bluuebunny/crossref_metadata_2025 huggingface dataset:
The Effect of Conference Calls on Analyst and Market Underreaction to Earnings Announcements
Authors: Kimbrough Michael D.
Published: March 2008

I extend prior research on the information content of conference calls by examining whether they accelerate analysts' and investors' responses to the future implications of currently announced earnings. I find that the initiation of conference calls is associated with a significant reduction in the serial correlation in analyst forecast errors, a measure of initial analyst underreaction. I also find that the initiation of conference calls is associated with significant reductions in two measures of initial investor underreaction: (1) post-earnings announcement drift and (2) the proportion of the total market reaction to firms' earnings announcements that is “delayed” (i.e., that is attributable to post-earnings announcement drift). The reduction in post-earnings announcement drift surrounding conference call initiation is concentrated in the set of sample firms where drift is most severe (i.e., the smallest, least heavily traded sample firms) while the largest, most heavily traded sample firms do not exhibit significant drift either before or after conference call initiation. Robustness tests, including analyses of matched samples of nonconference call firms, indicate that the results are not driven by general increases in analyst and investor sophistication over time or by contemporaneous increases in the information and trading environments of conference call initiators.
The Effect of Changes in Regulation and Competition on Firms' Demand for Accounting Information
Authors: Krishnan Ranjani
Published: March 2008

This paper examines whether the type of competition in a market influences the association between the intensity of competition and demand for accounting information. Empirical analysis using a sample of 1,578 hospital-year observations from hospitals in California finds no association between the intensity of competition and demand for accounting information in the presence of quality competition; however, when firms compete on price, the need to control costs leads to a positive association between the two. In addition, the change in the unit of analysis in the hospital industry from the payer to the ailment increased the demand for accounting information for all California hospitals. This study suggests that competition intensity increases the demand for accounting information under one type of competition (price), but not another (quality competition), and thereby contributes to our understanding of the reasons for the mixed evidence in prior literature on the relation between competition and the demand for accounting information.
Auditor Negotiations: An Examination of the Efficacy of Intervention Methods
Authors: Trotman Ken T. , Wright Arnold M. , Wright Sally
Published: March 2008

Negotiations are a pervasive feature of the audit process (e.g., the resolution of proposed audit adjustments and disclosures). The results of such negotiations are of great importance to the capital markets, the client, and the auditor. The purpose of this study is to examine the effectiveness of three promising, pragmatic intervention methods for enhancing auditor negotiation performance: a role-playing intervention—assuming the client's position in a mock negotiation; a passive intervention—explicitly considering the client's interests and options; and a practice intervention—engaging in a mock negotiation prior to the client negotiation. We posit that the role-playing intervention will improve negotiation results, because this approach requires direct experience in considering and arguing the client's position and more cognitive effort in obtaining an understanding of the counterpart's position, a critical factor identified in the negotiation literature for successful performance.

Forty-five audit managers and partners were provided a realistic case based on an actual scenario involving the potential writedown of inventory due to obsolescence. Participants were randomly assigned to one of three groups (role-playing, passive, or practice) and asked to negotiate the issue with a confederate playing the role of the CFO. Auditor conservatism and a large actual subsequent writedown suggest that a significant adjustment is warranted. The results indicate that the role-playing intervention method led to an enhanced negotiation outcome (greater writedown) compared to the passive and practice groups. Process improvements on a number of dimensions were also found, particularly for the role-playing group compared to the practice group.
The Importance of Circulating and Presenting Manuscripts: Evidence from the Accounting Literature
Authors: Brown Lawrence D.
Published: March 2008

Editors exhort authors to circulate and present their working papers to colleagues before submitting them to journals (Zimmerman 1989; Green et al. 2002). Authors heeding such advice are said to increase the likelihood of getting their work published and making their research, once published, more influential (Zimmerman 1989). While evidence regarding these matters is of keen importance to authors, editors, and administrators, no research exists showing that circulating and presenting manuscripts increases their probability of being accepted in accounting journals or, when published, their influence on stimulating other research. I present such evidence by perusing acknowledgments in premier accounting journals.

