We find a negative relationship between market share growth and subsequent stock returns, three‐ and four‐factor alphas. We report the potential explanatory role of market share growth in explaining subsequent average monthly stock returns. High (Low) market share growth firms report good (poor) operating performance and positive (negative) SUEs in the quarter in which market share growth is measured and investors overact to that good (bad) news. However, high (low) market share growth firms experience decrease (increase) in operating performance and SUEs in the subsequent quarters resulting in corrections in investors’ expectations and subsequent lower (higher) stock returns.
{"title":"Market Share Growth and Stock Returns","authors":"Jaideep Chowdhury, Gokhan Sonaer, Umut Celiker","doi":"10.1111/acfi.12300","DOIUrl":"https://doi.org/10.1111/acfi.12300","url":null,"abstract":"We find a negative relationship between market share growth and subsequent stock returns, three‐ and four‐factor alphas. We report the potential explanatory role of market share growth in explaining subsequent average monthly stock returns. High (Low) market share growth firms report good (poor) operating performance and positive (negative) SUEs in the quarter in which market share growth is measured and investors overact to that good (bad) news. However, high (low) market share growth firms experience decrease (increase) in operating performance and SUEs in the subsequent quarters resulting in corrections in investors’ expectations and subsequent lower (higher) stock returns.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132445279","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pedro Piccoli, Newton Carneiro Affonso da Costa Jr, W. V. da Silva, June A. W. Cruz
This study examines the influence of investor sentiment on the risk–return relationship in the Brazilian stock market from 2002 to 2015. Using the Consumer Confidence Index as a substitute for the level of investor sentiment, we find that the relationship between conditional variance and stocks return is positive (negative) in periods of low (high) sentiment, except for small stocks, which always show a negative relationship between the constructs. The deterioration of the positive relationship between risk and return when sentiment is high is a result of the sharp growth in the number of less sophisticated investors under these circumstances.
{"title":"Investor Sentiment and the Risk–Return Tradeoff in the Brazilian Market","authors":"Pedro Piccoli, Newton Carneiro Affonso da Costa Jr, W. V. da Silva, June A. W. Cruz","doi":"10.1111/acfi.12342","DOIUrl":"https://doi.org/10.1111/acfi.12342","url":null,"abstract":"This study examines the influence of investor sentiment on the risk–return relationship in the Brazilian stock market from 2002 to 2015. Using the Consumer Confidence Index as a substitute for the level of investor sentiment, we find that the relationship between conditional variance and stocks return is positive (negative) in periods of low (high) sentiment, except for small stocks, which always show a negative relationship between the constructs. The deterioration of the positive relationship between risk and return when sentiment is high is a result of the sharp growth in the number of less sophisticated investors under these circumstances.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114195481","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Christian Schnieder, Friedrich Sommer, Arnt Wöhrmann
This study examines the effect of relative performance information (RPI) on knowledge sharing among employees. Additionally, we investigate whether the effect of RPI on knowledge sharing differs when employees can observe each other’s knowledge-sharing decisions. Based on the concepts of social comparison, impression management, social norms, and reciprocity, we predict and find that the presence of RPI reduces knowledge sharing among employees and that the observability of individual knowledge-sharing decisions increases knowledge sharing. Concerning the interaction of RPI and observability, theory suggests that observability mitigates the negative effect of RPI on knowledge sharing. However, we find that observability reduces the negative effect of RPI on knowledge sharing only in the short term. Over time, observability leads to increased knowledge sharing when RPI is absent but not when RPI is present. Hence, mere observability cannot completely suspend the negative effect of RPI. Implications for research and practice are discussed.
