than constrained firms'. Following cash usage, their accounting performance decreases more, and their stocks realize inferior returns to constrained firms'. This positive effect of financial constraints is not attributed to good corporate governance. Additional evidence suggests that strong governance and financial constraints are substitutes in disciplining how managers disgorge cash; governance plays a less important role if the firm is financially constrained. The second essay investigates how financial constraints affect the interaction between firms' financing behavior and cash policies. I hypothesize that equity financing is an alternative channel, other than saving cash from internal cash flows, for constrained firms to build up cash reserves. Constrained firms should be more likely to invest the proceeds of equity issuance in the cash account than firms that are able to raise funds frictionlessly. I find that failing to control for the equity financing channel could lead to econometric problems in the estimation of cash-to-cash-flow sensitivity.

168)implementing an ERP system in the Guam public sector: A survey of the membership of the Association of Government Accountants

by Crisostomo, Doreen Therese, Ph.D., Capella University, 2007, 132 pages; AAT 3263166

Abstract (Summary)

Enterprise Resource Planning (ERP) systems have been around since the 1980s, and their purpose is to provide for two or more functions to work together. Implementing an ERP system is a difficult task, and if not implemented correctly may use up many of the organization's resources. As an organization implements an ERP system, there are several issues that must be considered for a successful implementation. The purpose of this study was to identify which factors are associated with the successful implementation of an enterprise resource planning system in the government of Guam. Given that most of the data are categorical, univariate linear regressions tests were conducted to establish a predictive relationship between the variables and further analyses were done to test the significance of the correlations using a 0.05 level of significance. The findings revealed that characteristics identified as being associated with the successful implementation of the enterprise resource planning system in the public sector are (a) top management's knowledge of the system, top management's preparedness to support the project team's efforts to manage change generated by the ERP system implementation and to support the implementation process; (b) project manager's skills and knowledge of the ERP system and keeping employees informed regarding the status of the ERP project; (c) project team that is knowledgeable and skillful, the project team's ability to manage the change process of the ERP project, the project team's awareness of, and their ability to deal with employee's reactions to the ERP project; (d) the project's clearly defined scope; (e) employee's perception of the project team's support; and (f) confident end users with skills regarding the effective training and technological preparedness.

169)inflation and nominal financial reporting: Implications for performance and stock prices

by Konchitchki, Yaniv, Ph.D., Stanford University, 2007, 50 pages; AAT 3267551

Abstract (Summary)

The Monetary Unit fundamental accounting assumption relies on a stable currency as the unit of record. Even during periods of low inflation, nominal financial statements violate this assumption. Although inflation effects are not recognized in nominal statements, such effects may have economic consequences. Moreover, because inflation affects firms differently depending on the structure of their assets and liabilities, these effects vary across firms and over time. I find that unrecognized gains and losses from inflation help predict future cash flows as these gains and losses manifest over time. I also find that investors do not fully incorporate this information in their pricing decisions.

170)legal framework for the development of venture capital in China: Policy recomendations for the establishment of a Growth Enterprise Market ("GEM")

by Wang, Dequan, J.S.D., Stanford University, 2007, 221 pages; AAT 3267656

Abstract (Summary)

Experimentation with Venture capital (VC) investment into high growth companies in China began in the 1990's. The past few years have seen rapid growth of foreign venture capital investment into Chinese-founded companies that are incorporated offshore (mostly in the Cayman Islands), operated in China, and listed in Hong Kong or on the NASDAQ. However, legal and institutional developments have lagged behind. This dissertation summarizes and evaluates the development of venture capital practice in China to date. It explains how China's recently developed "off-shore" system operates despite existing legal obstacles, compares China's VC system to China's banking system and government guaranteed loan program, and identifies ways to improve the relevant legal and institutional framework necessary for the growth of VC investment into China. By examining scholarly literature on the importance of a stock market as an exit mechanism for venture capital, this paper compares and analyzes Israel's experiences and China's current practice of piggybacking on institutions of the U.S. and other countries. This comparative analysis of the piggybacking or off-shore model reveals that this model does work to a certain extent but would not be scalable as a long term strategy for China, because China's vast domestic market demands home-grown or transplanted institutions. This dissertation concludes with a policy recommendation that China should consider opening a NASDAQ type Growth Enterprise Market (GEM). A GEM could contribute to the further development of China's venture capital financing via improved accounting standards, increased leveraging on imported professional services, and establishment of a specialized court to improve corporate governance and capital market regulations.

171)moral reasoning of finance and accounting professionals: An ethical and cognitive moral development examination

by Galla, Donna, D.B.A., Nova Southeastern University, 2007, 105 pages; AAT 3260185

Abstract (Summary)

Corporate America is at the crossroad where ethical and unethical behaviors intersect. After decades of an eroding of regulations to prevent corporate and personal self-serving behavior, the Sarbanes-Oxley Act of 2002 was legislated. However, will prosecution act as a deterrent to prevent further illegal acts and unethical behavior? Empirical research must continue to understand the antecedents of ethical behavior in order to prevent further corruption in the workplace.

Cognitive Moral Development theory states that cognitive ethical reasoning becomes more complex as one matures and gains cognitive processes. This theory assumes anyone with lower-order ethical reasoning is not able to process higher-order ethical reasoning. The theory is another indication that high ethical standards exhibited today do not guarantee the same standards tomorrow. Continuous education and training in what a company or profession considers high ethical standards are necessary to maintain and reinforce moral behavior. Such education and training emerge as even more important as the employee or member of the profession matures, so that his or her values are in alignment with the core ethical values of the company or the profession.

Lawrence Kohlberg developed a system to represent logical ethical reasoning with a model of six stages. James Rest extended the work of Kohlberg by developing a valid, reliable instrument to quantitatively measure logical ethical reasoning. This instrument is called Rest's Defining Issues Test (DIT). Using five ethical dilemmas that Rest created, the DIT determines how people use different processes when resolving a moral situation. Each survey participant rates the five moral dilemmas on a five-point-Likert-type scale. The person that makes moral decisions based on reasoning from ethical principles is at Kohlberg's highest stage, as determined by the DIT. Further, Rest developed a four-component model to describe the process most employees use when making ethical decisions. Rest's four-component process involves: moral sensitivity, identifying the correct course of moral action, determining what action to take when presented with an ethical dilemma, and the execution of the moral plan. Rest believed that moral failure could occur if a person lacked any of the four components.

Kohlberg's and Rest's models are combined with a demographic survey to test the variables of education level, age, gender, and ethical training. Research has proven these variables have an impact on ethical decision-making when surveying a student population. However, these variables have not yet been applied to finance and accounting professionals.

This research finds that the N2 score for the over 35 age group is significant: Subjects older than 35 years had a higher N2 score ( m = 25.66, sd = 5.66) than subjects 35 years old or younger ( m = 21.39, sd = 7.12). Although the variable for age was not significant, females scored higher for finance, and males scored higher for accounting.

The relationship between the moral maturity level of finance and accounting professionals and the variable ethics courses and/or ethics training of finance professionals compared to accounting professionals was not supported through this analysis. The results are similar when the moral maturity level of finance and accounting professionals were surveyed on gender, age, and education.

172)sarbanes-Oxley and the effect of restatements on CEO and CFO compensation and turnover

by Burks, Jeffrey John, Ph.D., The University of Iowa, 2007, 71 pages; AAT 3265934

Abstract (Summary)

Accounting scandals at Enron, WorldCom, and other corporations sparked regulatory reforms designed to hold managers and boards more accountable for the financial reports issued by their firms. I examine whether a shift in accountability has also occurred inside the firm by testing how boards discipline managers for accounting restatements, and whether disciplinary action has become more severe after passage of the Sarbanes-Oxley Act (SOX) and related reforms. The disciplinary actions I focus on are job termination and reductions in bonus payouts. To assess the extent to which boards hold managers accountable for financial reporting decisions and internal controls throughout the organization, I focus on restatements that are not obvious frauds perpetrated by top management.

I find no evidence that the turnover of CEOs or CFOs is more sensitive to these types of restatements after SOX. In fact, the association between CEO turnover and restatements observed before SOX disappears after SOX, although the decline in association around SOX is not statistically significant. CFO turnover is associated with restatements before and after SOX, with no change in association around SOX. Analysis of restatement characteristics reveals that restatements become less severe after SOX. However, even after controlling for the decline in restatement severity, I find no change in the sensitivity of executive turnover to restatements around SOX.

Tests of bonus compensation suggest that after SOX boards respond to restatements by withholding entire bonuses from the CEOs who retain their jobs. Restatements are associated with the cancellation of CEO bonuses after SOX but not before, and the change in this association across the two SOX periods is statistically significant. No association between restatements and the bonuses of CFOs is observed in either SOX period. In total, the evidence suggests that boards respond to the lower-severity restatements of the post-SOX period by withholding bonuses from CEOs rather than terminating them. In contrast, boards continue to discipline CFOs after SOX through termination rather than bonus penalties.

173)short-selling constraints, divergence of opinion, and overvaluation: The role of accounting conservatism

by Mashruwala, Christina, Ph.D., University of Washington, 2007, 62 pages; AAT 3265378

Abstract (Summary)

This study explores the role of accounting conservatism in equity valuation. Prior research has documented that stocks with high short-selling constraints and divergence of investor opinion are overvalued, on average, as predicted by Miller (1977). This study tests the theory developed by Miller (1980) and Dierker (2006) that accounting conservatism can reduce overvaluation in the presence of these constraints. Consistent with their predictions, I find that when short-selling constraints and divergence of opinion are high, the least conservative firms are overvalued while the most conservative firms are not mispriced. Thus, I find that accounting conservatism completely offsets the overvaluation that is expected in the presence of short-selling constraints and divergence of opinion. This study also sheds light on the pricing of conservatism in the absence of these constraints and I find that conservatism leads to undervaluation, on average, in this situation.

174)stochastics and the learning environment: Recognition and action related to statistics anxiety in accounting and business college students

by Edelman, Daniel, Ph.D., Illinois Institute of Technology, 2007, 195 pages; AAT 3270901

Abstract (Summary)

This study investigated if an experienced statistics teacher was able to recognize statistics anxiety. To address this question, four issues were explored, including: (1) Did the instructor recognize statistics anxiety? (2) If so, how did the instructor recognize statistics anxiety? (3) If statistics anxiety is present, do students share any common patterns? In addition, what actions, if any did the instructor take to alleviate statistics anxiety? To address these questions, the researcher utilized interviews, survey instruments, and observed an instructor teaching two sections of a basic statistics class in higher education.

The instructor believed all students in the present study had statistics anxiety. However, correlations between the instructor's ranking of students with anxiety and the Statistical Anxiety Rating Scale suggest the instructor did not recognize statistics anxiety.

Seventy three percent of the student's interviewed believed the instructor caused or increased their statistics anxiety. Students reported causes of their anxiety include that the pace of the class, the instructor's rules, mistakes, negative statements about statistics, institutional policies, and her inadequate responses to questions.

The instructor believed she alleviated statistical anxiety by using humor and intentionally making mistakes. However, researcher observation and student interviews did not discover any humor demonstrated by the instructor.

The instructor stated that she has unmet high student expectations. The instructor expressed frustration with time constraints, classroom behavior and mathematical inabilities of her students. The instructor believed that she projects a negative image to her students because of classroom management policies and strict enforcement of institutional policy. The instructor expressed frustration about the students and vice versa.

175)subcertification and relationship quality: Effects on subordinate effort and justification

by Vance, Thomas W., Ph.D., University of Washington, 2007, 92 pages; AAT 3265426

Abstract (Summary)

This study examines the decision to impose a control system and the resulting impact on the effort exerted by the controlled individual. I specifically consider subcertification, a system of certifications of financial data by the subordinate employees who provide those data. Despite the expected benefits of subcertification, it has not been universally adopted, largely due to concern about the impact on corporate culture and manager-subordinate relationships. To explore this concern, I examine the direct effects of relationship quality between a manager and subordinate on subordinate behavior when generating an accounting estimate. I provide evidence consistent with subordinates in high quality relationships exerting greater effort than those in low quality relationships. I next consider the effects of the decision to require subcertification on effort, finding that subordinate response to the control depends upon the existing relationship quality; high quality relationship subordinates decrease effort while low-quality relationship subordinates increase effort. When the subordinate is made aware that a control could be adopted, but is not, low quality relationship subordinates feel more accountable for the estimate they provide and increase effort but offer less justification. Conversely, high quality relationship subordinates report less accountability for the estimate and decrease effort. The findings I present are of particular importance to managerial accountants who are charged with control system design and implementation decisions. To the extent that greater effort yields higher quality estimates, this research has financial statement quality implications as well.

176)the audit committees, internal controls, and financial distress of United States public hospitals

by Chien, Wen-wen, D.B.A., Nova Southeastern University, 2007, 102 pages; AAT 3268677

Abstract (Summary)

Using OMB Circular A-133 audit reports on internal controls over financial reporting and Federal grants for 180 individual hospitals and 700 clinics operating in the United States, we find relationships among the presence of quality audit committees, internal control quality, and corresponding financial distress. The audit committee characteristics of independence, financial expertise, and increased activity level (meeting frequency) positively correlate with reduced frequencies of control problems and financial distress. Consistent with prior research on audit committees for publicly traded companies, these results suggest ways to improve public hospital financial controls, to reduce misappropriation of assets and the wasteful spending for supplies and services, to change the poorly managed collections, and to reduce the corresponding increases in public debt.

177)the conceptualization of government publications on the World Wide Web: A genre theory inspired investigation

by Lin, Chi-Shiou, Ph.D., The University of Wisconsin - Madison, 2007, 323 pages; AAT 3261507

Abstract (Summary)

This study explores the conceptualizations of Web-based government publications by government agency staff and digital depository librarians. Previous research suggests the concept of government publications determines the inclusion of agency Web content in state-level digital depositories. Practices in a current popular digital depository model also show a shift in content selection from state agencies to state libraries, raising questions regarding the social consequences of the shifting selection power and the future of digital depository collections as historical record. These suggest the importance of studying the conceptualization of government publications in the Web environment. Inspired by genre theory, phenomenology, and grounded theory, this study explores two aspects of conceptualization: conceptualization as interpretations (RQ1) & conceptualization as processes (RQ2).

RQ1 employs phenomenology methods to compare and contrast the meanings of government publications as perceived by two groups: agency Web content managers ("WMs") versus library Web publications seekers ("seekers"). Analysis reveals eight structural dimensions underlying WMs' interpretations of government publications, and ten dimensions for seekers'. Of the eight WMs dimensions, "documentation & control" and "intended circulation" are two definitive dimensions accounting for WMs' distinction between "publications" and "non-publications." In contrast, none of the seekers dimensions is definitive; librarians strategically draw on the ten structural dimensions to conceptualize a government publication depending on situations and collection needs. Further, the "typology" dimension (the "publication types" of government publications) significantly affects librarians' conceptualization.

RQ2 uses grounded theory to examine how seekers conceptualize government publications in librarian-initiated publications discovery (LIPD) activities at four state digital depositories employing OCLC Digital Archive. Analysis shows that conceptualization varies from site to site: some states are relatively conservative in conceptualizing Web publications, while the others are more radical. This study develops a model to describe the LIPD activities and discusses how the conceptions of government publications mediate the LIPD processes.

The conclusion chapter discusses theoretical and practical implications of the findings, including government publications as social institutions and the problems of the current publications-centered approach in digital depositories--the effects of Web publications as "discrete objects," "bibliographic objects," and the "publicationization" of Web content.Finally, it offers suggestions for future research.

178)the economic consequences of the Sarbanes-Oxley Act of 2002: Implications of corporate governance and agency costs

by Yu, Shaokun, Ph.D., University of Houston, 2007, 166 pages; AAT 3267064

Abstract (Summary)

The overall objective of this thesis is to advance the understanding of the economic consequences of the Sarbanes-Oxley Act of 2002 (SOX) by examining its impact on managerial incentives and shareholder wealth. Specifically, the study investigates (a) whether the market reaction to SOX is a function of corporate governance strength and the extent of firms' agency costs in the pre-SOX period and (b) whether the market reaction to SOX reflects its effect on executive compensation structure and investment opportunity sets.

The premise of this study is that the net benefit to shareholders from imposing stronger corporate governance requirements depends on how effective corporate governance was in the pre-SOX period. That is, strengthening inadequate corporate governance is beneficial to shareholders, but imposing too much governance on firms with adequate corporate governance is costly to shareholders.