I examine the relation between circulating and presenting manuscripts and the probability of acceptance by relating acknowledgments of 305 papers submitted to The Accounting Review during June 2002–May 2003 to the editor's reject versus revise and resubmit decision. I examine the relation between circulating and presenting manuscripts and an article's influence by relating the acknowledgments in 256 articles published in The Accounting Review, Journal of Accounting Research, and Journal of Accounting and Economics to citations to these articles.

My two analyses of acknowledgments to institutions, conferences, and individuals yield similar results. I find that papers presented at more workshops are more likely to be invited back to The Accounting Review, and that papers published in The Accounting Review, Journal of Accounting and Economics, or Journal of Accounting Research generate more citations if they were presented previously at more workshops.
An Experimental Investigation of Employer Discretion in Employee Performance Evaluation and Compensation
Authors: Fisher Joseph G. , Maines Laureen A. , Peffer Sean A. , Sprinkle Geoffrey B.
Published: March 2008

Employment relationships provide fertile ground for both employee and employer opportunism. Employers worry about whether employees will devote sufficient effort to work, and employees are concerned about whether employers will compensate them appropriately. In this paper, we examine whether employer discretion over the size of the total employee compensation pool and the allocation of this pool among employees influences employee and employer opportunism. The results of our experiment indicate that firm output and employees' compensation are greater when the employer does not have discretion over total employee compensation, but does have discretion over the allocation of total compensation. We find that the employer's residual profit increases with discretion over the allocation of compensation among employees; however, we find no effect on residual profit of the employer's discretion over the total amount of employee compensation. Our results suggest that firms benefit from a compensation contract that establishes total employee compensation as a predetermined function of public, aggregate measures such as accounting income, but provides the employer at least some discretion to allocate this compensation using private information. However, our results caution that employees and employers may not have similar preferences for the degree of employer discretion over the determination of total employee compensation.
The Value Relevance of Financial Statements in the Venture Capital Market
Authors: Hand John R. M.
Published: March 2008

This study examines the value relevance of financial statement data and nonfinancial statement information within and across the pre-IPO venture capital and post-IPO public equity markets. For a sample of U.S. biotechnology firms, I find that financial statements are highly value-relevant in the venture capital market, and that the signs of the associations between equity values and financial statement data in that market are similar to those in the public equity market, despite significant structural differences between the two. I also find that the value relevance of financial statements generally increases as firms mature, consistent with financial statements capturing the increasing intensity of assets-in-place relative to future investment options. In contrast, the value relevance of nonfinancial statement information decreases as firms mature, indicating that, in a dynamic sense, financial statements and nonfinancial statement information of venture-backed pre-IPO biotech companies are information substitutes in valuation, not complements.
Knowledge, Adaptivity, and Performance in Tax Research
Authors: Magro Anne M.
Published: March 2008

The ability to adapt decision making to the features of decision tasks and contexts is likely an important component of professional decision making, but not all professionals will exhibit this adaptivity. One explanation for decision makers' failure to adapt when adaptivity is appropriate is that they do not possess relevant knowledge of the features of decision tasks and contexts, or institutional knowledge. In this study, I examine the relations between institutional knowledge, information search adaptivity, and performance using an experimental research design in the tax decision-making setting. The results of the study are consistent with predictions. Tax professionals with relevant institutional knowledge responded to the differential features of the taxplanning and compliance contexts by conducting broader and more extensive information search in planning than in compliance; professionals lacking institutional knowledge did not exhibit such information search adaptivity. In addition, tax research performance increased with information search adaptivity, and that adaptivity mediated the relation between institutional knowledge and tax research performance. This study extends the accounting and psychology adaptivity literatures and contributes to tax practice and education.
Managers' Motives to Withhold Segment Disclosures and the Effect of SFAS No. 131 on Analysts' Information Environment
Authors: Botosan Christine A. , Stanford Mary
Published: March 2008

