The valuation-relevance of the foreign translation adjustment: The effect of barriers to entry

We examine the economic effects of barriers to entry on the association between foreign currency translation adjustments and the stock returns of multinational firms operating in the manufacturing and service industries. Firms that are innovation leaders, that is, firms that are research and development (R&D) intensive and firms with high foreign asset intensity (i.e., asset-intensive firms), are our proxies for firms operating in environments with barriers to entry (i.e., environments in which competition is less intense). We hypothesize and find that foreign currency translation adjustments are positively associated with abnormal stock returns for firms operating in environments with barriers to entry in both manufacturing and service industries. This finding highlights the importance of assessing the valuation-relevance of foreign currency translation adjustments by considering the economic contexts of foreign currency movements. Overall, the evidence shows that the accounting rules governing foreign currency translations generally produce results consistent with the economic effects of foreign exchange rate changes.     

Vertical Coordination in the Swine Industry: A Multi-Country Study

Pork constitutes about 45 percent of the world's total meat consumption. Recent trends indicate that pork consumption is likely to increase in future as well. The international pork industry is undergoing a structural and organizational change as a result of changes in the method of pork production and processing technology. This paper identifies a variety of pressures that are leading to these changes. One of the most important factors is the change in consumer demand patterns. Consumers now demand more specific product characteristics. In case of pork, the specificity of the product includes color and texture of the meat, origin of the meat, labeling information pertaining to nutritional contents, drug and chemical residues, and production methods used. In order to meet all these specific demands and to further reduce production costs, various stages of pork production have started to coordinate in many countries. The extent of vertical coordination varies both within and among the countries. This paper identifies the types of linkages and the methods of transaction(s) used between various stages of pork production in Canada, the Netherlands and the U.S. The paper also identifies the upcoming pressures for change and illustrates the analytical framework developed to compare coordination mechanisms that exist between stages of pork production in the three countries. The paper concludes that industrialization, globalization, and changes in consumer demand and preferences are resulting into massive structural and operational changes in the international pork industry.     

Understanding the intention to use mobile banking by existing online banking customers: an empirical study

The Indian banking sector can take advantage of the proliferation of smartphones as well as the government’s encouragement of cashless transactions to accelerate the use of mobile and online banking. The purpose of this study is to understand the initial acceptance of mobile banking by existing online banking users. Few studies have focused on online banking users’ behavioural intention to use similar services (such as mobile banking) in India. To this end, a theoretical model was developed using the technology acceptance model, which was extended to cover the adoption factors that influence users of online banking to use mobile banking. These adoption factors comprise perceived ease of use, perceived security, mobile self-efficacy, social influence and customer support. The dependent variable is customers’ behavioural intention to use mobile banking. A partial least squares structural equation modelling analysis was used to test the theoretical model with sample data from 420 online banking customers of various public, private, foreign and co-operative banks in India. The study found that the adoption factors had a significant impact on customers’ behavioural intention to use mobile banking. The findings of this study provide insight into digital banking channels, contribute to existing research on digital banking adoption and will educate banks and financial institutions on the adoption of mobile banking in India.

     

Consumer attitude towards brand-extension incongruity: The moderating role of need for cognition and need for change

Abstract

This paper integrates two contradictory predictions from the schema incongruity theory: a linear versus an inverted-U relationship between brand-extension incongruity and evaluation. It suggests two personality variables, namely, need for cognition and need for change that moderate the relationship. The major proposition that the relationship would be linear for individuals low in both personality dimensions and inverted-U for those high on both was supported by the data obtained through a questionnaire study. The highest evaluation was obtained for the moderately incongruent extension compared to the congruent and extremely incongruent brand extensions of an established brand for individuals high on both personality dimensions. Four innovative behaviour types identified on the basis of a combination of high and low categories of participants on the two personality dimensions also provided similar results. Theoretical and practical implications of the findings, limitations of the present study, and future possibilities are discussed.     

Selling-price estimates in revenue recognition and the usefulness of financial statements

Revenue is one of the largest and most value-relevant items in firms’ financial statements. Based on the “realizable” and the “earned” criteria of SFAC No. 5 (FASB in Concepts statement no. 5. Recognition and measurement in financial statements of business enterprises, 1984), revenues should reflect both selling price and timing of delivery. Of those two aspects, selling-price estimates are required for revenue recognition when standalone selling prices for products and services are not available. In this study, I examine the effects of selling-price estimates in revenue recognition on the contracting and informational roles of financial statements. Particularly, I examine the setting of SOP 97-2 (AICPA in Software revenue recognition. Statement of Position (SOP) 97-2, AICPA, New York, 1997) that removed software firms’ flexibility to recognize revenues using selling-price estimates. I find that SOP 97-2 implementation did not improve the contracting role of earnings. However its implementation partly shifted the informational role of financial statements from income-statement to balance-sheet components.     

Estimation of ratio of population means in survey sampling when some observations are missing

This paper considers the estimation of the ratio of population means when some observations are missing. Four estimators are presented and their bias and mean square error properties are studied. Received: June 1998     

The Dempster‐Shafer Theory: An Introduction and Fraud Risk Assessment Illustration

This article introduces the Dempster‐Shafer theory (DS theory) of belief functions for managing uncertainties, specifically in the auditing and information systems domains. The use of DS theory is illustrated by deriving a fraud risk assessment formula for a simplified version of a model developed by Srivastava et al. (2007). In this formulation, fraud risk is the normalised product of four risks: risk that management has incentives to commit fraud; risk that management has opportunities to commit fraud; risk that management has an attitude to rationalise committing fraud; and risk that an auditor's special procedures will fail to detect fraud. The article demonstrates how to use such a model to plan for a financial audit where management fraud risk is assessed to be high. In addition, it discusses whether audit planning is better served by an integrated audit/fraud risk assessment as now suggested in SAS 107 (AICPA 2006a, see also ASA 200 in AUASB 2007) or by the approach illustrated here where a parallel, but separate, assessment is made of audit risk and fraud risk.