Specifically, I examine three sets of hypotheses. First, SOX will be of greater net cost to firms with adequate corporate governance despite weak and of greater net benefit to firms with inadequate corporate governance despite strong. Second, the better the CEO compensation is tied to the change of the shareholders' wealth, the more adverse the consequences of SOX if it results in managers becoming overly risk averse after SOX. Last, the decrease in investment opportunity sets due to SOX stipulations for firms with adequate pre-SOX corporate governance would be value-decreasing to shareholders in such firms. Following Core et al. [1999], I use long-term firm performance (relative to industry) as the proxy for the adequacy of pre-SOX corporate governance and use Gompers' index as a measure of the strength or level of pre-SOX corporate governance.

The results suggest that the market reaction to SOX is a function of the adequacy rather than the strength or the level of pre-SOX corporate governance. For firms with adequate pre-SOX corporate governance, the higher the incentive ratio, the lower is the market reaction to SOX. For firms with inadequate pre-SOX corporate governance, the higher the incentive ratio, the higher is the market reaction to SOX. Finally, I document significant declines in investment opportunity only for firms with adequate pre-SOX corporate governance (despite apparently being weak). Sensitivity tests indicate that these firms have smaller magnitudes of discretionary accruals and higher cash flow predictability of such discretionary accruals. In the post-SOX period, they are also associated with significant declines in sales, return-on-assets, price-earning ratio for these firms. These results are consistent with the market reaction to the events leading up to the implementation of SOX.

179)the effect of causally related arrangements of audit evidence on the occurrence of memory conjunction errors: A study of the going concern decision

by Grossman, Amanda M., Ph.D., Southern Illinois University at Carbondale, 2007, 213 pages; AAT 3264805

Abstract (Summary)

When auditors are working on more than one client at once, they may be prone to accidentally attributing the evidence of one company to another company. One possible reason why auditors might misattribute evidence to the incorrect source company is a particular type of memory error known as memory conjunction error, which occurs when information from different sources is improperly combined in memory as originating from only one source. This study examines whether grouping going concern audit evidence from two companies according to causal connections reduces auditors' proneness to memory conjunction error. Audit evidence arranged to clearly display the causal connections among evidence items was expected to assist the auditors' memory in forming (a) distinctive representations of each company and (b) stronger bonds among the evidence items that pertain to a particular company. An experimental study, utilizing participants with auditing experience, was conducted to examine the effects of different organizational arrangements of going concern evidence on proneness to memory conjunction error. Contrary to expectations, the study results revealed that when going concern evidence was arranged according to causal connections, participants were more prone to memory conjunction error than when the going concern evidence was organized according to a traditional working paper format or randomly. The results suggest that when audit evidence is arranged in a causally relevant order, auditors are able to form distinctive representations of each company in memory but are unable to retain an accurate memory for precise evidence items.

180)the effect of conservative reporting on the relationship between long-term accruals and operating cash flows: Implications for the persistence and value relevance of earnings

by Liu, Cathy Zishang, Ph.D., University of Houston, 2007, 127 pages; AAT 3267941

Abstract (Summary)

This study investigates the effect of conservative reporting on the relationship between long-term accruals and operating cash flows. Focusing on conservative reporting of depreciation, I find that the discretionary portion of depreciation accruals has a strong, negative relationship with future operating cash flows. These results remain strong even using different measures of discretionary accruals, different sample compositions and the addition of control variables. As depreciation accruals are " inherently " negative as an earnings component, this implies that higher discretionary depreciation is associated with higher future cash flows. This finding is consistent with the positive private information hypothesis, that conservative reporting reveals managers' expectations of superior future performance. I also document that this negative relationship depresses earnings persistence. However, the market ignores the lower earnings persistence and places a higher valuation weight on earnings for firms that are more conservative in reporting their depreciation.

This study makes several contributions to accrual accounting and conservative reporting. First, inherently negative accruals such as depreciation and asset write-downs behave very differently from short-term and other non-negative long-term accruals, both theoretically and empirically. Researchers should be cautious of the potential adverse impact of combining all accruals together in their inquiries. Second, theorists have long suggested that conservative reporting can reveal managers' private information. No study has tested the private information hypothesis from the perspective of depreciation. The findings in this study confirm the positive private information hypothesis for conservative recording of depreciation. Third, this study shows that the conventional framework of higher persistence of earnings leading to higher value relevance does not work when considering the conservative reporting of depreciation. This framework serves as a backbone for the literature on earnings quality and accrual mispricing. Researchers should be cautious with their conclusions in these avenues of accounting research when dealing with aggregate accruals.

181)the impact of earnings management on price momentum

by Woodgate, Artemiza, Ph.D., University of Washington, 2007, 163 pages; AAT 3265436

Abstract (Summary)

In this dissertation I propose and test a new explanation for the price momentum anomaly: fundamental firm characteristics initially form price momentum portfolios, yet the return pattern is continued through earnings management. I find some evidence of earnings management being used to continue the return pattern of price momentum portfolios, yet not enough to explain the momentum anomaly. Namely, I find that discretionary accruals are positively and significantly predicted by past returns. However, contemporaneous returns are negatively correlated with discretionary accruals. Those price momentum firms that encounter changes in business conditions appear to be successful at misleading the market through earnings management.

182)the impact of accounting smoothing on asset allocation in corporate pension plans: Evidence from the United Kingdom

by Mashruwala, Shamin D., Ph.D., University of Washington, 2007, 74 pages; AAT 3265379

Abstract (Summary)

I test whether the introduction of a new pension standard (FRS 17) in the U.K., which virtually eliminated smoothing in pension accounting, is associated with a re-allocation of assets from equities to bonds in defined-benefit pension plans. My findings indicate that sample firms decrease their equity allocation by about 8 percentage points, on average, after the passage of FRS 17. The magnitude of the asset re-allocation depends on the financial reporting effect of FRS 17, and is positively associated with: (i) the increase in reported pension underfunding, (ii) the expected future volatility of reported actuarial gains/losses in the pension plan, and (iii) the increase in reported pension cost. I also find that the sensitivity of asset allocation to the financial reporting impact of FRS 17 depends on firm characteristics such as dividends, financial constraints, pension plan size, profitability, and shareholder governance. The systematic shift away from equities after FRS 17 indicates that smoothing encourages equity investment in pension plans by allowing firms to mitigate the financial reporting costs of equity volatility.

183)the impact of superstar CEOs on financial reporting practices and firm performance

by Koh, Whee Ling Kevin, Ph.D., University of Washington, 2007, 62 pages; AAT 3265362

Abstract (Summary)

The objective of this study is to examine the impact of managerial reputation on the financial reporting practices of firms and their operating performance. Using victory in high-profile CEO competitions as a proxy for managerial reputation, I compare within-firm changes in the timeliness of loss recognition, earnings management, and operating performance before and after CEOs win awards. The results indicate that, first, superstar CEOs (i.e. CEOs who win awards) improve the quality of financial reporting by reporting economic losses in a more timely fashion than before winning their award. Second, superstar CEOs are less likely to engage in opportunistic earnings management to meet short-term earnings benchmarks. Finally, firm performance, measured by indicators such as stock returns, return-on-assets, and operating cash flows, improve after superstar CEOs win awards. In contrast, no similar trends are observed for a control sample of non-superstar CEOs whose firms share similar characteristics to those managed by superstar CEOs prior to winning awards.

184)the impact of environmental accounting on the profit growth, development and sustainability of the organization: A case study on Nypro Inc

by Elewa, May M., M.A., University of Massachusetts Lowell, 2007, 77 pages; AAT 1442065

Abstract (Summary)

Environmental preservation is becoming progressively the center of attention of public and private organizations on the national and international levels. Companies' awareness of the importance of assessing the impacts of their activities on the environment is growing significantly. EA is considered an important technique, which can be used to evaluate the environmental costs of business operations. In the past, EA was considered a separate form of accounting and not many businesses used this technique. Recently, more and more companies are applying EA. However, many specialists argue that it creates many conflicts with corporate interests and thus might have undesirable economic impacts. It is also indicated that applying EA on the organizational level is not a clear-cut operation. Many companies around the world might be interested in incorporating this technique into their managerial system, but are not sure of how to do it. The main focus of this research is to emphasize the importance of EA and show how this concept can be applied. This study attempts to highlight the impact of EA on profit growth, development, and sustainability of organizations.

The main finding of this research implies that applying an adjusted conventional accounting system, which includes full environmental cost assessment, produces accurate accounting reports for the organization. These reports are considered an imperative source of truthful information regarding the organization's operations. Such information is essential for formulating the most appropriate decisions regarding the organization's profit growth, development, and sustainability. Apposite managerial decisions augment the organization's benefits and limit its risks. Hence, investing in applying an environmental management system (EMS) enhances the organization's environmental performance in the short-run as well as in the future.

185)the implications of cash flow forecasts for investors' pricing and managers' reporting of earnings

by Call, Andrew Crafton, Ph.D., University of Washington, 2007, 75 pages; AAT 3265306

Abstract (Summary)

I examine the role of analysts' cash flow forecasts on both investors' pricing and managers' reporting of earnings. I find that when setting stock prices, investors place more (less) weight on the cash (accrual) component of earnings for firms with a cash flow forecast, and that investors shift this weighting in the years immediately following analysts' initiation of cash flow coverage. Furthermore, the weight investors assign to these earnings components is a function of firm-specific factors predicted to affect the usefulness of the underlying cash flow information. I also find that for firms with a cash flow forecast, the cash (accrual) component of earnings is more (less) predictive of future firm prospects, consistent with analysts successfully choosing firms for which to issue a cash flow forecast. Lastly, I document that managers are more likely to boost operating cash flows if the firm has a cash flow forecast, suggesting that the nature of the capital market pressure affects the mechanism through which earnings are managed.

186)the lender's curse: A new look at the origin and persistence of interest bans in Islam and Christianity

by Rubin, Jared, Ph.D., Stanford University, 2007, 149 pages; AAT 3267615

Abstract (Summary)

It is well known that the economic and institutional development of the Middle East and Western Europe has diverged greatly over the last millennium. Until recently, most scholars attributed this divergence to the "conservative nature" of Islam. This dissertation departs from this scholarship by analyzing the institutional determinants underlying the emergence and persistence of economically inhibitive religious norms, a crucial avenue through which religion has contributed to this divergence. I concentrate my analysis on a specific norm, bans on taking interest. I begin by accounting for the origin of the Christian ban, employing a game theoretic analysis and historical evidence to suggest that the Church's commitment to providing social insurance for its poorest constituents--who primarily borrowed for consumption--encouraged over-borrowing, which the Church attempted to limit by banning interest. Next, I analyze economically inhibitive religious norms (e.g., interest bans in economies where investment lending is prominent), which have frequently persisted in Islam but not in Christianity. I argue that the salient exogenous difference between Christian and Islamic institutional structures is the greater degree of overlap between the religious and the politico-legal authorities in the latter. I employ a general model examining the basic tension between a politico-legal authority, which has incentive to maximize the welfare of the laity, and a religious authority, which has incentive to uphold its "eternal" doctrine. When the degree of overlap between the authorities is large, this tension diminishes and there exists less incentive for the laity to "push the envelope" and pressure the religious authority to re-interpret its doctrine. I suggest that this institutional difference entailed that economically inhibitive norms were more likely to become self-enforcing in the Muslim world, hence providing an appearance of conservatism. Islamic conservatism was thus a result, and not a cause, of the region's institutional structures. The final chapter presents a case study surveying the progression of interest theory and its practice in Islam and Christianity. I analyze these histories in the context of the model, substantiating its primary claims while providing unique insight into the institutional determinants underlying the interest ban's persistence in Islam and dissipation in Christianity.

187)the usefulness of goodwill impairment under SFAS No. 142 in reflecting the relative efficiency of firms

by Vichitsarawong, Thanyaluk, Ph.D., Oklahoma State University, 2007, 209 pages; AAT 3274634

Abstract (Summary)

Scope and method of study. This study examines goodwill impairment under SFAS No. 142 whether it improves financial reporting quality by better reflecting the underlying relative efficiency of a firm. A firm's relative efficiency is measured by using Data Envelopment Analysis (DEA). The analysis is undertaken on three selected industries--durable manufacturers, computers, and services. First, Wilcoxon rank sum tests are used to compare the efficiency of a firm with other firms in the same industry (the cross-sectional analysis) and with similar firms over different periods (the longitudinal analysis). Second, Tobit and logistic regressions are applied to analyze factors affecting the percentage of goodwill impairment and a decision to report goodwill impairment. Finally, a logistic regression and a multivariate discriminant analysis (MDA) are used to assess the predictive ability of relative efficiency in determining potential goodwill impairment.

Findings and conclusions. Results of Wilcoxon rank sum tests strongly support the hypothesis that impairment firms are relatively less efficient than non-impairment firms in the year of goodwill impairment reporting. Tobit and logistic regressions provide evidence that lagged relative efficiency of firms is negatively associated with the percentage of goodwill impairment and a decision to report goodwill impairment, after controlling for managerial reporting incentives. The inferences are robust to the choice of various input/output variables in the DEA model. The results suggest that the relative efficiency is an important determinant of goodwill impairment. Finally, results of logistic regressions used to assess the predictive ability of relative efficiency indicate that measures of relative efficiency can be used to identify the likelihood of goodwill impairment. The MDA models including relative efficiency measures correctly predict more than 50 percent of the actual impairment. These findings provide opportunity for future research to include a measure of firm overall performance in the prediction model. Overall, goodwill impairment under SFAS No. 142 can reflect the decline in relative efficiency of firms, thereby achieving the FASB's objective.

188)three essays on skill premium, college choice, and investment-specific technological change

by He, Hui, Ph.D., University of Minnesota, 2007, 122 pages; AAT 3268988

Abstract (Summary)

The relative wage and quantity of skilled workers have evolved in the post-war U.S. economy. Both the skill premium, i. e., college wage premium, and the relative supply of workers holding college degrees have been increasing over the second half of the last century. The college enrollment rate of recent high school graduates also exhibits a similar pattern as that of the skill premium. This thesis aims to (1) understand the dynamic linkage between the skill premium and college enrollment rate and (2) quantitatively investigate the driving force behind the dynamics of the skill premium and skill accumulation in a dynamic general equilibrium framework. The first essay studies the driving forces behind the dynamics of the skill premium and college enrollment rate. I develop an overlapping generations general equilibrium model with endogenous discrete schooling choice. The production technology features capital-skill complementarity as in Krusell et al. (2000). Within this framework, I quantitatively examine the effects on the skill premium and enrollment rate of two exogenous forces, investment-specific technological change (ISTC) and the demographic change known as "the baby boom and the baby bust". I find that demographic change plays an important role in accounting for the dynamics of the skill premium before the late 1970s, while ISTC drives most of the changes in the skill premium since then. ISTC also explains about 30% of the increases in the enrollment rate for the period 1951-2000, while demographic change does not have a significant effect on the enrollment rate. The second essay develops and calibrates a standard growth model, in which the dynamics of both skill accumulation and wage inequality arise as an equilibrium outcome driven by measured investment-specific technological change. It also studies the effects of three hypothetical tax policy reforms on the skill premium, skill accumulation and welfare. The third essay documents a dramatic reverse pattern of gender-specific college educational attainment over the past four decades and asks a quantitative question: to what extent can such changes be accounted for by changes in the gender-specific college wage premium?

189)three essays on entertainment industry economics

by Besocke, Portia D., Ph.D., The Claremont Graduate University, 2007, 117 pages; AAT 3268240

Abstract (Summary)

Essay one describes a real-world profit sharing contract - the movie exhibition contract - and considers alternative explanations for its use. Two explanations based on difficulties with forecasting fit the facts better than asymmetric information models. The first emphasizes two-sided risk aversion; the second emphasizes measurement costs. Transaction costs and long-term relationships also affect contractual practices. We use an original data set of all exhibition contracts involving thirteen theaters owned by a prominent St. Louis exhibitor over a two-year period to inform our theories and test hypotheses. The findings question traditional contract theory and may be relevant for other contracting environments.