{"title":"The Effect of Relative Performance Information on Knowledge Sharing among Employees","authors":"Christian Schnieder, Friedrich Sommer, Arnt Wöhrmann","doi":"10.2139/ssrn.3275320","DOIUrl":"https://doi.org/10.2139/ssrn.3275320","url":null,"abstract":"This study examines the effect of relative performance information (RPI) on knowledge sharing among employees. Additionally, we investigate whether the effect of RPI on knowledge sharing differs when employees can observe each other’s knowledge-sharing decisions. Based on the concepts of social comparison, impression management, social norms, and reciprocity, we predict and find that the presence of RPI reduces knowledge sharing among employees and that the observability of individual knowledge-sharing decisions increases knowledge sharing. Concerning the interaction of RPI and observability, theory suggests that observability mitigates the negative effect of RPI on knowledge sharing. However, we find that observability reduces the negative effect of RPI on knowledge sharing only in the short term. Over time, observability leads to increased knowledge sharing when RPI is absent but not when RPI is present. Hence, mere observability cannot completely suspend the negative effect of RPI. Implications for research and practice are discussed.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-10-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133894497","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Stephanie F. Cheng, Michael Majerczyk, James C. Wilhelm
In this study, we experimentally investigate how performance risk and relational risk affect a principal’s willingness to offer gift, bonus, or penalty contracts and the subsequent motivational effect that these three contracts have on agents. Prior literature has not directly compared performance-contingent contracts to gift contracts, and extrapolation from existing empirical data is difficult because the literature has typically examined each in settings focused only on the mechanism through which each contract acts (i.e., interactive settings for gift exchange and settings with stochastic production and unobservable effort for performance-contingent contracts). We combine features of both settings and construct a willingness-to-pay (WTP) measure indicative of the principal’s propensity to offer a contract. Comparing the WTPs for the contracts, we find that gift exchange contracts are less attractive to principals than performance-contingent contracts. More importantly, we demonstrate that performance-contingent contracts evoke reciprocity concerns, suggesting that they function as both incentive compatible instruments, consistent with agency theory, and as behavioral instruments, consistent with models of gift exchange.
{"title":"Comparing Incentive Contract Desirability within an Integrated Risk Setting","authors":"Stephanie F. Cheng, Michael Majerczyk, James C. Wilhelm","doi":"10.2139/ssrn.3233897","DOIUrl":"https://doi.org/10.2139/ssrn.3233897","url":null,"abstract":"In this study, we experimentally investigate how performance risk and relational risk affect a principal’s willingness to offer gift, bonus, or penalty contracts and the subsequent motivational effect that these three contracts have on agents. Prior literature has not directly compared performance-contingent contracts to gift contracts, and extrapolation from existing empirical data is difficult because the literature has typically examined each in settings focused only on the mechanism through which each contract acts (i.e., interactive settings for gift exchange and settings with stochastic production and unobservable effort for performance-contingent contracts). We combine features of both settings and construct a willingness-to-pay (WTP) measure indicative of the principal’s propensity to offer a contract. Comparing the WTPs for the contracts, we find that gift exchange contracts are less attractive to principals than performance-contingent contracts. More importantly, we demonstrate that performance-contingent contracts evoke reciprocity concerns, suggesting that they function as both incentive compatible instruments, consistent with agency theory, and as behavioral instruments, consistent with models of gift exchange.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133193345","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Shanming Liu, A. Ditillo, Alexandra G. H. L. Van den Abbeele
This study investigates the effects of different types of reward on the performances of two types of creativity. We challenge the assumption that creativity is a unitary concept that cannot be differentiated. Specifically, we distinguish creativity into expected creativity (for open, self-discovered problems) and responsive creativity (for closed, presented problems) (Unsworth, 2001). We examine whether monetary reward (present or absent) has different effects on creativity performance when the creativity task is responsive creativity compared to when the creativity task is expected creativity. We predict and find that the presence of monetary reward positively affects creativity performance when it is responsive creativity, but negatively affects creativity performance when it is expected creativity. Additionally, we find that compared to monetary reward, social-recognition reward leads to higher performance in expected creativity task but not in responsive creativity task. These results document that, when stimulating different types of creativity performance, it is important for managers to know not only whether to use reward or not, but also how the reward should be provided.
