Michael R. Kinney and John C. Groth
The prescription for 1992 for the European Community calls for the completion of the Internal Market and the absence of many of the fiscal and physical barriers to the movement of…
Abstract
The prescription for 1992 for the European Community calls for the completion of the Internal Market and the absence of many of the fiscal and physical barriers to the movement of goods, capital, and labour within the community. However, realistically it is likely that residual fiscal and other barriers will remain into the next century. Both the effected change and delay in changes will induce predictable patterns in the movement of labour and capital, the distribution of goods and services, and industrial location and development.
John C. Groth and Michael R. Kinney
The value of a company is a function of many variables. Costs are ofspecial importance since managers can influence costs. Success at costmanagement has a phenomenal effect on…
Abstract
The value of a company is a function of many variables. Costs are of special importance since managers can influence costs. Success at cost management has a phenomenal effect on value because of the relationships between costs, business risk, financial risk, and valuation. These relationships are non‐linear. Consequently, success in cost management yields amplified benefits in terms of value creation. In a counter sense, shortcomings in cost management result in an intensified eradication of value. Last, improved profits derived from cost management are “higher quality” increments to profits. Interestingly, the same non‐linear phenomenon holds: an increment to profits that results from costs management will have a greater addition to company value than an equal increment in profits that results from higher sales or higher sales price per unit. These reasons attest to the importance of attention to costs in value creation. Focuses on benefits of cost management in terms of: the reduction of business risk; the favourable asymmetric effect on the creation of value; the increased tax benefits since it allows, in fact calls for, an adjustment in the financing of the firm with attendant tax benefits. It offers additional considerations relevant in emerging cost control technologies such as activity‐based costing (ABC) and cost driver analysis. The issues also are consistent with the topical theme of relating organizational activities to value additivity.
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Stewart Li, Richard Fisher and Michael Falta
Auditors are required to perform analytical procedures during the planning and concluding phases of the audit. Such procedures typically use data aggregated at a high level. The…
Abstract
Purpose
Auditors are required to perform analytical procedures during the planning and concluding phases of the audit. Such procedures typically use data aggregated at a high level. The authors investigate whether artificial neural networks, a more sophisticated technique for analytical review than typically used by auditors, may be effective when using high level data.
Design/methodology/approach
Data from companies operating in the dairy industry were used to train an artificial neural network. Data with and without material seeded errors were used to test alternative techniques.
Findings
Results suggest that the artificial neural network approach was not significantly more effective (taking into account both Type I and II errors) than traditional ratio and regression analysis, and none of the three approaches provided more overall effectiveness than a purely random procedure. However, the artificial neural network approach did yield considerably fewer Type II errors than the other methods, which suggests artificial neural networks could be a candidate to improve the performance of analytical procedures in circumstances where Type II error rates are the primary concern of the auditor.
Originality/value
The authors extend the work of Coakley and Brown (1983) by investigating the application of artificial neural networks as an analytical procedure using aggregated data. Furthermore, the authors examine multiple companies from one industry and supplement financial information with both exogenous industry and macro-economic data.
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Michael Bradbury, Y T Mak and S M Tan
This paper examines the relation between governance (as measured by board and audit committee characteristics) and accounting quality (as measured by abnormal accruals) in a…
Abstract
This paper examines the relation between governance (as measured by board and audit committee characteristics) and accounting quality (as measured by abnormal accruals) in a setting where there is no a priori reason to suspect systematic management of earnings. Using data from Singapore and Malaysia, we find both board size and audit committee independence are related to lower abnormal working capital accruals. Furthermore, the relation between audit committee independence and higher quality accounting exists only when the abnormal accruals are income increasing. This suggests that audit committees are effective in the financial reporting process by reducing the level of income increasing abnormal accruals. The results also indicate that audit committees are effective only when all members are independent directors.
Keryn Chalmers, David Hay and Hichem Khlif
In 2001, the US moved to regulate internal control reporting by management and auditors. While some jurisdictions have followed the lead of the US, many others have not. An…
Abstract
In 2001, the US moved to regulate internal control reporting by management and auditors. While some jurisdictions have followed the lead of the US, many others have not. An important question, therefore, is the relevance of internal control to stakeholders. The more specific issue of the benefits of US-style regulation of internal control reporting is also topical. We review studies on the determinants of internal control quality and its economic consequences for stakeholders including investors, creditors, managers, auditors and financial analysts. We extend previous reviews by focusing on US studies published since 2013 as well as all non-US studies investigating IC quality including countries regulating IC disclosure as well as unregulated settings and both developed and developing economies. In doing so, we identify research questions where evidence remains mixed and new directions in which there are research opportunities.