Essay two describes the complex revenue-sharing rules used by movie distributors and exhibitors, discusses recent trends that make such rules less useful and then proposes alternative rules that have much lower transaction costs. We use a large sample of contracts to show that our simpler rules would lead to virtually no change in the allocation of movies to screens or in total revenues generated. Thus, the persistence of suboptimal rules poses a challenge for contract theory. The industry has been moving toward simpler rules like the ones we describe; and thus we may be describing the long run result of this evolution.

Essay three analyzes the entertainment conglomerates response to revenue shock in the music sector. Utilizing tools from the internal capital markets literature developed by Lamont (1997) and Vogel (2004), I investigate whether negative revenue shocks in the music industry affected entertainment conglomerates' investment or resource allocation decisions. Revenues in the U.S. music market increased for a decade, peaking in 1999, then dropped 20% in four years allegedly due to piracy. In 2000, the five major music companies that dominate music sales were owned by four entertainment conglomerates, TimeWarner, Vivendi Universal, Sony Corp., Bertelsmann and one stand-alone company, EMI. By 2004, only four major music companies remained. The conglomerate responses to the revenue shock in the music sector are unique to each firm. I analyze division and firm-level accounting data and company stock price to understand why these seemingly similar organizations made such different allocation decisions.

190)using cognitive load theory to explain the accrual anomaly

by Hewitt, Max R., Ph.D., University of Washington, 2007, 78 pages; AAT 3265347

Abstract (Summary)

The accrual anomaly represents the positive abnormal returns generated by a trading strategy that seeks to exploit investors' failure to accurately forecast earnings when the accrual and cash components of earnings (earnings components) are differentially persistent. This dissertation investigates: (i) whether analysts and nonprofessional investors accurately forecast earnings when the earnings components are differentially persistent; and, (ii) a behavioral process that contributes to the accrual anomaly. I find that the earnings forecasts of analysts and nonprofessional investors are less accurate when the earnings components are differentially persistent relative to when the earnings components are equally persistent. Using cognitive load theory as a framework, I consider the effect of two hurdles (i.e., intrinsic and extraneous cognitive load) that investors need to overcome to accurately forecast earnings of firms with differentially persistent earnings components. I investigate how task decomposition and disclosure format combine to enable analysts and nonprofessional investors to overcome the cognitive load hurdles and more accurately forecast earnings when the earnings components are differentially persistent. I predict and find that the earnings forecasts of analysts and nonprofessional investors are only more accurate when analysts and nonprofessional investors attend to the earnings components and this information is disclosed in a format that minimizes their information processing costs.

191)value relevance of asset write-offs/write-downs and effectiveness of FASB pronouncements (SFAS #121, #142, #144)

by Xu, Wei, Ph.D., Rutgers The State University of New Jersey - Newark, 2007, 166 pages; AAT 3252424

Abstract (Summary)

This study, from the long-term association study perspective, aims to examine whether asset write-off/write-down (WO/WD) information is value relevant and whether SFAS #121, #142 and #144 are effective in improving the information value of both the asset WO/WD information and the aggregate accounting numbers. Further, to better understand the market valuation process and provide standard setters with more insights about WO/WD activities, the value relevance (timeliness) of goodwill impairment charges as well as other categorized asset WO/WD charges is separately investigated.

The empirical results suggest that (1) on average, asset WO/WD is value relevant information, but not reported in a timely fashion; (2) the overall explanatory power of the major accounting information reported by WO/WD firms' is of no difference from that of their non-WO/WD counterparts after controlling for profitability; (3) SFAS #121 did not help to improve value relevance or timeliness of reported financial information; (4) SFAS #142 and #144 have made the asset impairment charges more aligned with book value and share prices; (5) SFAS #142 and #144 have improved the alignment between book value and market value for all adopting firms (WO/WD or non-WO/WD); (6) goodwill impairment charges are not value relevant in the pre-142 period; but became significant negative value signals in the post-142 time regime; (7) information value of asset WO/WD differ across types of assets involved (and WO/WD reasons): market interprets WO/WD of current assets, PPE, and deferred charges (pure-impairment and DISC-related-impairment in case of WO/WD reasons) as negative value signals (with different magnitudes); however, the coefficients attached to WO/WD of non-GW intangibles or R&D-in-process (RESTR-related or M&A-related in case of "reasons") are not significantly different from zero.

This is the first study that thoroughly examined the value relevance of (categorized) asset WO/WD and the effectiveness of three consecutively announced FASB pronouncements by using quasi-hand-collected data over a long and recent sample period (1992-2004). Empirical findings from this area of research will contribute to the study of security evaluation process, provide valuable feedbacks to the concurrent accounting guidance and supplement asset WO/WD accounting literature with empirical evidence from the association study perspective.

192)voluntary disclosures in mergers and acquisitions

by Wandler, Scott Allen, Ph.D., Louisiana State University and Agricultural & Mechanical College, 2007, 100 pages; AAT 3277120

Abstract (Summary)

Whenever there is a merger between two publicly held companies in the form of a stock transaction, the companies must provide a proxy-prospectus to their shareholders with enough information to vote on the proposed merger. The proxy-prospectus contains mandatory pro forma financial statements as if the firms had merged as of the end of the previous year. Occasionally, the proxy-prospectus contains voluntary, forward-looking information, such as projected earnings per share (EPS) or price-to-earnings (PE) ratios of the combined firm.

There are two reasons that management may provide this voluntary forward-looking information: (1) management could be providing an optimistic view of the new firm to persuade the shareholders to vote in favor of the merger or (2) the information could be used to provide a clearer picture to help management reduce the information asymmetry between management and shareholders.

This study investigates the factors that increase the likelihood of a merger being completed. Second, this study examines the impact that important reporting incentives and firm characteristics have on whether or not firms choose to voluntarily disclose earnings estimates. Lastly, this study examines earnings forecast bias and the factors related to the accuracy and bias of the voluntarily disclosed earnings estimates.

Results indicate that shareholders of bidder firms that are weaker financially are more likely to approve a merger suggesting that shareholders of weaker firms might be trying to get stronger by merging with another firm. Second, bidder firms with stronger financial characteristics and target firms with weaker financial characteristics are more apt to voluntarily disclose earnings estimates. Additionally, for those firms that provided EPS forecasts, the forecasts were positively biased. These findings indicate that management of bidder firms that are stronger financially may use these voluntary EPS forecasts to enhance the future outlook of the firm.

Lastly, firms that provided voluntary earnings estimates were examined. Results indicate that firms with stronger corporate governance provided more accurate and less biased EPS forecasts. This suggests that corporate governance, which is in place to protect shareholder rights, is doing its job.

193)analyzing interaction of electricity markets and environmental policies using equilibrium models

by Chen, Yihsu, Ph.D., The Johns Hopkins University, 2007, 241 pages; AAT 3240682

Abstract (Summary)

Around the world, the electric sector is evolving from a system of regulated vertically-integrated monopolies to a complex system of competing generation companies, unregulated traders, and regulated transmission and distribution. One emerging challenge faced by environmental policymakers and electricity industry is the interaction between electricity markets and environmental policies. The objective of this dissertation is to examine these interactions using large-scale computational models of electricity markets based on noncooperative game theory. In particular, this dissertation is comprised of four essays.

The first essay studies the interaction of the United States Environmental Protection Agency NO x Budget Program and the mid-Atlantic electricity market. This research quantifies emissions, economic inefficiencies, price distortions, and overall social welfare under various market assumptions using engineering-economic models. The models calculate equilibria for imperfectly competitive markets---Cournot oligopoly---considering the actual landscape of power plants and transmission lines, and including the possibility of market power in the NO x allowances market. The second essay extends the results from first essay and models imperfectly competitive markets using a Stackelberg or leader-follower formulation. A leader in the power and NO x markets is assumed to have perfect foresight of its rivals' responses. The rivals' best response functions are explicitly embedded in the leader's constraints. The solutions quantify the extent to which a leader in the markets can extract economic rents on the expense of its followers. The third essay investigates the effect of implementing the European Union (EU) CO 2 Emissions Trading Scheme (ETS) on wholesale power prices in the Western European electricity market. This research uses theoretical and computational modeling approaches to quantify the degree to which CO 2 costs were passed on to power prices, and quantifies the windfall profits earned by generators under the current EU allowances allocation method. The results show that the generators in EU could earn substantial windfall profits from two sources: free emissions allowances and increased gross margin among inframarginal generating units. The fourth essay examines effect of climate change on future pollution emissions from regional electricity markets, accounting for how climate influences demand profiles and generation efficiencies. This research illustrates that even when seasonal/annual pollution emissions are limited by regulatory caps, significant increases in emissions during high-demand hours could potentially lead to an increase in the occurrences of acute ozone episodes, which worsen public health during summer months.

The major contributions of this dissertation are two fold. First, the methodological and computational framework developed in the research provides a basis for understanding complex interactions among several oligopolistic markets and climate policies. Second, the outcomes of the research reinforce the need for careful monitoring of market interactions and a thorough examination of the design of allowances and power markets.

194)an examination of municipal finance reform regarding municipal bankruptcies in the United States

by Deal, Keren H., Ph.D., Auburn University, 2007, 339 pages; AAT 3273352

Abstract (Summary)

Municipal bankruptcy is considered rare. A total of 569 U.S. municipalities filed Chapter 9 from 1938-2005; however, the occurrence of Chapter 9 cases since 1990 seems to be escalating nationwide. At the time of this writing, 29 states allow their municipalities to file for Chapter 9 protection. Of these 29 states, 14 states do not require an additional step to be taken by the municipality prior to filing bankruptcy documents, such as approval by the Governor or state agency or commission. Alabama's current legislation allows municipalities to file for Chapter 9 protection without notification of the state government.

Alabama is ranked fourth in all municipal bankruptcy filings that occurred between 1990 and 2004. However, when considering the total state municipal bankruptcy filings per number of local governments per state, Alabama is ranked first in the total filings per number of local governments during the 1990 to 2004 period.

In light of the increase in filings, an analysis of the nine Alabama municipal bankruptcies was conducted. The overall contributing factors found were a mixture of financial mismanagement by public officials and the economic decline of the municipalities from loss of businesses and demographic changes. The total financial impact of these municipal bankruptcies is unknown; however, an analysis of the interest rates of debt issuances from two of the municipalities that underwent bankruptcy showed that both municipalities incurred higher-than-average interest rates. This translates to a higher burden on the local taxpayer to repay the debt.

This study also performed a comparative analysis on the financial reform methods enacted by Florida, Georgia, North Carolina, Ohio, Pennsylvania, and Tennessee in dealing with local government fiscal stress and municipal bankruptcy. A secondary analysis of the policies and procedures currently employed by the Alabama State Department of Education (SDE) for local boards of education in Alabama was also conducted.

Bankruptcy, of any type, should be considered as a last resort. Numerous municipal bankruptcies indicate underlying state policy problems in addressing local government finances. This study found information that might be useful to elected officials in Alabama and public administrators in considering other state programs as well as the SDE for municipal finance reform and in determining future policies for local governments in Alabama.

195)an investigation of hope, academics, environment, and motivation predictors of persistence in higher education online programs

by Holder, Bruce A., Ph.D., Northcentral University, 2007, 72 pages; AAT 3249232

Abstract (Summary)

Retention rates in distance education programs are frequently lower than in traditional brick-and-mortar institutions. Predictors of persistence previously found useful in distinguishing successful from unsuccessful distance learners were assembled in a 60-item survey. The survey was completed by 259 learners enrolled in associate's, bachelor's, or master's level distance learning courses in accounting, business administration, information services, criminal justice, nursing, management, and education at a mid-western university. The survey measured variables related to academics, environment, motivation, and hope as predictors of persistence, where persistence was defined as continuing beyond the first three classes in one of the three degree-granting programs. Persisters ( N = 209) tended to score higher on environmental measures of Emotional Support, Self-efficacy, and Time and Study Management than non-persisters ( N = 50). Surprisingly, high scores on a measure of Learner Autonomy (independent learning) were associated with non-persistence in the online programs. The measures of academics, motivation, and hope were not significantly predictive of persistence. The findings were interpreted in the context of the cohort model used in the online programs attended by the students surveyed in the study.

196)an investigation of the association between governance quality and accrual-based earnings quality

by Nitkin, Mindell Reiss, D.B.A., Boston University, 2007, 211 pages; AAT 3240635

Abstract (Summary)

In the wake of instances of earnings management and aggressive financial reporting, the US Congress passed the Sarbanes-Oxley Act of 2002, which mandated sweeping reforms in corporate governance. Implicit in SOX is the belief that governance mechanisms impact earnings quality. Broadly defined, governance encompasses all processes that ensure proper stewardship over a company's resources by mitigating agency issues that arise due to the separation of ownership and control. Despite the positive association between specific governance choices and earnings quality, the relationship between earnings quality and the overall tenor of a firm's governance is not clear. This is because financial reporting serves as a governance mechanism in its own right and because management exercises control over earnings quality and influences the firm's portfolio of non-earnings governance choices.

In regards to non-earnings governance mechanisms, management, in conjunction with the Board of Directors, constructs a governance portfolio by choosing the governing rules of the firm and the composition of the Board of Directors. I develop a framework that assesses the quality of this portfolio as a function of preservation of shareholder rights. I apply the framework to the governing rules of a firm and its board and develop three governance indices that reflect the tenor of a firm's governance portfolio. The index approach is based on the theory that a firm's governance portfolio is the result of choosing from a menu of options that may be substitutes or complement. Using these indices, I investigate the association between governance and accruals-based earnings quality.

Two competing hypotheses are proposed. Under the "monitoring/matching" hypothesis, earnings quality is hypothesized to be positively associated with governance quality. Under the "assurance/tradeoff" hypothesis, earnings quality is hypothesized to be inversely associated with governance quality. Findings show that firms with better Governance manage earnings more than firms with poorer governance, but that they are more likely to utilize income-decreasing discretionary accruals than income-increasing. Taken together, the results reflect systematic trade-offs between both earnings quality and governance quality as well as between attributes of earnings quality. The results also highlight that caution must be exercised when choosing metrics to model earnings quality.

197)auditor tenure and accounting conservatism

by Li, Dan, Ph.D., Georgia Institute of Technology, 2007, 138 pages; AAT 3271548

Abstract (Summary)

Accounting regulators are concerned about the potential threat of long-term auditor-client relationships on auditor independence, leading to lower audit quality. The main objective of this study is to examine the association between auditor tenure and an important feature of accounting, namely conservatism. Following Basu (1997) and Ball, Kothari and Robin (2000), I define conservatism as the quicker recognition in earnings of bad news about expected future cash flows. I investigate whether long-term auditor-client relationships are associated with less timely recognition of earnings to bad news, and a lower rate of reversal of negative earnings changes.

The overall results strongly show that conservatism decreases as auditor tenure lengthens. The results are robust across various measures of conservatism and a series of sensitivity tests. However, auditors' litigation exposure appears to be able to mitigate the adverse impact of auditor tenure. In additional tests, I find that the reduced conservatism is not driven by the larger clients that auditors have incentives to retain. Moreover, I find that even industry specialists could not avoid the negative impact of longer auditor-client relationships on conservatism. The study provides some support to the regulators who are concerned about the potential negative impact of auditor tenure on audit quality and the rule of mandatory audit firm rotation.

198)does incorporating non-linearity into discretionary accrual models improve their performance?

by Wan, Huishan, Ph.D., The University of Iowa, 2007, 78 pages; AAT 3266007

Abstract (Summary)

Using a large sample of firms that restated earnings, this study investigates whether incorporating non-linearity into discretionary accrual models improves their performance along three dimensions: earnings management detection, accuracy (the ability to accurately estimate the magnitude of managed earnings), and directional analysis (the ability to detect the direction of earnings management). The non-linearity refers to the well-documented asymmetry of timely recognition of losses versus gains. The findings of this study are important for three reasons. First, discretionary accrual models play a prominent role in several streams of accounting research, especially in earnings management research. Thus, the ability of discretionary accrual models to isolate the discretionary (managed) component from the non-discretionary (unmanaged) component of total accruals is critical. Second, there is a concern about the linear specification of the currently widely used discretionary accrual models. If the conventional linear discretionary accrual models are mis-specified, it is likely to result in misleading inferences about earnings management behavior. Finally, there is little evidence on whether a non-linear specification improves the performance of discretionary accrual models, especially recently refined models. This study attempts to fill this void in the literature. Using 317 firm-year observations of earnings restatements from 1997 to 2005, I investigate whether a non-linear specification improves the performance of several widely used discretionary accrual models. The findings indicate that the non-linear specification improves the models' performance in detecting the existence of earnings management but does not improve model's performance in accuracy and directional analysis. The findings also indicate that a more sophisticated model that incorporates a performance measure, an expense variable, and a future growth measure outperforms other simple models.

