Auditors' Use of Formal Advice from Internal Firm Subject Matter Experts: The Impact of Advice Quality and Advice Awareness on Auditors' Judgments

When subject matter experts are consulted during an audit, the quality of the expert's advice depends upon their ability to fully understand and incorporate client‐specific facts into their advice. Public Company Accounting Oversight Board (PCAOB) inspection reports suggest that auditors are neglecting to perform the required work to assess the quality of experts' recommendations. This study examines how characteristics of the audit, notably staffing decisions, can impede auditors' ability to discern advice quality. In an experiment, we examine how receiving advice of different levels of quality (lower or higher incorporation of relevant client facts) and awareness at the planning stage of the use of a subject matter expert (a priori aware or unaware) impacts auditors' effort, utilization of the advice, and judgment accuracy. We find that awareness of an expert being employed led to a social facilitation effect such that auditors who were a priori aware put forth more effort prior to receiving the expert advice and were initially in less agreement with management's aggressive revenue recognition position than auditors who were unaware. Upon receiving the expert advice, auditors who were a priori aware were more accurate than auditors who were unaware. These results should interest both audit regulators and practitioners by demonstrating how the timing and communication of consulting decisions affect auditors' assessments of advice received from subject matter experts.     

Maintaining a Flexible Payout Policy in a Mature Industry: The Case of Crown Cork and Seal in the Connelly Era

This case study suggests that the payment of cash dividends may not be essential to the long-run success of even mature companies. A mature company in a mature industry, the Crown Cork and Seal Company did not pay any common dividends during John Connelly's 33-year tenure as chairman and CEO. During that period (from 1957 to 1990), the company used stock repurchases along with a compensation policy featuring low executive salaries and generous executive stock options to motivate and execute a focused business strategy. Under the leadership of Connelly, Crown was rescued from what appeared to be certain bankruptcy to become one of the most profitable firms in its industry. Debt was immediately paid down, preferred stock was retired, and the firm's operations were revamped and streamlined. Instead of following the diversification strategies of larger industry peers, Crown's strategy was focused and driven by profit margin and customer service. This strategy eventually led Crown to invest internationally and acquire one of its major rivals. In addition to significant equity ownership by Crown's management and board members, the company's board had a remarkable number of “outsiders” and representatives from international operations, creating a culture that was outward-looking as well as cohesive. And without paying a dollar of dividends—a practice that many finance scholars believe imposes a necessary discipline on mature companies—Crown both preserved its financing flexibility and produced a remarkable record of increases in both profits and market value.     

Factors Affecting Group-Oriented Travel Intention to Major Events

Large-scale, major social events, such as music and cultural festivals and international sporting events, are an important motivator of tourism activity and an increasingly significant component of destination marketing. Despite the growing consumption trend of group-oriented travel behavior and the economic significance of large-scale, event-based tourism, a theoretical gap exists in understanding what drives potential attendees' desire to attend these events, particularly in groups. A theoretically developed conceptual model is empirically tested using survey data from 170 Australian respondents planning to attend, and travel in a group, to a major social event. The results support the model showing that travel motivations (configured as a Type II multidimensional model), affective destination image, and enduring involvement in the event category influence group-oriented travel behavior to major events. Managerial implications and recommendations for future research are also presented.     

What Should be Taught in Intermediate Macroeconomics?

A lack of consensus remains on what should form the theoretical core of the undergraduate intermediate macroeconomic course. In determining how to deal with the Keynesian/classical divide, instructors must decide whether to follow the modern approach of building macroeconomic relationships from micro foundations, or to use the traditional approach based on aggregate models of the macroeconomy. In this article, the authors discuss the advantages and shortcomings of each approach in the context of course objectives. Because there is significant heterogeneity in textbook coverage, the authors summarize some of the approaches taken in current intermediate-level textbooks, which should serve as a useful starting point for new instructors. The authors also discuss how each approach can be extended to analyze the recent recession in the United States.     

Transformational leadership,team climate,and team performance within the NPD team: Evidence from China

This study analyzes the impact of team transformational leadership on team performance during the new product development (NPD) process and the mediating role of team climate. Data were collected from 184 NPD projects of Chinese high-tech firms. The results show that NPD team transformational leadership is positively related to team performance. In addition, team climate mediates the relationship between most dimensions of NPD team transformational leadership (charisma, inspirational motivation, intellectual stimulation, and individualized consideration) and team performance.     

Culture,leadership and motivation in two Commonwealth Caribbean countries: One look at the African Diaspora

Little is known of Caribbean people's views on their culture or of their beliefs regarding leadership and motivation. This study reports the results of a Delphi Technique with people in leadership positions and focus groups. Across groups, responses were relatively consistent: ethnicity and culture are described as influenced by religion, and Christianity in particular; African roots and country of origin are important; effective leaders are charismatic, visionary, results oriented, and they motivate others, lead by example, and develop vision and goals. Leaders believe motivation comes from making a difference for others. Nonleaders believe leaders are influenced by financial rewards and self‐fulfilment; nonleaders are motivated primarily by financial rewards. The results are generally similar to Western beliefs, but some interesting differences are identified. Copyright © 2014 ASAC. Published by John Wiley & Sons, Ltd.     

Early Tracking and the Misfortune of Being Young

Recent research suggests that the relative age of a student within a grade has a causal effect on educational achievement, and that this effect fades with the duration of schooling. In this study, we estimate the causal relative‐age effect on track choice in Austria, a country where students are first tracked in grade 5 (at the age of 10 years), and again in grade 9. We find a strong positive relative‐age effect on track choice in grades 5–8. The age effect persists beyond grade 8 for students from less‐favorable socioeconomic backgrounds and students in urban areas.     

Sustainability Management within Supply Chains – A Resource Dependence View

Proceeding from three basic concepts of resource dependence theory – organizational effectiveness, interdependence and external control – we conducted a multiple‐case study to investigate factors that facilitate and hinder sustainability management within supply chains. Our empirical observations highlight that focal firms do not necessarily transfer their own corporate sustainability agendas into control mechanisms for managing the sustainability of their suppliers. Based on this insight, we develop a new theory that explains how intra‐ and interorganizational sustainability management is affected by a firm's business case for promoting sustainability, control mechanisms, trade‐offs, trust and market liberalization. The theory offers new insights into drivers and barriers for effective interorganizational sustainability management, whereas previous theories could not fully explain the reasons for diverging sustainability management practices in supply chains. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment     

Valuing and value in diversity: the policy‐implementation gap in an IT firm

The focus of UK‐based research on diversity theory and diversity managers has led to a relative dearth of studies focusing on the critical issue of line managers' agency in policy implementation. This article provides a context‐sensitive organisational case study of the policy‐implementation gap in the UK base of one multinational IT company. The article explores male and female managers' perspectives on valuing diversity at a level of general abstraction, and the extent to which they see value in diversity for the effectiveness of their project teams. In the context of a White, male‐dominated industry, the case study shows how the gap is sustained rather than bridged despite the implementation of numerous diversity initiatives.