Using retroactive disclosures required by Statement of Financial Accounting Standards (SFAS) No. 131, we examine managers' incentives for withholding segment information under SFAS No. 14 and the impact of SFAS No. 131 on analysts' information environment for a sample of firms that previously reported as single-segment firms and initiated segment disclosure with SFAS No. 131. We examine this set of firms because they likely had the strongest incentives to withhold segment information and analysts potentially had the most to gain when these firms were forced to begin providing segment disclosures under SFAS No. 131. We find that these firms used the latitude in SFAS No. 14 to hide profitable segments operating in less competitive industries than their primary operations. However, we find no evidence to suggest that these firms used the latitude in SFAS No. 14 to mask poor performance. In contrast, our results suggest that by withholding segment information, these firms allowed themselves to appear as if they were underperforming their competition when this was not the case. Thus, their decision to withhold segment disclosures under SFAS No. 14 appears to be motivated by a desire to protect profits in less competitive industries. In terms of the impact of SFAS No. 131 on analysts' information environment, our evidence suggests that SFAS No. 131 increased analysts' reliance on public data, but we provide weak evidence to suggest that this shift may have come at the cost of a marginal increase in overall uncertainty and squared error in the mean forecast.
The Effect of Quantitative Materiality Approach on Auditors' Adjustment Decisions
Authors: Nelson Mark W. , Smith Steven D. , Palmrose Zoe-Vonna
Published: March 2008

Two alternative approaches are used in audit practice to provide quantitative materiality assessments about proposed audit adjustments. The cumulative approach compares to net income the total amount of misstatement existing at the end of the current period, while the current-period approach compares to net income the amount of misstatement added in the current period. Depending on the relation between total misstatement and current-period misstatement, either the cumulative approach or the current-period approach can calculate higher quantitative materiality. This paper reports an experiment that varies materiality approach between auditors by providing auditors with either the current-period or cumulative formats used by their firm to summarize proposed audit adjustments. Results indicate that, across a variety of experimental contexts (varying misstatement size, subjectivity, precision, and income effect, and varying whether auditors document effects on their client's quality of earnings), auditors are more likely to require their client to book the misstatement under the approach that makes the misstatement appear more material. These results suggest that standard setters mandate that auditors require adjustment whenever a misstatement is material under either approach.
Management Accounting Systems Adoption Decisions: Evidence and Performance Implications from Early-Stage/Startup Companies
Authors: Davila Antonio , Foster George
Published: March 2008

Adopting management accounting systems are important events in the life of young and growing companies. Using a sample of 78 startup companies, we document cross-sectional differences in the adoption of operating budgets as well as seven other management accounting systems. We find that our proxies for agency costs, perceived benefits and costs, company scale, and top management style explain cross-sectional differences in the time-to-adoption of budgets. In particular, the presence of venture capital, CEO experience, presence of a financial manager, number of employees, and the CEO beliefs about management planning systems are associated with this adoption decision. We further investigate the effect of hiring a financial manager as an endogenous variable. In the first stage of a two-stage model, we find that CEO experience, the presence of venture capital funds, CEO beliefs about management accounting systems, and number of employees are associated with crosssectional variation in this hiring decision. When treating this decision as endogenous, time-to-hiring a financial manager is unrelated to operating budget adoption. The paper also examines the association between the time-to-adoption of operating budgets and company performance. We find a significant increase in the number of employees of the company around the adoption of operating budgets; moreover, faster adoption of operating budgets is associated with faster growing companies. We extend the findings to additional management accounting systems including: cash budgets, variance analysis, operating expense approval policies, capital expenditure approval policies, product profitability, customer profitability, and customer acquisition costs. The influence of industry (biotechnology, information technology, or non-tech) is examined in each stage of the research.
The Role of Biased Earnings Guidance in Creating a Healthy Tension between Managers and Analysts
Authors: Mittendorf Brian , Zhang Yun
Published: March 2008