199)earnings volatility, cash flow volatility and informed trading

by Jayaraman, Sudarshan, Ph.D., The University of North Carolina at Chapel Hill, 2007, 67 pages; AAT 3272683

Abstract (Summary)

I examine whether earnings that are smoother or more volatile than cash flows provide or garble information. Consistent with theories that predict more informed trading when public information is less informative, I find that bid-ask spreads and the probability of informed trading are higher both when earnings are smoother than cash flows and also when earnings are more volatile than cash flows. Additional tests suggest that managers' discretionary choices that lead to smoother or more volatile earnings than cash flows, on average, garble information. However, I find that informed trading is attenuated in settings in which theory suggests that discretionary smoothing or volatizing of earnings is likely to be informative.

200)effect of derivative accounting rules on corporate risk-management behavior

by Zhang, Haiwen, Ph.D., University of Minnesota, 2007, 84 pages; AAT 3249520

Abstract (Summary)

This paper examines the impact of Statement of Financial Accounting Standard No. 133 (SFAS 133), " Accounting for derivative instruments and hedging activities ", on corporate risk-management behavior. SFAS 133 requires companies to recognize fair values of derivative instruments in the balance sheet and changes in fair values in the income statement; however, it provides preferential accounting treatment for derivative instruments that effectively hedge the underlying business risk. Hedge accounting allows only the ineffective hedging or speculative positions to be reflected in current period earnings. Thus, I hypothesize that the effect of the standard on firms' risk-management activities varies depending on the hedging effectiveness of their derivative instruments. I designate a new derivative user as an effective hedger if its risk exposures decreased relative to non-users after the initiation of the derivatives program and as an ineffective hedger ("speculator") otherwise. The empirical results show that risk exposures related to interest-rate, foreign exchange-rate, and commodity price decrease significantly for speculators but not for hedgers after the adoption of SFAS 133. Consistent with the decrease in risk exposures, I find that the volatility of cash flows for speculators also decreases significantly relative to hedgers while the volatility of earnings remains unchanged for both groups. Overall, the evidence suggests that SFAS 133 has discouraged firms' speculative use of derivative instruments.

201)essays on the economics of exchange networks

by Lee, Jeongsik, Ph.D., University of California, Los Angeles, 2007, 213 pages; AAT 3272332

Abstract (Summary)

This dissertation investigates the economics of exchange networks, focusing on the mechanisms that drive the association between network position/relationship and economic performance of actors involved in the exchanges. It argues that network position/relationship is endogenously determined--driven by actor-level heterogeneity and the conditions associated with exchanges--rather than a given, and demonstrates that understanding this dynamic can help clarify the position-performance relation. This dissertation begins with a critical review of existing work on exchange networks, pointing to empirical issues in these studies and suggesting research methodologies for addressing them. The empirical part of this dissertation explores two popular topics in the literature--network position and relational embeddedness. The first study examines how past performance influences the relative positions of actors in a network and how accounting for this endogeneity alters the often-demonstrated association between network position and performance. The collaboration network of U.S. biotech inventors shows that inventors with superior track records are more apt to form new collaboration ties, thereby occupying positions that allow them to broker across network boundaries. Controlling for past performance weakens the positive relationship between brokering position and patent performance. Further, when inventor-level heterogeneity is controlled for through inventor-fixed effects, the position-performance correlation all but disappears. These findings suggest that actor-level heterogeneity explains most of the position-performance association. The second study examines the relational embeddedness, focusing on the performance consequences of embedded exchanges and the mechanism behind the embeddedness-performance association. It identifies boundary conditions under which relational embeddedness can fail to deliver the positive outcomes found in prior studies. It also explores why maintaining embedded relationships might be optimal despite the possible hazard associated with the exchanges. The acquirer-advisor relationship data in U.S. M&A market provide evidence of negative returns to embedded exchanges. This negative impact stays significant even after accounting for possible endogeneity in relational embeddedness. Uncertainty associated with the exchanges strengthens the negative correlation. Opportunism appears to prevail when the enabling mechanisms of embeddedness likely fail. Persistent information asymmetry concerning the quality of advisory service seems to foster such malfeasance. Switching costs may partially explain why repeated exchanges nevertheless exist in this market.

202)essays on the information contents of bank subordinated debt spreads and the pricings of bank loans and services

by Pornrojnangkool, Thanavut, Ph.D., Columbia University, 2007, 185 pages; AAT 3266661

Abstract (Summary)

This dissertation is a collection of three essays on banking topics related to pricing of bank loans and services, and information content of bank subordinated debts. The main focus of the first essay is to address sensitivity and timeliness issues of bank subordinated debt spreads in assessing bank risk. Previous studies in this area have examined the relationship between spread and accounting or enhanced accounting indicators of bank risk. The backward looking nature of accounting variables creates econometric specification problems for the standard OLS and fixed-effects estimators. I propose the use of a GMM estimator to address this issue, in addition to three equity market indicators of risk to address the timeliness and risk sensitivity issues. For the study period of Q3:1992-Q2:2001, the subordinated debt spread is significantly sensitive to these market indicators of risk. These results, however, do not extend to the uninsured CD spread during the same period. I also find supporting evidence that both equity and debt markets actively monitor bank risk in a timely fashion, using the Granger causality test between spread and each of the market indicators of risk within panel VAR analysis. The findings suggest that subordinated debt spread could potentially provide a timely indicator of bank risk to other market participants and regulators.

The second essay investigates a case study of a mega-merger of two regional banks in New England in 1999 and assesses its impact on market power in some segment of the lending markets. Prior to the merger, these banks charged small- and medium-sized middle-market borrowers unusually low interest rates on loans, reflecting their ability to realize economies of scope and scale. After the merger, those cost savings were no longer passed on to those borrowers, with the exception of small middle-market borrowers. The finding suggests that regulators should consider the consequences of concentration in lending markets in addition to deposit markets when evaluating mergers and structuring appropriate divestiture requirements.

The last essay investigates how banking relationships affect the terms of lending, through both supply- and demand-side effects, and the underwriting costs of debt and equity issues. The micro-level loan and underwriting data are used to investigate pricing effects of the joint production of loans and security underwritings within the context of relationship banking using a dataset of complete financial histories of 7,315 firms for the period from 1992 to 2002. There is strong evidence that banks price loans and underwriting services in a strategic way to extract value from their relationships. In particular, banks charge premiums for both loans and underwriting services to extract value from their combined relationships. Part of this value may include a reduced demand for borrowing, which takes the form of reduced demand for lines of credit.

203)evaluation and comparison of management strategies by data envelopment analysis with an application to mutual funds

by Wilson, Chester Lewis, Ph.D., The University of Texas at Austin, 2007, 315 pages; AAT 3245797

Abstract (Summary)

A new categorical schema for strategic management is developed; a methodology for its implementation is elaborated; an application to mutual funds based on microeconomic theory is demonstrated; and results which establish quantitative measures for evaluating strategies, improve measures of managerial performance, and establish a new method of evaluating portfolio performance with guidance for potential mutual fund shareholders is presented.

The evaluation of strategies themselves depends fundamentally on distinguishing them from their execution, from their realization in practice. The accounting definition of strategy, ''a plan of action used to guide or control other plans of action'' finds an observable, indeed measurable, example in the strategic choices of mutual funds, which are required by law to declare and conform to the general strategy by which they conduct investment management.

The methodology to exploit the declared strategies and performance data of mutual funds is Data Envelopment Analysis (DEA), a nonparametric linear programming method of analysis for use with empirical data. By producing a piecewise linear frontier based on the Pareto-Koopmans efficient performers, DEA provides a basis for measuring performances and facilitates sensitivity analysis. Data Envelopment Analysis measures assume no prior, underlying functional form (such as regression equations or production functions) to relate input to output or to other variables. An evaluation of a selected group of mutual funds illustrates the general DEA method and evaluates the actual performance of the funds. Then a new application involving an extended, three-stage Data Envelopment Analysis separates the performance of the investment strategies from the effects of managerial shortcomings and abilities to implement the strategies. This makes it possible to separately identify and evaluate what a strategy can accomplish. It also makes it possible to evaluate separately short-run from long-run performance. Finally, DEA identifies benchmarking possibilities for removing these short-run deficiencies.

This new method for evaluating strategies and shortcomings in performance is demonstrated by application to mutual funds, which display striking contrasts in managerial performance and strategic potential. Although demonstrated with mutual funds, this method is not restricted to such applications. Indeed, the methods in this thesis provide a new way of evaluating investment potentials by distinguishing between actual short-run performance and long-run potentials.

204)financial misrepresentation: Antecedents and performance effects

by Harris, Jared D., Ph.D., University of Minnesota, 2007, 130 pages; AAT 3249497

Abstract (Summary)

Corporate misconduct is a critical problem; it not only represents a breakdown of corporate ethics, but also undermines firm performance. Firm misconduct has been studied from a variety of vantage points, yet there remains great opportunity to better understand the antecedents and consequences---both economic and social---of financial misrepresentation, a specific form of corporate misconduct.

This thesis examines the influence of relative performance and managerial incentives on corporate misrepresentation, and then tests the relationship between misrepresentation and subsequent operating performance, including the moderating effects of change in board composition and CEO turnover. Using a hand-collected dataset from several archival sources of company records, I draw several important conclusions from the empirical analyses. First, CEO incentive pay and poor relative performance increase the likelihood of misrepresentation. Second, misrepresentation impairs subsequent operating performance, although this negative effect can be partially offset by CEO replacement and increased board independence.

The analysis includes a combination of estimation techniques, including categorical dependent variable and fixed-effect methods, all conducted using a matched sample of misrepresenting and non-misrepresenting firms.

This dissertation advances our academic understanding of corporate misconduct, and contributes to academic theory across research literatures, including strategic management, organization theory, and business ethics. The results are also likely to be of practical interest to corporate board members, top executives, and shareholders.

205)independent directors, investment opportunities and earnings conservatism

by Zhang, Liping, Ph.D., The George Washington University, 2007, 86 pages; AAT 3230286

Abstract (Summary)

Prior research is inconclusive on the associations between independent directors and earnings conservatism. These studies suffer from deficiencies in research design, including a failure to consider the moderating effects of firm characteristics on the associations. This study reexamines the issue while conditioning the investigation on the extent that investment opportunities (IOS) comprise firm value and addressing research design limitations in prior studies. The analysis employs two measures of earnings conservatism. One is accrual-based advanced by Givoly and Hayn (2000) and Ahmed et al. (2002); the other is based on the differential sensitivity of earnings to negative versus nonnegative returns as developed by Basu (1997). The sample comprises 3,134 (2,516) S&P 500, S&P MidCap 400 and SmallCap 600 public companies from 1997 to 2003 for accrual-based (Basu) measure of conservatism.

The study documents (1) positive associations between both measures of conservatism and the fraction of independent directors on the board and (2) the association between board independence and accrual-based measure of conservatism declines significantly with IOS. Overall, the evidence is consistent with the hypotheses that independent directors encourage conservative accounting, and as IOS and the related information asymmetry between insiders and outsiders increases, the efficacy of independent directors in promoting conservative accounting declines. In addition, the evidence indicates that failure to consider IDS can undermine the ability to detect empirical relationships between board and audit committee independence and earnings conservatism.

206)indicators of saving: A case study of earned income tax credit recipients in the Twin Cities of Minnesota

by Gabriel, Leo T., D.B.A., Anderson University, 2007, 140 pages; AAT 3246912

Abstract (Summary)

The primary purpose of this dissertation was to examine factors associated with the decision to save in financial assets for earned income tax credit (EITC) recipients in the Twin Cities of Minnesota, using tax return and survey data. A secondary purpose was to determine if there is a positive association between tax refund amounts and the intention to save tax refunds. The EITC, the largest U.S. antipoverty program, is a tax transfer policy that provides an incentive for low-income households to move from welfare to the workplace. If EITC recipients are able to save, to access credit, and to accumulate assets, then the antipoverty effect of the EITC tax policy will be enhanced.

Economic theory predicts that individuals will act in their best interest and save for income over their life time. Behavioral and institutional theories identify factors in saving decisions that are outside of economic theory. Institutional factors, which include access to financial products, saving incentives, financial education, and facilitation of savings, are increasingly considered in studies of low-income families.

This study utilized empirical analysis of tax return and survey data to examine the determinants of saving. Data came from AccountAbility Minnesota, a nonprofit organization that provides tax assistance to low-income individuals. Savings were determined by indicators of investments in financial assets on 2004 tax returns and EITC recipients' intention to save their tax refunds. Results indicated that income, being banked, race, and marital status were significant factors associated with the decision to save in financial assets. Results also indicated that there was not a significant association between tax refund amounts and the intention to save tax refunds.

207)information asymmetry, dividend increases, risk and expected future earnings changes

by Jung, Boo Chun, Ph.D., University of Colorado at Boulder, 2007, 65 pages; AAT 3273740

Abstract (Summary)

This paper examines the information content of dividend increases in a setting where firms face different levels of information asymmetry between management and investors. Specifically, I investigate whether and why stock market reactions to dividend increase announcements are greater for firms with lower analyst coverage. This study provides three sets of findings. First, the information content of dividend increases is greater for firms covered by fewer analysts. Second, stronger stock market reactions to dividend increases by firms with lower analyst coverage are due to both: (1) a stronger association between dividend increases and future earnings changes, and (2) greater declines in Fama and French (1993) three risk factor loadings. Finally, I find that prior studies mismatch the current dividend change year with the future earnings change year. After correcting for this misalignment, I show that dividend increases contain information regarding increases in future earnings and profitability. My findings generally hold using other measures of information asymmetry. Overall evidence suggests that managers facing greater information asymmetry signal their firms' true worth' through dividend increases.

208)investment, acquisitions, and financial constraints

by Pierce, Joshua Robert, Ph.D., Michigan State University, 2007, 133 pages; AAT 3264216

Abstract (Summary)

In this dissertation we examine the determinants of investment at the firm level. We investigate the impact of cash flow on investment, ownership on investment, and finally the classification and correlation of qualitative measures of financial constraint status with quantitative accounting variables. In the first essay we use a unique, hand-collected dataset, and find a significant positive relation between a firm's U.S. advertising spending and its contemporaneous foreign cash flow. This relation holds even after controlling for factors that should be related to the optimal level of U.S. advertising and is stronger for subsets of firms that we expect to be relatively more financially constrained including younger firms, firms that pay low dividends, highly levered firms, firms with low credit ratings, and firms that do not hedge. Our evidence supports the important hypothesis that there is a causal and economically substantial link between a firm's cash flow and its investment decisions, even for intangible investments such as advertising. In the second essay we study a sample of 555 brands that experience an ownership change and find that new owners often sharply increase or decrease advertising spending on the acquired brand, with large cuts being particularly common. Increased private ownership of a brand is associated with a significant downward shift in advertising relative to other deals. Buyers tend to cut advertising in existing brands that closely overlap with purchased brands, but do not cut spending on non-overlapping brands. Combined buyer-seller announcement returns are positively related to some measures of post-acquisition downward shifts in advertising spending. Acquired brands do not on average experience significant losses in market share, even when advertising spending is revised downwards. Our evidence is consistent with the hypothesis that the identity and characteristics of an asset's owner are important determinants of investment policy for the asset. In the final essay we examine the annual reports of 400 randomly chosen companies between 1995-2004 to investigate both the existence and implications of financial constraints based on qualitative and quantitative measures. We extend the work of Kaplan and Zingales (1997) and use over 1900 firm-year observations to construct indicators of financial constraints based on the management discussion and analysis section of annual reports and quantitative measures constructed from accounting data on COMPUSTAT. We use these measures to investigate how stable financial constraint classifications are over time and how robust they are to sample size issues. Further, we are able to ascertain whether the correlations between qualitative and quantitative measures of financial constraints have changed over time and what is driving this change. Finally, we re-investigate the sensitivity of investment to cash flow using an updated and more heterogeneous sample. We find that (1) the distribution of financial constraint status has changed over time; (2) the correlation between quantitative factors and qualitative financial constraint classifications has changed; and (3) the relation between investment and cash flow has decreased over time and is a questionable measure of financial constraint status when cash flow and investment are positively correlated.

