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Article
Publication date: 22 April 2008

David N. Hurtt, Jerry G. Kreuze and Sheldon A. Langsam

One of the most complex and controversial issues confronting the Financial Accounting Standards Board (FASB) over the last several years has been the accounting and…

Abstract

One of the most complex and controversial issues confronting the Financial Accounting Standards Board (FASB) over the last several years has been the accounting and financial reporting of stock options. In December 2004, the FASB issued Statement 123R, Share‐Based Payment, in the hope that the long process of revising the accounting and financial reporting for stock options will be put to rest. FASB Statement 123R requires the fair‐value‐based method of accounting for share‐based payments. In order to offset the dilutive effects of generous stock option compensation packages for employees, companies are seemingly participating in stock repurchase plans. In the past, stock buyback programs were viewed as a means of distributing excess cash flow to investors; however, it appears now that many companies are financing stock repurchases through the issuance of debt, which can significantly impact the financial flexibility of a company. So, why do companies engage in this behavior? One possible reason for stock buybacks is to reduce the dilutive effect of stock option plans. Companies have, however, disputed that there is a direct relationship between exercised stock options and stock buyback transactions. Nevertheless, several articles and studies have found that there is a relationship and the FASB seems to believe that there is an association between stock buybacks and stock options, as Statement 123R requires that companies disclose the relationship between stock buybacks and stock payment programs. Using a sample of technology firms, we find evidence of an association between exercised stock options and repurchase of stock.

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American Journal of Business, vol. 23 no. 1
Type: Research Article
ISSN: 1935-5181

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Article
Publication date: 22 April 2000

David N. Hurtt, Jerry G. Kreuze and Sheldon A. Langsam

Significant investment dollars are now allocated to companies deemed by investors as socially responsible. This socially responsible theme contends that corporations…

Abstract

Significant investment dollars are now allocated to companies deemed by investors as socially responsible. This socially responsible theme contends that corporations should be held accountable for the totality of their actions and decisions, including CEO compensation levels. This paper investigates whether CEO compensation levels are more associated with traditional performance measures for socially responsible firms than for firms deemed not socially responsible, with the assumption being that social choice firms will be more sensitive to and may attempt to align CEO compensation levels with corporate performance. Rank correlation analysis and regression results using nine performance variables for 270 firms indicated that CEO compensation levels at social choice companies were more highly associated with performance variables than those at nonsocial companies. The study results suggest that social choice companies, in addition to their other corporate good deeds, seem to include CEO compensation levels as a part of their overall corporate decision process.

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American Journal of Business, vol. 15 no. 1
Type: Research Article
ISSN: 1935-5181

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Article
Publication date: 23 September 2019

Alan Blankley, David Hurtt and Jason MacGregor

Central to the Sarbanes–Oxley Act was a requirement that every company have an audit of its internal control over financial reporting. However, there were concerns that…

Abstract

Purpose

Central to the Sarbanes–Oxley Act was a requirement that every company have an audit of its internal control over financial reporting. However, there were concerns that this requirement was overly burdensome, from a financial perspective, for small businesses. This concern promoted several delays in enforcing the law for small companies and ultimately caused congress to permanently exempt small businesses. Yet, there are some small companies that voluntarily elect to comply with the law. The purpose of this paper is to explore why these companies elect to incur these costly audits.

Design/methodology/approach

Using a sample of 5,834 non-accelerator US firms, this paper uses a robust logistic regression model to examine why some firms comply voluntary with SOX Section 404(b).

Findings

This study shows that small companies getting audits of internal controls may be doing so to restore investor confidence after reporting failures, to appear credible prior to raising funds, as a response to organizational changes, or in anticipation of being required to comply.

Practical implications

This study provides regulators with an improved understanding of when it is necessary to implement mandatory rather than voluntary guidance.

Originality/value

This study is the first to document why a client would voluntarily comply with SOX Section 404 (b).

