Department of Accounting & Finance
Permanent URI for this collectionhttps://hdl.handle.net/11274/9565
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Item Causal effect of business accreditation on the CPA exam success rate(2023) Baker, Pamela; Maurer, Robert; Li, Zhen; Zou, Lin; Tengesdal, MarkWe examine the relationship between AACSB post-secondary business program accreditation and program success rate on the CPA Exam. We use panel data and a difference-in-differences quasi-experimental design to identify the causal effect of AACSB accreditation on the CPA exam success rate. In programs with intermediate to large numbers of exam candidates, we find no evidence that accreditation per se is causally related to the pass rate although a positive correlation between them is supported. In programs with small numbers of exam candidates, our results show the existence of causal effect of accreditation on the pass rate.Item A cross-national study of nomophobia among Brazilian, Chinese, French, and U.S. young people: The role of materialism(Sage, 2023) Gentina, Elodie; Maille, Virginie; Li, ZhenWhy do young people from Generation Z (born between 1995 and the mid-2000s) become nomophobic consumers of smartphones? This research aims for a better understanding of nomophobia, the fear of being without mobile phone contact, and this from a cross-national perspective. Data collected from 1,326 young people (aged 16-24) from Brazil, China, France, and the United States demonstrate that nomophobia is positively related to materialism, the value that consumers place on the acquisition of material objects. A structural equation model shows that the different dimensions of materialism do not affect nomophobia uniformly across national identity. Nomophobia is positively related to the happiness dimension (possessions needed for happiness) in Brazil, to the success dimension (possessions as indicators of success) in China, and to the centrality dimension (possessions as central for the self) in France and the United States. These findings have notable implications for practitioners and researchers.Item Behavioral economics and monetary wisdom: A cross-level analysis of monetary aspiration, pay (dis)satisfaction, risk perception, and corruption in 32 nations(Wiley, 2023) Li-Ping Tang, Thomas; Li, Zhen; Özbek, Mehmet Ferhat; Lim, Vivien K. G.; Teo, Thompson S. H.; Ansari, Mahfooz A.; Sutarso, Toto; Garber, Ilya; Chiu, Randy Ki-Kwan; Charles-Pauvers, Brigitte; Urbain, Caroline; Luna-Arocas, Roberto; Chen, Jingqiu; Tang, Ningyu; Tang, Theresa Li-Na; Arias-Galicia, Fernando; De La Torre, Consuelo Garcia; Vlerick, Peter; Akande, Adebowale; Al-Zubaidi, Abdulqawi Salim; Kazem, Ali Mahdi; Borg, Mark G.; Cheng, Bor-Shiuan; Du, Linzhi; Ibrahim, Abdul Hamid Safwat; Kim, Kilsun; Malovics, Eva; Mpoyi, Richard T.; Nnedum, Obiajulu Anthony Ugochukwu; Sardžoska, Elisaveta Gjorgji; Allen, Michael W.; Correia, Rosário; Jen, Chin-Kang; Moreira, Alice S.; Osagie, Johnston E.; Osman-Gani, Aahad M.; Pholsward, Ruja; Polic, Marko; Skobic, Petar; Stembridge, Allen F.; Canova, Luigina; Manganelli, Anna Maria; Pitariu, Adrian H.; Pereira, Francisco José CostaCorruption involves greed, money, and risky decision-making. We explore the love of money, pay satisfaction, probability of risk, and dishonesty across cultures. Avaricious monetary aspiration breeds unethicality. Prospect theory frames decisions in the gains-losses domain and high-low probability. Pay dissatisfaction (in the losses domain) incites dishonesty in the name of justice at the individual level. The Corruption Perceptions Index, CPI, signals a high-low probability of getting caught for dishonesty at the country level. We theorize that decision-makers adopt avaricious love-of-money aspiration as a lens and frame dishonesty in the gains-losses domain (pay satisfaction-dissatisfaction, Level 1) and high-low probability (CPI, Level 2) to maximize expected utility and ultimate serenity. We challenge the myth: Pay satisfaction mitigates dishonesty across nations consistently. Based on 6500 managers in 32 countries, our cross-level three-dimensional visualization offers the following discoveries. Under high aspiration conditions, pay dissatisfaction excites the highest- (third-highest) avaricious justice-seeking dishonesty in high (medium) CPI nations, supporting the certainty effect. However, pay satisfaction provokes the second-highest avaricious opportunity-seizing dishonesty in low CPI entities, sustaining the possibility effect—maximizing expected utility. Under low aspiration conditions, high pay satisfaction consistently leads to low dishonesty, demonstrating risk aversion—achieving ultimate serenity. We expand prospect theory from a micro and individual-level theory to a cross-level theory of monetary wisdom across 32 nations. We enhance the S-shaped Curve to three 3-D corruption surfaces across three levels of the global economic pyramid, providing novel insights into behavioral economics, business ethics, the environment, and responsibility.Item The effect of U.S. investor sentiment on cross-listed securities returns: A high-frequency approach(MDPI, 2021) Gutierrez Pineda, Juan Pablo; Perez Liston, DanielThis paper studies the impact of a high-frequency investor sentiment measure (New FEARS) on the returns of foreign securities listed in U.S. markets as American Depository Receipts (ADRs). We recreate a high-frequency investor sentiment measure by