209)quantitative explorations of the aggregate economy

by Schoellman, Todd Kurtis, Ph.D., Stanford University, 2007, 114 pages; AAT 3267621

Abstract (Summary)

This dissertation uses a combination of data and calibrated computational models to address issues of relevance to the aggregate economy.

After an introductory chapter, the second chapter seeks to account for the importance of quality-adjusted schooling in explaining cross-country income differences. I construct a measure of school quality based on the returns to schooling of immigrants to the United States. I use the school quality measure as an input to a calibrated model of differences in education quality and quantity across countries. Both education quality and education quantity are relevant in explaining the large observed income differences across countries. If quality-adjusted education were the only factor differing across countries, the United States should be 5.9 times richer than the poorest country in the world. Accounting for immigrant selection does little to change this estimate.

The third chapter, co-authored with Michèle Tertilt, documents that the average American today lives with almost half as many people today as the average American in 1850. We model household formation as a tradeoff between sharing local public goods and costly interpersonal frictions. We postulate that the demand for private goods is more income-elastic than the demand for local public goods, so as incomes rise, there is a decrease in the relative importance of local public goods, which leads to an endogenous decline in household sizes. We document a quantitatively important link between household size, income, and expenditure patterns. Our model calibrated to the 2000 cross-section accounts for 30 percent of the decline since 1850. We extend the model to the case where children themselves are a form of local public good. Children also have non-homothetic preferences, leading children to become more costly as incomes rise. The model with children accounts for 95 percent of the decline since 1850 as well as several other interesting features of the data.

210)the spread of performance auditing among American cities

by Funkhouser, Mark Allen, Ph.D., University of Missouri - Kansas City, 2000, 157 pages; AAT 9999149

Abstract (Summary)

The focus of this study is performance auditing in American cities. The study traces the development of performance auditing in the United States and argues that performance auditing speaks to classic problems in public administration related to the governance and control of organizations. A theoretical framework for explaining the spread of performance auditing is developed, primarily from the literature of the diffusion of innovations, but also using the frame analysis of organizations developed by Lee Bolman and Terrence Deal, and the concept of the activist auditor put forth by Edward Wheat.

A two-stage model of performance audit adoption is proposed in which cities are seen as first creating an audit function as part of municipal government. The second stage of adoption occurs when the audit function begins to conduct performance audits as part of its audit practice.

A sample comprised of all cities in the United States with a population of 100,000 or greater was examined, primarily through the use of a mail survey. The survey response rate for cities with an audit function was 88 percent. An audit function was found to be present in 148, and performance auditing has begun in 109, of the 218 cities in the study.

The adoption of performance auditing is generally found to be positively correlated with the classic features of the diffusion of innovations model. In addition, auditors who have adopted performance auditing are more likely to use the political frame to analyze organizations and to have beliefs about auditing that are consistent with Wheat's activist auditor concept. Performance auditing was found to be positively correlated with city size and with proximity to other cities with performance auditing. Performance auditing was found to be negatively correlated with the elements of council-manager government.

The study concludes with recommendations for government auditors and for public administrations. Auditors should recognize the linkage between politics, conflict and performance auditing and should see equity as an implicit value in performance auditing. Public administrators should recognize the implications of performance auditing for the policy process and the potential of performance auditing for combating abuse of organizational power.

211)an empirical study of select financial variables inherent in fraudulent financial reporting in the financial institutions industry

by Shawver, Todd A., D.B.A., Nova Southeastern University, 2007, 151 pages; AAT 3286188

Abstract (Summary)

Detecting fraudulent activities in financial reporting is, and will continue to be, a challenge for audit firms. Detecting management fraud is a difficult task utilizing normal auditing procedures. There is a shortage of knowledge concerning the characteristics of management fraud. Most auditors lack the experience necessary to detect fraud, and some managers are deliberately trying to deceive the auditors.

This dissertation seeks to identify some of the quantitative characteristics of fraudulent financial reporting within financial institutions. This industry is the third most likely industry involved in fraudulent financial reporting. This research will utilize a holistic strategic-systems lens theory to identify these characteristics, supported by logistic regression. Thirty-five financial institutions extracted from a report generated by the United States General Accounting Office will be utilized in this study, matched with thirty-five similar firms not found to be fraudulent during the same period. The companies will be matched based on asset size and SIC code.

From this research, the model tested may be utilized to assist audit firms and research committees of the Securities and Exchange Commission in early detection of fraudulent financial reporting, in particular, the financial institutions industry.

212)an examination of the relationship between incentive compensation and deceptive performance reporting

by Cornell, Robert M., Ph.D., The University of Utah, 2007, 171 pages; AAT 3255568

Abstract (Summary)

This dissertation examined the relationship between incentive compensation and deceptive performance reporting. A substantial body of literature primarily in accounting, economics, and psychology examined how motivation is affected by goals, standards, and economic compensation for superior performance. Relatively little research, however, has investigated reactions to substandard performance or outright failure. In this dissertation, comprised of three papers, prior literature is reviewed on motivation by goals and incentives to form predictions of how incentive compensation contracts differentially motivate deceptive behavior that may be harmful to firm stakeholders. The results of two experiments are reported in which the relationships are empirically tested between the structure of incentive compensation contracts and relative compensation information on deceptive performance reporting.

Empirical results indicated that quota compensation structures or those in which the bonus is not earned until a challenging level of performance is achieved are more likely to lead to intentional performance overstatement than bounded piece-rate structures. I also found that although auditing reduces the frequency of deception, auditing does not reduce the desire to engage in such behavior but instead is effective because it reduces the likelihood of being discovered acting deceptively. Together, the results generally provide support that the structure of performance based incentive compensation structures may impact the accuracy of reported performance information, thereby adversely impacting the reliability of accounting information for decision-making purposes.

213)financial markets development, allocation of capital to ideas, and firm-sponsored training

by Popov, Alexander A., Ph.D., The University of Chicago, 2007, 115 pages; AAT 3273060

Abstract (Summary)

In the absence of venture capital, constrained entrepreneurs rely on bank credit to fund projects, but banks often require costly external monitoring. I argue that an underdeveloped auditing market may be behind the observed suboptimal distribution of credit in developing countries with bank-based financial systems, leading to an inefficient allocation of capital and skilled labor to managerial talent. Using microdata for 5,704 firms from 24 countries, I show that an increase in financial development from its 25th to its 75th percentile is associated with an increase in average physical capital and size of the skilled workforce overseen by managers with a college degree by at least 17.4% and 27.1%, respectively. I also find that within a country, this effect is bigger in knowledge-intensive industries, but not greatly so, implying that a financial system dominated by commercial banks and coupled with a well-functioning auditing market is no substitute for equity ownership. In addition to that, I find that certain financial and legal constraints at the firm and country level are associated with lower probabilities of running a formal firm-sponsored training program. Specifically, at the firm level, a higher loan rejection rate, a judiciary system perceived as corrupt, and a legal system perceived as non-transparent all decrease the probability of running a formal training program by between 11% and 20%. The same effects are obtained when firm-level constraints are replaced with country-level measures like a low ratio of private credit to GDP, a low availability of information about credit history, a low index of creditors' rights protection, and a Socialist legal origin. These results hold when controlling for the characteristics of the labor market, and they are larger for smaller firms and for capital- and intangibles-intensive industries.

214)role of environmental self-auditing and audit policies in regulatory compliance

by Widyawati, Diah, Ph.D., University of Illinois at Urbana-Champaign, 2007, 113 pages; AAT 3270049

Abstract (Summary)

We examine the effect of voluntary efforts to self-audit on compliance with Clean Air Act regulations. It also examines the effect that state audit and immunity laws have on the incentives for improving compliance. Using data for a sample of S&P 500 firms, we estimate a bivariate probit model with compliance status and decision to self-audit as two discrete choice variables and a duration model with the length of compliance month as the dependent variable. The empirical analysis controls for the incentives created for compliance and for self-auditing by regulatory and community-based pressures and by pressures created through toxic release information disclosure. We find that facilities belonging to firms subject to inspections in the past, that face a stronger threat of liabilities for Superfund sites, that are more visible due to size and that have a larger ratio of toxic releases relative to the industry are more likely to undertake an environmental audit. Facilities that self-audit are more likely to be and stay longer in compliance with Clean Air Act regulations. Audit privilege and immunity policies have significant and opposite effects on facilities. While audit privilege policies reduce incentives for compliance, audit immunity policies significantly increase them, particularly for firms that have high costs of abatement and would otherwise have a higher likelihood of being in violation. Additionally, we find that facilities that achieve larger reductions in their toxic releases compared to their industry/region are more likely to be and stay longer in compliance with air regulations.

215)the attitude toward and rationalization of fraudulent financial reporting

by Murphy, Pamela R., Ph.D., The University of Wisconsin - Madison, 2007, 94 pages; AAT 3278864

Abstract (Summary)

Statement on Auditing Standards 99 describes three factors, known together as the fraud triangle, that predict the likelihood of fraudulent financial reporting. The first two factors, opportunity and motivation, are accepted as being associated with fraud (Graham et al. 2004, Erickson et al. 2004, Wells 2001 a, AICPA 2002, Murphy 1999), whereas the third factor, attitude/rationalization, remains a relative mystery. In this paper, I develop a misreporting model using cognitive dissonance and moral disengagement theories to investigate whether attitudes and rationalizations are associated with misreporting. The model suggests that individuals who are not predisposed to misreporting (i.e. they believe misreporting is unacceptable) will experience negative feelings if they misreport, along with a motivation to reduce those feelings. Rationalization is one method of reducing negative feelings. I test the model using experiments in which the opportunity and motivation to misreport exist, with participants whose attitudes were measured previously. I also test interventions intended to make the use of rationalizations more difficult. As expected, I find significant increases in both guilt and psychological discomfort among those who misreport versus those who report honestly. When reminded of the flaws in typical rationalizations, significantly fewer participants misreport. I find weak evidence of a link between a pre-existing attitude and misreporting levels, and between a character measure, Machiavellianism, and misreporting levels. The results: (1) inform the fraud triangle and management reporting literatures, and (2) suggest that interventions in the corporate reporting process might prevent certain individuals from misreporting.

216)an exploratory study of the peer review process: Perceptions held by federal audit executives compared to perceptions held by private sector audit executives

by Little, Carroll Samuel, D.P.A., University of Baltimore, 2006, 193 pages; AAT 3261860

Abstract (Summary)

This study focused on the perceptions held by federal audit executives of the peer review process. It documented the perceptions of these executives and compared them to the perceptions of private sector audit executives. McCabe, Luzi, and Brennan's Managing Partners' Perception of Peer Review article served as the study's basis. A public administration literature search did not locate a similar study of the perceptions of federal sector audit executives. The peer review process in the federal sector is framed by the Guide for Conducting External Quality Control Reviews of the Audit Operations of Offices of Inspector General which precisely directs, through the use of questions and checklists, the conduct of peer reviews. A comparable document, issued by the American Institute of Certified Public Accountants, direct public accounting and auditing firms. The mandated reviews for both federal and private auditing entities occur every three years and the results are presented to the heads of the federal offices of inspector general and the heads of the private auditing entities, respectively.

After deconstructing interview narratives using grounded theory methodology, the study concluded that federal sector audit executives, specifically audit executives from interviewed offices of inspectors general, held some, but not all, of the perceptions held by private sector audit executives on the peer review process. The study also concluded that federal sector audit executives did not use their organizational peer review reports in the same way private sector audit executives used their reports. The study attempted to determine if the smaller federal offices of inspector general perceived that they experienced more difficulty in performing peer reviews than the larger federal offices of inspector general. The hypothesis was not supported.

The federal audit peer review process should: (1) pay more attention to the attitudinal qualities of peer review team members; (2) provide team members better training; (3) move away from checklists for some areas that are examined; and (4) add an efficiency and effectiveness aspect to the reviews. More study is needed to identify the reasons why public and private sector audit executives perceived differently a very similar process and used the results differently.

217)continuous tests of details and analytical procedures in continuous auditing

by Wu, Jia, Ph.D., Rutgers The State University of New Jersey - Newark, 2006, 127 pages; AAT 3247648

Abstract (Summary)

In a Continuous auditing (CA) environment audits are performed on a more frequent and timely basis than traditional auditing. CA is a great leap forward in both audit depth and audit breadth. Thanks to fast advances in information technologies, the implementation of CA has become technologically feasible. Moreover, the recent spate of corporate scandals and related auditing failures drives the demand for better quality audits. New regulations such as Sarbanes-Oxley Act require better corporate internal control and shortened reporting lags. These factors have created an amenable environment for CA development. Especially in the past few years CA has attracted the attention of more and more academic researchers, audit professionals, and software developers. The research on CA has been continuously flourishing. This study extends the prior research by using a real-world case to discuss two essential procedures in CA---tests of details and analytical procedures.

This dissertation consists of two primary parts. First, it discusses how to apply continuous test of details to detect errors in the business processes of the company's procurement cycle. Second, it proposes new auditing protocols, tests various expectation models, and compares anomaly detection performance using aggregated and disaggregated data for the analytical procedures in CA. The online learning protocol and error correction protocol are introduced for expectation models to improve anomaly detection performance. Four different expectation models are analyzed in terms of the prediction accuracy and detection performance, which include Linear Regression Models (LRM), Simultaneous Equation Models (SEM), Subset Vector Autoregressive (SVAR) models and Bayesian Vector Autoregressive (BVAR) models. The results indicate that error correction protocol generally improves the detection performance. Using disaggregated data can lead to better anomaly detection when the entire error concentrates on a single day or a single location. However, the detection performance would deteriorate when error is dispersed evenly on every day or each location.

218)determining differences in the preferred undergraduate accounting curriculum among students, practitioners and educators

by Smith, Gene L., Ph.D., Northcentral University, 2006, 178 pages; AAT 3233954

Abstract (Summary)

Scope of study . This dissertation detailed research on the disagreement between accounting educators and accounting practitioners on how best to institute changes in accounting education in order to better prepare students for professional positions in today's complex, global market-place. The dilemma for accounting educators and accounting practitioners was how to create an effective undergraduate accounting program when there was no clear opinion of what was needed and how to deliver the needed information. This dissertation consisted of a questionnaire transmitted to four categories of accounting participants: (a) recent graduates, (b) public accountants, (c) management accountants and (d) educators. This research study, through a survey utilizing the Likert-scale, obtained the preferred accounting undergraduate curriculum from accounting educators public accountants, management accountants and recent graduates. The variables studied were (a) accounting courses required and electives for an accounting degree, (b) accounting topics accounting students should understand, (c) accounting topics that should be developed more thoroughly, (d) time devoted to developing each of 25 designated skills in an undergraduate program and (e) ranking the most effective teaching methods of accounting. As surveys were forwarded to 3,255 individuals, the response rate of 495 (15% response rate) was sufficient to project the survey results to a larger population.

Findings and conclusions . The study found that educators, graduates, public accountants and management accountants agreed on seven of the nine required courses: Accounting Principles; Managerial Accounting, Accounting Information Systems, Intermediate Accounting I, Intermediate Accounting II, Auditing and Advanced Accounting. The only elective course selected by all four categories of respondents was Ethical Responsibilities of Accountants. The categories of respondents agreed that academic institutions should offer a program whereby students could obtain the equivalent of 150 semester hours to sit for the CPA exam. The categories of respondents agreed that seven of 44 undergraduate topics required more than an introductory level knowledge: generally accepted auditing standards, internal control, accounting ethics, preparation and presentation of financial statements, including footnotes, disclosure standards, revenue recognition and expense recognition. The categories of respondents agreed that only three of 25 skills required more than a medium level of classroom time: problem solving in diverse and unstructured situations, written communications and analytical. (Abstract shortened by UMI.)

