The Effects of Fraud Risk and Management Representation on Auditors' Hypothesis Generation

Hypothesis generation is considered to be critical to the effectiveness and efficiency of diagnostic processes in auditing. Using a between-subjects experimental design, this work examines the impact of fraud risk and the availability of a non-misstatement management explanation on auditors' hypothesis generation performance. The context is when managers undertake analytical procedures at the planning stage of the audit. The results indicate that auditors are sensitive to increased fraud risk by generating more fraud hypotheses, while the number of misstatement hypotheses generated is not affected by fraud risk. The availability of a non-misstatement management explanation was found not to interfere with auditors' hypothesis generation performance, but facilitated the generation of proportionately more misstatement and fraud hypotheses from the same transaction cycle as that indicated by the management explanation. Together, these findings provide some insights on the sensitivity of auditors' hypothesis generation to fraud risk and whether this sensitivity could be undermined by the availability of management representations.     

Taiwan Chinese managers' personality: is Confucian influence on the wane?

This paper conjectures that Chinese managers' personality in the Taiwan context, as shaped by Chinese tradition, has been moderated in response to their career experience. The paper begins with an introduction to Chinese culture and its impact on values and personality. It then goes on to argue that if the cultural context can nurture personality, we should therefore expect that as the context changes, personality can be moderated via economic reforms as in the case of Taiwan. It is reasonable to assume that among the Taiwanese, the occupational grouping that has most actively felt the impact of these reforms is managers who have been at the forefront of making them happen. We are not aware of any studies focusing on Taiwanese managers which attempt to assess how far their personality is still shaped by Confucian values which have strongly influenced Chinese traditions, and how far it has experienced changes that have come about through modernization and economic reform. We have addressed this research gap using the Chinese Personality Assessment Inventory (CPAI), an indigenous Chinese personality instrument developed by Cheung et al. (1996) with the support of an interview programme and a biographical data sheet to flesh out details related to the subjects' lives and experience. The findings suggest that the traditional Chinese personality with its grounding in Confucianism has been gradually eroding but that some elements of it are still strongly in evidence. The contribution of this study lies in illustrating how personality may be undergoing convergence through modernization. It also signals that cultural boundaries with reference to emic and etic research may also be converging. To the extent that this is so, future studies on culture and business management in China may need to reappraise their understanding of the nature of Chinese culture, values and personality, and how they have responded to business forces in a globalized world.     

The effect of adverse impact in selection practices on organizational diversity: a field study

Based on a sample of 154 organizations across Canada, we examined the influence of the use of different employee selection methods on workplace minority representation rates. Results indicated that usage of cognitive ability and personality testing significantly influences minority representation after controlling for other diversity management practices. In particular, cognitive ability testing appears to be associated with lower levels of minority group representation in organizations as a whole and in their management ranks; personality testing is associated with higher levels of minority representation in organizations. To advance our understanding of the organizational factors that influence minority group representation and the use of different selection practices, we also examined HR manager perceptions of test bias and the effects of employment equity (EEA) legislation on selection test usage. Results indicated that firms covered under employment equity legislation were less likely to use cognitive ability tests. Interestingly, HR managers reported that personality tests may be more biased against minorities than cognitive ability tests. Implications for research and practice are discussed.     

Risk-taking and relational perspective on turnover intentions

This study investigated risking-taking and network ties and their impact on an individual's intention to quit from a relational perspective. Using the social identity and social capital as the theoretical foundation, hypotheses were developed to examine how internal instrumental and external ties as well as ties with higher ranked individuals and their association with turnover intention. These hypotheses were empirically tested using data collected from 126 full-time employees in a Chinese setting. The results showed that high risk propensity was positively associated with turnover intention. Not only internal ties that binds, but external networking also matter in turnover decisions.     

How effective human resource management promotes corporate entrepreneurship: evidence from China

Strategic human resource management (SHRM) represents a set of HRM practices that are aligned with firm strategies. The relationship between SHRM and organizational performance has been extensively examined; however, whether and how SHRM influences corporate entrepreneurship remains unknown. Based on the resource-based perspective, this study examined a model linking SHRM with corporate entrepreneurship. The importance of HRM people's political skill for a firm's development of devolved management through SHRM implementation was also examined. Data from a survey of 201 Chinese manufacturing firms confirm a significant relationship between SHRM and corporate entrepreneurship and that the relationship is partially mediated by a devolved management style. The relationship between SHRM and devolved management was shown to be stronger for firms with more politically skillful HRM people.     

