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This paper examines how a red-flag item (RFI), an unfavorable projection error (UPE) and time pressure affect the aggressiveness of tax preparers' recommendations. We…
This paper examines how a red-flag item (RFI), an unfavorable projection error (UPE) and time pressure affect the aggressiveness of tax preparers' recommendations. We hypothesize that a RFI causes preparers to make more conservative recommendations, and UPE and time pressure lead to more aggressive recommendations. The hypotheses were tested on 153 tax practitioners using a hypothetical tax scenario. There was a strong indication that practitioners made more conservative recommendations when a RFI was present. Additionally, the results indicated that the effect of time pressure on tax preparers' recommendations was dependent upon other variables in their decision-making environment.
This study examines the effect of several factors causally associated with CEO compensation on firm performance. Previous studies of the association between CEO…
This study examines the effect of several factors causally associated with CEO compensation on firm performance. Previous studies of the association between CEO compensation and firm performance lacked sufficient use of control variables in the examination of this association. This study used a comprehensive measure of firm performance (the relative excess value ratio) that has not previously been used in this context. The results indicate that: (i) short-term CEO compensation has a stronger positive association with firm performance (as measured by the relative excess value ratio) than Long-term CEO compensation; (ii) market-based longterm CEO compensation has a stronger positive association with firm performance than accounting-based long-term CEO compensation; and (iii) CEO stock options are more positively related to the firm performance than restricted stock CEO compensation.
This paper examines factors that are associated with the level of a firm's environmental disclosure in the footnotes of its annual report financial statements and its 10-K…
This paper examines factors that are associated with the level of a firm's environmental disclosure in the footnotes of its annual report financial statements and its 10-K report filed with the Securities and Exchange Commission (SEC). The levels of environmental disclosure are measured using the Wiseman scale (Wiseman, 1982). An N-chotomous probit analysis is utilized where the level of disclosure is the dependent variable, and the independent variables are firm characteristics including: (1) institutional blockholder stock ownership, (2) amount of foreign concentration, (3) earnings volatility, (4) profitability, (5) leverage, (6) future need for debt financing, (7) firm size, and (8) industry membership.
The results indicate that higher foreign concentration, and to some extent, higher earnings volatility are associated with less environmental disclosure. These results provide evidence that firms with higher foreign concentration are more reluctant to disclose environmental information because they are under higher scrutiny from other countries and the international community. Additionally, it is probable that firms with a more volatile earnings process are less willing to disclose potential environmental costs and obligations because these additional expenditures can have an especially adverse effect during low-earnings periods.
Schein (1985) defines a career anchor as a person's perceived area of competence, values, and motives that he or she would not want to forfeit when faced with a career…
Schein (1985) defines a career anchor as a person's perceived area of competence, values, and motives that he or she would not want to forfeit when faced with a career decision that might prevent him or her from fulfilling it. Hardin, Stocks and Graves (2001) utilized Schein's Career Orientation Inventory to determine the predominant career anchors of Certified Public Accountants (CPAs) and to investigate the relationship of CPA career anchor and job setting. This chapter builds on the Hardin et al. study and focuses on the younger professional accountant. This younger generation of accountants are part of the millennial generation, which prior research has indicated vary significantly in their wants, values, and desires for an employment situation. Based on the survey results, 46.1% of the millennials possess a Lifestyle career anchor, 18.0% possess a Security career anchor, and 12.4% possess a Service career anchor. Each of the other five career anchors were selected by fewer than 8.0% of the respondents. The results suggest the career anchors of today's millennial professional accountants differ from those of professional accountants some 15 years ago. In particular, the Security career anchor is far more prevalent than in the past, which suggests millennial accountants have an increased interest in job security. This research provides important information to organizations seeking to recruit and retain young accounting professionals. Similarly, young professionals should be aware of their career anchor, so they can manage their career choices, rather than conform to choices that others make for them.
This study examines the market reaction to the adoption of an allowance for tax amortization of purchased goodwill. Specifically, this study compares the market reaction…
This study examines the market reaction to the adoption of an allowance for tax amortization of purchased goodwill. Specifically, this study compares the market reaction between asset-acquiring firms with substantial purchased goodwill, which could most utilize this provision, and stock-acquiring firms, which could not benefit from this allowance, as well as firms with insubstantial purchased goodwill. The results of this study indicate that the market did react to the goodwill amortization provision. The market reaction for asset-acquiring firms with high goodwill, relative to total assets, experienced positive abnormal returns. A positive reaction also was observed for the Supreme Court's decision in Newark Morning Ledger and the vote in the House of Representatives on an earlier version of the legislation. The study provides evidence that there is a relationship between the type of acquisition and level of abnormal returns, but not between the magnitude of goodwill acquired and the level of abnormal returns.
The purpose of this paper is to apply signal detection theory (SDT) to the problem of detecting management fraud. The use of SDT methodology significantly strengthens…
The purpose of this paper is to apply signal detection theory (SDT) to the problem of detecting management fraud. The use of SDT methodology significantly strengthens understanding of the relationships among audit technology, base rates of management fraud, costs of Type I and Type II errors, extensions of audit procedures, and risk assessments prior and during the audit. The analysis suggests that the auditor must accept disproportionate false alarm rates in order to maintain audit effectiveness in the presence of management fraud. This condition becomes even stronger as the costs of Type II errors increase compared to costs of Type I errors. The study also provides policy implications for auditor practice and standard‐setters.