Search results

1 – 10 of over 8000
To view the access options for this content please click here
Book part
Publication date: 10 December 2018

Thomas Keil, Pasi Kuusela and Nils Stieglitz

How do organizations respond to negative feedback regarding their innovation activities? In this chapter, the authors reconcile contradictory predictions stemming from…

Abstract

How do organizations respond to negative feedback regarding their innovation activities? In this chapter, the authors reconcile contradictory predictions stemming from behavioral learning and from the escalation of commitment (EoC) perspectives regarding persistence under negative performance feedback. The authors core argument suggests that the seemingly contradictory psychological processes indicated by these two perspectives occur simultaneously in decision makers but that the design of organizational roles and reward systems affects their prevalence in decision-making tasks. Specifically, the authors argue that for decision makers responsible for an individual project, responses given to negative performance feedback regarding a project are dominated by self-justification and loss-avoidance mechanisms predicted by the EoC literature, while for decision makers responsible for a portfolio of projects, responses to negative performance regarding a project are dominated by an under-sampling of poorly performing alternatives that behavioral learning theory predicts. In addition to assigning decision-making authority to different organizational roles, organizational designers shape the strength of these mechanisms through the design of reward systems and specifically by setting more or less ambiguous goals, aspiration levels, time horizons of incentives provided, and levels of failure tolerance.

To view the access options for this content please click here
Article
Publication date: 6 February 2017

B. Brian Lee, Haeyoung Shin, William Vetter and Dong Wuk Kim

Charting the earnings numbers reported by Korean firms produces a bell curve, but for a sharp discontinuity in the area surrounding zero. The purpose of this paper is to…

Downloads
1391

Abstract

Purpose

Charting the earnings numbers reported by Korean firms produces a bell curve, but for a sharp discontinuity in the area surrounding zero. The purpose of this paper is to investigate if and how a large segment of Korean managers might manage accounting numbers to produce the observed result.

Design/methodology/approach

This study adopts an empirical research method using Korean listed firms as a sample. The primary focus of investigation is on major income statement variables that might produce the observed results in earnings from operations and net income.

Findings

Managers of Korean firms opportunistically use almost all income statement variables to influence earnings numbers. They manage revenues and selling, general & administrative expenses to report small positive earnings from operations, but manage non-operating gains (losses) to report small positive net income.

Research limitations/implications

This paper does not answer several questions related to loss avoidance. First, the paper did not examine which actions, such as discretionary accruals, opportunistic business decisions, or bogus transactions, were employed to affect line items on the income statement. Second, the paper did not investigate what specific incentives trigger Korean managers to report small positive earnings. Korean firms have traditionally raised capital by borrowing funds from creditors and governmental agencies. Thus, they may be concerned that reporting losses would reduce their borrowing capacity. Finally, corporate governance, such as CEO tenure and option grants may influence the extent of earnings management to avoid losses, but most corporate governance data for Korean companies must be manually collected. Accordingly, these subjects are left for future studies as well.

Originality/value

This study contributes to accounting literature by reporting how managers of Korean firms artificially coordinate major income statement variables and report small positive earnings figures, noting the differences between earnings management investigating methodology and ones used in previous studies.

Details

Asian Review of Accounting, vol. 25 no. 1
Type: Research Article
ISSN: 1321-7348

Keywords

To view the access options for this content please click here
Article
Publication date: 1 April 2021

Selim Aren, Hatice Nayman Hamamci and Safvan Özcan

The aim of this study, the moderating effect of pleasure-seeking and loss aversion, was investigated in relation to the big five personality traits with regard to risky…

Abstract

Purpose

The aim of this study, the moderating effect of pleasure-seeking and loss aversion, was investigated in relation to the big five personality traits with regard to risky investment intentions.

Design/methodology/approach

In the study, the data was obtained between January and November 2019 via an online survey with convenience sampling. The total number of subjects is 886. The authors used IBM SPSS Statistics for analysis. Exploratory factor analysis, correlation analysis, regression analysis and discriminant analysis were performed.

Findings

Significant relationships were found between five personality traits and risky investment intentions. In these relationships, the moderator effect of pleasure-seeking for extraversion, conscientiousness and neuroticism personality traits was also determined. Besides, investment preferences for choosing “unknown and new investment” against “known and experienced investment”, which is a typical feature of the balloon periods, were modeled with big five personality traits and motivation variables (pleasure-seeking and loss aversion) and the equation was formed. As a result, high accuracy classification success was obtained.

Originality/value

The study is unique owing to its findings. In addition, general risk aversion and risky investment intention were investigated simultaneously to explain the different findings in the literature regarding the attitude of big five personality traits to risk and personality traits that show consistent approach were identified.

