Mostrando recursos 121 - 140 de 224

  1. Audit Quality and Auditor Reputation: Evidence from Japan

    Skinner, Douglas; Srinivasan, Suraj
    We study events surrounding ChuoAoyama's failed audit of Kanebo, a large Japanese cosmetics company whose management engaged in a massive accounting fraud. ChuoAoyama was PwC's Japanese affiliate and one of Japan's largest audit firms. In May 2006, the Japanese Financial Services Agency (FSA) suspended ChuoAoyama for two months for its role in the Kanebo fraud. This unprecedented action followed a series of events that seriously damaged ChuoAoyama's reputation. We use these events to provide evidence on the importance of auditors' reputation for quality in a setting where litigation plays essentially no role. Around one quarter of ChuoAoyama's clients defected from...

  2. Non-audit services and financial reporting quality: evidence from 1978 to 1980

    Koh, Kevin; Rajgopal, Shiva; Srinivasan, Suraj
    We provide evidence for the long-standing concern on auditor conflicts of interest from providing non-audit services (NAS) to audit clients by using rarely explored NAS fee data from 1978 to 1980. Using this earlier setting, we find cross-sectional evidence of improved earnings quality when auditors provide NAS, especially those related to information services. This is consistent with better audit quality from knowledge spillovers due to the joint offering of audit and consulting services. Events related to the repeal of these NAS disclosures in 1982 are associated with a small positive stock price reaction suggesting no adverse economic consequences of withdrawing...

  3. Which U.S. Market Interactions Affect CEO Pay? Evidence from UK Companies

    Gerakos, Joseph; Piotroski, Joseph; Srinivasan, Suraj
    This paper examines how different types of interactions with U.S. markets by non-U.S. firms are associated with higher level of CEO pay, greater emphasis on incentive-based compensation, and smaller pay gap with U.S. firms. Using a sample of CEOs of UK firms and using both broad cross-sectional and narrow event-window tests, we find that capital market relationship in the form of an U.S. exchange listing is related to higher UK CEO pay; however, the effect is similar when UK firms have a listing in any foreign country implying a foreign listing effect not unique to the U.S. Product market relationships...

  4. Accountability of independent directors: Evidence from firms subject to securities litigation

    Brochet, Francois; Srinivasan, Suraj
    We examine which independent directors are held accountable when investors sue firms for financial- and disclosure-related fraud. Investors can name independent directors as defendants in lawsuits, and they can vote against their re-election to express displeasure over the directors' ineffectiveness at monitoring managers. In a sample of securities class-action lawsuits from 1996 to 2010, about 11% of independent directors are named as defendants. The likelihood of being named is greater for audit committee members and directors who sell stock during the class period. Named directors receive more negative recommendations from Institutional Shareholder Services (ISS), a proxy advisory firm, and significantly...

  5. Do Analysts Follow Managers Who Switch Companies? An Analysis of Relationships in the Capital Markets

    Brochet, Francois; Miller, Gregory S.; Srinivasan, Suraj
    We examine the importance of professional relationships developed between analysts and managers by investigating analyst coverage decisions in the context of CEO and CFO moves between publicly listed firms. We find that top executive moves from an origin firm to a destination firm trigger analysts following the origin firm to initiate coverage of the destination firm in 10% of our sample, which is significantly higher than in a matched sample. Analyst-manager "co-migration" is significantly stronger when both firms are within the same industry. Analysts who move with managers to the destination firm exhibit more intense and accurate coverage of the...

  6. Can Analysts Assess Fundamental Risk and Valuation Uncertainty? An Empirical Analysis of Scenario-Based Value Estimates

    Joos, Peter R.; Piotroski, Joseph D.; Srinivasan, Suraj
    We use a dataset of sell-side analysts' scenario-based valuation estimates to examine whether analysts reliably assess the risk surrounding a firm's fundamental value. We find that the spread in analysts' state-side contingent valuations captures the riskiness of operations and predicts the absolute magnitude of future long-run valuation errors and changes in fundamentals. Similarly, asymmetry embedded in the analysts' scenario-based valuations conveys information about asymmetric risk-reward exposure and predicts skewness in future long-run valuation errors; however, embedded asymmetry is not correlated with changes in fundamentals. The results confirm that analysts' valuations reflect both state-contingent risk assessments and non-fundamental factors.

