The link between SMEs alliance portfolio diversity and top management’s entrepreneurial and alliance orientations

International Entrepreneurship and Management Journal - To be able to survive and grow in twenty-first century global network economies, small-to-medium-sized enterprises (SMEs) strive to develop...     

To push performance,check the leader’s power motive

The power motive, defined as the desire to impact the behavior and emotions of another person, has long been controversial. On one side, the exercise of power has been put forth as a fundamental human need greater in strength than the need to survive. On the other, it has been vilified for its potentially devastating consequences. We argue the latter view is distorted, and, by relying too heavily on it, we have come to misunderstand the essential nature of power and its use by leaders charged with driving performance. It is not the power motive that leads to corruption and tyranny, but rather how the power motive is channeled into behavior by other personality factors. Consequently, those charged with leader selection should place greater emphasis on how individuals with strong power motives differ in how they channel power. Doing so will support the selection of executives best equipped to deliver organizational performance.     

Country Market Sequential Order-of-Entry: A Learning Effects Approach

ABSTRACT

In this article, we identify and describe the sequential order-of-entry problem. The sequential order-of-entry problem arises when, after having identified a desirable set of country markets to enter, firms are unable (because of budgetary constraints), or unwilling (because of possible learning or strategic issues), to enter all at once. The question then arises whether some sequences to entering the desirable set of country markets are better than others? Answering this question is shown to be nontrivial. The article outlines a number of arguments for the existence of superior sequences to entering a set of desirable country markets, and develops normative and dynamic frameworks to aid in the identification and evaluation of sequences.     

Do Analysts Matter for Corporate Tax Planning? Evidence from a Natural Experiment

We exploit an exogenous shock to analyst coverage as a result of brokerage house mergers and closures to examine whether financial analysts influence the tax‐planning activities of the firms they cover. Using a difference‐in‐differences design, we find that, on average, firms affected by broker mergers and/or closures experience a reduction in their GAAP (cash) effective tax rates (ETR) of 2.5 percent (2.6 percent), relative to control firms, translating into average tax expense (cash tax) savings of $34 ($35) million. The treatment effect is more pronounced among firms with lower pre‐event analyst coverage. To explore how analysts affect tax planning, we further document that the treatment effect is greater among firms that lose an analyst who provided an implied ETR forecast in the past, suggesting that analysts influence tax planning via their tax‐specific research efforts. In addition, we find that after merger/closure, weakly governed firms increase their use of aggressive tax strategies, and financially distressed firms experience a larger reduction of cash effective tax rates, relative to control firms. Overall, we provide evidence that a shock to analyst coverage sufficiently changes the cost‐benefit trade‐off of tax planning.     

Impact of Auditor Report Changes on Financial Reporting Quality and Audit Costs: Evidence from the United Kingdom

While substantial revisions to auditor reporting requirements are being implemented internationally, the impact of these reforms on financial reporting quality is unknown. We exploit the United Kingdom's recent auditor reporting changes and find that the United Kingdom's new reporting regime is associated with an improvement in financial reporting quality as proxied by significant decreases in absolute abnormal accruals and the propensity to just meet or beat analyst forecasts, and a significant increase in earnings response coefficients. As for audit costs, we do not find a significant change in audit fees or audit delay surrounding the implementation of the new reporting regime. Taken together, the results of this study suggest that new auditor reporting requirements are associated with a significant improvement in financial reporting quality without detecting a significant increase in audit costs.     

Investor Overreaction to Earnings Surprises and Post‐Earnings‐Announcement Reversals

Prior literature suggests that the market underreacts to the positive correlation in a typical firm's seasonal earnings changes, which leads to a post‐earnings‐announcement drift (PEAD) in prices. We examine the market reaction for a distinct set of firms whose seasonal earnings changes are uncorrelated and show that the market incorrectly assumes that the earnings changes of these firms are positively correlated. We also document that positive (negative) seasonal earnings changes in the current quarter are associated with negative (positive) abnormal returns in the next quarter. Thus, we observe a reversal of abnormal returns, consistent with a systematic overreaction to earnings, rather than the previously documented PEAD. Additional analysis indicates that financial analysts similarly overestimate the autocorrelation of these firms, although to a lesser extent. We also find that the magnitude of overestimation and the subsequent price reversal are inversely related to the richness of the information environment. Our results challenge the notion that investors recognize but consistently underestimate earnings correlation and provide a new perspective on the inability of prices to fully reflect the implications of current earnings for future earnings. That is, we show that investors predictably overestimate correlation when it is lacking, but underestimate it when it is present.     