Details

Kybernetes, vol. 50 no. 12
Type: Research Article
ISSN: 0368-492X

Keywords

To view the access options for this content please click here
Book part
Publication date: 4 July 2019

Ercan Özen and Gürsel Ersoy

Introduction – Markowitz (1952) argues that individuals act rationally in their financial decisions. In contrast, Kahneman and Tversky (1979) claim that the psychological…

Abstract

Introduction – Markowitz (1952) argues that individuals act rationally in their financial decisions. In contrast, Kahneman and Tversky (1979) claim that the psychological characteristics of people significantly affect financial decisions. In making these decisions, factors such as age, gender, and educational status may have an impact.

Purpose – The purpose of this study is to determine whether financial literacy has an impact on individuals’ cognitive biases related to financial investments.

Methodology – A sample of 444 individuals were surveyed.

Findings – In the results of study (1) it was determined that financial literacy leads to differences in cognitive biases; and (2) cognitive biases of individuals who do not receive finance education are different from individuals who receive finance education and professionals in the business world. The findings indicate that the increase in the level of financial literacy of individuals will reduce the cognitive biases and heuristics, and therefore will have a positive effect on the investor behavior in financial markets.

Details

Contemporary Issues in Behavioral Finance
Type: Book
ISBN: 978-1-78769-881-9

Keywords

To view the access options for this content please click here
Article
Publication date: 23 February 2010

Sherry Fang Li

Previous research has provided mixed evidence on the relative importance of three earnings thresholds that managers seek to achieve: avoiding losses, avoiding earnings…

Abstract

Purpose

Previous research has provided mixed evidence on the relative importance of three earnings thresholds that managers seek to achieve: avoiding losses, avoiding earnings declines and avoiding negative earnings surprises. The purpose of this paper is to investigate whether firm‐specific factors influence management's preferences for an earnings threshold.

Design/methodology/approach

Logit models are estimated to explore the relationships between firm‐characteristics and management's perceptions of the relative importance of each threshold.

Findings

This paper finds that: large firms, firms with high growth prospects and firms with high trading volume are more concerned with avoiding negative earnings surprises, while small firms, firms with low growth prospects and firms with low trading volume are more prone to avoid earnings declines and losses; for firms with high analyst forecast accuracy (relative to a random walk model forecast), avoiding negative earnings surprises is more important than avoiding earnings declines and losses; and firms with low analyst forecast dispersion focus more on avoiding negative earnings surprises and losses, while firms with high analyst forecast dispersion focus more on avoiding earnings declines. Overall, this paper shows that firm characteristics do affect management's perceptions of the relative importance of each threshold.

Originality/value

This study recognizes the cross‐sectional differences in the earnings threshold hierarchy. The results suggest that regulators and practitioners should focus on different thresholds for different types of firms when investigating the mechanisms used to achieve the thresholds.

Details

Review of Accounting and Finance, vol. 9 no. 1
Type: Research Article
ISSN: 1475-7702

Keywords

To view the access options for this content please click here
Article
Publication date: 21 September 2010

Chuan‐San Wang, Samuel Tung, Lin Chen‐Chang, Wang Lan‐Fen and Lai Ching‐Hui

The paper aims to clarify the relationship between earnings management and the sale of long‐lived assets and investments for firms listed in Taiwan. In addition, it…

Abstract

Purpose

The paper aims to clarify the relationship between earnings management and the sale of long‐lived assets and investments for firms listed in Taiwan. In addition, it suggests several interesting issues for further studies by proposing that positive earnings are one of the necessary conditions for the companies to issue bonds or new shares.

Design/methodology/approach

The paper uses archival data and regression analysis to document empirical evidence that assets sales are one of the methods to manipulate reported earnings among 12,484 firm‐years over the period of 1984‐2006.

Findings

The paper finds that approximately 54‐57 percent of firms in Taiwan with small pre‐managed earnings losses manipulate reported earnings to show small positive earnings. This is in contrast to 30‐40 percent of firms in the USA as reported by Burgstahler and Dichev.

Research limitations/implications

The paper makes a good use of the unique institutional features of Taiwan. It has not produced other unique results that differ significantly from the findings of prior studies.

Practical implications

The paper shows that reported earnings are viewed as a primary measure of firm performance and mechanisms behind earnings management have important implications in deriving informative summary measures of firm performance.

Originality/value

The paper fulfils an identified need to study how companies listed in Taiwan to beat thresholds by selling long‐lived assets and investments and provides a comparison in earnings management with US companies. Moreover, it provides several suggestions for future studies.

Details

International Journal of Accounting & Information Management, vol. 18 no. 3
Type: Research Article
ISSN: 1834-7649

Keywords

To view the access options for this content please click here
Article
Publication date: 11 March 2020

Ali R. Almutairi and Majdi Anwar Quttainah

The purpose of this paper is to examine whether foreign directors’ influence on opportunistic behavior among managers varies between Islamic banks (IBs) and conventional…

Abstract

Purpose

The purpose of this paper is to examine whether foreign directors’ influence on opportunistic behavior among managers varies between Islamic banks (IBs) and conventional banks (CBs). It also examines how religious ethics and morals guide foreign directors to be better monitors.

