Some effects of accounting expertise and information load: An empirical study

Effects of accounting expertise and information load upon predictions made from accounting reports were explored in a laboratory setting. Both greater expertise and lower information load (where achieved by increasing the processing time available) were associated with the placement of wider confidence intervals around predictions by subjects. These two variables also had systematic (though generally not statistically significant) effects upon the dispersion of predictions made by the subjects (auditors and students).     

The spatial effects of information technology: Some literature

The conclusion emerging from comparing many studies is that information technologies can indeed encourage and also substitute for the physical movement of goods and people, with consequences for centralisation and decentralisation. Which of the two effects will appear in any given case appears to depend more on factors other than the choice of technology.     

Relational effects of relative performance information: The role of professional identity

Prior accounting studies on relative performance information (RPI) have mainly considered the effects of RPI on employees’ performance. This study extends this stream of research by investigating relational effects of RPI that capture RPI recipients’ attitudes towards RPI provision. Specifically, we examine the conditions under which RPI has a positive influence on perceived organizational support (POS). This is important because research on organizational behaviour has demonstrated that POS is an antecedent of desirable job-related attitudes such as organizational commitment, job involvement, and extra-role performance. The results of a dyadic survey in a hospital setting suggest that the effect of RPI on POS is conditional not only on the perceived usefulness of information and relative performance but also on the professional identification of RPI recipients. Our findings indicate that RPI provision is especially suitable for employees who possess a stronger social identification with their peer groups. Our study adds a relational perspective to the hitherto mostly informational and motivational focus in studying social comparison mechanisms linked to RPI systems.     

Asymmetric information effects on loan spreads

This paper estimates the cost arising from information asymmetry between the lead bank and members of the lending syndicate. In a lending syndicate, the lead bank retains only a fraction of the loan but acts as the intermediary between the borrower and the syndicate participants. Theory predicts that asymmetric information will cause participants to demand a higher interest rate and that a large loan ownership by the lead bank should reduce this effect. In equilibrium, however, the asymmetric information premium demanded by participants is offset by the diversification premium demanded by the lead. Using shifts in the idiosyncratic credit risk of the lead bank's loan portfolio as an instrument, I measure the asymmetric information effect of the lead's share on the loan spread and find that it accounts for approximately 4% of the total cost of credit.     

Organizing information into useful management reports: Short cases to illustrate reporting principles and coding

The accounting information systems course snatches students from their comfort zone of debits and credits and drops them into the position of czar of information needed by managers to make decisions and manage their day-to-day operations. Instructors of this course have the daunting task of teaching students how to report information in a way that it is meaningful to managers. These reports must adhere to principles not necessarily pertinent to the financial statements with which students are already familiar. These principles of management reports include concise and timely reports, inclusion of physical as well as monetary data, and exception reporting. The authors have developed and used three different teaching cases that resemble real-world experience to help students understand and apply these reporting principles. These cases can be used individually, and instructors might choose to use more than one of them in their AIS course. In addition, these cases challenge students to develop data coding methods that must be used to enable the generation of reports adhering to these principles. Learning objectives, implementation guidance, and teaching notes are provided. Feedback from students on the use of these cases has been overwhelmingly positive. The cases were administered at two universities (the authors’ university and another university) during the fall 2013 semester. The questionnaires administered to the instructor and the students are provided. Results included in this paper suggest that both the students and the instructors found the cases interesting and useful.     

Strategy,performance measurement techniques and information technology of the firm and their links to organizational performance

This study investigates the relationships between organizational performance and customer-focused strategies, performance measures and information technology. The results indicate that when a firm does not follow a customer-focused strategy, contemporary management accounting systems in combination with advanced information technology are related to high customer performance. The results also indicate that contemporary performance measures do not help firms with a highly customer-focused strategy to achieve high customer performance. Finally, the results show that a fit between the customer-focused strategy and financial performance measures improves customer performance.     

Assurance provided by auditors' reports on prospective financial information: implications for the expectation gap

The results of this study indicate significant differences in beliefs between auditors, users and preparers of prospective financial information, concerning forecast reliability and the role and responsibilities of auditors and management. Contrary to the usual published studies on expectation gap, it was found that auditors believe that forecasts are more reliable than users or preparers. Auditors also believe that they have a higher level of responsibility and accountability than is attributed to them by users or preparers. Beliefs were affected by the type of report issued by the auditor and subjects were able to discriminate between the level of assurance provided by positive and negative assurance opinions. However, based on the responses of shareholders, it appears that the negative assurance opinion on assumptions for an audit might confuse users and might not meet the demands of the market.     

