Perceptions of auditor independence: Its perceived effect on the loan and investment decisions of German financial statement users

Recent research in the United States and the United Kingdom investigated the effect of the perceived independece of auditors on the financial decisions of financial statement users. This paper is an extension of that research, reporting the results of a mail survey of two groups of German users of financial statements audited by German auditors. The survey was undertaken to investigate the user' perceptions of auditors' independence for a number of auditor-client relationships and to determine how those perceptions would affect their financial decisions.     

Calculating, With Income Effects, the Compensating Variation for a State Change

One can easily obtain exact closed-form solutions for the compensating variation (and equivalent variation) in the presence of income effects when the policy being evaluated can be described as a change in the state of the world and one is willing to assume the policy change does not change the individual’s epsilon draw. Alternatively, if one assumes the policy changes the epsilon draw, the expectation of the compensating variation is a complicated integral, typically without a closed-form. The assumption that the policy does not affect one’s epsilon draw is common, and often reasonable, but little discussed.     

Changes in CEO compensation structure and the impact on firm performance following CEO turnover

We document changes in compensation structure following CEO turnover and relate them to future performance. Compared to outgoing CEOs, incoming CEOs derive a significantly greater percentage of their compensation from option grants and new stock grants. The voluntary turnover sample shows similar changes in compensation structure while the forced turnover sample results suggest that new stock grants drive the significant increase in incentive compensation following turnover. Post-turnover performance is positively associated with new stock grants as a percentage of total compensation in the full sample and when analyzing forced and voluntary turnovers separately. We find limited evidence that future operating income is positively associated with option grants following forced turnover. Post-turnover improvement in operating income is positively associated with an increase in new stock grants for the incoming relative to the outgoing CEO.

Corporate Social Responsibility: The Link Between Sustainability Disclosure and Sustainability Performance

This paper explores the relation between sustainability performance and sustainability disclosure within the Australian extractive industries. The study utilizes Ullmann's (1985) stakeholder framework, which depicts sustainability disclosure and performance as two components of management strategy for dealing with stakeholder demands. Consistent with this framework, we predict a positive performance–disclosure relation. Extending prior research that has utilized problematic environmental performance indices such as CEP indices or toxic emissions levels, we develop a sustainability performance index based on the International Finance Corporation's Measuring Sustainability Framework (2001). Using data from 339 mining and energy firms listed on the Australian Securities Exchange in 2006, we find that corporate sustainability performance is strongly associated with disclosure as expected. Sustainability disclosure is also greater for firms with a proactive communication strategy as manifested through press release activity. Finally, asset age and firm size are both positively associated with sustainability, consistent with predictions from the stakeholder framework.     

The process of assisted negotiations: A network analysis

This article introduces network analysis as a supplement to current research on the process of negotiations. We briefly review the literature on negotiations involving third parties, and argue that to understand fully the dynamics of dispute resolution, it is important to examine processes in addition to outcomes. We propose social network methods as a way to examine systematically the step-by-step process through which self-interested third parties influence negotiated outcomes. To illustrate, we analyze process data from triads in an agent-assisted negotiation. We describe three classes of results. First, we describe the basic properties of the third-party-assisted negotiation process (e.g., we found agents to be the most active players in the negotiation process—they initiate interactions significantly more frequently than buyers or sellers). Second, we study the changes in the process characteristics due to experimental conditions (i.e., we found the interactive patterns to vary depending on the information made available to the third party). Finally, we examine the relationships between the systematic process measures and standard outcome measures. We argue that these measures are complementary, and that the process should be informative with respect to interpreting, predicting, and managing outcomes.This research was supported in part by a grant from the Dispute Resolution Research Center.     

Exploring the effect of retail sector and firm characteristics on retail price promotion strategy

This study examines why retail price promotion strategies vary across retail sectors and across firms within sectors. Using hierarchical linear modeling and a sample of 38 firms from 11 retail sectors, the authors investigate how two sector-level characteristics, related to product assortment perishability and heterogeneity, and three firm-level characteristics, related to retailer differentiation, number of stores, and average store size, influence price promotion decisions. The results indicate that assortment heterogeneity moderates the positive influence of perishability on price promotion activity; scale and scope also have significant effects. These results offer fresh insight into the ongoing debate surrounding stable versus promotional pricing, suggesting that the benefits of a particular strategy are driven largely by a complex interaction between sector-level characteristics as well as firm-level cost advantages.     

Perceived Relative Power and its Influence on Negotiations

In an experimental study, we investigate perceived relative power in negotiations and its effect on the distribution of resources and the integrativeness of agreements. We contrast perceived relative power with the objective individual level measure of power often used in past research: the parties alternatives to a negotiated agreement. We found that alternatives affected the distribution of outcomes, while perceived relative power and alternatives affected the integrativeness of outcomes. We found that negotiating pairs who perceived a smaller difference in relative power reached agreements of greater integrativeness than pairs who perceived a greater power difference, even after controlling for alternatives and aspirations. We explore the implications of treating power in negotiations as a perceived and relational construct.     

A study of the airline boarding problem

The airline industry is currently under intense pressure to simultaneously increase efficiency, customer satisfaction, and profitability. The boarding process is one way to achieve this objective as it lends itself to adaptive changes. The purpose of this paper is to determine the most cost-effective way to board passengers and still maintain quality and customer satisfaction. We conclude that the best strategy is to use a non-traditional methodology of outside-in or some modification thereof. The findings suggest that airline managers should consider issues related to evenly distributing boarding activity throughout the aircraft, developing more effective policies for managing carry-on luggage, and using simultaneous loading through two doors.     

An in-depth investigation of student information gathering meetings with stakeholders and domain experts

International Journal of Technology and Design Education - Information gathering activities in engineering design projects play an important role in the identification and definition of stakeholder...     

The impact of monitor choice on insurer loss reserves

This paper examines the association between monitoring and earnings management by property-casualty insurers. Prior literature has evaluated the impact of auditors and actuaries on insurer reserving. We extend this work by considering the nonrandom nature of monitor assignment. We model the insurer decisions regarding choice of auditor and actuary jointly using a Heckman selection model. Consistent with prior literature, we account for potential loss reserving incentives that may confound these decisions. We find that the use of internal actuaries is significantly related to higher reserve errors, but this is reduced, but not fully offset, when the internal actuary is an officer of the insurer. We find lower reserve error for auditors from a Big N firm. However, the use of an auditor and actuary from the same Big N firm is significantly related to higher reserve errors.