aggregating search volume indices (SVIs) for a set of negative economic search terms. We find that ADR aggregate market returns exhibit a negative reaction to increases in searches for negative economic terms such as “recession”, “crisis”, and “bankruptcy” by U.S. households. This is the first paper to measure the effects of high-frequency investor sentiment on cross-listed securities. Moreover, the results are consistent throughout our study regardless of the variation of sentiment and aggregate market return measure we use. We also explore ADR regional market indices and show that Latin American ADRs are more sensitive to this investor sentiment measure.Item Pension fund monitoring and corporate debt policy: Evidence from the Korean market*(Wiley, 2021) Choi, Wonseok; Chung, Chune Young; Park, JongchanWe investigate whether the Korean National Pension Service, a corporate watchdog and major long-term investor in South Korea, positively affects corporate financial policy. The Korean National Pension Service is less likely to influence corporate financial policy even among firms with high uncertainty and information opacity, which increases the importance of large shareholders’ monitoring role. Additionally, ownership by the Korean National Pension Service has statistically insignificant effects on firms’ performance and financial soundness.Item Independent directors’ dissensions and firm value(Elsevier, 2021) Choi, Wonseok; Rabarison, Monika K.; Wang, BinUsing a novel dataset of independent directors’ voting activities on items proposed by managers of Korean firms, we investigate whether independent directors’ dissension in board meetings plays an effective role in enhancing firm value through improved corporate governance. Our results indicate that dissension improves firm value. This finding is robust to different measures of firm value and alternative model specifications including subsample, propensity score matching, and instrumental variable analyses. Overall, we contribute to the understanding of the relation between corporate governance and firm value. Specifically, we provide new evidence that the monitoring by independent directors enhances firm value.Item Market efficiency in foreign exchange market(Elsevier, 2021) Lee, Namhoon; Choi, Wonseok; Yuntaek, PaeThe study examines foreign exchange market overreaction for various combinations of formation and testing periods over 30 years. First, we find that reversal is significant for longer test periods and longer formation periods. Second, we find no evidence of persistent momentum or reversal during the entire sample period. Thus, the results of overreaction studies should be sensitive to the sample period. Third, we observe losers outperform most of the formation and test periods combinations except for the short-term when spot rates are used to construct portfolios. We observe the evidence of overreaction becomes stronger with the longer formation and test period.Item How do heterogeneous institutional investors influence corporate advertising decisions?(Elsevier, 2022) Kang, Sanggyu; Chung, Chune Young; Choi, WonseokMarketing increases firm value; therefore, it is imperative to determine the factors affecting corporate marketing decision processes. Considering that the current understanding of these factors is limited, this study examines institutional investors’ effects on Korean firms’ marketing decisions by focusing on advertising spending. We present evidence that institutional investors may play a significant role in such decisions. Further, our results indicate that domestic institutional investors negatively influence advertising spending. In contrast, foreign institutional investors positively impact advertising spending regardless of their investment horizon. These results highlight the influence of external institutions’ characteristics in firms’ marketing decision processes.Item Firm-level political risk and corporate investment(Elsevier, 2022) Choi, Wonseok; Chung, Chune Young; Wang, KainanExtant literature shows that firms reduce their capital investment in response to political risk. We examine firm-level activities and characteristics that mitigate the impact of political risk on firm investment. First, we empirically investigate the relationship between firm-level political risk and future investment, showing that firms with higher political exposure and political risk spend less on capital investment. Next, we examine the mechanisms behind the negative relationship between firm-level political risk and corporate investment. We find that political lobbying effectively reduces the negative impact of political exposure and political risk on corporate investment. In addition to corroborating the key findings documented in the literature that firms react to political risk by cutting investment, we show that this relationship is affected by certain firm activities and characteristics.Item Related party transactions and corporate environmental responsibility(Elsevier, 2022-05) Choi, Wonseok; Chung, Chune Young; Rabarison, Monika K.; Wang, KainanWe examine the effect of related party transactions on corporate environmental responsibility and find that firms with more related party transactions tend to have more controversial environmental reports, less emissions reduction, and less environmental expenditures. This relationship is more significant for firms with a high investment-cash flow sensitivity and those with