The Importance of Account Relations when Responding to Interim Audit Testing Results*

Auditors are expected to plan and adapt audit programs in response to changes in risk associated with each client. Results in the existing research have been mixed regarding whether auditors respond to changes in risk. Two possible explanations for the lack of responsiveness to changes in risk found in the existing research are that auditors succumb to profit pressure, and that researchers only analyze responses in the risky accounts without considering related accounts. This paper experimentally tests how auditors respond to changes in risk of material misstatement identified by means of interim audit testing results. The response to changes in risk of material misstatement is analyzed using planned audit hours across related financial statement accounts and at varying levels of profit pressure. Results indicate the following primary findings: (a) auditors respond to changes in risk of material misstatement by increasing planned audit hours in accounts related to the risky account, and (b) profit pressure does not affect the auditor's response to changes in risk. These results indicate that the relations between accounts must be considered in order to identify the auditors' response to changes in risk of material misstatement. In addition, the results are consistent with audit firms decreasing the emphasis on profit pressure due to the current importance that the market places on audit quality.     

Recruiting Agricultural Economics Graduate Students: Student Demand for Program Attributes

We use data from an Internet and traditional print mail survey to determine student demand for graduate program attributes. Results reveal that students value graduate program ranking more than stipend level, geographic location, or office/computer facilities. Higher ranked programs, as a whole, may be able to offer substantially lower stipends to students and remain competitive with lower ranked programs. Results also suggest that students might be willing to accept higher stipends or office space to attend lower ranked schools. The results may provide graduate program leaders with information to improve their recruitment efforts and/or potentially reduce graduate program expenditures.     

SUPPLY CHAIN COLLABORATION AND LOGISTICAL SERVICE PERFORMANCE

Collaboration with external supply chain entities influences increased internal collaboration, which in turn improves service performance. This relationship may be the key to helping managers understand how best to facilitate behavioral change. The implication is that collaborating with customers and suppliers is a first step toward effective collaboration within the firm.     

Portfolio management for new product development: results of an industry practices study

Portfolio management for product innovation – picking the right set of development projects – is critical to new product success. This article reports on the new product portfolio practices and performance of a large sample of firms in North America. Reasons why portfolio management is important are identified, followed by the relative popularity of the different portfolio techniques: financial methods are first, followed by business strategy methods, bubble diagrams and scoring models. Next, how the various portfolio methods fare in terms of six performance metrics is probed. Financial methods, although the most popular and rigorous, yield the worst results overall, while top performing firms rely more on non‐financial approaches – strategic and scoring methods. The details of how some of these more popular methods are employed by firms to rate and rank development projects are also provided. Finally, managerial implications, including suggestions for making portfolio management more effective in industry, are outlined.     

Determinants of invention commercialization: an empirical examination of academically sourced inventions

We examine the attributes of technological inventions that influence their commercialization. Using a unique dataset of the Massachusetts Institute of Technology (MIT)‐licensed patents, we show that the likelihood of invention commercialization, which we measure by the achievement of first sale, is positively associated with two characteristics of licensed technological inventions—scope and pioneering nature—and has an inverted U‐shaped relationship with the age of the invention. Copyright © 2007 John Wiley & Sons, Ltd.     

Volatility trade design

Despite the fact that they are heavily traded, discussed in every derivatives text, and necessary to aligning implied volatilities with volatility expectations, volatility trades such as straddles, strangles, and option/asset combinations have received scant attention in the finance research literature. Using a unique data set for the Eurodollar options market, the trading and structure of seven volatility trades—straddles, strangles, option/asset combinations, guts, butterflies, iron butterflies, and condors—are examined. We find that both traders' choices among the seven strategies and the designs they choose for the individual strategies indicate that volatility traders seek designs with (1) low deltas, (2) low transaction costs, and (3) high gammas and vegas. Among other things, these three presumed objectives explain why butterflies, guts, and condors are rarely traded; covered call and put writing is rare; and straddles are the most popular volatility trade. These objectives also explain the usual design of straddles, strangles, and asset/option combinations and the straddle–strangle choice. Our data also indicate that, in constructing their spreads, traders rely on heuristics that lead to relatively low deltas and high gammas and vegas, but not always the lowest delta and highest gamma/vega constructions implied by more sophisticated models. We find little evidence of trading based on the shape of the smile, that is, little evidence that trades are designed to long (short) strikes with low (high) implied volatilities. We find that some volatility trade structures—those that (1) receive considerable attention in finance textbooks, (2) have been posited by finance researchers, or (3) are recognized by the exchanges—are rarely employed by traders, whereas others are quite common. © 2005 Wiley Periodicals, Inc. Jrl Fut Mark 25:243–279, 2005     

Ethics Audits and Corporate Governance: The Case of Public Sector Sports Organizations

This article presents a theorized and conceptually informed method for the undertaking of an ethics audit organization. At an operational level, the overall integrity of an organization, it is argued, may be evaluated through the application of a conceptual framework that embraces the inter-related themes of individual responsibility, social equity and political responsibility. Finally, a method is presented for ethics audit which was developed in the auditing of a national public sector sports organization: sportscotland. This emphasizes the significance of key personnel (individuals and in groups) in producing and reproducing the organizational ethos, whilst recognizing the importance of anonymity and confidentiality throughout the process. The theoretical terrain of the ethics audit is articulated through a consideration of ethics as applied moral philosophy, equity as social justice and corporate governance as the moral health (or otherwise) of a public sector sports organization.     

Organizational Ethics in Developing Countries: A Comparative Analysis

Relationships with one’s employees, co-workers, or superiors create ethical dilemmas. Employees’ judgments and ethical perceptions have been extensively studied in Western cultures, but not in developing countries. The purpose of this investigation is to examine employees’ self-reported work-related ethics and compare them to their perceptions of co-workers’ and top managements’ along various morally challenging situations in three developing countries’ organizations. Saudi Arabia, Kuwait, and Oman, known as the Gulf countries, were selected as the research setting – and provided the sampling frame – for this study. The results suggest that respondents perceived all ethically challenging situations as unethical and had significant differences among themselves regarding the ethical perceptions of self, as compared to perceptions of peers’, and top managements’. Discussion of the results and implications are provided.