Auditing Goodwill in the Post‐Amortization Era: Challenges for Auditors

The elimination of goodwill amortization in 2001 brought about significant change in how companies are required to account for goodwill. This change in accounting also brought with it new challenges for auditors, namely evaluating the reasonableness of management's assumptions related to goodwill valuation. In addition to introducing technical challenges, this task is particularly difficult given the misalignment in incentives it creates between managers who likely prefer to avoid recording an impairment and auditors who seek to minimize the bias in management's impairment testing. This study focuses on the consequences of the misaligned incentives that auditors face under the current goodwill assessment process. We find that the decision to record a goodwill impairment is associated with an increase in the probability of auditor dismissal. Consistent with the presence of significant friction with clients, our results also indicate that the likelihood of auditor dismissals is negatively related to the favorability of the impairment decision. Furthermore, we find that companies impairing goodwill prior to dismissing auditors subsequently employ auditors that are, on average, more favorable to clients in their impairment decisions.     

Spirituality and corporate social responsibility: an empirical narrative from the Balinese tourism industry

The emerging body of knowledge has indicated the positive relationship between spirituality and corporate social responsibility (CSR), yet our understanding of how spirituality can play a role in CSR in general, and in tourism in particular, remains limited. This research takes a qualitative case study approach to the role of spirituality-inspired CSR by providing an empirical investigation of tourism businesses in Bali, Indonesia, where the Hindu based Tri Hita Karana philosophy drives its cultural identity. A total of 20 qualitative interviews and two focus groups were conducted with Bali tourism stakeholders including businesses, government, community and NGOs. The findings show that spirituality plays an important role in CSR in Balinese tourism in three dimensions, namely (1) as a key element of the broader social and cultural context to create a conducive external environment for CSR; (2) as a CSR driver to inspire business leaders; and (3) as a complement to CSR governance, though with limitations. This research contributes to the literature by providing an empirical narrative that demonstrates strong multi-layered links between spirituality and CSR and the implications for tourism destinations in spirituality-oriented cultures.     

A Challenge in Our Time: Issues of Race in Supply Chain Management

This editorial addresses one of the greatest challenges of our time—racial inequality. Logistics and supply chain management (SCM) factor prominently in people’s everyday experiences, as consumers of products and logistics services as well as through participation in logistics and supply chain workforces. These everyday experiences can be quite disparate depending on one’s race. As academics, we have a responsibility to peel back the layers of how these issues of race and diversity impact and interact with supply chain phenomena. This editorial is intended to bolster conversation around these issues. We identify compelling themes that merit consideration and, perhaps, deeper investigation, including race as an individual difference variable in our research, race in SCM talent and leadership, and race and racism in SCM execution. We also call for more research that addresses racial inclusion and equal access in other aspects of SCM in light of its far-reaching influence in the realms of business and society. The time has come to address these pervasive issues affecting organizations and individuals. We also introduce the articles appearing in the current issue of the journal.     

The intellectual ecology of mainstream marketing research: an inquiry into the place of marketing in the family of business disciplines

Many inside mainstream academic marketing judge the discipline’s influence within the family of business disciplines (as well as in practice) to be in decline. Despite great research productivity, methodologies as sophisticated as any in the social sciences, and a large and rich literature, opinion and evidence suggest that academic marketing is the least influential of the mainstream academic business disciplines. Nevertheless, marketing’s decline is not inexorable. The purpose of this paper is to evaluate this perplexing situation by: (1) assembling and evaluating a number of expert opinions from within marketing; (2) exploring relations and patterns of influence among the leading academic journals in accounting, finance, management, and marketing and evaluating the position and influence of each field; (3) attempting to understand marketing’s problems; and (4) exploring avenues to move marketing back to its once prominent position among the business disciplines.