219)is ethical judgment a dimension of auditor expertise?

by Oxner, Mary Martha, Ph.D., University of Alberta (Canada), 2006, 146 pages; AAT NR23092

Abstract (Summary)

One of the distinguishing features of the auditing environment is the existence of multiple stakeholders who rely on auditors' judgments. Ethical dilemmas are inherent in this environment because of the potential conflicts in serving multiple stakeholders (e.g. shareholders, management, creditors, etc.) who have potentially conflicting interests (Gaa and Ponemon 1997; Mautz and Sharaf 1961). This study explored whether a sensitivity to a wide variety of potential stakeholders is a dimension of auditor expertise. Using Rest's (1984) model of ethical judgment as a framework for inquiry, experts' sensitivity to stakeholders was investigated. Expertise was operationalized by asking participating audit firms to create teams of audit seniors and managers who have been classified as either being outstanding (expert) or average (novice) based on their firm's performance evaluation records.

Using a between-subjects experimental design, this study investigated the impact of expertise and factors germane to producing judgments in an auditing environment (i.e. outcome consequences and management's intentions) on the ethical sensitivity and judgment of auditors. The results suggest that a sensitivity to multiple stakeholders is a dimension of auditor expertise. The contextual factor outcome had a robust effect on both the stakeholder sensitivity and judgment of novice auditors however expert auditors were less susceptible to the effect of outcome. Further, management's intentions had a mixed effect on stakeholder sensitivity and evaluative judgments.

220)private firms working in the public interest: Is the financial statement audit broken?

by Brown, Abigail Bugbee, Ph.D., The Pardee RAND Graduate School, 2006, 268 pages; AAT 3239646

Abstract (Summary)

The Big Four accounting firms have become the object of much scrutiny following the string of financial statement fraud scandals at the beginning of this century. The apparent involvement of the large auditing firms in the accounting misdeeds comes as a surprise, since the academic literature on auditor incentives predicts that large, reputable firms will not engage in collusion with their clients. The lace of a consensus economic framework to understand the incentives facing the audit firms that reflects the historical reality has hindered consensus building in the policy response to the scandals. This dissertation develops a principal-auditor-agent model that suggests there may well be socially sub-optimal levels of audit intensity, even among the best audit firms. It explores archival historical evidence to identify examples of how these incentives have shaped the profession and develops a more nuanced reading of the root causes of the recent scandals. This work also identifies the gaps in our understanding of the cost and occurrence of fraud that hinders a proper cost-benefit analysis of policy options designed to improve the quality of information available to the market.

221)the effects of type of accounting standard and outcome knowledge on juror evaluations of auditor responsibility

by Becker, Charles P., D.B.A., Nova Southeastern University, 2006, 159 pages; AAT 3240854

Abstract (Summary)

Prior research findings suggest that jurors, rendering verdicts in audit litigation cases, may inappropriately use information obtained after the questionable event has occurred in their evaluations of auditor responsibility. This is called outcome knowledge. Research also suggests that auditor reliance on the proper application of auditing standards does not always result in a favorable evaluation of auditor responsibility. What is not known is whether the auditor's application of an accounting standard will have similar results. Accounting standards are based upon principles that are subject to interpretation. Some accounting standards rely on the underlying principle for interpretation, while other standards provide rules for interpretation. An experiment was conducted with 182 prospective jurors from a county circuit court. Participants were provided a case scenario involving the accounting for a lease transaction. The accounting standard was manipulated at two levels: (a) principles-based accounting standard, and (b) rules-based accounting standard. Outcome knowledge was manipulated at three levels: (a) no outcome information, (b) moderately negative outcome information, and (c) severe negative outcome information. Results from the experiment suggest that jurors evaluated auditors more negatively when the auditors relied on a principles-based, versus a rules-based, accounting standard. Further, outcome knowledge was found to influence the juror's evaluation of auditor responsibility. Type of accounting standard and outcome knowledge did not interact to produce more negative evaluations of auditor responsibility.

222_the influence of firm management tone at the top on auditor behavior: Two experimental essays

by Tervo, Wayne Alan, Ph.D., The University of Texas at San Antonio, 2006, 134 pages; AAT 3217353

Abstract (Summary)

This dissertation consists of two experimental essays. The first essay examines the influence of firm management's "tone at the top" (tone) and the working relationship an auditor has with his/her senior on the auditor's susceptibility to perform a dysfunctional auditor behavior (DAB). The results of the study show that environmental factors can influence the respondents' decision of whether or not he/she would follow the course of action suggested by the senior, that is contrary to both the audit program and generally accepted auditing standards (GAAS). Specifically, I find that auditors are influenced by the tone that the partner sets for the firm and by the working relationship that the staff auditor has with the senior. Positive working relationships can be a beneficial trait for an audit team as it can help build cohesion, synergy and an enjoyable work environment. However, this same trait may produce negative results in the form of increased potential for the acceptance of DABs. Additionally, if the firm's tone directly influences the decision that the staff auditor makes, there could be an opportunity to address the potential for eliminating DABS early in the auditor's tenure through developing an understanding of the firm's expectations. The second essay examines the influence that firm management's tone and the moral intensity of the particular issue have on an auditor's judgment of DAB actions. The results of the study show that tone was significant in only one (premature signoff on audit step) of the three scenarios presented. Analysis failed to find significance in any of the three scenarios for the situational variable of moral intensity or an interaction between the variables. There was a significant difference in the respondents' agreement with the performance of the DAB and their perception of whether another auditor would agree with the DAB in each of the three scenarios. These results show that the respondents believe that another auditor would act differently than they would. The reason for this difference could be that the respondents believe that they are less susceptible to the manipulations included in the research instrument, or that they answered in a socially-biased way. The results of these essays have ramifications for the auditing profession as they show specific factors outside of the staff auditor's moral reasoning capabilities or compliance with GAAS can influence the acceptance of DABs.

223)an empirical study of audit quality in China from the perspectives of regulators and the accounting profession

by Wong, Man Kong Raymond, Ph.D., Hong Kong Polytechnic University (People's Republic of China), 2005, 162 pages; AAT 3205525

Abstract (Summary)

In this thesis, I first evaluate audit quality directly through an examination of the cases of audit failure that have been discovered by the Chinese regulator, the China Securities Regulatory Commission (CSRC). I attempt to show the extent to which the regulator perceives auditors to be responsible for their failure to detect fraud. Then I use auditor independence as a measure of audit quality to investigate two specific factors that drive auditor independence from the perspective of the accounting profession. I hypothesize that regulatory sanctions serve as an incentive to improve auditor independence, and further posit that the organizational form of CPA firms affects the independence level of auditors.

The empirical results indicate that audit failures that involve material misstatements by clients are more likely to lead to enforcement actions against auditors than disclosure fraud. Misstatement fraud that involves accounting earnings is more likely to lead to enforcement actions against auditors than misstatement fraud that involves balance sheet figures. The results reveal a strong association between several types of fraud and audit failures from the regulator's perspective. To examine the factors that drive auditor independence, I use the issuance of modified audit opinions as a proxy for auditor independence, and demonstrate that sanctioned auditors act more independently after being subject to regulatory sanctions and that CPA firms that are registered as partnership firms are more independent than firms that are registered as limited liability firms. This implies that formal regulatory sanctions and the organizational form of CPA firms are important drivers of auditor independence and audit quality in China.

Overall, the results make several contributions to regulators, the accounting profession, and academia. First, the analyses on audit failures provide direct and useful information for the improvement of audit quality. In particular, regulators and the accounting profession can make use of my findings in their policy making. Regulators and policy makers may consider devising new accounting and auditing standards to govern substandard audits to detect specific types of fraud. The accounting profession may also consider providing technical training for staff to identify various prominent types of fraud. Second, the evidence of an improvement in auditor independence that is motivated by regulatory sanctions implies that formal sanctions serve as an effective deterrent to the unethical behavior of auditors. This result supports the view that more resources should be devoted to regulatory supervision to improve audit quality and auditor independence. Finally, the results on the organizational form of CPA firms contribute to the literature by empirically demonstrating the link between auditor independence and the organizational form of CPA firms. This finding is also useful for regulators and the accounting profession as they attempt to evaluate the optimal balance in implementing a limited liability regime without diminishing audit quality and auditor independence. (Abstract shortened by UMI.)

224)do staggered boards affect financial reporting quality?

by Zhao, Yijiang, Ph.D., The University of Nebraska - Lincoln, 2005, 120 pages; AAT 3199707

Abstract (Summary)

The recent wave of corporate fraud and scandals has raised concerns on the practices of protecting directors from the threat of removal. This study examines the association between protecting directors from removal and financial reporting quality.

Existing theories suggest two opposite effects on financial reporting quality when directors are protected from removal. Entrenchment theory argues that measures to protect directors from removal increase both managers' motivations and opportunities to manipulate earnings, asserting a negative association between protection from removal and financial reporting quality. In contrast, alignment theory predicts a positive association between protecting directors from removal and financial reporting quality.

This study uses the existence of staggered boards as a proxy for directors' protection from removal. By adopting three widely used measures of financial reporting quality (i.e., the occurrence of financial reporting fraud, the likelihood of financial statement misstatements, and earnings management), this study attempts to provide a complete picture of how protecting directors from removal affects financial reporting quality.

First, selecting fraud cases between 1995 and 2001 from the SEC's Accounting and Auditing Enforcement Releases and using a matched-pair methodology, this study shows that fraud firms are less likely to have staggered boards that protect directors from removal. Next, selecting firms that misstated financial statements during 1995-2001 and using a matched-pair methodology, this study shows that firms without staggered boards are more likely to inflate reported earnings. Finally, focusing on the constituents in the S&P 1,500 for the period 1995-2001, this study shows that staggered boards are associated with lower levels of earnings management. The above results remain unchanged in various robustness tests.

Overall, the findings favor the alignment theory, which states that protecting directors from removal helps improve financial reporting quality. The findings can help resolve the debates on the merit of protecting directors from removal, point a way to improve financial reporting quality, and shed additional insights into the associations between corporate governance and financial reporting quality.

225)the contributions of Lawrence B. Sawyer to the profession of internal auditing

by Goza, Nina Marie, Ph.D., The University of Mississippi, 2005, 448 pages; AAT 3246013

Abstract (Summary)

Lawrence Sawyer is known as The Father of Modern Internal Auditing. He was active in the Institute of Internal Auditors as a member for forty-five years serving as chapter president, and on the local board of governors. At the national level he served as chair of the International Research Committee, and as a member of the professional standards subcommittee. Other national appointments included Director-at-Large and member of the Board of Regents.

Sawyer has given more than 100 speeches, conducted 186 seminars, authored or coauthored 11 books, two video series, and over 40 journal articles on internal auditing. His book Sawyer's Internal Auditing is a top selling college textbook as well as the reference source for practitioners. Sawyer won the IIA's annual Thurston Award for writing excellence four times and the Outstanding Contributor three times for his articles. Other awards for his contributions include the Bradford Cadmus Memorial Award, the Victor Z. Brink Award, and the Lifetime Achievement Award.

A series of articles was published in the 1970's called "The Grandfather Dialogues". Each article consisted of a conversation between a grandfather and grandson about internal auditing. They were later published as a book entitled Modern Internal Auditing: What's it all about? The Grandfather Dialogues .

Sawyer's other writings are categorized by subject as relating to the practice, politics, philosophy, and the profession of internal auditing. The writings are summarized and analyzed for consistency. Inconsistencies are explained by changes in the environment or the profession. Comparison to an internal auditing professional timeline indicated that Sawyer's ideas were rarely original or new. He wrote about topics that were being practiced by the leaders in the profession at the time. Sawyer provided expanded coverage of topics that brought information together from other sources into one useful resource, his book. Many of his writings are still relevant to today's internal auditing profession including internal control and fraud prevention.

226)assessing actual audit quality

by Dang, Li, Ph.D., Drexel University, 2004, 111 pages; AAT 3127034

Abstract (Summary)

Prior audit quality research has adopted a variety of measures for audit quality. Since actual audit quality is unobservable before and when the audit is conducted, market-perceived audit quality proxies have been widely used. However, no research has examined whether market-perceived audit quality can appropriately proxy for actual audit quality. This study addresses the research question "does market-perceived audit quality capture actual audit quality?". Using a post hoc identification of "apparent audit failures" as cases of poor actual audit quality, this study examines whether poor actual audit quality is related to higher levels of earnings management and to smaller analysts' forecast errors.

This study uses a matched-pair design, matching each audit failure company with a similar non-audit failure company. In investigating the first research question, value relevance of accounting information is used as the measure of market-perceived audit quality. By comparing value-relevance of accounting information across audit failure and non-audit failure groups, this study documents that accounting information is less value-relevance for audit failure group. This result suggests that the market appears to assess actual audit quality accurately and, therefore, market-perceived audit quality can be used as the proxy for actual audit quality.

Consistent with prior studies, discretionary accruals are estimated to measure earnings management. Compared with the non-audit failure group, the audit failure group exhibits higher levels of discretionary accruals. The result supports my hypothesis that poor actual audit quality is associated with higher levels of earnings management. The results of this study do not reveal any statistically significant relationship between actual audit quality and financial analysts' forecast errors.

227)auditor's pre-negotiation information, accuracy of financial reports and consulting services

by Zhang, Yun, Ph.D., Yale University, 2004, 122 pages; AAT 3125342

Abstract (Summary)

The financial reporting process is modeled as a negotiation game between an auditor and a manager. A breakdown in this negotiation leads to costly additional auditing, for uncovering more accurate financial facts. This dissertation focuses on the auditor's pre-negotiation information, namely, the auditor's knowledge about the client. In particular, I analyze the impact of this information on the accuracy of final financial reports. Counter-intuitively, this dissertation shows, exogenously giving an auditor more pre-negotiation information can lead to less accurate financial reports by lowering the likelihood of a negotiation breakdown.

The auditor's access to the pre-negotiation information is then endogenized. This dissertation characterizes the information acquisition game between the manager and auditor in the pre-negotiation stage. First, I consider a situation that allows the manager to strategically influence the auditor's pre-negotiation information. The dissertation characterizes this manager's strategic information delegation decision. I show that the manager tends to keep information from a lenient auditor, one less willing to push the negotiation to a disagreement, in order to retain the rents from inflated reported earnings. Conversely, in order to avoid a costly negotiation breakdown, the manager tends to inform a tough auditor, one more willing to push the negotiation to break down and go through the additional auditing. Furthermore, I analyze the case where the auditor, rationally foreseeing the manager's strategic information delegation behavior, makes the pre-negotiation audit decision.

This dissertation has two main implications. First, an auditor can prefer a higher liability in order to convince the manager to provide more pre-negotiation information. This increase in liability makes the auditor tougher in the negotiation. As a result, the manager prefers giving more information in order to reduce the expected additional auditing cost. Accordingly, the auditor trades the increased liability of inaccuracy in financial reports for the benefits of getting access to more pre-negotiation information. Lastly, if information spills over from consulting to auditing and consequently serves as a channel through which the manager can influence the auditor's pre-negotiation information, the second main implication of my analysis shows that less accurate financial reports can be associated with the auditor-provided consulting services.

228)Developing a theory of auditing behavior in the electronic business environment

by Adebayo, Arinola Olufunmilola, Ph.D., Virginia Commonwealth University, 2004, 270 pages; AAT 3160739

Abstract (Summary)

The rapid adoption of e-business technology has led to the disappearance of paper documents. Auditors now receive electronic information from their clients instead of the traditional paper-based information. Current auditing literature acknowledges that auditors have concerns about the competency and sufficiency of electronic information. Hence, this study endeavors to develop a theory of auditing behavior in the e-business environment by exploring those factors that may influence the assessment of electronic evidence as "sufficient competent evidential matter."

The recommended solutions, presented in the literature, to alleviate the auditing concerns are technology-focused solutions. While the technology-focused solutions may address some of the concerns, they are inadequate because e-business technology does not function independently of the humans who interact with it. Therefore, the consideration of certain social, behavioral and contextual factors in seeking resolution to the auditing concerns is essential. This study seeks to answer the question of what factors influence auditors' concerns regarding evidential matter in the e-business environment, as well as the questions of how and why these factors exert influence in the ways that they do.

A grounded theory research design is utilized to collect and evaluate research data to formulate a theory of auditing behavior. Three types of auditing behavior emerge from the data; these behaviors are consistent with the technological imperative, social/organizational imperative and socio-technical imperative schools of thought. The study identifies six factors that influence auditors' behavior toward electronic information as sufficient, competent evidential matter. Consequently, the study theorizes that the auditor's behavior toward electronic information as audit evidential matter is influenced by his or her perceived risk associated with the institutional factors of audit objective, professional orientation (training), professional standards, professional responsibility, professional reputation, and legal liability.