Analysts and the managers of firms they track have both come under fire in recent years. In particular, managers are accused of using earnings guidance to exert undue influence on analyst forecasts. This paper analyzes optimal incentive contracts that take into account the interaction between analysts and firm managers. In our setting, biased earnings guidance is a natural consequence of contract design. The bias serves to create enough uncertainty so as to motivate the analyst and, thus, may not necessarily be the scourge suggested by conventional wisdom.
Management of Financial Information in Charitable Organizations: The Case of Joint-Cost Allocations
Authors: Jones Christopher L. , Roberts Andrea Alston
Published: March 2008

Charities that use direct mailings or other activities that combine a public education effort with fundraising appeals must allocate the joint costs related to these activities to programs, fundraising, and administration. This study investigates whether charities use joint-cost allocations to manage the program ratio—a widely used measure of spending efficiency. Using a hand-collected dataset of 708 organization-year observations from 1992 to 2000, we find evidence that charities use joint costs to mitigate changes in the program ratio.
Security Analyst and Stock Market Efficiency in Anticipating Tax-Motivated Income Shifting
Authors: Shane Philip B. , Stock Toby
Published: March 2008

In the context of the statutory tax rate reductions enacted in the Tax Reform Act of 1986, this paper investigates the degree to which capital market participants anticipate and correctly interpret temporary income effects of tax-motivated income shifting. We find evidence consistent with financial analysts' earnings forecasts failing to anticipate earnings management that shifts income from fourth quarters in higher tax rate years to immediately following first quarters of lower tax rate years. The evidence suggests that this failure is not the result of a decision to ignore the income shifting, but rather an inability to recognize temporary components of reported earnings. We also find evidence that market prices do not fully reflect the temporary income effects of tax-motivated income shifting, and that analyst inefficiency explains about half of the market inefficiency. We interpret these inefficiencies as potentially important costs of tax planning that could limit the ability of public firm managers to implement otherwise optimal tax strategies.
Responsibility for Cost Management Hinders Learning to Avoid the Winner's Curse
Authors: Bloomfield Robert J. , Luft Joan L.
Published: March 2008

Errors in estimated product costs lead firms to win business that is unprofitable, because firms are more likely to win business when underestimated product costs lead them to bid below actual cost (Cooper et al. 1992; Hilton 2005). Feedback from repeated competitive bidding markets can teach people to bid well above estimated costs to avoid this winner's curse (Kagel 1995; Kagel and Levin 2002). We present experimental evidence that such learning is substantially hampered by sellers' sense of responsibility for the costs. This effect is consistent with psychological evidence that people tend to attribute bad outcomes to environmental factors out of their control, such as cost-estimation errors, and attribute good outcomes to their own skills, such as their ability to choose effective cost-management initiatives (Miller and Ross 1975; Zuckerman 1979). The results suggest that responsibility structures that combine pricing and production decisions may have unexpected drawbacks.
After Enron: Auditor Conservatism and Ex-Andersen Clients
Authors: Cahan Steven F. , Zhang Wei
Published: March 2008

This study examines whether after Arthur Andersen's demise, successor auditors required more conservative accounting for their ex-Andersen clients in order to minimize litigation risk. We use unadjusted and performance-adjusted measures of abnormal accruals, and we examine the level of and changes in the abnormal accruals of ex-Andersen clients in 2002 relative to a control sample of clients that were audited by a Big 4 auditor in 2001 and 2002. We conduct univariate and multivariate tests. In our multivariate tests, we control for other factors that may affect litigation risk crosssectionally. Our results indicate that the ex-Andersen clients had lower levels of and larger decreases in abnormal accruals in 2002. This is consistent with auditor conservatism and suggests the successor auditors viewed an Andersen audit as a unique source of litigation risk.
Income Smoothing over the Business Cycle: Changes in Banks' Coordinated Management of Provisions for Loan Losses and Loan Charge-Offs from the Pre-1990 Bust to the 1990s Boom
Authors: Liu Chi-Chun , Ryan Stephen G.
Published: March 2008

