Vikram Desai, Joung W. Kim, Allison Kristina Beck, Renu Desai and Robin Roberts
We examine the content of auditors’ going concern opinions (GCOs) to investigate how the market reacts to particular explanations and to the overall number of reasons presented by…
Abstract
Purpose
We examine the content of auditors’ going concern opinions (GCOs) to investigate how the market reacts to particular explanations and to the overall number of reasons presented by auditors. We investigate whether the market reacts differentially to explanatory paragraphs alluding to specific financial concerns emphasized in the finance literature: reductions in expected future cash flows, difficulties with short-term liquidity and violations of debt covenants. Finally, we examine whether GCOs that are ex-post accurate, as indicated by a subsequent bankruptcy, are accompanied by more negative reactions.
Design/methodology/approach
We regress cumulative abnormal returns on the number of reasons cited by auditors and indicator variables for whether auditors cited concerns pertaining to future cash flows, debt covenant violations or short-term cash holdings. We include an indicator for subsequent bankruptcy and control variables.
Findings
The market reaction to GCOs is significantly more negative when auditors offer more reasons or specifically cite a decrease in expected future cashflows or a violation of debt covenants and when GCOs are ex-post accurate.
Research limitations/implications
The results indicate that auditors’ explanations for GCOs contain incremental information content that is useful to investors.
Practical implications
We find that more detailed GCO reports are more informative to investors, supporting the need for regulations requiring auditors to provide detailed justifications when issuing GCOs.
Originality/value
This study is the first to examine how the number of reasons given by auditors affects market reactions to GCOs and to specifically examine how investors react to GCOs that cite violations of debt covenants or reductions in future cash flows as justifications for the GCO.
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Barri Litt, Vikram Desai and Renu Desai
The purpose of this paper is to explore the audit price reactions of local accounting firms to the entry of the Big Four accounting firms into the Indian audit market, providing…
Abstract
Purpose
The purpose of this paper is to explore the audit price reactions of local accounting firms to the entry of the Big Four accounting firms into the Indian audit market, providing unique insight into emerging market dynamics.
Design/methodology/approach
Using financial data from Indian audit clients for a ten-year period from 1996 to 2005, the authors conduct a multivariate regression analysis based on extant audit fee literature.
Findings
This study finds evidence of a price-cutting strategy on behalf of the local incumbent accounting firms in response to the entry of the Big Four firms. It also shows small-sized incumbent firms to cut prices more drastically relative to medium-sized incumbent firms.
Originality/value
This study provides empirical insight into the pricing dynamics of professional services in an emerging market setting. Such insight is increasingly important in our evermore globalized economy where emerging markets are frequently the targets of expansion.
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The present paper attempts to integrate three streams of alternative approaches to provide a contingency‐based framework to understand the management control systems (MCS) that…
Abstract
Purpose
The present paper attempts to integrate three streams of alternative approaches to provide a contingency‐based framework to understand the management control systems (MCS) that are operating in call centers. Specifically, the paper's aim is to analyse the work practices of call center employees from three different lenses: the radical approach using Braverman's labor process theory; the Foucauldian approach, which explains the governance of the self; and the naturalistic approach, which explains the governance of the built environment.
Design/methodology/approach
The data for the case study were collected by conducting interviews. The data were gathered to identify if the work experience of the call center operators reflects the Tayloristic principles of scientific management, whether their responses reflect evidence of internalizing norms and adjusting their selves to fit to the norm, and lastly whether their work conditions are shaped in the manner described above to facilitate control of their work lives.
Findings
Prior academic studies have relied on either one of the approaches and the author's contention is that neither of the theories in isolation can explain the complexities that characterize the contemporary call center operator's labor process.
Research limitations/implications
The study of control and its resistance can add to the understanding of the modern workplace. Since the call center environment is unique, the results of this study may have limited generalizability.
Practical implications
Future researchers can extend the approach used in this research to areas other than call centers that may have similar overlapping paradigms. Such an endeavor will enrich the understanding of complex phenomena, where multiple theories may be espoused to explain a particular research question.
Originality/value
A significant contribution of this study is to recognize that there is concentration of limited control and power in the hands of those who are controlled. Such an understanding may revive the “emancipatory tradition” of labour process theory and though it may not lead to the revolutionary overthrow of capitalism, it may lead to the awareness that strategies aimed at improving the lives of workers within the capitalist political economy are desirable.
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Alexandra L. Ferrentino, Meghan L. Maliga, Richard A. Bernardi and Susan M. Bosco
This research provides accounting-ethics authors and administrators with a benchmark for accounting-ethics research. While Bernardi and Bean (2010) considered publications in…
Abstract
This research provides accounting-ethics authors and administrators with a benchmark for accounting-ethics research. While Bernardi and Bean (2010) considered publications in business-ethics and accounting’s top-40 journals this study considers research in eight accounting-ethics and public-interest journals, as well as, 34 business-ethics journals. We analyzed the contents of our 42 journals for the 25-year period between 1991 through 2015. This research documents the continued growth (Bernardi & Bean, 2007) of accounting-ethics research in both accounting-ethics and business-ethics journals. We provide data on the top-10 ethics authors in each doctoral year group, the top-50 ethics authors over the most recent 10, 20, and 25 years, and a distribution among ethics scholars for these periods. For the 25-year timeframe, our data indicate that only 665 (274) of the 5,125 accounting PhDs/DBAs (13.0% and 5.4% respectively) in Canada and the United States had authored or co-authored one (more than one) ethics article.
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Ashish Sinha, Haodong Gu, Namwoon Kim and Renu Emile
Given the high uncertainty in the quality perception of experiential products, manufacturers use signals to influence consumers’ decisions. In the movie industry, literature shows…
Abstract
Purpose
Given the high uncertainty in the quality perception of experiential products, manufacturers use signals to influence consumers’ decisions. In the movie industry, literature shows that performance of the main channel (e.g. cinema) strongly influences the performance of auxiliary channels (e.g. DVDs). The success of a movie in the home country is also to be resonated by its good performance in host countries. However, the cultural contingency of these success-breeds-success (SBS) effects has not been examined. This paper aims to test the influence of cultural values on the SBS effects across channels and countries.
Design/methodology/approach
Borrowing concepts from the signaling literature and analyzing DVD sales data from six international markets using a multilevel mixed-effects model, the study finds that culture plays a significant role to influence both SBS effects.
Findings
In countries with low power distance, short-term orientation and high indulgence, consumers who purchase from auxiliary channels are more likely to be influenced by the box office performance of movies. Meanwhile, cultural distance between the home and host nations significantly decreases the cross-national SBS effect.
Research limitations/implications
The findings are likely to be generalized to online auxiliary channels of movies, but empirical testing is required to ensure that no major adaptation is required in the process. Future research can also extend the framework of this paper to include more countries into the analysis and investigate cultural variables beyond Hofstede’s dimensions.
Practical implications
This paper suggests that the SBS effects may vary across nations. When managers plan for the sequential distributions of experiential products, the cultural values of target markets should be considered to decrease the uncertainty in sales prediction.
Originality/value
This paper contributes to the existing literature by investigating the international auxiliary channels of movies and incorporating cultural values into the framework of sequential distributions. To the best of the authors’ knowledge, this study is the first to test the links between the main and auxiliary channels from an international marketing perspective.