  7. Think global, act local: Preserving the global commons

    Hauser, Oliver P.; Hendriks, Achim; Rand, David G.; Nowak, Martin A.
    Preserving global public goods, such as the planet’s ecosystem, depends on large-scale cooperation, which is difficult to achieve because the standard reciprocity mechanisms weaken in large groups. Here we demonstrate a method by which reciprocity can maintain cooperation in a large-scale public goods game (PGG). In a first experiment, participants in groups of on average 39 people play one round of a Prisoner’s Dilemma (PD) with their two nearest neighbours on a cyclic network after each PGG round. We observe that people engage in “local-to-global” reciprocity, leveraging local interactions to enforce global cooperation: Participants reduce PD cooperation with neighbours who...

  8. Productivity and Selection of Human Capital with Machine Learning

    Chalfin, Aaron; Danieli, Oren; Hillis, Andrew Blair; Jelveh, Zubin; Luca, Michael; Ludwig, Jens; Mullainathan, Sendhil
    Economists have become increasingly interested in studying the nature of production functions in social policy applications, with the goal of improving productivity. Traditionally models have assumed workers are homogenous inputs. However, in practice, substantial variability in productivity means the marginal productivity of labor depends substantially on which new workers are hired—which requires not an estimate of a causal effect, but rather a prediction. We demonstrate that there can be large social welfare gains from using machine learning tools to predict worker productivity, using data from two important applications—police hiring and teacher tenure decisions.

  9. Diversified Business Groups in the West: History and Theory

    Colpan, Meziyet Asli; Hikino, Takashi
    This chapter examines the historical origins, evolutionary paths and long-term resilience of diversified business groups in contemporary developed economies of Western Europe, North America and Oceania. It aims to come up with a new theoretical understanding of diversified business groups and other comparable models of corporate organizations by broadening the analytical perspectives of the earlier approaches on the subject in terms of longitudinal and geographical scope. We suggest that the straightforward association of the general environmental settings of market immaturities and institutional voids with the existence of diversified business groups is rather incomplete in reality. Our findings draw attention to...

  10. The Effect of Background Music in Shark Documentaries on Viewers' Perceptions of Sharks

    Nosal, Andrew P.; Keenan, Elizabeth A.; Hastings, Philip A.; Gneezy, Ayelet
    Despite the ongoing need for shark conservation and management, prevailing negative sentiments marginalize these animals and legitimize permissive exploitation. These negative attitudes arise from an instinctive, yet exaggerated fear, which is validated and reinforced by disproportionate and sensationalistic news coverage of shark ‘attacks’ and by highlighting shark-on-human violence in popular movies and documentaries. In this study, we investigate another subtler, yet powerful factor that contributes to this fear: the ominous background music that often accompanies shark footage in documentaries. Using three experiments, we show that participants rated sharks more negatively and less positively after viewing a 60-second video clip of...

  11. Pathway-Informed Classification System (PICS) for Cancer Analysis Using Gene Expression Data

    Young, Michael R; Craft, David L
    We introduce Pathway-Informed Classification System (PICS) for classifying cancers based on tumor sample gene expression levels. PICS is a computational method capable of expeditiously elucidating both known and novel biological pathway involvement specific to various cancers and uses that learned pathway information to separate patients into distinct classes. The method clearly separates a pan-cancer dataset by tissue of origin and also sub-classifies individual cancer datasets into distinct survival classes. Gene expression values are collapsed into pathway scores that reveal which biological activities are most useful for clustering cancer cohorts into subtypes. Variants of the method allow it to be used...

  12. BYOB: How Bringing Your Own Shopping Bags Leads to Treating Yourself, and the Environment

    Karmarkar, Uma Reeta; Bollinger, Bryan
    As concerns about pollution and climate change have become more central in public discourse, shopping with reusable grocery bags has been strongly promoted as environmentally and socially conscious. In parallel, firms have joined policy makers in using a variety of initiatives to reduce the use of plastic bags. However, little is known about how these initiatives might alter consumers' in-store behavior. Using scanner panel data from a single California location of a major grocery chain, and completely controlling for consumer heterogeneity, we demonstrate that bringing your own bags simultaneously increases purchases of environmentally friendly as well as indulgent (hedonic) items....

  13. Cost Conscious? The Neural and Behavioral Impact of Price Primacy on Decision-Making

    Karmarkar, Uma Reeta; Shiv, Baba; Knutson, Brian
    Price is a key factor in most purchases, but it can be presented at different stages of decision making prior to a purchase. We examine the sequence-dependent effects of price and product information on the decision-making process at both neural and behavioral levels. During functional magnetic resonance imaging, the price of a product was shown to participants either before or after the product itself was presented. Early exposure to price, or price primacy, altered the process of valuation, as seen via altered patterns of activity in medial prefrontal cortex immediately prior to purchase decisions. Specifically, whereas viewing products first resulted...

