Auditor Independence and Fair Value Accounting: An Examination of Nonaudit Fees and Goodwill Impairments

Inadequate testing of fair value accounting estimates, including goodwill, is often cited as an audit deficiency in PCAOB inspection reports, and, in some cases, these deficiencies have led to enforcement actions against the auditor. As a result of these issues, the PCAOB recently proposed a new auditing standard for fair value accounting. While these regulatory actions suggest that auditors are challenged by the fair value regime of accounting for goodwill, they also highlight an area where the auditor could be influenced by their financial ties to a client. In this study, we test whether nonaudit fees are associated with goodwill impairment decision outcomes. Our results indicate that the nonaudit fees a client pays are inversely related to the likelihood of impairment in settings where goodwill is likely to be impaired. Additional examinations suggest that the negative relation between nonaudit fees and auditor independence is driven by clients who are most incentivized to exert their influence over the auditor.     

The Switch-Up: An Examination of Changes in Earnings Management after Receiving SEC Comment Letters

The SEC has long asserted that earnings management practices result in adverse consequences for investors. We examine whether SEC oversight affects firms' accounting quality in terms of earnings management trade-offs. We expect that increased firm-specific regulatory scrutiny, in the form of an SEC comment letter, will induce management to switch from accrual-based earnings management (AEM), which is a main focus of the SEC, to real-activities-based earnings management (REM), which is not likely to be commented on in the SEC's review process. Consistent with our predictions, we find that AEM is lower and REM is higher following the receipt of a comment letter, relative to non-comment-letter years and a propensity-score-matched sample of non-comment-letter firms. However, we do not find a significant difference in total earnings management (i.e., the sum of AEM and REM), suggesting that the higher REM acts as a substitute for lower AEM activity. We further find that our results are driven by accounting comments relating to estimates and accruals and not by classification-only comments, which suggests that a comment letter that does not question specific issues associated with estimates and accruals is not a strong enough signal to induce the firm to change earnings management behavior. Additionally, the shift to REM is attenuated for firms with high institutional ownership. These results collectively suggest that the comment letter process effectively constrains AEM but has the unintended consequence of firms, on average, switching to REM.     

Terrorism and women’s employment in Afghanistan

ABSTRACT

Afghanistan is one of the most dangerous countries for women and has the sixth lowest women’s employment rate globally. Evidence shows that security concerns prevent women from working, but there is little work estimating the magnitude of or mechanism behind these effects. We address this gap in the literature by estimating the relationship between increased terrorist attacks and women’s employment using the Global Terrorism Database (GTD) and the 2015 Demographic and Health Survey (DHS). We find the number of attacks is negatively associated with men’s and women’s employment, yet the relative magnitude is larger for women due to their low employment rate. Conversely, we find that an increase in fatalities is associated with higher women’s employment, suggesting that women replace men that have died from attacks. This research illuminates a potential link between women’s employment and terrorism, thus adding to the ever-increasing knowledge of the costs of conflict.     

The readability of company responses to SEC comment letters and SEC 10-K filing review outcomes

Review of Accounting Studies - An emerging literature shows that shareholders benefit from the Securities and Exchange Commission’s (SEC) filing reviews in terms of improved disclosures and...     

Understanding the long-term implications of retailer returns in business-to-business relationships

Providing end consumers with the ability to return products is an important part of a retailer’s service offering. While research in reverse logistics has explored the movement of returned merchandise upstream, little research examines the relational implications of returned merchandise in the business-to-business (B2B) context. This research explores the relational implications, as well as the impact on the supplier salesperson’s behaviors, of retailer returns. Using a comprehensive dataset which includes longitudinal archival returns data, as well as two waves of retailer surveys reporting on salesperson behaviors, our research investigates how retail returns impact salesperson responses in the following time period, retailer perceptions of the relationship in the following time period, and returns in the following time period. Consistent with a reciprocal exchange perspective, results suggest that when salespeople respond to returns by engaging in relationship building behaviors, these behaviors are noted by the retailer, which in turn results in fewer returns in a future time period.     

Understanding the contribution of curb appeal to retail real estate values

The concept of curb appeal and its impact on property values has been largely neglected in the real estate literature. In the context of retail real estate, curb appeal represents the general attractiveness of a store as viewed from the sidewalk or parking lot that is expected to affect consumer patronage decisions and consequently property values. We first develop a measurement instrument for curb appeal and assess its validity using exploratory and confirmatory factor analysis. Our results suggest that curb appeal is multidimensional and consists of an atmospheric, architectural and authenticity dimension. Then, we use survey responses, transaction data and spatial regression to quantify the impact of curb appeal on sales prices. We find that the atmospheric and architectural dimensions have a significantly positive impact on sales prices. We also show that curb appeal dimensions are highly correlated with observable building features traditionally included in hedonic pricing models.     

Teaching for critical thinking: preparing hospitality and tourism students for careers in the twenty-first century

Twenty-first century tourism educators and career-seeking graduates are faced with a host of novel challenges. Given the dynamic, complex nature of the contemporary tourism industry, students must be equipped with relevant twenty-first century skills. To address this need, critical thinking is currently being promoted, via university initiatives, as an employable skill. This study assesses the extent to which critical thinking is being transmitted to tourism students at a large southeastern university in the United States. Precourse and postcourse data were collected from students (n = 85) who participated in a tourism management class, that emphasized case study learning, during the fall 2014, spring 2015, and spring 2016 semesters. Uncorrected results indicate significant positive increases in overall critical thinking and two of five sub-domains – inference and deduction; however, in the conservative, corrected results there are no significant effects. Recommendations for improving critical thinking and three sub-domains – analysis, evaluation, and induction – are discussed.     

联邦制森林治理:分权管理经验和潜在影响

80%以上的发展中国家和经济转轨国家正在进行着某种形式的分权试验。以11个国家(拥有全球森林总量60%以上)为例,简要描述了实施联邦制的主要林业国家当前的森林行政管理类型以及施政形式,认为分权后强化了跨部门联系的重要性,许多政府机构都介入了有关森林资源的各项决策;有效的森林治理取决于各种管理机构的能力;私营部门和民间组织在成功治理各种森林资源中也发挥着重要作用。从11国经验中分析了各种潜在优势、潜在危险,指出分权管理减少了中央政府的官僚和决策障碍,但会使全国性的政策协调、实施和监督变得困难。     

The impact of pronoun choices on consumer engagement actions: Exploring top global brands' social media communications

To enhance the understanding of consumer engagement with brand content on social media, this study examines how pronoun choices affect different types of consumer engagement (e.g., likes, comments, shares) by simultaneously exploring five different pronoun types (first-person singular, first-person plural, second person, third-person singular, and third-person plural). Furthermore, this study explores how the effects of these linguistic (pronoun) choices vary across two brand classifications: characteristics (hedonic vs. utilitarian) and offerings (goods vs. services). The proposed multivariate Poisson regression model, analyzing 15,788 unique brand posts from Facebook over an 8-month period, reveals differences in engagement due to pronoun usage across brand classifications. These results offer a deeper understanding of how the way brands talk to consumers on social media platforms influences consumers' attitudes (likes), propensity to engage with the brand (comments), and willingness to share branded content with their social networks (shares) across different brand classifications.