Details

Managerial Auditing Journal, vol. 35 no. 1
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 28 October 2002

Gale E. Newell, Jerry G. Kreuze and David Hurtt

With the bankruptcy of Enron and the accompanying loss of pension benefits of its employees, pensions have recently received significant press. Accounting for pension plan…

Abstract

With the bankruptcy of Enron and the accompanying loss of pension benefits of its employees, pensions have recently received significant press. Accounting for pension plan obligations, for defined benefit plans in particular, requires companies to make assumptions regarding discount rates, projected salary increases, and expected long‐term return on plan assets. Such assumptions, in turn, determine the funding status of the pension plan and the annual pension expense. Higher assumed discount rates reduce the pension obligation, enhance the funding status of the plan, and reduce any lump‐sum payments. Higher expected return on assets reduces the current pension expense. This study investigates the relationship between pension plan assumptions and the funding status of a pension plan. The results reveal that companies with pension plans that are more fully funded assume higher discount rates and expected long‐term return on assets than do companies with less funded plans. The effect of these assumptions is that higher discount rate assumptions lead to better funding status, and higher expected long‐term rates of return on assets partially offset the pension expense impacts of these higher discount rate assumptions. We are doubtful that more funded plans collectively should be assuming higher discount rates and expected long‐term return on plan assets, especially since the actual return on plan assets investigated did not correlate with these assumptions.

Details

American Journal of Business, vol. 17 no. 2
Type: Research Article
ISSN: 1935-5181

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Book part
Publication date: 6 March 2017

Patrick T. Kelly

This chapter examines the integration of leadership topics into an accounting ethics course. Literature review, course review, student feedback. Both practitioners and…

Abstract

This chapter examines the integration of leadership topics into an accounting ethics course. Literature review, course review, student feedback. Both practitioners and educators have called for broader education of accounting students in general, and student learning of leadership and interpersonal skills in particular, to prepare students who are entering the profession. I have used the leadership topics and activities discussed in this chapter in a stand-alone ethics course in a graduate business program, but they could also be integrated into an undergraduate course. I provide details regarding course content and delivery, including a weekly schedule of accounting ethics and leadership readings, short cases, and leadership/ethics case research topics. Many of the leadership and ethics subjects in the course are expected to be addressed in the accounting workplace – exploring these topics helps better prepare students to confront future challenges. Although both practitioners and educators have called for broader education of accounting students in general, and student learning of leadership and interpersonal skills in particular, little progress has been made in this area. This chapter contributes to this area by highlighting the value of integrating leadership topics into an accounting ethics course.

Details

Advances in Accounting Education: Teaching and Curriculum Innovations
Type: Book
ISBN: 978-1-78714-180-3

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Book part
Publication date: 6 March 2017

Michael K. Shaub

The purpose of this chapter is to describe an accounting ethics course whose purpose, in part, is to short circuit the process that leads to foolish ethical decisions by…

Abstract

The purpose of this chapter is to describe an accounting ethics course whose purpose, in part, is to short circuit the process that leads to foolish ethical decisions by professional accountants. In addressing how to make ethical decisions, the course deliberately includes processes intended to develop wisdom and to impede reflexive decisions that reflect the five fallacies of thinking. The approach described represents an active, engaging approach to increasing dialogical and dialectical reasoning in students’ pursuit of wisdom through individual selection of outside reading, engaging speakers, and the use of ethics accountability groups. The course is adaptable to large and small class settings where the professor desires extensive interaction among students, and it creates an environment designed to help students develop self-chosen principles to guide their professional lives. Students take responsibility for developing self-determined principles to guide their professional lives. Clearly identifying these principles provides students a basis for resisting ethical compromises in their careers. The course focuses students on developing wisdom and recognizing the weaknesses in a purely calculation-based moral reasoning.

Details

Advances in Accounting Education: Teaching and Curriculum Innovations
Type: Book
ISBN: 978-1-78714-180-3

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Book part
Publication date: 27 October 2016

Diane H. Roberts

This paper explores the contribution of the AAA Symposium on Ethics Research in Accounting to fostering accounting ethics research. For a 17-year period, the contributors…

Abstract

This paper explores the contribution of the AAA Symposium on Ethics Research in Accounting to fostering accounting ethics research. For a 17-year period, the contributors, their schools of affiliation, and their research topics were analyzed to determine the extent of and trends in accounting ethics research. The research rankings of the contributing authors were examined in business ethics journals, top-40 accounting journals, and accounting education journals. Institutional rankings identify supportive places to do accounting ethics research. The impact of significant accounting scandals such as Enron and Madoff was examined and a financial scandal “bump” in paper presentations was found. Authors affiliated with Texas schools had papers following the state requirement of an ethics accounting course. A large amount of ethics education-related research was also presented at the Ethics Symposia. Overall the study results indicate that the Symposium with its AAA affiliation is a high-quality venue for paper presentation.