{"title":"When Should We Reward Creativity: A New Perspective on Creativity Types","authors":"Shanming Liu, A. Ditillo, Alexandra G. H. L. Van den Abbeele","doi":"10.2139/ssrn.3233126","DOIUrl":"https://doi.org/10.2139/ssrn.3233126","url":null,"abstract":"This study investigates the effects of different types of reward on the performances of two types of creativity. We challenge the assumption that creativity is a unitary concept that cannot be differentiated. Specifically, we distinguish creativity into expected creativity (for open, self-discovered problems) and responsive creativity (for closed, presented problems) (Unsworth, 2001). We examine whether monetary reward (present or absent) has different effects on creativity performance when the creativity task is responsive creativity compared to when the creativity task is expected creativity. We predict and find that the presence of monetary reward positively affects creativity performance when it is responsive creativity, but negatively affects creativity performance when it is expected creativity. Additionally, we find that compared to monetary reward, social-recognition reward leads to higher performance in expected creativity task but not in responsive creativity task. These results document that, when stimulating different types of creativity performance, it is important for managers to know not only whether to use reward or not, but also how the reward should be provided.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127050549","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Accounting literature on cost stickiness documents an asymmetric behavior of costs, meaning that costs rise more in response to sales increases than they drop for sales decreases. This asymmetric behavior of costs is ascribed to managerial decisions on resource commitment. In this study, we apply prospect theory to further explore this asymmetry. More specifically, we build on core components of prospect theory to examine how cost stickiness may be affected by risk preferences in managerial decision-making when firms face declining (increasing) activity. In particular, we hypothesize how risk taking (aversion) in the domain of losses (gains) as well as industry performance as a reference point for firm performance act as determinants of managerial decision-making on resource commitment decisions. To test these hypotheses, we use secondary unbalanced panel data on 3,558 companies across nine industry sectors from 26 countries around the world over the period of six years (2008-2013). By introducing a behavioral perspective rooted in prospect theory, we contribute to existing cost stickiness literature in considering the role of risk preferences in different domains (losses and gains) as well as the aspect of industry performance as a reference point for managerial decisions on resource commitment.
{"title":"Implications of Prospect Theory for the Stickiness of Costs","authors":"A. Klein, Thomas Lindner, Markus Wabnegg","doi":"10.2139/ssrn.3230688","DOIUrl":"https://doi.org/10.2139/ssrn.3230688","url":null,"abstract":"Accounting literature on cost stickiness documents an asymmetric behavior of costs, meaning that costs rise more in response to sales increases than they drop for sales decreases. This asymmetric behavior of costs is ascribed to managerial decisions on resource commitment. In this study, we apply prospect theory to further explore this asymmetry. More specifically, we build on core components of prospect theory to examine how cost stickiness may be affected by risk preferences in managerial decision-making when firms face declining (increasing) activity. In particular, we hypothesize how risk taking (aversion) in the domain of losses (gains) as well as industry performance as a reference point for firm performance act as determinants of managerial decision-making on resource commitment decisions. To test these hypotheses, we use secondary unbalanced panel data on 3,558 companies across nine industry sectors from 26 countries around the world over the period of six years (2008-2013). By introducing a behavioral perspective rooted in prospect theory, we contribute to existing cost stickiness literature in considering the role of risk preferences in different domains (losses and gains) as well as the aspect of industry performance as a reference point for managerial decisions on resource commitment.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-08-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115466532","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We review empirical papers published in JAR over the past 10 years examining management accounting and control systems in organizational contexts that are complex, ambiguous and where performance is difficult to measure. These papers draw on a variety of newer economic models of organization culture and relational contracts and related theories from sociology and psychology.
{"title":"Virtual Issue on Empirical Management Accounting Research","authors":"M. Abernethy, D. Campbell","doi":"10.1111/1475-679x.12222","DOIUrl":"https://doi.org/10.1111/1475-679x.12222","url":null,"abstract":"We review empirical papers published in JAR over the past 10 years examining management accounting and control systems in organizational contexts that are complex, ambiguous and where performance is difficult to measure. These papers draw on a variety of newer economic models of organization culture and relational contracts and related theories from sociology and psychology.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120454698","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Superannuation funds heavily outsource key fund functions to service providers who play a crucial role in superannuation fund operations and affecting Australians’ retirement savings. We examine the impact of related party service provider usage and trustee‐director affiliation on investment performance. We find that for‐profit funds significantly underperform when using related party service providers. The underperformance is more severe when the board is controlled by more affiliated trustee‐directors and belongs to a vertically integrated conglomerate group. Our results raise concerns about whether recent regulatory reforms increasing trustee‐directors’ duties effectively address the conflicts of interest inherent in related party service provider arrangements.
