Contemporary Accounting Research最新文献

In contrast to prior research that typically focuses on the characteristics of the audit committee (AC), we investigate how intergroup differences between the AC and the rest of the board (ROB) affect monitoring effectiveness. Drawing on group literature and the similarity attraction paradigm, we hypothesize that high intergroup differences between the AC and the ROB impede communication and information sharing. Poor “fit” between the AC and the ROB can lead to an “us versus them” mentality that reduces trust and hinders knowledge exchange, diminishing monitoring effectiveness. Using a sample of listed US firms, we find that intergroup differences between the AC and the ROB in terms of their respective characteristics are linked to a lower likelihood of reporting an existing or likely material weakness, higher discretionary accruals, and a lower likelihood of a going-concern opinion among financially distressed firms. These negative effects are most pronounced when the AC and the ROB are very different (i.e., in the upper quartile and decile of the AC-ROB distance distribution). Additional analyses show a higher probability of a Big R restatement, a lower likelihood of a Big R restatement when a material misstatement likely exists, and a lower likelihood of goodwill impairment when one is expected. Notably, the adverse impact of AC-ROB dissimilarity is more prominent when the AC is less powerful or lacks group stability. Regulators and companies should be aware that AC composition decisions cannot be made in isolation because large intergroup differences in director profiles between the AC and the ROB reduce monitoring effectiveness.

This study examines the association between firm performance and promotion incentives (i.e., the product of vertical pay disparity and promotion probability) in multilayer corporate tournaments using a unique data set of Korean public firms. We dissect the corporate tournament into layers and separately examine their association with firm performance while also accounting for the role of promotion probability. We find that (1) upper-layer, rather than lower-layer, tournaments are the main drivers of the positive association between vertical pay disparity and firm performance and (2) this association becomes stronger with higher promotion probability, consistent with tournament theory, but only in the upper layer. These results are more pronounced in settings where tournament incentives are plausibly more important, such as those characterized by high labor productivity and high average tenure. Our study draws a comprehensive picture of the corporate tournaments that simultaneously accounts for various factors that previous studies have examined only in isolation.

This paper extends a familiar model of competition and disclosure to incorporate the practical feature that firms may not only hold private information about consumer demand, but they can also influence demand by the investments they make in improving product quality. Such investments can reflect installing new product features, improving durability, adding design enhancements, and the like. This paper demonstrates that investments stand to significantly influence the firm's preference for disclosures and, in fact, become a determining feature of disclosure choice. In particular, under Cournot competition, a firm prefers disclosure when the industry-wide effects of information and investments are concordant. That is, if both product quality and demand information have large positive industry spillovers, disclosure is desirable because it promotes implicit cooperation in investments; if both have low spillover, disclosure permits a firm to convey strength to a rival and then use quantity and quality in concert to dominate the market precisely when the firm's demand is at its peak.

The study develops theorizing of external organizational communications that entail impression management. This includes developing linkages to Goffman's work and a Goffmanian research tradition. Our approach innovatively articulates dimensions of impression management entailing the presentation of others and nuanced practices of what we term organizational altercasting (OAC). Altercasting has been conceptualized in a Goffmanian tradition. OAC, seen as implicated in more developed organizational impression management (OIM), involves an organization constructing for another/others (an audience with whom the organization interacts) a persona that is congruent with the organization's goals. Our theorizing also innovatively draws from Goffmanian insight in a coherently associated way—namely, by appreciating the pervasiveness of interaction rituals, including those that take place in an organizational communication style using today's technology. We suggest that OAC especially tends to entail tact. The empirical focus is a case analysis of a Polish bank (CB) facing challenges of cybersecurity and disclosing/communicating externally on cybersecurity/cyber-risk. For insight, we address this question: In terms of a developed theorizing of OIM (including OAC), how did the bank respond to external challenges, related to cybersecurity, through public disclosures/communications? A content analysis of types of multimedia, with attention given to context, indicated the importance of the presentation of others. We were drawn to how CB's customers, a key audience, were presented in CB's external communications, highlighting long-term engagement in, and an increase in the significance of, these communications. For our case, articulation of OIM and the presentation of others was further developed through OAC, with particular attention given to communication style vis-à-vis modern technology. Our work promotes OAC's wider applicability, including beyond cyber-risk disclosures.

In three experiments, we examine how the widespread phenomenon of overwithholding affects retirement savings and how the additional option at tax time of saving retroactively for retirement affects total savings levels. Our results show that overwithholding significantly reduces retirement savings. We show that this outcome can be explained by individuals' anchoring on their take-home pay when making savings decisions and by individuals' reduced motivation to save in the presence of overwithholding. Moreover, we find that the introduction of an additional retroactive savings option at tax time increases overall savings by providing information about the correct after-tax income and by emphasizing the importance of a savings norm that nudges individuals to save. Furthermore, our findings demonstrate that immediate taxation (back-loaded retirement plans) results in greater effective savings than deferred taxation (front-loaded retirement plans), irrespective of whether there is overwithholding or the existence of an additional option to save. Policy-makers may therefore consider both the introduction of an additional savings option at tax time and immediate taxation as policy tools to encourage retirement saving.