Returns to IT excellence: Evidence from financial performance around information technology excellence awards

The resource-based view has been used in IT business value research to theorize and investigate the impact of unique IT capabilities on sustainable competitive advantages. Prior research has empirically documented a positive association between superior IT capabilities and firm performance. However, such analyses have focused on IT capabilities of firms in the early 1990s. In this study, we examine the impact of superior IT capabilities on firm performance over the 1988–2007 period, which allows us to consider the structural shifts in the return of IT capability over time. Our results suggest that firms with superior IT capabilities are able to attain higher firm performance levels until 1999. However, such performance advantage disappears in the post-1999 time period. We also find that a subset of firms that sustain high levels of IT capabilities during the period 1988 to 2007 continue to perform better than their peers. We conclude that managers are able to achieve superior firm performance if they are able to maintain high levels of IT capability over time.     

A predecisional approach to the measurement of the demand for information in a performance report

Accountants are concerned with what information decision makers demand to solve problems. The research reported in this paper measures the demand for information in performance reports. The measurements are obtained by a method developed by psychologists to measure the cognitive processing of information. The evidence indicates that there is a moderate but varying level of convergence among six behavioral measures of demand and that there is a low level of demand consensus. Finally, limitations and implications of the evidence are presented.     

Conditioning manager alphas on economic information: another look at the persistence of performance

This article presents evidence on persistence in the relativeinvestment performance of large, institutional equity managers.Similar to existing evidence for mutual funds, we find persistentperformance concentrated in the managers with poor prior-periodperformance measures. A conditional approach, using time-varyingmeasures of risk and abnormal performance, is better able todetect this persistence and to predict the future performanceof the funds than are traditional methods.     

Abnormal returns to investment strategies based on the timing of earnings reports

This paper adds to recent evidence on market inefficiency in processing information in earnings reports. It documents that short positions taken in sample stocks which did not report earnings by the date expected during the sample period, 1971–1976, would have been abnormally profitable, before transaction costs. This is because late reports, on average, revealed bad news which was not anticipated in market prices prior to the report date. The magnitude of the average abnormal returns is in the order of 1.0% over 20 days but is larger for smaller firms in the sample and positively related to the length of the reporting delay. The paper also documents that long positions taken in stocks reporting early with good news would have generated abnormal returns of approximately 1.0% on average over a 20-day holding period.     

The effects of information availability on the benefits accrued from enhancing audit-firm reputation

This paper reports on a laboratory experiment that examines the effect of market setting and reputation enhancement on audit prices, profits, and number of contracts. Klein and Leffler (1981) The role of market forces in assuring contractual performance. Journal of Political Economy, 89, 615–641 provide theory related to reputation effects based on the availability of perfect ex-post quality (of the audit) information. Such information is not routinely available within audit markets. Therefore, the assumption of the availability of perfect ex-post quality information was relaxed to reflect a more realistic market in which audit quality must be inferred from information related to audit failure. Findings are that restricting the information available in this manner significantly affected the market's response to the auditor's attempts to establish a reputation. While the markets for which perfect ex-post quality information was provided closely followed the model's expectations, the limited information markets did not—auditors who attempted to enhance their reputation were unable to charge significantly higher prices and correspondingly made significantly lower profits.     

Strategic orientation,organisational structure,and the associated effects on performance

The paper presents an investigation of the structural characteristics of firms' strategic orientation (as conceptualised by Miles and Snow (1978)). The associated relationships to profitability and perceived market share are studied in financial services firms, specifically in credit unions. The author finds that most firms have a mixed structural form, with fewer firms being either highly structured or lowly structured. Defenders are more likely than expected to be of mixed structural form and less likely to be highly structured. Prospectors are more likely than expected to be highly structured. Analysers are more likely than expected to be highly structured. Reactors show little variation from the expected distribution. No interaction of structure and strategy is evident on either share or profits. The results do indicate that strategic orientation has an influence on perceived market share, but not profitability. Reactors are shown to have significantly smaller market shares than the Prospectors, Analysers, and Defenders. Also, Defenders are shown to have smaller shares than Prospectors. On the other hand, structural form is shown to have an influence on profitability. The less structured firms are shown to be more profitable than either the highly structured or mixed structure firms. It appears, at least in this sample, that organisational structure is more relevant to profitability, while organisational strategy is more relevant to market share.     