Design/methodology/approach

A panel fixed effects regression is used to analyze the effect of foreign directors on opportunistic behavior among managers in IBs and CBs. The authors use different proxies such as loss avoidance, discretionary loan loss provision and expense preference behavior to measure management opportunistic behavior.

Findings

Based on sample of 3,758 bank-year observations for 164 banks over the period 1993-2015, the authors show that the presence of foreign directors in IBs increases boards’ effectiveness in impeding management opportunistic behavior, whereas the presence of foreign directors in CBs reduces boards’ effectiveness in curbing management’s unethical acts. The authors also document that IBs (CBs) with foreign directors demonstrate less (more) earnings management and expense-preference behavior among managers. In addition, the authors’ evidence indicates that the existence of the Shari’ah supervisory boards helps foreign directors be more effective monitors.

Research limitations/implications

The current study focuses on banks only which makes its results subject to sample bias; there are many other forms of financial institutions (e.g. investments, real-estates and mutual funds) complying to the Shari’ah law. Second, owing to the lack of foreign board directors characteristics, the authors cannot investigate the intensity of the specific characteristics that could have specific directions in affecting managerial behavior.

Practical implications

The findings in this paper may help standards-setters, auditors, investors and regulators take appropriate measures and create better policies that reduce managers’ discretion. This could in turn improve information transparency decision-making, monitoring, advising and accounting quality.

Originality/value

The authors’ theoretical framework combines the agency, contingency, resource-dependence, stewardship and stakeholders’ theories and applies them to Shari’ah as an alternative ethical and internal governance mechanism. The authors find that the impact of foreign directors on management opportunistic behavior depends on the corporate religious norms within boards of directors, in particular, suggesting that religious values affect how foreign directors influence bank managers’ behavior.

To view the access options for this content please click here
Article
Publication date: 13 July 2021

Yanji Duan, John A. Aloysius and Diane A. Mollenkopf

Firms employ various forms of disclosure to demonstrate commitment to and involvement in sustainable supply chain management (SSCM) practices. This research provides…

Abstract

Purpose

Firms employ various forms of disclosure to demonstrate commitment to and involvement in sustainable supply chain management (SSCM) practices. This research provides guidance to firms employing framing strategies when communicating their SSCM with external stakeholders like consumers as part of their supply chain transparency efforts.

Design/methodology/approach

The authors employed a middle-range theorizing approach to understand the context of SSCM practices and mechanisms of variously framed communication methods to disclose sustainability information to consumers. The authors conducted two experiments in an e-waste recycling context, studying how sustainable information disclosed to consumers using attribute framing and goal framing can affect consumers' attitudes. The authors also examined the moderating role of consumers' environmental involvement.

Findings

Results suggest that when attribute framing is used, firms should avoid framing the attribute from a negative valence. When goal framing is used, messages with consequences stated as “avoid loss” yield the most substantial effect. Additionally, framing effects are more significant for consumers with higher-than-average environmental involvement.

Originality/value

The authors’ results contribute to the ongoing theorization of SSCM by providing contextual understanding of how to communicate sustainability information. Corroborating evidence from marketing, framing effects are found to be context specific, thereby elucidating the framing literature more fully to the SSCM context. The authors extend this literature by studying attribute framing and comparing the effectiveness of all possible goal framing combinations of valence and gain/loss perspective in the SSCM communication context.

Details

International Journal of Physical Distribution & Logistics Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0960-0035

Keywords

To view the access options for this content please click here
Article
Publication date: 1 December 2001

Christine Helliar, Alasdair Lonie, David Power and Donald Sinclair

The authors provide an overview of their research into the attitudes of UK managers to risk and uncertainty. They find that, when it comes to decision making, managers in…

Downloads
1879

Abstract

The authors provide an overview of their research into the attitudes of UK managers to risk and uncertainty. They find that, when it comes to decision making, managers in UK enterprises tend to focus on loss aversion rather than risk aversion. They found that managers’ personal attitudes to risk were often more important than risk management systems and their appropriateness.

Details

Balance Sheet, vol. 9 no. 4
Type: Research Article
ISSN: 0965-7967

Keywords

Content available
Article
Publication date: 20 June 2020

Putri Anindya Listya Purwa and Doddy Setiawan

This paper aims to investigate the relation between gender and accounting conservatism in banking industry using cross-countries study.

Abstract

Purpose

This paper aims to investigate the relation between gender and accounting conservatism in banking industry using cross-countries study.

Design/methodology/approach

The study use cross-country data in banking industry. Sample of the study consists of 202 banks from 24 countries in the period 2016–2017.

Findings

The result of the study indicates that banks that operate in high masculine society are less conservative than banks that operate in low masculine society (feminine).

Originality/value

This research suggests that investors could consider investing in a country that has low masculinity (feminine) because it is more concerned with the protection of other society members through conservative choice as a protection from misleading decisions made based on too optimistic financial report.

Details

PSU Research Review, vol. 5 no. 2
Type: Research Article
ISSN: 2399-1747

Keywords

1 – 10 of over 8000