229)Essays on institutional economics and the quality of financial reporting

by Hepp, John A., Ph.D., The University of Wisconsin - Madison, 2004, 93 pages; AAT 3143207

Abstract (Summary)

This dissertation consists of two papers. The first paper evaluates the definitions of accounting elements, transactions and the objectives of accounting using the institutional economist work of John R. Commons. While the definitions of assets and comprehensive income used in the major accounting conceptual frameworks aligns with that of Commons, the definition of liabilities and equities could be improved by reference to his work. A significant shortcoming of the current frameworks is the definition of transactions. An improved definition of transactions that incorporates Commons' managerial and rationing transactions would better inform standard setting and financial reporting. The paper suggests that the objectives of accounting derive from the nature of property and property rights and not from the use of the information, a premise consistent with the conceptual frameworks but not with the majority of current accounting research. The second paper uses institutional economics to develop a theory of auditor regulation. The paper describes the incentives of reporting entities to manage the financial reporting process and auditors to work in the public interest under certain conditions of transparency and enforcement. The theory is tested using experimental economic markets. The results suggest a role for accounting and auditing standards and a blend of self-enforcement and external enforcement to arrive at a least cost regulatory regime


230)intelligent day trading agent: A natural language processing approach to financial information analysis

by Jiang, Wei, Ph.D., Rutgers The State University of New Jersey - Newark, 2005, 137 pages; AAT 3170751

Abstract (Summary)

Traders with immediate access to real-time news services (such as Dow Jones News Wire, Bloomberg News Service) constantly monitor and track financial news that is expected to have a significant impact on stock prices. A precondition for successful news-based trading is fast and accurate analysis of the news content. However, manually identifying relevant newswire articles and performing human analysis on the selected news items within a reasonable timeframe represents a daunting task due to the fact that traders face large amounts of financial news releases and reports throughout the trading hours. This research seeks to develop a prototype trading system that automates the procedure of news tracking and analysis. The design of our system adopts an integrated approach using a variety of natural language processing (NLP) techniques to extract the relevant information from merger and acquisition news announcements and generate trading signals based on a set of predefined rules. First, a learning algorithm is employed to identify and classify merger-and-acquisition-related newswire articles from Dow Jones News Wire database. Then the selected news texts are run through an Information Extraction system that performs in sequence the individual tasks of preprocessing, name entity recognition and semantic analysis. Finally, by simulating human-like analysis of all the collected informational elements, the system produces a trading signal by following the simple rule of "buying the target firm and shorting the acquiring firm".

The core of our system is built with hand-crafted rules that are obtained through an iterative training process. Following the Knowledge Engineering approach enables us to achieve a high level of system performance, which is critical to the practical application of automated trading systems. Our system reports a precision rate of 98.3% and high scores in other performance measurements as well. Further empirical evidence is obtained through an event study to lend support to the hypothesis that our prototype system is capable of capturing a small portion of the post-announcement stock price movement despite the fact that the bulk of the price reaction is completed within the first few trades.

231)an inference systems approach for financial modeling

by Ortiz Lerma, Maria Magdalena, M.A.Sc., The University of Regina (Canada), 2004, 153 pages; AAT MQ92867

Abstract (Summary)

The main objective of this thesis is to develop Intelligent Systems Methodologies for the modeling of some systems behaviors characterized by highly non-linear relationships and having a high degree of uncertainty. In particular, it focuses on the implementation of Artificial/Computational Intelligence and Soft Computing techniques in some Financial Engineering problems. Here, a hybrid approach, based on non-conventional (Computational Intelligence, Soft Computing) and conventional (Mean-variance optimization) techniques, is proposed for market indicators and price modeling, and portfolio selection. In particular, an Adaptive Neuro-Fuzzy Inference System (ANFIS) is used for decision-making, which has been designed to model and forecast market indicators and prices from any date (ti ) to six days after (ti+6 ) for short-term prediction. Also, a Fuzzy Inference System (FIS) is utilized for investment scenario analysis. Besides considering proper Intelligent Systems Methodologies, in this work great attention has been devoted to the application and the proper integration of some financial concepts. (Abstract shortened by UMI.)

232)intelligent scheduling model and multi-dimensional CM information system

by Chen, Shih-Ming, Ph.D., Columbia University, 2002, 245 pages; AAT 3066823

Abstract (Summary)

Whereas three-dimensional computer models offer significant advantages and improvements on product quality during the design phase, four-dimensional computer models (3D + time) enhance the potential of computer-aided tools and their advantages in both the design and the construction phase. However, the existing commercial four-dimensional tools only allow the planners to create graphic simulations of the construction process without providing any features to support analysis of such process. The main objective of this research is to build a multi-dimensional construction management information system, called EFFCON (short for EFFective CONstruction management information system), which can be utilized throughout the planning, design, and construction management stages of a project. There are two development stages in this system. The first involves developing an intelligent scheduling model called ISM. This model can automatically optimize the user specified objectives based on the utilization of resources and space by using simulation techniques. The outputs of ISM including: (1) resource distribution with resource allocation, (2) space distribution with dynamic space allocation, (3) production rates of driving resources, (4) utilization rates of resources and space, (5) activity duration, (6) project schedule and cost (including project revenue and project net present value), (7) material management and procurement schedule, and (8) stochastic risk analyses of project duration, project cost, project revenue and project net present value. Furthermore, it allows for what-if analyses of possible scenarios, and schedule adjustments based on unforeseen conditions (change orders, late material delivery, etc.). The second is to build EFFCON, which involves developing the Dynamic Database System (used to build a multi-dimensional computer model) and the Database Linkage System (a database management system), besides ISM, and integrates a 3D CAD tool, ISM, the Dynamic Database System and the Database Linkage System by applying Fully Integrated and Automated Project Process (FIAPP), and has some important functions (dynamic database window, object-identifier function, "3D WalkThrough" function, etc.) to assist in the construction stage. The database management system allows users to do detailed and effective database management of labor, material, equipment, space, purchase order, activity, accounting and cost, and generate each report automatically. ISM can work independently of EFFCON to find the optimum schedule plan, and it is a part of the EFFCON integrated system.

233)does venture capitalist quality affect corporate governance?

by Wong Sun-Wai, Wan Tay Tay, D.B.A., Harvard University, 2007, 75 pages; AAT 3269228

Abstract (Summary)

This dissertation investigates the effect of venture capitalist (VC) quality on the corporate governance of portfolio companies, focusing on board characteristics and financial reporting quality. I develop a new metric to measure VC quality, using data that are obtainable for virtually all VC firms. This metric is highly correlated with VC funds' financial returns, and with the likelihood of successful exits through initial public offerings or trade sales. Companies backed by higher quality VCs have larger, more independent boards of directors, and have increased VC presence on the board, even after controlling for endogeneity. After going public, companies backed by higher quality VCs have lower abnormal accruals and a lower likelihood of financial restatement. Overall, the results suggest that higher quality VCs help establish better governance at companies in which they invest.

234)entrepreneurial team formation: The effects of technological intensity and decision making on organizational emergence

by Smith, Brett R., Ph.D., University of Cincinnati, 2007, 237 pages; AAT 3269264

Abstract (Summary)                                                        

This dissertation offers a lens to understand the critical processes of organizational emergence by examining the network processes and outcomes in the development of early stage entrepreneurial founding teams. In addition, this dissertation explores the important boundary condition of high technology and its effect on the early stage network processes. Using a mixed methodology approach, this dissertation explores the question of how founders construct organizations. In the quantitative section, panel data is used to explore how the level of technological intensity affects the organizational demography and social network structure of the founding team. Results from logistic regression show the level of technology affects the motives through which founders constructed organizations. Increasing levels of technology are associated with greater demographic diversity and lower density social networks. These findings highlight the role of technological intensity as an important antecedent to organizational demography and social network structure. In the qualitative section, in-depth interviews were conducted with 40 early stage entrepreneurs and team members to explore how the decision making process affects the construction of organizations. Through this analysis, a series of three grounded conceptual models are developed to explain the mutual decision making process of entrepreneurial team formation: (1) the first model highlights the role of individual level factors (e.g., attitude towards networking) and situational factors (e.g., geography) in the identification and screening processes of decision making; (2) the second conceptual model explores the opportunity costs of pursuing different search processes in the identification of team members; and (3) the third model identifies the overall marginal benefits of different search processes after accounting for both the benefits and costs of each search process. Taken together, these models describe how the decision making process affects organizational emergence.

235)essays on environmental and natural resource economics

by Wagner, Gernot, Ph.D., Harvard University, 2007, 132 pages; AAT 3265213

Abstract (Summary)

I present three essays on environmental and natural resource economics and policy for my dissertation.

First, I construct a comprehensive dataset of oil and total energy embedded in world trade of manufacturing goods for 73 countries from 1978 to 2000. Applying this dataset to debates on the dependency on foreign energy sources makes clear that achieving complete energy independence in the foreseeable future is unlikely to be feasible and may not be desirable. Applying it to the discussion of environmental Kuznets curves (EKCs) highlights an important distinction between production and consumption of energy. Richer countries use relatively less energy in their industrial production yet still consume relatively large amounts of energy indirectly. A further investigation largely excludes structural shifts of production in and out of the manufacturing sector as an explanation for the downward-sloping portion of the EKC. Country-level analyses add caveats but show tentative support for the cross-country conclusions.

Green accounting can take on various forms of adjustments to standard output measures. In a Ramsey model, as in chapter two, it highlights the importance of defensive expenditures and their role in output and welfare calculations. If both labor and environmental quality are included in a standard Ramsey growth model with two kinds of consumption goods, negative externalities increase the steady-state path of per capita output. At the same time, per capita utility--as well as societal welfare--decline. Economy-wide technological progress and population growth further widen this discrepancy between per capita output and utility. Accounting for defensive expenditures in this context enables an accurate description of welfare in that economy.

The third paper, joint with C.-Y. Cynthia Lin re-examines the Hotelling model of optimal depletable resource extraction in light of stock effects and technological progress. We assume functional forms for cost and demand so that the solution to the Hotelling problem is a steady-state consistent with the empirical observation that the growth rates of market prices have remained zero over a long period of time. We use data on 14 minerals from 1970 to 2004 to estimate the supply and demand functions using SUR and 3SLS and to test the model. We validate the model for 8 of 14 minerals.

236)an empirical analysis of the fractal dimension of Chinese equity returns
by Thiele, Thomas A., Ph.D., Walden University, 2007, 174 pages; AAT 3249684

An empirical analysis of the fractal dimension of Chinese equity returns

by Thiele, Thomas A., Ph.D., Walden University, 2007, 174 pages; AAT 3249684

Abstract (Summary)

In recent years, China has taken important steps to reform its economy and liberalize its capital markets. Despite these efforts, there is a lack of quantitative evidence of the efficiency of the stock markets in China. The purpose of this research was to determine the fundamental characteristics of asset returns of the two Chinese stock markets located in Shanghai and Shenzhen. A main assumption of the efficient market hypothesis and modern asset pricing theories is that security returns follow a random walk and are lognormally distributed. This assumption was tested by analyzing daily Chinese returns in these two stock markets over the past decade, including the pre and post reform periods of 1999-2002 and 2003-2006. The statistical investigation included descriptive analysis, autocorrelation test, rescaled range analysis, and the Kolmogorov-Smirnov goodness-of-fit test. In both stock markets, the lognormal distribution hypothesis was rejected for all data sets at the 5% significant level; and the random walk assumption and ordinary Brownian motion as a scaling property of empirical stock returns were also rejected. The findings confirm that despite the regulatory reforms in 2003 the Chinese stock markets are still inefficient and show strong evidence of speculative trading. As a result, it is recommended that further regulatory changes be accomplished to reduce the role of speculative traders and improve market efficiency. From a social perspective, the insights provided by this research may help finance practitioners improve risk management models and support rational decision contributing to the continued growth and economic prosperity of China

238)urban marketplaces and mobile vendors: The flea market in the metropolitan economy. A case study of two flea markets: Aqueduct and Roosevelt Raceway flea markets

by Abrams, Les, Ph.D., City University of New York, 2007, 118 pages; AAT 3245031

Abstract (Summary)

Two flea markets were researched form an interactionist perspective. Two research goals provided the central themes in this dissertation: (1) an ethnographic study of two hugely successful flea markets---Aqueduct Racetrack Flea Market (in Queens) and Roosevelt Racetrack Flea Market (in Suburban Long Island)---both in the New York area (2) an interactionist perspective---economic actors participating in a variety of exchanges with a socio-cultural perspective. Rather than economic activity being classified as a separate entity from society as in the neo-classical economic theoretical framework, a dramaturgical, approach actually demonstrates that normative behavior in terms of cooperation, inclusion and fair play in business transactions have proven to be advantageous. An amalgamation of feelings of excitement in being part of the flea market action scene, combined with a multitude of fashions and cultural impact, form the basis of some of the ingredients adding to the spectacle that has made flea markets a huge success. Other variables describing the relatedness of economics and society were politics, local traditions, capital formation and sociability. In short, the regulations, which control economic life, cannot be explained purely in economic terms.

Three groups were researched: manufacturers/suppliers, vendors, and shoppers. Each was described in detail as my family and I were vendors in these markets for more than six years. Furthermore, the cash underground economy and its relationship to the flea markets and economic participants were explored. Though there were no formal institutional laws in the cash underground economy, embeddedness of cultural variables such as trust, and the presentation of self, the formation of identity, ego gratification and power relations were described from an "insider's" vantage point.

Assuming that flea market business activity could be reduced to a few a priori assumptions is simply unrealistic. Hopefully, this study will add to the understanding of the workings and success of flea markets, as well as to the development of economic sociology, and as an impetus to a paradigm shift away from neo-classical economic thinking.

239)analytical query processing in data intensive applications

by Feng, Ying, Ph.D., University of California, Santa Barbara, 2005, 225 pages; AAT 3186826

Abstract (Summary)

Recent advances in web applications and IT infrastructures have to deal with large amounts of data collected from the Internet and business transactions. Such large scale data sets need more advanced database support for analyzing and processing and querying. Analytical queries are one of the important operations for business analysis and decision-making. These queries involve a large number of data entities and pre-processing is usually used to improve online response time along with efficient query processing algorithms. This dissertation addresses the efficient and scalable online execution of analytical query processing, including aggregate queries and rank queries.

As the widely used pre-computation method for aggregate queries, data cubes are prohibitively expensive in terms of computation time and storage space. A new data structure, range trie, is proposed to capture and utilize data dependency, or data correlations, in data sets. Furthermore, a new cube representation is proposed to compress data cube storage without information loss by taking advantage of the partial order relationships in a data cube. Therefore, the approach effectively reduces both the computation and I/O cost for cube computation. In addition, a hierarchical indexing scheme based on range tries is also suggested to process point aggregation queries and range aggregation queries. For temporal data sets in which data are appended periodically, this dissertation addresses the challenges for range aggregate queries due to the sparsity and incremental property of temporal attributes. A new data structure named PBBT (Perfect Binary Block Tree) is used to ensure logarithmic time complexity for both query processing and data appending.

Moreover, the dissertation introduces a scalable and efficient approach to ranking top-k preference queries. An optimal search algorithm based on multidimensional index structures is investigated and analyzed for performance bottlenecks due to memory consumption. A notion of dominance rank is proposed to pre-process data sets to adaptively reduce data accesses at runtime for a given top- k query. Thus the method ensures high level of scalability and stable performance with bounded memory for increasing data set size.

240)perception and Degree

by Redmon, Jason, M.A., Northern Michigan University, 2007, 78 pages; AAT 1442820

Abstract (Summary)

"Perception and Degree" is the story of two people from diametrically opposed walks of life coming to the understanding that not everything they've heard about "the other side" is necessarily true. When a young Thief of the Guild breaks in to the King's Officer's Academy on a dare, he runs into Gabrielle Ni'sho, a soon-to-graduate Noble student of the Academy. In the confrontation that follows, blood will be shed, perceptions will shift and desperate bargains will be made. Less a morality tale and more an exploration of the forces that drive and shape the beliefs of individuals, "Perception and Degree" attempts to set all sides of an argument forth, leaving the reader to decide who to trust, and whether the decision to end a life is justifiable or not.

