Encouraging Professional Skepticism in the Industry Specialization Era

This paper provides theory and experimental evidence that, under common audit conditions, industry specialization inhibits some aspects of auditors’ professional skepticism. As auditors amass industry experience, they develop extensive knowledge of non-misstatement explanations for unusual financial statement fluctuations. This knowledge coupled with confidence in their ability to analyze audit evidence inhibits their inclination to be skeptical when there are no overt indicators of elevated misstatement risk. Although these conditions are, by definition, the conditions where misstatements are least likely, they are also the same conditions where the PCAOB has alleged pervasive insufficient professional skepticism and where well-concealed fraud is possible. These results pose an ethical dilemma for the PCAOB in terms of weighing its charge to protect the public interest against the fairness of its inspections to audit firms. Encouragingly, I also predict and find that audit firm efforts to promote professional skepticism are more effective for specialists as non-specialists are skeptical regardless of these efforts.     

Defining Corporate Citizenship: Evidence from Australia

This study reports the results of a survey of the attitudes to corporate citizenship and practices of corporate citizenship of 93 of the largest private and publicly listed corporations in Australia. The results suggest there was considerable hesitation in positioning corporate citizenship as a proactive, long term, internal culture process. Instead, corporate emphasis was generally on short-term community activities. Also, there was little variation in these results when respondents were classified by industry, international involvement and legal structure. Clearly, significant links have yet to be made by corporate Australia to connect the financial, social and environmental bottom lines.     

Responsibility Cost Control System in China: The Han Dan Experience

This study undertakes a longitudinal analysis of the ethical management practices of Sri Lankan companies by comparing the results from a survey conducted in 2003. During this period regulatory developments have taken place within Sri Lanka and internationally aimed at improving the level of corporate governance. Based upon this survey data we conclude that progress has been made in ensuring that ethical management practices are more homogenous and standard practice across companies. Internationalized companies remain the ones that are more aware of the environmental consequences of their actions, although few companies, unfortunately, recognize this as an issue of concern.     

Using involvement for segmenting the adoption of e-commerce in travel

While the adoption of e-commerce in the purchasing of leisure travel is gaining momentum, higher levels of adoption can be achieved if greater knowledge of the market for e-commerce is obtained. This research uses two variables, involvement with computers for leisure purposes and purchasing leisure travel over the Internet, as a means of segmenting the market with regard to the adoption of e-commerce in the purchasing of leisure travel. A sample of residents of a suburban borough of Lisbon (Portugal) was surveyed and hierarchical clustering was performed on 225 usable questionnaires. The four resulting clusters of residents that emerged were quite different from one another in relation to the adoption of e-commerce in the purchasing of leisure travel and in supporting the internal and external validity of the clustering procedure. One segment that has not been reported in the literature before was identified, comprising those who have moderate involvement with both innovations (the moderate enthusiasts). Moreover, the results suggest that individuals in this cluster may be stronger candidates for the adoption of e-commerce in the purchasing of leisure travel that computer fanatics.     

Measuring the Impact of Reserve Requirement Changes Using Interest Rate Spreads: Evidence from Costa Rica

Researchers have proposed several different theories regarding the effects of reserve requirement changes. One theory suggests that reserve requirements represent a tax on financial institutions. This theory is usually tested by examining stock price responses to announced reserve requirement changes. Reliable, historical stock price information for Costa Rica firms is generally not publicly available. In this paper, the spread between deposit rates and loan rates is used as a proxy for firm profitability. The results indicate a complex response to reserve requirement changes that is dependent on bank classification.     

Positive uncertainty: the benefit of the doubt in advertising

Positive uncertainty refers to uncertainty surrounding an anticipated positive outcome. It provides consumers with the opportunity to imagine and speculate on a product's or experience's potentially positive characteristics. Research has shown that when uncertainty is associated with something positive, consumers may prefer uncertainty to certainty. In a between-subjects experimental design with a large US (n = 446) and Japanese sample (n = 453), the present study demonstrates that positive uncertainty increases consumers’ positive feelings when they evaluate a product, particularly for high-involvement products that allow consumers to imagine and speculate about potentially positive product benefits. Unexpectedly, the study findings are consistent across the two different markets, which vary substantially in terms of consumers’ level of uncertainty avoidance. Specifically, results show that future-framed advertisements are effective in generating positive uncertainty and that positive uncertainty generates positive attitudes, both in countries scoring high (Japan) and low (USA) on uncertainty avoidance.     

Examining the Paths from Export Strategic Orientations to Export Performance: The Mediating Role of Export Resource Transformation Capability

Export strategic orientation research suggests that export entrepreneurial orientation (EO) and market orientation (MO) directly affect export performance. Based on the dynamic capability theory, this study hypothesizes that export resource transformation capability is an intervening factor that helps explain how EO and MO, individually and jointly, impact export performance. Using archival and survey data from small and medium‐sized exporters in the United Kingdom and Nigeria, the study finds that export resource transformation capability partially mediates the individual effects of EO and MO on export performance in both samples. Results further show that export resource transformation capability does not mediate the joint effect of EO and MO on export performance. The findings help provide a more complete understanding of how export strategic orientations might be related to export performance. © 2016 Wiley Periodicals, Inc.     

Immigration, In-Migration, Ethnicity and Entrepreneurship in the United Kingdom

This paper develops and tests hypotheses concerning the effect of migrant status and ethnicity on propensity to engage in entrepreneurship (defined as new business activity) at the individual level in the UK. The hypotheses are tested using bivariate analysis (Pearson tests of independence) and multivariate analysis (binary logistic regression). Bivariate analysis suggests that new business activity varies with migrant status and ethnicity. Multivariate analysis suggests that migration increases the odds of engaging in new business activity, that the independent effect of ethnicity is marginal, and that being a recent ethnic minority migrant decreases the odds, after controlling for other individual level factors. At the regional level, a preliminary analysis suggests that gross migration flow has a higher correlation with new business activity than other commonly used regional demographic or economic development measures.      

Housing Activity and Consumer Spending

The current expansion has seen record-high levels of transactions in housing, extraordinary growth in the aggregate value of owner-occupied housing, and large increases in the amount of funds realized from the refinancing of mortgage debt. Many analysts thus have pointed to the strong housing market and rising home prices as a major pillar supporting recent economic growth and have expressed concern that a contraction in housing activity and values could pose a significant risk to consumer spending and real economic growth. This paper explores the channels by which the housing market may affect consumer spending and assesses the potential risk from a softening in the housing market. Our assessment is that while a housing slowdown by itself may slow consumer spending some, it is probably insufficient to precipitate a downturn without some additional shocks outside of the sector. JEL Classification E21,R21     

Lord Acton and Employment Doctrines: Absolute Power and the Spread of At-Will Employment

This study analyzes the at-will employment doctrine using a tool that encompasses the complementarity of results-based utilitarian ethics, rule-based duty ethics, and virtue-based character ethics. The paper begins with a discussion of the importance of the problem followed by its evolution and current status. After describing the method of analysis, the central section evaluates the employment at-will doctrine, and is informed by Lord Acton’s dictum, “power tends to corrupt, and absolute power corrupts absolutely.” The conclusion explores the implications of the findings. This is a revised version of a paper presented at the World Ethics Forum, Oxford University, Oxford, UK April 9–12, 2006.