{"title":"When Boards Use Related Parties: Outsourcing and Superannuation Fund Performance","authors":"K. Liu, E. Ooi","doi":"10.1111/acfi.12379","DOIUrl":"https://doi.org/10.1111/acfi.12379","url":null,"abstract":"Superannuation funds heavily outsource key fund functions to service providers who play a crucial role in superannuation fund operations and affecting Australians’ retirement savings. We examine the impact of related party service provider usage and trustee‐director affiliation on investment performance. We find that for‐profit funds significantly underperform when using related party service providers. The underperformance is more severe when the board is controlled by more affiliated trustee‐directors and belongs to a vertically integrated conglomerate group. Our results raise concerns about whether recent regulatory reforms increasing trustee‐directors’ duties effectively address the conflicts of interest inherent in related party service provider arrangements.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-06-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114049256","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
V. Richardson, J. M. Sánchez, Pankaj Setia, Rodney E. Smith
Abstract The chief information officer (CIO) is responsible for bridging the gap between two critical domains—technology and business, making the CIO's job uniquely different from other executives. As digital technologies become increasingly important to firms' competitive success, boards of directors and senior executives seek to align the CIO role with overall firm's objectives. Agency theory suggests that one way to create the alignment between an executive's efforts and firm performance is to implement appropriate equity compensation incentives (i.e., those resulting from stock and stock options) tying the executive's wealth to firm value. To date, research does not address what factors a firm should consider when designing CIO incentives and how these incentives influence firm performance. To address this major gap, we examine both the antecedents and performance consequences of CIO equity incentives. We assess organizational, environmental, and individual factors that influence CIO equity incentives and find that environmental and organizational factors are more important than individual CIO characteristics in the determination of CIO equity incentives. We also find that firms that create higher CIO equity incentives realize greater subsequent accounting and market performance. Our research contributes to the IT personnel literature by showing how firms can use compensation policies to leverage the CIO role to enhance overall business performance.
{"title":"Determinants and Consequences of Chief Information Officer Equity Incentives","authors":"V. Richardson, J. M. Sánchez, Pankaj Setia, Rodney E. Smith","doi":"10.2139/ssrn.3192082","DOIUrl":"https://doi.org/10.2139/ssrn.3192082","url":null,"abstract":"Abstract The chief information officer (CIO) is responsible for bridging the gap between two critical domains—technology and business, making the CIO's job uniquely different from other executives. As digital technologies become increasingly important to firms' competitive success, boards of directors and senior executives seek to align the CIO role with overall firm's objectives. Agency theory suggests that one way to create the alignment between an executive's efforts and firm performance is to implement appropriate equity compensation incentives (i.e., those resulting from stock and stock options) tying the executive's wealth to firm value. To date, research does not address what factors a firm should consider when designing CIO incentives and how these incentives influence firm performance. To address this major gap, we examine both the antecedents and performance consequences of CIO equity incentives. We assess organizational, environmental, and individual factors that influence CIO equity incentives and find that environmental and organizational factors are more important than individual CIO characteristics in the determination of CIO equity incentives. We also find that firms that create higher CIO equity incentives realize greater subsequent accounting and market performance. Our research contributes to the IT personnel literature by showing how firms can use compensation policies to leverage the CIO role to enhance overall business performance.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-06-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121536791","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this study, we examine whether the accruals quality premium arises from information risk through the following: (i) an investigation of the accruals quality (AQ) premium conditioned by market competition levels; (ii) a test of the impact of an exogenous shock on tax-loss-selling incentives; and (iii) an examination of the quality of specific accruals. Consistent with an information risk explanation, we find that the pricing effect of AQ is concentrated in firms with low market competition; that tax-loss selling is unlikely to explain the observed AQ premium; and that specific accruals quality measures which are more likely to reflect information risk are priced.
{"title":"Does the Accruals Quality Premium Arise from Information Risk?","authors":"Lijuan Zhang, Mark Wilson","doi":"10.1111/acfi.12224","DOIUrl":"https://doi.org/10.1111/acfi.12224","url":null,"abstract":"In this study, we examine whether the accruals quality premium arises from information risk through the following: (i) an investigation of the accruals quality (AQ) premium conditioned by market competition levels; (ii) a test of the impact of an exogenous shock on tax-loss-selling incentives; and (iii) an examination of the quality of specific accruals. Consistent with an information risk explanation, we find that the pricing effect of AQ is concentrated in firms with low market competition; that tax-loss selling is unlikely to explain the observed AQ premium; and that specific accruals quality measures which are more likely to reflect information risk are priced.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134608200","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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