  14. Should You Sleep on It? The Effects of Overnight Sleep on Subjective Preference-based Choice

    Karmarkar, Uma Reeta; Shiv, Baba; Spencer, Rebecca M.C.
    Conventional wisdom and studies of unconscious processing suggest that sleeping on a choice may improve decision-making. Though sleep has been shown to benefit several cognitive tasks, including problem solving, its impact on everyday choices remains unclear. Here we explore the effects of "sleeping on it" on preference-based decisions among multiple options. In two studies, individuals viewed several attributes describing a set of items and were asked to select their preferred item after a 12-hour interval that either contained sleep or was spent fully awake. After an overnight period including sleep, individuals showed increases in positive perceptions of the choice set....

  15. Criminal Recidivism after Prison and Electronic Monitoring

    Di Tella, Rafael M.; Schargrodsky, Ernesto
    We study criminal recidivism in Argentina by focusing on the re-arrest rates of two groups: individuals released from prison and individuals released from electronic monitoring. Detainees are randomly assigned to judges, and ideological differences across judges translate into large differences in the allocation of electronic monitoring to an otherwise similar population. Using these peculiarities of the Argentine setting we argue that there is a large, negative causal effect on criminal recidivism of treating individuals with electronic monitoring relative to prison.

  16. Boardroom Centrality and Firm Performance

    Larcker, David F.; So, Eric C.; Wang, Changyi Chang-Yi
    Firms with central or well-connected boards of directors earn superior risk-adjusted stock returns. Initiating a long position in the most central firms and a short position in the least central firms earns an average risk-adjusted return of 4.68% per year. Firms with central boards also experience higher future growth in return-on-assets (ROA) with analysts failing to fully reflect this information in their earnings forecasts. Return prediction, growth in ROA, and analyst forecast errors are concentrated among firms with high growth opportunities or firms confronting adverse circumstances, consistent with boardroom connections mattering most for firms that stand to benefit most from...

  17. How Do Staggered Boards Affect Shareholder Value? Evidence from a Natural Experiment

    Cohen, Alma; Wang, Changyi Chang-Yi
    The well-established negative correlation between staggered boards (SBs) and firm value could be due to SBs leading to lower value or a reflection of low-value firms' greater propensity to maintain SBs. We analyze the causal question using a natural experiment involving two Delaware court rulings―separated by several weeks and going in opposite directions―that affected the antitakeover force of SBs. We contribute to the long-standing debate on staggered boards by documenting empirical evidence consistent with the market viewing SBs as leading to lower firm value for the affected firms.

  18. Sustainable Operations Management: An Enduring Stream or a Passing Fancy?

    Drake, David Francis; Spinler, Stefan
    Paul Kleindorfer was among the first to weigh in on and nurture the stream of Sustainable Operations Management. The thoughts laid out here are based on conversations we had with Paul relating to the drivers underlying sustainability as a management issue: population and per capita consumption growth, the limited nature of resources and sinks, and the responsibility and exposure of firms to ensuing ecological risks and costs. We then discuss how an operations management lens contributes to the issue and criteria to help the Sustainable Operations Management perspective endure. This article relates to a presentation delivered by Morris Cohen for...

  19. Observation Bias: The Impact of Demand Censoring on Newsvendor Level and Adjustment Behavior

    Rudi, Nils; Drake, David Francis
    In an experimental newsvendor setting we investigate three phenomena: level behavior—the decision-maker's average ordering tendency; adjustment behavior—the tendency to adjust period-to-period order quantities; and observation bias—the tendency to let the degree of demand feedback influence order quantities. We find that the portion of mismatch cost due to adjustment behavior exceeds the portion of mismatch cost due to level behavior in three out of four conditions. Observation bias is studied through censored demand feedback, a situation which arguably represents the majority of newsvendor settings. When demands are uncensored, subjects tend to order below the normative quantity when facing high margin and...

  20. Technology Choice and Capacity Portfolios under Emissions Regulation

    Drake, David Francis; Kleindorfer, Paul R.; Van Wassenhove, Luk N.
    We study the impact of emissions tax and emissions cap-and-trade regulation on a firm's technology choice and capacity decisions. We show that emissions price uncertainty under cap-and-trade results in greater expected profit than a constant emissions price under an emissions tax, which contradicts popular arguments that the greater uncertainty under cap-and-trade will erode value. We further show that two operational drivers underlie this result: i) the firm's option not to operate, which effectively right-censors the uncertain emissions price and ii) dispatch flexibility, which is the firm's ability to first deploy its most profitable capacity given the realized emissions price. In...

Aviso de cookies: Usamos cookies propias y de terceros para mejorar nuestros servicios, para análisis estadístico y para mostrarle publicidad. Si continua navegando consideramos que acepta su uso en los términos establecidos en la Política de cookies.