Environmental Multi‐dimensionality and Staff Localization in Multinational Enterprises: The Case of Korean Firms

The person–environment fit theory posits that the term “environment” can be defined at different levels. This study delineates two environmental dimensions (strategic and organizational) and empirically examines the potential moderating effects of two strategic factors (intra‐ and inter‐regional diversification) on the relationship between two organizational factors (subsidiary ownership and host‐country experience) and MNE subsidiary staffing composition. The results indicate that strategic and organizational dimensions have impacts on subsidiary staffing composition. This study also finds that the interaction effects between strategic and organizational factors are significant only when there is congruence between demands from different environmental dimensions.     

Debt Covenant Restriction,Financial Misreporting,and Auditor Monitoring*

Theory suggests that financial report-based debt covenants engender incentives for the manager to relax covenant constraints through accounting choices in order to avoid costly covenant violations. Prior studies directly testing this hypothesis in the context of financial misreporting fail to find consistent evidence. Using a more refined measure of debt covenant restriction, we find that debt covenant restriction is positively associated with the probability of financial statement misstatements. This positive association is driven by performance covenants rather than capital covenants and is more consistent with the manager striving to avoid a “false-positive” violation than to delay the violation. Our results also imply that managers resort to both income-increasing and non–income-increasing misreporting to relieve covenant constraints and rely more on the latter when faced with greater earnings management constraints. Additionally, the auditor charges higher audit fees to firms with more binding covenants even outside the violation state, and audit fees increase with constraints relative to both performance and capital covenants, reflecting greater financial reporting risk and bankruptcy risk, respectively. Within capital covenants, we find some evidence of even higher audit fees for tighter intangible-inclusive versus intangible-exclusive capital covenants. Lastly, our evidence suggests that the positive association between covenant constraints and misreporting is attenuated when the auditor has more experience with debt covenants, has greater bargaining power over the client, or faces greater litigation risk.     

When do MNCs fail to learn from prior failure experience?

Do multinational corporations (MNCs) learn from their prior failures in international joint ventures (IJVs)? When does decision makers’ cognitive inability hinder MNCs from learning through their prior failure experiences? In the context of IJV survival in subsequent IJV entries, this study compares predictions made from two distinct theoretical perspectives, both of which belong to the behavioural school in strategy literature. According to the performance feedback perspective, MNCs may effectively learn from their prior failure experiences gained in familiar decision‐making contexts. On the other hand, according to the cognitive bias perspective, MNCs may not be able to effectively learn from their prior failure experiences if they inaccurately interpret the causes of their prior failures. The results provide partial support for the notion that MNC decision makers may not be able to effectively learn from their prior failures because of their cognitive biases. Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd.     

Tourism in British Columbia Metropolitan and Camping Visitors

Two issues common to tourism planning are investigated in the context of a current planning proposal between the British Columbia and Canadian governments. These issue are the problem of spatial imbalance in travel patterns and the place of camping in market development strategies. Through the use of multiple regression two group discriminatory analysis, several characteristic of metropolitan and campers visitor to British Columbia are differentiated. The dominant tourist position of British Columbia's two metropolitan centers is shown to be a function of their relative location and the availability of familiar visits. The campers proved to be independent travellers: independent of familial ties and metropolitan locations. Some implications and planning strategies for the integration of these two groups into the travel industry development objectives for the province of British Columbia are suggested.     

Common Institutional Ownership and Earnings Management*

This study examines the relation between earnings management and block ownership of same‐industry peer firms by a common set of institutional investors (common institutional ownership). This relation is important given the tremendous growth of common institutional ownership and the significant influence of blockholders on financial reporting. We hypothesize that common institutional ownership mitigates earnings management by enhancing institutions' monitoring efficiency and by encouraging institutions to internalize the negative externality of a firm's earnings management on peer firms' investments. Consistent with our hypothesis, we find that higher common institutional ownership is related to less earnings management. Analyses of a quasi‐natural experiment based on financial institution mergers show that this negative relation is unlikely to be driven by the endogeneity of common institutional ownership. Cross‐sectional tests provide evidence that the negative relation is stronger among firms for which common institutional ownership is likely to generate a greater reduction in institutions' information acquisition and processing costs, and among firms whose severe financial misstatements are more likely to distort co‐owned peer firms' investments, supporting both mechanisms underlying our hypothesis. Our findings inform the ongoing debate on the costs and benefits of common institutional ownership by highlighting an important benefit: the enhanced monitoring of financial reporting.     