a low ESG score. Overall, the results corroborate the hypothesis that the marginal costs of corporate environmental responsibility outweigh the benefits for financially constrained firms, thus deterring these firms from engaging in corporate environmental responsibility activities.Item Behavioral economics: who are the investors with the most sustainable stock happiness, and why? Low aspiration, external control, and country domicile may save your lives—monetary wisdom(Springer, 2022) Tang, Ningyu; Li, Zhen; Chen, Jingqiu; Tang, Thomas Li-PingSlight absolute changes in the Shanghai Stock Exchange Index (SHSE) corresponded to the city’s immediate increases in coronary heart disease deaths and stroke deaths. Signifcant fuctuations in the Shenzhen Stock Exchange Index (SZSE) corresponded to the country’s minor, delayed death rates. Investors deal with money, greed, stock volatility, and risky decision-making. Happy people live longer and better. We ask the following question: Who are the investors with the highest and most sustainable stock happiness, and why? Monetary wisdom asserts: Investors apply their deep-rooted values (avaricious love-of-money aspiration and locus of control, Level 2) as a lens to frame critical concerns in the proximal-immediate (Shanghai Stock Exchange Index changes, Level 1) and the omnibus-distal contexts (domicile: city vs. country, Level 2) to maximize expected utility (portfolio changes, Level 1) and ultimate serenity (stock happiness, Level 1). We collected multilevel data—the longitudinal SHSE and 227 private investors’ daily stock happiness and portfolio changes for 36 consecutive trading days in four regions of China. Investors had an average liquid asset of $76,747.41 and $54,660.85 in stocks. This study is not a “one-shot” game with “nothing at stake.” We classifed Shanghai and Beijing as the city and Shenzhen and Chongqing as the country. Our cross-level 3-D visualization reveals that regardless of SHSE volatility, investors with low aspiration, external control, and country domicile enjoy the highest and most sustainable stock happiness with minimum fuctuations. Independently, investors with low aspiration, external control, and country domicile tend to make fewer portfolio changes than their counterparts. Behaviorally, less is more, debunking the myth—risky decisions excite stock happiness. Our longitudinal study expands prospect theory, incorporates attitude toward money, and makes robust contributions to behavioral economics and business ethics. We help investors and ordinary citizens make happy, healthy, and wealthy decisions. Most importantly, the life you save may be your own.Item Student engagement and fun: Evidence from the field(Elm Street Press, 2019) Purinton, Elizabeth F.; Burke, Megan M.How do you entice students to engage with the class, its content, and each other? Student engagement has been linked to deeper learning, making connections to topics, and improved course performance. However, engaging students can be challenging. Recent studies have linked fun in the classroom with engagement. Fun can be categorized as fun activities and fun delivery. While fun characteristics are identified, specific examples are not presented. This paper fills that gap by presenting two fun cases in business courses. The cases illustrate that fun activities can be developed for all types of courses: undergraduate or graduate courses, online or face-to-face courses, and various subject areas. The first example is a fun activity in a face-to-face undergraduate accounting class. The second example used a fun delivery method to introduce an exercise on brand relevance in an online MBA marketing class. In general, the projects increased student engagement and course performance. Implications for classroom application are provided.Item Benefits of an employee stock ownership plan in succession planning(Association of International Certified Professional Accountants, 2015) Burke, Megan M.Employee stock ownership plans (ESOPs) provide numerous benefits for small business owners and their employees, many of which are realized while the owner is still actively engaged in the business. In addition, proper planning for the owner's exit from the business can result in sizable tax savings. Many owners take advantage of the opportunities under Sec. 1042, which permits nonrecognition (or, more accurately, deferral) of gain on the sale of stock to an ESOP (or a worker-owned cooperative) if the seller purchases qualifying replacement property. This benefit can be magnified by using either a charitable remainder trust (CRT) or a family limited partnership (FLP) along with additional trusts. Although the IRS has recently increased its scrutiny of FLPs, owning an active business through an FLP should bolster the position that the structure has the characteristics of what the IRS considers a "good" FLP.Item Great time for a GRAT(Association of International Certified Professional Accountants, 2019) Burke, Megan M.Grantor retained annuity trusts (GRATs) represent an opportunity for a client to transfer appreciating assets to the next generation with little to no gift or estate tax consequences. Wealthy families can use GRATs to freeze the value of their estate while transferring any future appreciation to the next generation free of tax. Additionally, GRATs have little downside.Item Transferring ownership of small, closely-held business(Texas Society of Certified Public