This study examines whether and how brokers manage the distribution of their stock recommendations. We document that if a broker's percentage of buy recommendations in a quarter is substantially higher than its target level, the broker issues significantly fewer buy recommendations than other brokers in the following quarter. This evidence remains robust after controlling for mean reversion in the data and varies systematically with brokers' expected benefits and costs of managing the distribution. Exploring possible methods to manage the distribution, we find evidence suggesting that brokers alter the timing of recommendation initiations and reiterations, and shift recommendations between adjacent quarters. Finally, we show that distribution management affects the informativeness of stock recommendations in the market.

One view of the socialization experienced by professionals in global Big 4 firms suggests that the intensity of socialization engenders a strong and deep-rooted professional identity. We scrutinize this claim by drawing on interviews with partners who retired from lifelong employment in Big 4 firms in Japan. Through partners' reflections on their experiences in detaching from the firm, we examine how socialization manifests in partners' identity work. We find that partners' identity, which often appears entrenched, invariable, and heroic, can be highly fragile and vulnerable to changing circumstances. Before leaving the firm, interviewees attempt to reconcile their Big 4 “graduation” with feelings of obsolescence and a growing distance from previous accomplishments. After leaving the firm, interviewees revisit the identity built throughout their careers. Unable to move on to a selfhood detached from that identity, they refashion their identity relative to their former Big 4 partner self, backgrounding their private life and post-firm professional affiliations. Not knowing how to “close the books,” retired partners seek comfort in the old “plot” and in the old “characters,” finding ways to “keep the books open” even after the “setting” has changed. Our results reconfirm the powerful socialization experienced by partners during their tenure with the Big 4 but run counter to scholarship that characterizes the identity of Big 4 partners as strong and fixed. Rather, we demonstrate the insecurity underlying our professional service heroes' identity work and the contingent identity work processes that partners engage in while navigating departure from the Big 4.

In this paper, I conduct three experiments to investigate whether and how relative performance information (RPI) influences employee advice-seeking and how advice-seeking, in turn, affects employees' trust in their manager. The first experiment shows that, in a setting where the manager can provide useful advice, RPI increases advice-seeking frequency, which is marginally positively associated with trust in the manager. The second experiment indicates that RPI increases advice-seeking frequency when the manager's advice is highly useful, with a marginally significant effect when the advice is of low usefulness. Mediation analyses reveal that RPI alleviates employees' concerns about self-presentation toward their manager, thereby increasing advice-seeking frequency, but only when the manager's advice is of high usefulness. The third experiment shows that advice usefulness impacts employees' trust in their manager by influencing their perceptions of managerial competence and benevolence. This paper discusses theoretical and practical implications of these findings.

Using terrorist attacks and mass shootings as an exogenous source driving psychological changes in managerial sentiment, we explore the causal effect of managerial sentiment on firms' short-term operating decisions. Employing cost stickiness to measure short-term operating decisions on resource allocation and cost control, we find that firms located in the attacked metropolitan areas experience a significant decline in the degree of cost stickiness. We further find that the effect is more pronounced for firms that have inexperienced and less confident CEOs, when attack events are more salient, and when managers have lower prior exposure to negative events in their personal experiences. We also explore inventory management as another form of short-term operating decisions and find that firms exhibit reduced asymmetric inventory management and a lower level of abnormal inventory holdings in postattack periods. Overall, our study suggests that shocks caused by exogenous negative events affect managerial sentiment, which in turn shapes managers' short-term operating decisions.

We interview public company tax executives to provide new evidence on how corporate taxpayers experience and navigate the income tax audit process. Interviewees describe being “targeted” by “tax police” and having to “defend” their positions. Thus, we adopt a structural metaphor of tax audits as police investigations and use a framework from the policing literature to explain what influences taxpayers' perceptions of fairness during audits. Perceptions of fairness are important as targets of investigations are more likely to cooperate and accept outcomes when they perceive policing processes as fair. Tax executives aim to obtain fair and consistent treatment by compiling documentation, consulting with peers and external advisors, and educating tax agents. Audits are adversarial, however, and taxpayers also act strategically to secure favorable outcomes and appeal or litigate when they believe outcomes are unfair. Interviewees note variation in the extent to which tax authorities create frameworks that facilitate fair audit processes and whether tax agents implement these frameworks. Our study offers new insights into the tax audit process from corporate taxpayers' perspectives. First, public company taxpayers view tax audits as redundant to financial statement audits of their tax positions. Thus, tax audits may have limited scope to deter tax noncompliance. Second, tax executives are not passive actors; they take deliberate actions to shape audit outcomes. Third, audits are less efficient for everyone when taxpayers perceive them as procedurally unfair. Investments by tax authorities that increase perceptions of fairness may enhance audit efficiency by increasing taxpayers' cooperation and acceptance of outcomes.