Quand les analystes ajustent‐ils leurs évaluations en fonction du biais des annonces de résultats prévisionnels ? Conséquences de la feuille de route des entreprises en ce qui a trait à la publication de résultats prévisionnels et enjeux motivant les analystes

Les études précédentes indiquent que les analystes n’ajustent pas totalement leurs évaluations en fonction du biais général à la baisse des annonces de résultats prévisionnels faites par les directions d’entreprises. Les auteurs rapportent les résultats de deux expériences visant à déterminer comment la feuille de route des entreprises en ce qui a trait à la publication de résultats prévisionnels et les enjeux motivant les analystes expliquent de concert la mesure dans laquelle ces derniers ajustent leurs évaluations en fonction du biais des annonces de résultats prévisionnels. Ces résultats d’expérience semblent indiquer que les analystes pour qui l’enjeu est celui de l’exactitude ajustent leurs évaluations selon la feuille de route de la direction en ce qui a trait à la publication de résultats prévisionnels biaisés à la baisse lorsque le biais est relativement modeste (un cent), mais que les analystes pour qui l’enjeu est celui de leur relation avec la direction s’en abstiennent. Au surplus, la différence dans l’ajustement est plus importante lorsque la feuille de route de l’entreprise en matière de biais est irrégulière que lorsqu’elle est régulière. Aussi, lorsque le biais des annonces de résultats prévisionnels est plus important que moins (deux cents par rapport à un cent), les analystes pour qui l’enjeu est celui de la relation avec la direction procèdent à un ajustement partiel, paraissant ainsi rechercher un équilibre entre exactitude et volonté de plaire à la direction. Ces constatations ont des répercussions pour les investisseurs, les autorités de réglementation et l’interprétation des études précédentes.     

Sustainability Northwest: An Integrative Case of a Not‐for‐Profit Organization

Sustainability Northwest (SNW) is a fictional not‐for‐profit organization (NPO) that seeks to develop thought leaders for a sustainable future. This instructional case allows professors to assign students with up to six different roles, including SNW's chair of the board, executive director, volunteer treasurer, and the external auditor. Unique learning objectives include (i) the application of the CPA Canada Handbook, Accounting—Part III to prepare an NPO's financial statements using fund accounting, (ii) the development of recommendations to improve an NPO's board of directors, (iii) the analysis of system flow documents to identify control weaknesses, and (iv) the preparation of an audit planning memo. Instructors can use this case in several milieus. First, professors can foster a student's ability to integrate technical knowledge by (i) assigning students all six roles in a capstone course to promote integration within an individual course or (ii) assigning multiple roles across multiple courses to promote integration across a program of studies. Second, instructors can focus on a particular technical skill by assigning specific roles. This case is ideal for senior‐level undergraduate students or graduate students.     

Individual Investors' Attention to Accounting Information: Evidence from Online Financial Communities*

Online financial communities provide a unique opportunity to directly examine individual investors' attention to accounting information on a large scale and in great detail. I analyze accounting-related content in large samples of Yahoo! message board posts and StockTwits and find investors pay attention to a range of accounting information, fixating particularly on earnings, cash, and revenues. Consistent with the expectation that investors react to relevant information events, I find accounting-related discussion elevated around the filings of earnings releases and 8-K reports, but the reaction to periodic reports is confined to small firms. I also find investors expand their acquisition of accounting information and processing efforts in poor information environments. Greater attention to accounting information at earnings releases does not appear to be meaningfully associated with better information processing.     

Co-presence and mobile apps: Technology's impact on being with others

Despite a lack of theoretical understanding regarding how consumers react when using mobile applications in a store, the latter are being used more and more often in shared consumption areas. This research explores the impact that using a mobile application has on perceptions of co-presence. Depending on the consumption experience stage, this technological tool can be a social facilitator that enhances interactions with companions or a device that makes it possible to reduce a negative crowd impression. This paper is positioned at the intersection of interpersonal influence research and research focused on mobile technologies' effect on the purchasing process. It may interest managers of sites where there is high co-presence and where a mobile application might reduce negative crowd impressions and facilitate in-group sharing.     

Is job control always beneficial? Exploring its nonlinearity in creativity and in-role performance

This study draws on resource allocation theory to examine the relationship between job control and two kinds of job performance, namely employee creativity and in-role performance, as well as to investigate whether supervisor encouragement of creativity moderates these two potentially nonlinear relationships. To test the proposed model, we collected data from 234 employees in Indonesia. The results show that job control has an inverted U-shaped relationship with employee creativity, but a U-shaped relationship with in-role performance. Supervisor encouragement of creativity moderates both relationships, such that the control–creativity relationship becomes U-shaped, while the control–in-role performance relationship becomes inverted U-shaped when supervisor encouragement of creativity is high. Implications for managers on how to provide resources to employees are discussed.