Search results

The purpose of this paper is to study the relationship between accuracy and conscientiousness among people working in a tidy/messy work environment.

A laboratory experiment was conducted, where participants performing a simple task in a highly controlled environment were sorted into two different treatments, a tidy or a messy work environment.

The results of this study suggest that conscientious people commit more errors in a messy environment than in a tidy environment. Therefore, one of the most significant findings to emerge from this study is that a messy environment could be detrimental to the accuracy of conscientious people.

This study is limited in several respects. First of all, the sample is not large, with 80 participants; some variables, such us IQ levels, fatigue levels, caffeine consumption, etc. were not controlled for. Third, the task was restricted to inputting data into a computer.

Taken together, these findings suggest the need to promote excellence in work environment tidiness, because highly conscientious employees will work with greater accuracy, while the less conscientious will not be affected. Therefore, overall, accuracy will be better. Consequently, the managers of the organization should be committed to defining policies about high standards of tidiness in the workplace environment.

This is the first study to provide evidence of the moderation of the tidy/messy work environment in the relationship between conscientiousness and human accuracy. The present study sheds light on the impact of messy work environment on accuracy of high conscientious people, inducing them to work in a defective way.

This case can be used to help students achieve the following objectives: To project financial statements and assemble different pieces of financial information to create a valuation model (objective #1, create), To calculate a value for Arcor shares, supporting the estimated value with the chosen assumptions and methodologies (objective #2, evaluate), To draw connections between four different approaches to valuation (DCF, EVA, RV and VI), contrasting them and weighting their advantages and limitations (objective #3, analyze), To examine the relationship between forecasted financial statements and valuation (objective #3, analyze), To discuss the calculation of the Weighted Average Cost of Capital in a new situation as is an emerging economy, with the corresponding country-risk adjustment (objective #4, apply), To discuss the sources of value creation in a family-owned private company in a developing economy (objective #4, apply), To understand the dilemma that the head of a company was facing, identifying the three possible financing alternatives discussed in the text as follows: corporate bonds, earnings reinvestment and an IPO (objective #5, understand). To recall basic facts, as the main character’s opinion on the direction of the local economy or the fact that Arcor already complies with the information requirements of a public company (objective #7, remember).

This case is based on the valuation of the world’s largest candy maker, Arcor S.A.I.C., originally a Latin American company, which remains a private family business. The key problem presented by the case is the use of different valuation approaches to price Arcor shares, in view of a possible Initial Public Offer. The case illustrates the application of four main valuation approaches as follows: Discounted Cash Flow (DCF), Economic Value Added (EVA), Relative Valuation (RV) and Value Investing (VI). Additionally, it includes a fundamental analysis of eight years of historical financial information and the preparation of forecasted financial statements. Set in a developing economy, the Arcor case introduces the complexities of calculating the cost of capital with the inclusion of country risk, as well as the financial analysis distortions caused by an environment of high inflation.

The Arcor case is appropriate to be used in graduate courses of Corporate Finance, Valuation or Private Equity.

Teaching notes are available for educators only.

CSS 1: Accounting and Finance.