Accountants, 2016) Burke, Megan M.; Gossett, Donna; Haskin, DanielFamily-owned businesses account for a significant portion of the U.S. economy. Unfortunately, only about 30 percent of these businesses will make it into the hands of the second generation (Stalk and Foley). As the Baby Boomer generation reaches retirement age, an increasing number of small businesses face succession challenges. While some family-owned businesses develop plans to transfer ownership and executive decision making to other family members, this is not a viable strategy for all small businesses. These firms will need to examine and implement strategies for transferring business ownership to external or internal buyers.Item U.S. accounting education: Misalignment with the needs of small and medium companies(The Clute Institute, 2014) Burke, Megan M.; Gandolfi, William R.This study looks to answer the question, “Does the current accounting educational system in the United States focus too heavily on the requirements of large (and SEC registered) companies at the expense of small companies and individuals who comprise the primary clientele of most practicing CPAs?” This investigation surveys CPAs regarding their perceptions of the focus of their accounting education. The results of the survey suggest that the current accounting curriculum does not focus enough on the accounting needs of small businesses. Suggestions for improvement in the curriculum include adding small business coverage in accounting courses, including more general business courses, requiring more hands-on practice with the material and adding internships with smaller firmsItem Academic integrity policies: Has your institution implemented an effective policy?(Accounting Educators' Journal, 2016) Bristor, Julia; Burke, Megan M.There is a strong consensus that widespread breaches of academic honesty exist on university campuses. This paper argues that effective solutions must begin with an acknowledgment that a problem exists and a plan to address it through the development of a comprehensive policy. Requirements for doing so include participation of key stakeholders with clearly defined roles and responsibilities, demonstrated support on the part of senior administrators, and a process for measuring and monitoring results as a way to “close the loop."Item Incorporating sustainability issues into the financial accounting curriculum(The Clute Institute, 2016) Haskin, Daniel L.; Burke, Megan M.Changes in the views that society holds of capital allocation suggest that sustainability reporting needs to be incorporated into the financial accounting curriculum. This paper reviews the background and history of corporate social responsibility and sustainability reporting and discusses formation of the Sustainability Accounting Standards Board (SASB). The development of the SASB provides us with a framework to enhance the credibility and provide assurance for corporate social responsibility and sustainability reporting. A suggested outline for including sustainability reporting in a financial accounting course is presentedItem Analysis of small credit union trends and opportunities for accountants(Sciedu Press, 2014) Burke, MeganThis paper reviews the benefits that small credit unions in the United States confer to their members and communities, the decrease in the number of institutions and members in recent history, the challenges facing small credit unions today, and how accountants can help small credit unions reverse these negative trends. Credit unions are able to pay higher interest rates on deposits, charge lower rates on borrowings, and charge fewer and lower fees than traditional banks. Additionally, bank customers benefit from the presence of credit unions through increased competition on rates. In the U.S., credit unions also serve traditionally underserved populations and, in the past, experienced high customer satisfaction ratings. However, there has been a 22 percent reduction in the number of small credit unions since 2008. This decrease can be linked to a decline in customer satisfaction, which is a result of the increased compliance and regulatory burden on already overworked staffs. The objective of this paper is to identify ways accountants can help small credit unions reverse these negative trends and thrive. By providing compliance and strategic planning support, accountants can reduce the time credit union staffs spend on non-customer related tasks and allow them to focus on serving their customers. This should allow credit unions to return to their previous levels of customer satisfaction and reverse the decline in membership and institutions.Item Local investor attention and post-earnings announcement drift(Springer, 2017-09-18) Choi, Wonseok; Wang, Bin; Ibrahim, SirajWe show that local investor attention, as a proxy for the arrival rate of informed trading, has an impact on post-earnings announcement drift. Measured by monthly abnormal Google search volume before the earnings announcement, high (low) local investor attention is associated with weak (strong) delayed market reaction to the earnings announcement and strong (weak) abnormal trading volume in the pre-earnings announcement period. The evidence documented in this paper supports both ‘‘rational structural uncertainty’’ and attention allocation theories that argue that information distribution among investors plays an important role in explaining market anomalies.