The China puzzle: Opportunities for accounting research

How can China achieve phenomenal economic growth despite what is considered as 'weak' institutions in market-based economies? Xu(2011) provides a framework to u...     

HomeGrocer.com: Anatomy of a failure

This case study examines the initiation, financing, development, and failed merger of an ambitious online grocery retail venture: HomeGrocer.com. It highlights the risks and challenges associated with developing a revolutionary venture. Even though the HomeGrocer.com team did many things right developmentally, some key errors and unfortunate timing resulted in them expanding too quickly and running low on cash. It also forced them to make a tough strategic decision about whether to scale back operations and renege on their IPO commitments or merge with a well-funded competitor, Webvan. The case discusses lessons that can be learned from business failure.     

Are less-favored environments over-invested? The case of rice research in India

Allocation of research resources between favorable and unfavorable rice-growing environments is analyzed in this paper using the case of India. The resource allocation in rice research for all ecosystems of India is approximated by the full-time equivalent (FTE) of scientist time spent in research. This was estimated through a survey of all major public research organizations involved in rice research. The FTEs were adjusted for any cost differences per scientist time across the rice growing environments. Unadjusted FTEs indicated a high congruence in resource allocation while adjusted FTEs showed slight under investment in rainfed environment. The use of equity weights amplified the extent of under investment in rainfed environments. It is concluded that, in the case of rice research, rainfed environments in India remain under-invested moderately. Options for addressing this imbalance and the overall implications for resource allocation are discussed.     

Wealth effects and committed cost allocation: An agency theory perspective

In this article we examine the effects of committed costs (CC) on compensation and effort (production) decisions in a principal-agent (P-A) setting. In the case where moral hazard is present, the compensation and effort (production) decisions are independent of CC whenever P has constant absolute risk aversion. When P has decreasing absolute risk aversion, he demands as increased risk premium, therefore increases the spread of the compensation schedule, and induces A to increase effort (production) and vice versa. The optimal compensation scheme can be decomposed to conform to incentive schemes that are generally observed in practice. In particular, we decompose the optimal compensation scheme that depends on CC into two parts—a part that is based on cash flows and a part that is based on income (after allocating committed costs). In the case where effort is observable, CC does not effect the compensation scheme and effort decisions, when P has constant absolute risk aversion. In contrast to earlier studies that examine the owner-manager case, when P has decreasing absolute risk aversion, effort (production) could either increase or decrease. The presence of moral hazard affects the effort (production) decision differently than when risk-sharing considerations alone exist. The reduction in A's compensation induced by increased CC never exceeds the amount of CC.     

The Value Relevance of Network Advantages: The Case of E–Commerce Firms

We show that network advantages constitute an important intangible asset that goes unrecognized in the financial statements. For a sample of e–commerce firms, we find that network advantages created by Web site traffic have substantial explanatory power for stock prices over and above traditional summary accounting measures such as earnings and book value of equity. Also, network advantages are positively associated with one–year–ahead and two–year–ahead earnings forecasts provided by equity analysts. When we allow network advantages to be endogenously determined by managerial actions, we find that at least part of the value relevance of network effects stems from the presence of affiliate referral programs and higher media visibility.     

Stakeholder pressure for sustainability: Can ‘innovative capabilities’ explain the idiosyncratic response in the manufacturing firms?

This study explores role of innovative capabilities in determining a manufacturing firm's response to stakeholder pressure for adopting sustainable practices. Drawing on the theory of conservatism, we delineate that the firm's response is idiosyncratic and undergirded in the nature of its innovative capabilities. Our empirical investigation reveals that the response to the stakeholder pressure is mediated by the nature of the firm's innovative capabilities. Indian manufacturing firms are identified as unit of analysis for this study. The individual manufacturing facilities implement the environmental practices. The findings suggest that the manufacturing firm's exposure to exploitative/exploratory innovative capabilities triggers sustainable behaviours with ephemeral focus and enduring focus. Further, the exploratory/exploitative innovation is capable of explaining idiosyncratic behaviour for the firms' sustainability practices adoption. The findings delineate, with analysis, that unlike China, regulatory stakeholder pressures in India inhibit the adoption of sustainable practices with enduring focus in manufacturing firms.     

Estimating loss of ecosystem services due to paddy straw burning in North-west India

Crop residue burning is severe in rice–wheat cropping system of North-western states (Punjab, Haryana, Uttarakhand, and western Uttar Pradesh) of India, where mechanized harvesting of rice using combine harvesters is a common practice, and management of leftover residue in the short window of 10–15 days for timely sowing of wheat is a formidable task. Moreover, there is a lack of user-friendly, cost-effective, and economically viable options and, around 23 million tonnes of rice residue is burnt annually in the region. Burning biomass not only pollutes environment but also results in loss of appreciable amount of plant’s essential nutrients. Straw burning releases soot particles, nitrogen oxides, sulphur dioxide, carbon dioxide, carbon monoxide, and polycyclic aromatic hydrocarbons, thus causing serious deterioration in atmospheric quality and human health hazards. We attempted to identify and quantify the environmental cost of paddy straw burning in North-west India. Using extant coefficients, it is estimated that cost of paddy residue burning is INR (Indian National Rupee) 8953?per?ha, and the social cost of burning is INR 3199 crores per annum in the region.     

The Impact of Better‐than‐Average Bias and Relative Performance Pay on Performance Outcome Satisfaction

Drawing on equity and expectancy theories, we hypothesize that the perception of accountants about their ability to contribute relative to a peer (operationalized as the better‐than‐average [BTA] bias) negatively influences their satisfaction with the outcomes of the performance evaluation process (operationalized as performance outcome satisfaction [POS]). We hypothesize further that this negative influence is mitigated by the amount of relative performance pay. We test these hypotheses using data collected from a survey of and an experiment involving 164 entry‐level accountants. We found that in general our participants rated themselves better than the average audit professional and their immediate work associate; that is, they displayed a BTA bias. Moreover, we found that both the BTA bias and performance pay individually influenced POS; we also found a moderately significant interaction effect. In their entirety, the results indicate that the greater an entry‐level accountant believes that she or he is better than average the more likely her or his performance outcome satisfaction will fall.