Fengchun Tang, Ling Yang and Huiqi Gan
The purpose of this paper is to investigate how internal auditors’ performance reputation for auditing and assurance engagements affects corporate managers’ reliance on their…
Abstract
Purpose
The purpose of this paper is to investigate how internal auditors’ performance reputation for auditing and assurance engagements affects corporate managers’ reliance on their consulting recommendations.
Design/methodology/approach
This study conducted a 2 × 2 between-subjects experiment in which 103 MBA students were randomly assigned to one of the four conditions. This paper uses analysis of covariance to analyze the data.
Findings
The results show that internal auditors’ reputation for performing assurance engagements positively influences managers’ reliance on their consulting recommendations. In addition, managers’ compensation structure affects their perceptions of the importance of the decision, and the perceived decision importance in turn partially moderates the effect of internal auditors’ performance reputation on managers’ reliance decision.
Research limitations/implications
This paper advances the understanding of the consulting function of the internal audit function (IAF) and provides evidence on how internal auditors’ performance in one field (assurance) affects management’s perception of their performance in the other field (consulting).
Practical implications
The findings of this paper should be particularly interesting to the parties that are responsible for training internal auditors by highlighting the importance of strengthening internal auditors’ capability of performing consulting service with respect to business operation.
Originality/value
This study is one of the few studies that examine how internal auditors’ consulting recommendations affect managerial decisions in an operational setting. The findings of the interdependence between the assurance and consulting components of the IAF advance the growing research stream of internal audit and its impact on management decision-making.
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Abstract
Purpose
The purpose of this paper is to propose a research model to examine the perception of non-professional investors toward the cybersecurity reporting framework developed by the American Institute of Certified Public Accountants (AICPA).
Design/methodology/approach
The proposed hypotheses were tested using structural equation modeling with data collected from Amazon's Mechanical Turk platform.
Findings
The findings conclude that investors' perceived benefits of the cybersecurity risk framework are positively related to investment intention. Information quality and cybersecurity awareness also positively influence perceived benefits of the risk framework and investment intention.
Practical implications
Findings of this study are relevant to both regulatory bodies and firms because non-professional investors’ perceptions of the benefits of the AICPA’s reporting framework are unveiled.
Originality/value
Findings from this research help to provide a more in-depth understanding of the impact of various factors on investor’s decision-making process and also significant insights into the non-professional investor’s attitude toward the AICPA’s framework.
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Alisa Brink, C. Kevin Eller and Huiqi Gan
We conduct an experiment to examine the occurrence of the bystander effect on willingness to report a fraudulent act. Specifically, we investigate the impact of evidence strength…
Abstract
We conduct an experiment to examine the occurrence of the bystander effect on willingness to report a fraudulent act. Specifically, we investigate the impact of evidence strength on managers’ decisions to blow the whistle in the presence and absence of other employees who have knowledge of the wrongdoing. Results indicate that when there is strong evidence indicating a fraudulent act, individuals with sole knowledge are more likely to report than when others are aware of the fraudulent act (the bystander effect). However, the bystander effect is not found when evidence of fraud is weak. Further, a mediated moderation analysis indicates that perceived personal responsibility to report mediates the relation between others’ awareness of the questionable act and reporting likelihood, suggesting that the bystander effect is driven by diffusion of responsibility. Our results have implications for all types of organizations that wish to mitigate the detrimental effect of fraud. Specifically, training or incentives may be necessary to overcome the bystander effect in an organization.
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Lisa M. Victoravich, Pisun Xu and Huiqi Gan
The purpose of this paper is to examine the association between institutional investor ownership and the compensation of executives at US banks during the financial crisis period.
Abstract
Purpose
The purpose of this paper is to examine the association between institutional investor ownership and the compensation of executives at US banks during the financial crisis period.
Design/methodology/approach
This paper uses a linear regression model to examine the association between institutional ownership and the level of executive compensation at US banks.
Findings
Institutional investors influence executive compensation at banks with the impact being most pronounced for the CEO. Ownership by the top five investors is associated with greater total compensation. Active investors have the strongest impact on executive compensation as evidenced by a positive association between active ownership and both equity compensation and total compensation. As well, active ownership is negatively associated with bonus compensation. The paper also finds that passive and grey investors influence compensation but to a less significant extent than active investors.
Research limitations/implications
The results suggest that the monitoring role of active and passive institutional investors is different in the banking industry. As well, institutional investors were likely a driving factor in shaping the compensation packages of the top executive team during the financial crisis period.
Practical implications
Stakeholders at banks should be aware that not all types of institutional investors act as effective monitors over issues such as controlling the amount of executive compensation paid to the highest paid executive, the CEO. Prospective investors should consider the type of institutional investor that owns large blocks of equity when making an investment decision. Namely, the interests of existing institutional investors may differ from their own interests.
Originality/value
This paper provides a new perspective on the monitoring roles played by different types of institutional investors. Furthermore, it provides a more comprehensive analysis by investigating the role of institutional investors in shaping the compensation packages of CEOs and other top executives including chief financial officers (CFOs) who play a vital role in risk management at banks.
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Ira Abdullah, Alisa G. Brink, C. Kevin Eller and Andrea Gouldman
We examine and compare current practices in teaching preparation in U.S. accounting, finance, management, and economics doctoral programs.
Abstract
Purpose
We examine and compare current practices in teaching preparation in U.S. accounting, finance, management, and economics doctoral programs.
Methodology/approach
We conduct an anonymous online survey of the pedagogical training practices experienced by Ph.D. students in accounting, finance, management, and economics programs in the United States.
Findings
Results indicate that accounting, finance, and management perform similarly with respect to providing doctoral students with first-hand teaching experience and requiring for-credit courses in teacher training. Accounting and management appear to utilize doctoral students as teaching assistants less than the other disciplines. A lower proportion of accounting doctoral students indicate that their program requires proof of English proficiency prior to teaching, and pedagogical mentoring is rare across disciplines. Accounting and management doctoral students feel more prepared to teach undergraduate courses compared to finance and economics students. However, all disciplines indicate a relative lack of perceived preparation to teach graduate courses.
Practical implications
This study provides empirical evidence of the current practices in pedagogical training of accounting, finance, management, and economics doctoral students.
Social implications
The results highlight several areas where accounting could possibly improve with regard to pedagogical training in doctoral programs. In particular we suggest (1) changes in the teaching evaluation process, (2) development of teaching mentorships, (3) implementing a teaching portfolio requirement, and (4) incorporation of additional methods of assisting non-native English speakers for teaching duties.
Originality/value
The study fills a gap in the literature regarding the pedagogical training in accounting doctoral programs.