The effects of reform on China’s bank structure and performance

This paper investigates the relationship between market structure and performance in China’s banking system from 1985 to 2002, a period when this sector was subject to gradual but notable reform. Using panel data estimation techniques, both the market-power and efficient-structure hypotheses are tested. In addition, the model is extended to consider issues such as the impact of bank size/ownership and whether the big four banks enjoy a “quiet life”. On average, X-efficiency declined significantly and most banks were operating below scale efficient levels. Estimation of the structure–performance models lends some support to the relative market-power hypothesis in the early period. The reforms had little impact on the structure of China’s banking sector, though the “joint stock” banks became relatively more X-efficient. There was no evidence to support the quiet-life hypothesis, probably because strict interest rate controls prevented the state banks from earning monopoly profits. Thus the ongoing liberalisation of interest rates should be accompanied by reduced concentration. Overall, to improve competitive structure, new policies should be directed at encouraging market entry and increasing the market share of the most efficient banks.     

The effects of job-related tension on managerial performance in participative budgetary settings

The association between job-related tension and managerial performance has been the subject of speculation and some preliminary research, with little resolution. Four potential reasons for the lack of resolution on this issue are explored in this paper. These are (1) the use of single organizational samples in prior studies, (2) the measurement of managerial performance, (3) the prospect of a curvilinear relation between job-related tension and performance, and (4) the possibility that budgetary participation moderates the association, if any, between job-related tension and performance. By systematically varying both the measurement of managerial performance and the employment of random sampling, the findings of this research suggest that the association between job-related tension and performance is significant and negative. There is no evidence to support the proposition that participation moderates the relation between job-related tension and performance.     

The incidence of earnings management on information asymmetry in an uncertain environment: Some Canadian evidence

In this study, we investigate the association between earnings management and information asymmetry considering environmental uncertainty. Results show that a complex and dynamic environment weakens the relationship between discretionary accruals and information asymmetry measured as share price volatility and bid-ask spread. More specifically, the positive relationship between earnings management and information asymmetry is weakened for diversified firms, those intensively investing in R&D, and those facing high sales volatility. This highlights the difficulty for investors to assess earnings management in an uncertain environment. Finally, in such a context, discretionary accruals are more likely to be detected by investors for firms cross-listed on a U.S. stock exchange, a more liquid and transparent stock market compared with the Canadian stock market.     

关于抵押品评估的若干理论与实践问题探讨

对于抵押品评估的一些问题,如抵押品评估价值类型的选择等,目前业界仍存在多种看法。本文作者就抵押品评估中的市场预期与评估判断、价值类型及评估前提的选择等问题进行了多方面的探讨,以期对进一步完善抵押品评估理论基础提供借鉴。     

An empirical study of portfolio-balance and information effects of order flow on exchange rates

We propose a simple structural model of exchange rate determination which is inspired by the analytical framework recently forward by Bacchetta and van Wincoop (2006) and allows us to disentangle the portfolio-balance and information effects of order flow on exchange rates. We estimate this model employing an innovative transaction data-set that covers all indirect foreign exchange transactions completed in the USD/EUR market via EBS and Reuters between August 2000 and January 2001. Our results indicate that the strong contemporaneous correlation between order flow and exchange rates is largely due to portfolio-balance effects. This result also appears to carry through the four FX intervention events that appear in our sample.     

The effects of a modest incentive on information overload in an investment analysis task

This paper investigates the effects of performance based monetary incentives on cue usage within the information overload paradigm. Participants suggested appropriate stock prices for hypothetical companies based on either six or nine non-correlated information cues. The presence of monetary incentives motivated increased response times compared to participants who did not receive incentives. This in turn resulted in higher levels of information usage than has been observed in previous studies. The results support the view that information processing capacity imposes a limit on the amount of information processed per unit of time rather than on the amount of information that can be processed in total.