Decomposition of Fraud‐Risk Assessments and Auditors' Sensitivity to Fraud Cues*

Practitioners and regulators are concerned that when auditors perceive management's attitude or character as indicative of low fraud risk, they are not sufficiently sensitive to high levels of incentive or opportunity risks in their overall fraud‐risk assessments. In this study, we examine whether a fraud‐triangle decomposition of fraud‐risk assessments (that is, separately assessing attitude, opportunity, and incentive risks prior to assessing overall fraud risk) increases auditors' sensitivity to opportunity and incentive cues when perceptions of management's attitude suggest low fraud risk. In an experiment with 52 practicing audit managers, we find that auditors who decompose fraud‐risk assessments are more sensitive to opportunity and incentive cues when making their overall assessments than auditors who simply make an overall fraud‐risk assessment. However, this increased sensitivity to opportunity and incentive cues appears to happen only when those cues suggest low fraud risk. When opportunity and incentive cues suggest high fraud risk, auditors are equally sensitive to those cues whether they use a decomposition or a holistic approach. We discuss and examine potential explanations for this finding.     

Spatial determinants of Japanese FDI in China

Research on foreign direct investment in China has spawned an increasingly large literature. Whilst regional cleavages with respect to the distribution of foreign direct investment (FDI) are acknowledged, empirical research on the spatial determinants of FDI in China has been limited. Furthermore, research on the spatial determinants of home country FDI in China has thus far been neglected due to difficulties in accessing the appropriate data. The objective of this paper is to examine the spatial determinants of Japanese direct investment in China by using an econometric model. To that purpose, a dataset is created from the Toyo Keizai directory on the overseas activities of Japanese companies. The results show that tertiary education, inland waterways, as well as coastal location are positive and significant determinants of Japanese investment in China.     

An empirical investigation of firm public and private knowledge

Many studies examine firm private knowledge, but purport to be generalizable to the totality of firm knowledge, both public and private. This study demonstrates that public and private firm knowledge are empirically separable constructs that have significant and yet different influences on innovative outcomes. The example of product development effectiveness within this study shows that both public and private knowledge are significantly related to product development quality; however, public knowledge is negatively related to quality lapses while private knowledge is positively related to quality lapses. Copyright © 2002 John Wiley & Sons, Ltd.     

Ethics,gratuities, and professionalization of the purchasing function

This study investigated (1) whether potential future purchasing agents were predisposed to accept gratuities or whether the practice of gratuity acceptance is a manifestation of the job itself, (2) whether the existence of a code of ethics forbidding gratuity acceptance curtails the occurrence, and (3) whether disparities in ethics policies between the sales and purchasing functions affect gratuity acceptance. Hypotheses based upon the concepts of organizational concern and institutionalized ethics are developed and empirically tested. Results suggest that future purchasing agents are predisposed to accept gratuities and that formal written ethics policies decrease the acceptance of gratuities. Disparities in ethics policies between the sales and purchasing functions concerning gratuities failed to affect gratuity acceptance significantly.Gregory B. Turner is assistant professor of marketing at Livingston University. He has published inThe International Journal of Logistics Management and theTransportation Journal.G. Stephen Taylor is Associate Professor of management at Mississippi State University. His research interests include ethics in computer usage, performance appraisal, and turnover control.Mark F. Hartley is Assistant Professor and National Association of Purchasing Management/Carolinas-Virginia chair of Purchasing at the College of Charleston. His research interests include ethics and professionalization of the purchasing function.     

Punishment in environmental protection

The fundamental character of a punishment is the subject of this paper. Based on the assumed function of a punishment (deterrent), a punishment has to be perceived and experienced to be an adverse result by the punished and the public. The first factor in particular means that the courts have to have flexibility to sentence a person to such a punishment that is experienced as such. The legal question becomes how this customization of a punishment is acceptable from an equality standpoint. In the field of environmental protection, the administrative process poses serious problems. There may be administrative proceedings that result in substantial economic losses for individuals and groups alike. Jürgen S. Poesche was born in Edmonton (Alberta, Canada), lived in Europe and North America and graduated from the Helsinki University of Technology, University of Helsinki, Swedish School of Economics and Business Administration and Tampere University of Technology. Areas of interest include chemical and mechanical pulping, environmental protection (EIA, environmental ethics, environmental law), and capital investment decision-making. He has published in, e.g., Wochenblatt für Papierfabrikation, Finnish Journal of Business Economics, Ympäristojuridiikka (Environmental Law), and in the publication series of the Helsinki University of Technology and the Tampere University of Technology. Presently, he is working for a major Canadian forest products company.     

Business ethics,economic development and protection of the environment in the new world order

The end of the cold war has elevated environmental issues to the highest level of concern for humanity while creating a world order dominated by the United States of America and other Western nations. This new power structure may likely lead to increased business activity in many parts of the world, as nations formerly preoccupied with the cold war turn their attention to economic development. This paper examines the linkages among ethics, economic development and protection and restoration of the environment in The New World Order.Emily F. Carasco is Associate Professor at the Faculty of Law of the University of Windsor. Her research focus is on international law and family law.Jang B. Singh is Associate Professor at the Faculty of Business Administration of the University of Windsor. His research focus is on ethical issues involved in the management process.     

Human capital,investment and growth: Some results from an endogenous growth model

Recent theoretical literature on the sources of economic growth has emphasized the role of human capital as an internal contributing force in the growth process. Empirical results reported in this paper provide support for this theoretical proposition. Cross-country data from 32 developing countries indicate that human capital (as alternatively measured by the primary school enrollment rate or the adult literacy rate) exerts a significant positive impact upon output growth.