Learning the “Craft” of Auditing: A Dynamic View of Auditors' On‐the‐Job Learning

We investigate how auditors learn the technical aspects of their professional role while performing client engagements, and how that learning process has been shaped by changes in societal, economic, and regulatory forces. Prior studies explicitly recognize that auditors need social skills and demeanor consistent with professional norms as well as requisite knowledge, but those studies generally focus on the processes through which new auditors are molded toward consistency with social norms. In contrast, we focus on forces affecting the transfer of technical knowledge from supervisor (guide) to subordinate (learner) in the everyday work setting. Our evidence derives from semi‐structured interviews with 30 relatively new and more experienced audit partners at one Big 4 firm, thus spanning multiple “generations” of experience. Results confirm that auditors primarily acquire technical knowledge on the job, through the interactions among individual engagement team members. However, partners express concern about changes in the practice environment that may limit effectiveness of on‐the‐job learning, including characteristics of personnel, the approach to formal training at induction, supervisors' reluctance to provide candid feedback, regulatory and economic pressures, and the increased distraction, and reduced interpersonal contact associated with the use of information technology. At the end of the day, our findings raise implications for practice regarding the difficulty of developing effective learning conditions for auditors in the face of these challenges.     

Entangled Affiliations and Attitudes: An Analysis of the Influences on Environmental Policy Stakeholders' Behavioral Intentions

We examined attitudes as one potential influence on the behavioral intentions of three stakeholder groups commonly in conflict. Business managers (n = 97), government environmental regulators (n = 69), and active members of pro-environmental groups (n = 49) were surveyed to assess the differences among these groups in their attitudes toward property rights, environmental regulation, and technology. We compared the influence of these attitudes and stakeholder group affiliation on intentions to engage in pro-environmental behavior. The attitudes measures explained a significant amount of the variance in behavioral intention, even after group membership was controlled. Theoretical implications of these findings for stakeholder theory are discussed along with some practical applications of these findings for stakeholder negotiations and management practices.     

Does One Bad Apple(Juice) Spoil the Bunch? Implicit Attitudes Toward One Product Transfer to Other Products by the Same Brand

If people like a product, they will automatically like another product from the same brand even if they do not know anything about it (demonstrated in Study 1). In one sense, this may be a reasonable inference—brands that have one good product may be likely to have other good products. But what if people learn that the second product is actually not good? Explicitly, people act as expected—the second product is disliked based on its negative features. Implicitly, however, people's positive attitude toward the first product still influences their liking of the second (Study 2). This attitude transfer effect (Ranganath & Nosek, 2008) shows that people are able to avoid using the qualities of one product to judge another explicitly. But, implicitly, once an attitude is formed toward a brand's product, other products by that brand will inherit some of the original evaluation regardless of their unique qualities.     

How to pitch a brilliant idea

Coming up with creative ideas is easy; selling them to strangers is hard. Entrepreneurs, sales executives, and marketing managers often go to great lengths to demonstrate how their new concepts are practical and profitable--only to be rejected by corporate decision makers who don't seem to understand the value of the ideas. Why does this happen? Having studied Hollywood executives who assess screenplay pitches, the author says the person on the receiving end--the "catcher"--tends to gauge the pitcher's creativity as well as the proposal itself. An impression of the pitcher's ability to come up with workable ideas can quickly and permanently overshadow the catcher's feelings about an idea's worth. To determine whether these observations apply to business settings beyond Hollywood, the author attended product design, marketing, and venture-capital pitch sessions and conducted interviews with executives responsible for judging new ideas. The results in those environments were similar to her observations in Hollywood, she says. Catchers subconsciously categorize successful pitchers as showrunners (smooth and professional), artists (quirky and unpolished), or neophytes (inexperienced and naive). The research also reveals that catchers tend to respond well when they believe they are participating in an idea's development. As Oscar-winning writer, director, and producer Oliver Stone puts it, screen-writers pitching an idea should "pull back and project what he needs onto your idea in order to make the story whole for him." To become a successful pitcher, portray yourself as one of the three creative types and engage your catchers in the creative process. By finding ways to give your catchers a chance to shine, you sell yourself as a likable collaborator.     

Analysis of intraday herding behavior among the sector ETFs

A body of literature has emerged suggesting that investors herd, or tend to make investment decisions on the basis of information provided by the trades of other market participants. In this paper, we use intraday data to examine whether traders herd during periods of extreme market movements using sector Exchange Traded Funds (ETFs). Two procedures, one based on identifying extreme up market and down market periods and the other based on incorporating a nonlinear term in a regression specification, are used to identify the possibility of the existence of herding behavior in nine sector ETFs traded on the American Stock Exchange. The results support the conclusion that investors do not herd during periods of extreme market movements using ETFs. Furthermore, we show that the market reaction to news is not symmetric for up markets and down markets.     

Financial accounting choice and earnings management

This paper presents a case that exposes students in graduate accounting or MBA financial accounting classes to the concepts of accounting choice and earnings management. In the case, students role-play as a manager who, facing conflicting incentives, must make and defend three expense estimates for a hypothetical company. Students also read selected business press articles that introduce earnings management and that highlight the importance of the issue to the business community. The articles give students some background from which to approach the choices they will make with respect to the financial statements.     

Can copycat private labels improve the consumer’s shopping experience? A fluency explanation

A top priority among retailers is enhancing the consumer’s shopping experience. With the number of private label products increasing at the same time retailers are shedding slower moving products, understanding how private labels impact the consumer’s experience at the retail shelf becomes critical. While one might think that private labels, in particular those that look similar to their national brand counterparts (i.e., copycat private labels), may hinder the shopping experience by making it more difficult for consumers to choose a product, we find the exact opposite. Adopting a fluency perspective, we show that when copycat private labels are included in a shelf set, consumers with high knowledge of the category experience greater choice ease, and as a result they subsequently evaluate their chosen product more favorably. Importantly, the choice ease and evaluations of novice consumers are found to be unaffected. Consequently, this research provides insights for retailers and manufacturers on how and why copycat private labels positively impact an important aspect of the consumer’s shopping experience (i.e., choice ease).     

Many-valued Logic in Multistate and Vague Stochastic Systems

The state of the art in coherent structure theory is driven by two assertions, both of which are limiting: (1) all units of a system can exist in one of two states, failed or functioning; and (2) at any point in time, each unit can exist in only one of the above states. In actuality, units can exist in more than two states, and it is possible that a unit can simultaneously exist in more than one state. This latter feature is a consequence of the view that it may not be possible to precisely define the subsets of a set of states; such subsets are called vague . The first limitation has been addressed via work labeled 'multistate systems'; however, this work has not capitalized on the mathematics of many-valued propositions in logic. Here, we invoke its truth tables to define the structure function of multistate systems and then harness our results in the context of vagueness. A key contribution of this paper is to argue that many-valued logic is a common platform for studying both multistate and vague systems but, to do so, it is necessary to lean on several principles of statistical inference.     

Erratum: The effects of procedural and informational justice in the integration of related acquisitions

The above article (DOI: 10.1000/smj728) was published online on 20 November 2008 in Wiley Interscience ( www.interscience.wiley.com ). Printing errors were subsequently identified in the article: Page 14. Table 1: row 13 should be labelled ‘Post‐integration financial return’. Page 14. Table 1: row 14 should be labelled ‘Post‐integration market position’. Page 17. lines 48‐50: ‘Improving financial return requires removal of critical organizational elements with which organization members feel tightly connected.’ should read ‘Improving financial return requires removal of critical organizational elements such as company names, departments, products, and people with which organization members feel tightly connected.’