Three main insights arise from our analysis. First, evidence on the economic consequences of internal control quality suggests that the quality of internal control can have a significant effect on decision making by users of financial information. Second, the results of research on the empirical association between ownership structure, certain board characteristics and internal control quality is generally mixed. Empirical evidence concerning the association between audit committee characteristics and internal control quality generally supports a positive and significant association. Finally, while studies in non-US jurisdictions are increasing, opportunities remain to explore the determinants and consequences of internal control in other jurisdictions. Our review provides evidence for policy makers of whether there are benefits from requiring management and auditors to report on internal control over financial reporting.
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Michael E. Roloff, Gaylen D. Paulson and Jennifer Vollbrecht
Social systems devise rules for member conduct and often specify punitive action for nonconformity. However, confronting and signaling the intent to punish a rule violator may be…
Abstract
Social systems devise rules for member conduct and often specify punitive action for nonconformity. However, confronting and signaling the intent to punish a rule violator may be an inherently face‐threatening and volatile situation. As such, in this paper we seek to add to the research aimed at minimizing the negative effects of confrontation. We conducted an experiment to examine the impact of linguistic cues and coercive potential on message categorization and on receiver perceptions of threat and face‐sensitivity. Results suggest that threats might be considered a special class of warnings, distinguishable by a speaker‐based locus of punishment Locus of punishment did not, however, impact perceptions of having been warned. These findings thus call into question the assumed parallelism between researcher conceptualizations of threats and warnings and those of typical language‐users. Additionally, targets reported feeling less threatened and perceived more face‐sensitivity, in cases when the speaker was not the source of punishment. Perceptions of threat were decreased when disclaimers were employed and where the message originated from a peer rather than an authority. Power of speech had an impact in ambiguous situations. Implications for researchers and practitioners are discussed.
This paper examines ambush marketing activities and their effects upon UK football-oriented consumers. It questions previous definitions of ambush marketing and proposes one more…
Abstract
This paper examines ambush marketing activities and their effects upon UK football-oriented consumers. It questions previous definitions of ambush marketing and proposes one more relevant for today. The research focuses upon the identification of 'event-connected brand recognition' achieved by sponsor versus ambush brands and the role of 'event involvement' as a driver of this. The research employs a pre- and post-event design that aims to track consumer recognition of predesignated brands. Results give initial indications that consumers can discern differences between the two forms of activity and that high event involvement increases recognition. This paper contributes towards the debate about a change in the definition of ambush marketing against the backdrop of increasing media saturation surrounding major sporting events, and suggests that a more relevant descriptor would be 'parallel event marketing'.
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Maria Ek Styvén, Tim Foster and Åsa Wallström
The purpose of this study is to characterize consumers with high impulse buying tendency (IBT) by comparing them with low-IBT consumers in an online shopping context.
Abstract
Purpose
The purpose of this study is to characterize consumers with high impulse buying tendency (IBT) by comparing them with low-IBT consumers in an online shopping context.
Design/methodology/approach
Data were collected through a postal survey to a random sample of Swedish citizens, resulting in 144 responses, which were analysed statistically..
Findings
Results indicate that high-IBT consumers, compared to those with low IBT, are on average younger, more likely to be female and more frequent online shoppers with higher levels of trust in the internet. However, they seem more likely than low-IBT consumers to abandon their online shopping carts before completing the purchase, often because of need uncertainty.
Practical implications
The findings can give retailers a better understanding of consumers with high IBT and thereby increase the possibility to target and communicate with them more effectively. This is an interesting opportunity as both multi-channel shopping and impulse buying behaviour is likely to become even more common in the future.
Originality/value
The study contributes to the understanding of impulsive consumers, as it addresses the role of situational and socio-demographic attributes of high-IBT consumers compared to low-IBT consumers. The differences in online purchases, intentions to buy fashion online, shopping cart abandonment and trust in the internet suggest that even if IBT is a relatively stable and general personal trait, the tendencies to act on buying impulses may be more context-specific.