Details

Research on Professional Responsibility and Ethics in Accounting
Type: Book
ISBN: 978-1-78560-973-2

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Article
Publication date: 3 August 2015

David L. Senteney, Grace H. Gao and Mohammad S. Bazaz

This paper aims to investigate the impact of the filing of Form 20-F to the Securities and Exchange Commission (SEC) on short-term trading volume and return by those…

Abstract

Purpose

This paper aims to investigate the impact of the filing of Form 20-F to the Securities and Exchange Commission (SEC) on short-term trading volume and return by those foreign firms which list their securities in the US Stock Exchanges.

Design/methodology/approach

The authors collected 402 American depository receipt (ADR) firms from 38 different countries that listed their securities in the US Stock Exchanges over a 10-year period of 2000-2009. A regression model was used to examine such impact, including the post year 2007 SEC elimination of reconciliation.

Findings

This paper found significant abnormal trading volumes and abnormal returns one day, two days and three days following the 20-F report for the sample firms whose financial statements were prepared under both home-country accounting principles and US generally accepted accounting principles (GAAP). Firms originally using international financial reporting standards (IFRS) do not present abnormal return and abnormal trading volume. This indicates that US investors view IFRS to be as high-quality as US GAAP.

Research limitations/implications

The findings might be limited to this period and might not draw statistical inference for the future period. This evidence offers support for the SEC’s elimination of the reconciliation requirement to US GAAP.

Practical implications

This study was carried out with the aim to investigate whether the release of Form 20-F by ADR firms offers any additional information useful to investors incorporating both abnormal return and trading volume, which is thought to be more sensitive.

Originality/value

This paper investigates the short-term return and volume reactions caused by the earnings and equity reconciliation from home-country accounting standards or IFRS to US GAAP for foreign cross-listed firms in the USA.

Details

International Journal of Accounting and Information Management, vol. 23 no. 3
Type: Research Article
ISSN: 1834-7649

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Book part
Publication date: 16 August 2011

Patrick T. Kelly and Christine E. Earley

This chapter examines ethical leaders in accounting. We analyze the actions of individuals broadly associated with the accounting profession who have been presented with…

Abstract

This chapter examines ethical leaders in accounting. We analyze the actions of individuals broadly associated with the accounting profession who have been presented with challenging situations and evaluate their responses to difficult circumstances. Our subjects are transformational leaders who have demonstrated a commitment to the public interest along with the moral motivation and character to persevere under challenging circumstances. By providing examples of leaders who have had a positive impact on the public accounting profession, both students and practicing accountants will learn how ethical leadership can make the profession stronger.

Details

Advances in Accounting Education: Teaching and Curriculum Innovations
Type: Book
ISBN: 978-1-78052-223-4

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Article
Publication date: 16 November 2012

Florian Lüdeke‐Freund, David Walmsley, Mirco Plath, Jan Wreesmann and Alexandra‐Maria Klein

This article seeks to address aviation as an emerging biofuel consumer and to discuss sustainability issues and consequences for feedstock production concepts. Biojet…

Abstract

Purpose

This article seeks to address aviation as an emerging biofuel consumer and to discuss sustainability issues and consequences for feedstock production concepts. Biojet fuels have been identified as a promising, readily deployable alternative to fossil‐based aviation fuels. At the same time they are highly criticised as their production may have negative social and environmental impacts. Therefore, the paper aims to identify major sustainability issues and assessment challenges and relate these to the production of biojet fuel feedstock.

Design/methodology/approach

Two plant oil production concepts are presented that address the sustainability issues discussed. Both concepts are being investigated within the research project “Platform for Sustainable Aviation Fuels”. A literature‐based overview of sustainability issues and assessment challenges is provided. Additionally, conceptual insights into new plant oil production concepts are presented.

Findings

The use of biojet fuels is often hailed as a strategy for the aviation industry to become more sustainable. However, biofuels are not necessarily sustainable and their potential to reduce GHG emissions is highly debated. Several unresolved sustainability issues are identified highlighting the need for improved assessment methods. Moreover, the two concepts presented have the potential to provide sustainably grown feedstock, but further empirical research is needed.

Originality/value

This article addresses researchers and practitioners by providing an overview of sustainability issues and assessment challenges related to biojet fuels. Consequences are identified for two plant oil feedstock concepts: catch cropping in temperate regions and silvopastoral systems in tropical and subtropical regions.

Details

Sustainability Accounting, Management and Policy Journal, vol. 3 no. 2
Type: Research Article
ISSN: 2040-8021

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