The missing link between innovation and performance in Brazilian firms: a panel data approach

This study aims to verify if there is a positive relationship between innovation and productivity and/or profit in Brazil using a recursive model in line with the Crépon, Duguet and Mairesse (CDM) model. Using a rich combination of three databases, this paper considers a sample of more than 10,000 Brazilian industrial firms and the period 2001–2008. Besides using R&D expenditure as a measure of innovation input, this study also tests the technical-scientific personnel stock as a more appropriate measure of innovative effort in emerging countries. This variable considers the tacit knowledge intrinsic to the worker and corrects a possible measurement error bias in the R&D expenditure variable. The empirical strategy uses a reduced form of the CDM model in a panel data structure to provide consistent estimates as it controls for selectivity, simultaneity and endogeneity due to unobserved firm effects. There are still few studies that apply the CDM model for panel data, especially regarding developing countries. The main results suggest that technical-scientific workers positively affect the firms’ probability to innovate while R&D expenditure has no effect. The results also highlight the absence of the effect of innovation on productivity and profit, suggesting a missing link between innovative efforts and Brazilian firms’ performance.     

The glass ceiling in context: the influence of CEO gender,recruitment practices and firm internationalisation on the representation of women in management

This study examines macro‐level organisational determinants of women in management. Specifically, we examined organisational characteristics and strategies, including firm levels of internationalisation, firm foreign ownership, chief executive officer gender and the active recruitment of women, as predictors of an organisation's level of representation of women in management. Results from a survey of 278 firms indicated that the presence of a female chief executive officer and an organisation's active recruitment of women are positively associated with a firm's percentage of women in management while firm internationalisation and firm foreign ownership are negatively associated with the representation of women in management. Overall, these findings suggest that although firms exercise discretion with respect to hiring and promoting women, they are also constrained by the external environment and organisational characteristics. For example, firms with higher levels of firm internationalisation and that are foreign‐owned may limit their efforts and investment in the advancement of women into management.     

Improving the Economic Performance of Remanufacturing Systems through Flexible Design Strategies: A Case Study Based on Remanufacturing Laptop Computers for the Cambodian Market

Although numerous studies have highlighted the contributions of remanufacturing to sustainable development and the circular economy, the decision for a company to take up this strategy is riddled with uncertainties, especially when significant capital investment is involved. To improve the economic performance of a remanufacturing system in the face of uncertainties, we propose a methodological framework for flexible design of remanufacturing systems. Its application is demonstrated using a case study based on remanufacturing laptop computers for the Cambodian market. Through the case study, we show how one can explore the opportunity of setting up a remanufacturing system, study its economic feasibility and design flexible strategies to improve its economic performance in the face of uncertainties. More interestingly, we demonstrate how Monte Carlo simulation can be used to evaluate the effectiveness of different flexible design strategies in dealing with the uncertainties. Copyright © 2018 John Wiley & Sons, Ltd and ERP Environment     

Adjusting covariance matrix for risk management

The covariance matrix of asset returns can change drastically and generate huge losses in portfolio value under extreme conditions such as market interventions and financial crises. Estimation of the covariance matrix under a chaotic market is often a call to action in risk management. Nowadays, stress testing has become a standard procedure for many financial institutions to estimate the capital requirement for their portfolio holdings under various stress scenarios. A possible stress scenario is to adjust the covariance matrix to mimic the situation under an underlying stress event. It is reasonable that when some covariances are altered, other covariances should vary as well. Recently, Ng et al. proposed a unified approach to determine a proper correlation matrix which reflects the subjective views of correlations. However, this approach requires matrix vectorization and hence it is not computationally efficient for high dimensional matrices. Besides, it only adjusts correlations, but it is well known that high correlations often go together with high standard deviations during a crisis period. To address these limitations, we propose a Bayesian approach to covariance matrix adjustment by incorporating subjective views of covariances. Our approach is computationally efficient and can be applied to high dimensional matrices.