241)essays on behavior and incentives in institutions

by Goertz, Johanna Maria Margarethe, Ph.D., The Ohio State University, 2006, 92 pages; AAT 3226477

Abstract (Summary)

This dissertation consists of three chapters. The first chapter, "Sequential Demands in Multi-Issue Legislative Bargaining", presents a new model of legislative multi-issue bargaining. Legislators have to approve a policy position and a budget distribution. I investigate whether legislators prefer to bundle both issues in one bill or bargain over them separately. Although bundling issues allows for trade-offs between issues, I find that the preference for bundling, postulated by the literature, disappears when a bargaining game is used that restricts the bargaining power of the first mover. I use a modified demand bargaining game and show that it leads to a second mover advantage when issues are bundled. This induces the first mover to separate issues in most cases. The previous literature offers a rationale for bundled issues, such as omnibus legislation. This chapter provides a rationale for separated issues that has been missing before. Besides the fact that issues are almost always separated, the model predicts that the median legislator's ideal point is implemented as the policy position and that the budget is divided evenly among the members of a minimum winning coalition.

The second, "Multi-Issue Legislative Demand Bargaining: A Pilot Experiment", chapter presents an experimental investigation of the theoretical model presented in the first chapter. I design two treatments, one with bundled issues and one with separated. I test whether subjects recognize the strategic difference between bundled and separated issues in the demand bargaining game. I find that subjects behave substantially different in the two treatments. In the separating treatment, they meet equilibrium predictions in more than 80% of the observations. In the bundling treatment, the data qualitatively matches the theory. Subjects behave strategically and the predicted second-mover advantage in payoffs can be found in the data.

In the third chapter, "Learning Differences in Mixed Common Value Auctions", I examine behavior of inexperienced and experienced bidders in mixed common value auctions. In all previous studies of behavior in common value auctions, subjects had the same level of experience. I design an experiment with mixed auction markets, in which subjects are both experienced and inexperienced. I find that mixing experience levels in the same auction market has an effect on the behavior of inexperienced subjects, and gender is important: Inexperienced males bid more aggressively in mixed auction markets than in markets with only inexperienced bidders, but inexperienced females bid less aggressively. Experienced bidders do not react significantly different in mixed auction markets than in markets with only experienced bidders. These findings have two implications: First, they shed additional light on the different learning behavior of males and females. And second, they give an indication of the robustness of learning to changes in the environment.

242)two essays on government bond markets

by Wang, Junbo, Ph.D., Syracuse University, 2005, 116 pages; AAT 3194011

Abstract (Summary)

In the first part of this study, the effects of liquidity and information risks on expected returns of U.S. government bonds are examined. Information risk is measured by probability of information-based trading (PIN) derived from the market microstructure model of Easley, Hvidkjaer, and O'Hara (2002). Liquidity risk is captured by sensitivity of individual bond returns to a market-wide liquidity measure along with the line of Pastor and Stambaugh (2003). After controlling systematic risks and bond characteristics, it is found that both liquidity and information risks have a significantly positive effect on expected bond returns. The findings suggest that incorporating microstructure factors into existing term structure models is a promising avenue for improving the understanding of bond price behavior.

In the second part of this study, I examine the effects of liquidity, default and taxes on the relative yields of Treasuries and municipals. A term structure model of municipal bonds with liquidity risk is employed to estimate the effects of the three important factors on municipal bond yields. After accounting for default and liquidity risks, the implied marginal tax rates are much closer to statutory tax rates of high-income individuals and corporations. In addition, the implied tax rates for long-maturity municipals are very close to those of short-maturity municipal bonds. Results show that the generalized model with liquidity and default risks has explained the municipal anomalies with a reasonable success. Municipal bond yields are strongly affected by default and liquidity risks.

243)evaluating change in regional economic contributions of forest-based industries in the South

by Tilley, Bart Keith, M.S., Mississippi State University, 2006, 80 pages; AAT 1438710

Abstract (Summary)

Timberlands in the South provide a large resource base for forest-based industry. This resource base is utilized to provide economic contributions to the southern economy. Aruna et al. (1997) examined southern forest-based industry economic contributions from the early 1990's. In 1992, southern forest-based industries provided 633,367 jobs and this increased to 718,176 in 2001, accounting for only 1.3% of the total employment in the South versus 1.5%. Forest-based earnings in the South experienced a real increase of $181 million (1990 dollars) and accounted for 1.7% of total southern U.S. earnings in both years. The value of shipments from southern forest-based industries increased $22.8 billion in real 1991 dollars and value-added increased $11.0 billion. In 2001, value of shipments increased to 9.6% of the South's total from 7.8% in 1991 and value-added increased from 8.0% in 1991 to 9.1% in 2001. Overall there was little relative change over this time period.

244)managerial opportunism and earnings surprise: An investigation of insider trading and perceived market valuation divergence

by Yu, Wen, Ph.D., Case Western Reserve University, 2007, 111 pages; AAT 3244788

Abstract (Summary)

This research studies whether the difference in managerial and investors' beliefs about firm value, "market valuation divergence", is related to managerial insider trading, and if so, whether there is evidence of private accounting information to capture these different beliefs. The main idea involves two steps. First, insiders carefully measure and compare the market's reaction to their company's earnings announcement with their own informed assessment. Second, they act and trade as if they observe the divergence in the market's security valuation from their own assessment. Accordingly, this study hypothesizes that such insider trading is associated with managers' perceptions of such market valuation divergence. The traditional view is that insider trading reveals managers' implicit assessment of company prospects. The hypothesis of this study is that such trading decisions also incorporate mangers' private perceptions about the divergence in security pricing from their own opinion.

The particular focus of this study is a set of publicly traded non-financial companies whose reported earnings are in the middle of the earnings distribution spectrum (which includes companies whose earnings meet or just beat their earnings benchmark versus companies whose earnings just miss the benchmark). The sample consists of 4,357 non-financial firm-year observations from 1996 to 2005. The study applies methodological framework of the Mishkin (1983) test to address the hypothesis. It assesses the relations involving market pricing, characteristics of company earnings and managerial insider trading as these variables relate to the fundamental idea of market valuation divergence. In addition, managerial insiders may have control over the timing of their open market trades and unscheduled stock-option grants. This study analyzes insider trading considering both open market transactions and the unscheduled stock-option grants.

The results of this study indicate managerial opportunism. When the market does not fully assess the valuation implication of accounting accruals, managerial insider trading (broadly conceived to include open market transactions and unscheduled stock-option grants) corresponds to buying or selling behavior associated with managers' private accounting information and the direction of market valuation divergence.

245)rules versus principles, accountants' cognitive styles and professional penalties

by Stetson, Tracy Elizabeth, Ph.D., The University of Oklahoma, 2006, 95 pages; AAT 3206889

Abstract (Summary)

This study examined the effect of accountants' cognitive styles and the severity of potential professional penalties under rules-based versus principles-based standards in the context of client pressure to approve of an inappropriately aggressive transaction. Cognitive style was operationalized using the Myers-Briggs Type Indicator. With respect to the individual elements of cognitive style, the Perceiving (SN) mental function was not significant and did not interact significantly with standard precision (rules-based versus principles-based standards, or rules versus principles). The Judging (TF) mental function interacted marginally significantly with standard precision and was significant under rules but not under principles, with Thinkers (T) under rules exhibiting greater aggressiveness (21.5% mean chance of approving an inappropriately aggressive transaction versus 9.00%, 12.73% and 13.64%). This differential effect of the Judging (TF) mental function may be enhanced if the Thinker (T) is also a Sensor (S) and a Judging (J) type (STJ) (29% mean chance of approving an inappropriately aggressive transaction for STJs versus 21.5% chance of doing so for Thinkers (T)).

While 40.2% of the general U.S. population are Thinkers (T), 70.5% of accounting professionals are Thinkers (T). While 20.3% of the general U.S. population are STJs, 39.1% of accounting professionals are STJs and the STJ cognitive style combination is the most prevalent cognitive style combination for accounting professionals. Thus, this study provides some evidence that the cognitive style preferences materially more prevalent among accounting professionals than the general U.S. population may lead to more willingness to approve an inappropriately aggressive transaction under rules but not under principles.

Surprisingly, under both rules-based and principles-based standards, greater aggressiveness was indicated when potential professional penalties were high (three times the fee obtained for the opinion) rather than low ($250). Thus, this study provides some evidence that heightening the monetary amount of potential professional penalties may not lower and may even increase the willingness of accountants to approve an aggressive transaction under either rules or principles.

246)the role of accountants in the implementation and maintenance of enterprise resource planning systems: A survey of the membership of the Institute of Management Accountants

by Jean-Baptiste, Rodney, Ph.D., Capella University, 2006, 135 pages; AAT 3205724

Abstract (Summary)

The role of the accountant in a business environment has been evolving over the years. Besides traditional accounting knowledge, accountants need to possess other skills that are vital to their survival in an effective organization. Among those skills are knowledge sharing, the understanding of information systems design, systems development, and applications. One of the systems issues that accountants face is the implementation and maintenance of ERP (Enterprise resources planning) systems in the organization. ERP systems allow companies to integrate at all levels and to utilize important ERP application such as supply-chain management, accounting application, human resource and customer relationship management (Boubekri, 2001).

The purpose of the study encompasses two aspects. First it addresses the role of the accountant during the implementation and maintenance phase. The second purpose of the study is to find the characteristics, traits, and skills of accountants that can help them in a successful implementation and maintenance of ERP.

A survey was used to collect the data. It was sent to accounting or finance professionals of the Institute of Management Accountants with ERP experience. Two hundred nineteen responses were obtained. Regression analysis and Pearson correlation are used to find the relationship between the role of accountants and successful implementation of ERP systems. One-sample t test is used to find the difference between the phases during which accountants contribute. Regression analysis also examines the relationship between accountants who possess certain skills in addition to their financial expertise and their participation in ERP teams because of these skills. Paired-sample-t-test helps establish the difference between smaller companies that used more complex ERP combinations versus simpler combinations during both phases. Results confirm that there is a positive significant relationship between the contribution of accountants and the successful implementation of ERP. Also respondents spend most of their time during the implementation phase. Although knowledge sharing, business context, and technical skills show a positive relationship to the acceptance of accountants to ERP teams, only technical skills at the implementation phase passed the regression analysis test at the desired confidence level. The accountants' contribution working for smaller companies using a complex ERP configuration is highest during the post-implementation phase.

247)three essays on entertainment industry economics

by Besocke, Portia D., Ph.D., The Claremont Graduate University, 2007, 117 pages; AAT 3268240

Abstract (Summary)

Essay one describes a real-world profit sharing contract - the movie exhibition contract - and considers alternative explanations for its use. Two explanations based on difficulties with forecasting fit the facts better than asymmetric information models. The first emphasizes two-sided risk aversion; the second emphasizes measurement costs. Transaction costs and long-term relationships also affect contractual practices. We use an original data set of all exhibition contracts involving thirteen theaters owned by a prominent St. Louis exhibitor over a two-year period to inform our theories and test hypotheses. The findings question traditional contract theory and may be relevant for other contracting environments.

Essay two describes the complex revenue-sharing rules used by movie distributors and exhibitors, discusses recent trends that make such rules less useful and then proposes alternative rules that have much lower transaction costs. We use a large sample of contracts to show that our simpler rules would lead to virtually no change in the allocation of movies to screens or in total revenues generated. Thus, the persistence of suboptimal rules poses a challenge for contract theory. The industry has been moving toward simpler rules like the ones we describe; and thus we may be describing the long run result of this evolution.

Essay three analyzes the entertainment conglomerates response to revenue shock in the music sector. Utilizing tools from the internal capital markets literature developed by Lamont (1997) and Vogel (2004), I investigate whether negative revenue shocks in the music industry affected entertainment conglomerates' investment or resource allocation decisions. Revenues in the U.S. music market increased for a decade, peaking in 1999, then dropped 20% in four years allegedly due to piracy. In 2000, the five major music companies that dominate music sales were owned by four entertainment conglomerates, TimeWarner, Vivendi Universal, Sony Corp., Bertelsmann and one stand-alone company, EMI. By 2004, only four major music companies remained. The conglomerate responses to the revenue shock in the music sector are unique to each firm. I analyze division and firm-level accounting data and company stock price to understand why these seemingly similar organizations made such different allocation decisions.

248)bank loans as a financial discipline: A direct agency cost of equity perspective

by Hijazi, Bassem, Ph.D., University of North Texas, 2006, 188 pages; AAT 3254193

Abstract (Summary)        

In a 2004 study, Harvey, Lin and Roper argue that debt makers with a commitment to monitoring can create value for outside shareholders whenever information asymmetry and agency costs are pronounced. I investigate Harvey, Lin and Roper's claim for bank loans by empirically testing the effect of information asymmetry and direct agency costs on the abnormal returns of the borrowers' stock around the announcement of bank loans.

I divide my study into two main sections. The first section tests whether three proxies of the direct agency costs of equity are equally significant in measuring the direct costs associated with outside equity agency problems. I find that the asset utilization ratio proxy is the most statistically significant proxy of the direct agency costs of equity using a Chow F-test statistic.

The second main section of my dissertation includes and event study and a cross-sectional analysis. The event study results document significant and positive average abnormal returns of 1.01% for the borrowers' stock on the announcement day of bank loans.

In the cross sectional analysis of the borrowers' average abnormal stock returns, I find that higher quality and more reputable banks/lenders provide a reliable certification to the capital market about the low level of the borrowers' direct agency costs of equity and information asymmetry. This certification hypothesis holds only for renewed bank loans. In other words, in renewing the borrowers' line of credit, the bank/lender is actually confirming that the borrower has a low level of information asymmetry and direct costs of equity. Given such a certificate from the banks/lenders, shareholders reward the company/borrower by bidding the share price up in the capital market.

249)the role of conservatism in loan loss provisioning

by Ditchkus, Linda Valerie, D.B.A., University of Phoenix, 2006, 124 pages; AAT 3232324

Abstract (Summary)

Banker motivation for loan loss provisioning has been extensively researched. Results have been inconclusive or divergent. No studies have evaluated the relationship between loss provisioning and conservative leadership characteristics. As accounting standards are steered away from the underlying concept of conservatism, understanding whether conservative leadership characteristics are associated with management's accounting decisions is timely and important. The purpose of this quantitative research study was to determine whether loan loss provisioning behaviors between 1984 and 2004, by conservative commercial bank management in the United States, had a pattern of sensitivity that is similar to conservative accounting behaviors. The results suggested that conservatism did have an association with provisioning behaviors; however, determining the pattern of sensitivity will require additional research.

250)reported earnings, auditor's opinion, and compensation: Theory and evidence

by Basu, Atasi, Ph.D., Syracuse University, 2005, 100 pages; AAT 3207091

Abstract (Summary)

Delegation of responsibility and use of performance measures in compensation contracts are important issues in management accounting. Unfortunately, no performance measure or compensation contract is perfect in aligning the goals of the organization with that of the agent. It is well known that an incentive motivates an agent to exert productive effort as well as unproductive effort to inflate his performance measure. Thus, a compensation contract needs to provide incentive for productive effort, and also control for unproductive effort.

This dissertation studies the effect of auditor's independence and opinion on executive compensation and executive effort allocation. Using principal agent theory, I examine a compensation contract involving two signals, one for incentive and one for control. The incentive signal is the net income reported by the executive (agent) and the control signal is the auditor's opinion. The owner (principal) can induce higher productive effort level by including the audit opinion in the compensation contract. The impact on productive effort level is higher when the auditor is more independent.

The optimal weights on earnings and audit opinion in the agent's compensation contract are obtained in a LEN framework. The weights show that the agent is rewarded for higher earnings and penalized for audit qualification. The pay-performance sensitivity increases monotonically as the auditor becomes more independent. However, the pay-opinion sensitivity does not increase monotonically as the auditor becomes more independent.

Interestingly, the pay-opinion sensitivity first increases and then decreases as the auditor becomes more independent. Intuitively, with increasing auditor independence, the need of audit opinion in the compensation contract decreases because the presence of the independent auditor itself exerts a control on the agent.

Some of these analytical results are tested empirically. Empirical evidence shows that the executive is rewarded for higher reported earnings and penalized for departures from standard unqualified opinion. The pay-performance sensitivity increases as the auditor becomes more independent. Auditor independence is measured by audit fee/(audit fee+ nonaudit fee).

The analytical model is also modified to incorporate auditor competence along with auditor independence. The modified model gives similar results to the model that only includes auditor independence.





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