Prior research shows that during the pre-1990 bust financially weak banks managed income upward by delaying provisions for losses on heterogeneous loans. In contrast, we predict and find that during the 1990s boom profitable banks managed income downward by accelerating provisions for losses on homogeneous loans. Profitable banks obscured their income smoothing by accelerating charge-offs of homogeneous loans and by recording more gross charge-offs to offset recoveries of previously charged-off loans. Over the three years subsequent to the acceleration of charge-offs, they had higher and more persistent income before provisions for loan losses than other banks, consistent with income smoothing over a prolonged horizon.
Classification and Market Pricing of the Cash Flows and Accruals on Trading Positions
Authors: Ryan Stephen G. , Tucker Jennifer W. , Zarowin Paul A.
Published: March 2008

Despite the classification of the cash flows on trading positions as operating under SFAS No. 102, trading is economically a hybrid operating/non-operating activity. Reflecting this hybrid nature, we hypothesize and find that the change in net trading assets has a less positive association with returns and future CFO than do the pure operating components of cash flows and accruals, and it has a more positive association with returns and future CFO than do the pure non-operating components of cash flows. Our paper is the first to propose and test hypotheses about the valuation implications of such hybrid cash flows and accruals.
Determinants of Audit Preparers' Workpaper Justifications
Authors: Shankar Premila Gowri , Tan Hun-Tong
Published: March 2008

Research indicates that justifiability of a decision is a key determinant of work quality. In this paper, we investigate whether and how the requirement for preparers to justify an audit conclusion to a reviewer with task preferences that are similar to or dissimilar from their explicitly stated initial task preferences determine the nature and extent of justifications documented in their workpapers, and how this effect is moderated by their technical and tacit managerial knowledge. Results of an experiment with auditors as participants indicate that auditors use different forms of justifications under different circumstances. Auditors with high tacit managerial knowledge and high technical knowledge have a higher proclivity to enumerate more pro versus con reasons, and to consider a wider breadth of issues when they are required to justify their conclusions to reviewers with dissimilar task preferences. In contrast, high tacit managerial knowledge auditors required to justify to reviewers with similar initial task preferences have a greater tendency to employ an evidence framing approach, in which language is used to emphasize consistent evidence by downplaying associated inconsistent evidence. In additional analyses, we find that these three specific forms of justifications are positively associated with evaluations of work quality.
Do Venture Capitalists Influence the Decision to Manage Earnings in Initial Public Offerings?
Authors: Morsfield Suzanne G. , Tan Christine E. L.
Published: March 2008

Prior studies suggest that venture capitalists (VCs) play a monitoring role. We predict and find that IPO-year abnormal accruals are lower in the presence of VCs for a sample of 2,630 IPO firms during 1983–2001. Our findings are robust to controls for the endogenous choice of VC financing. We consistently find that the VC effect holds even when controlling for IPO lock-up provisions, VC partial cashing out subsequent to the IPO, and alternative proxies for earnings management. In addition, our findings do not support the claims of critics that VCs inflated earnings during the Internet IPO bubble. Finally, we provide some evidence that the lower earnings management associated with VC monitoring partially explains the superior post-IPO returns of VC-backed firms.
Evidence of the Abnormal Accrual Anomaly Incremental to Operating Cash Flows
Authors: Cheng C. S. Agnes , Thomas Wayne B.
Published: March 2008

Recent research provides evidence that the operating cash flows-to-price ratio subsumes accruals in explaining future annual returns. This suggests that the accrual anomaly is part of the overall value-glamour anomaly and does not represent the mispricing of earnings. We extend the literature by using multiple measures of abnormal accruals and separate analyses of future annual returns and future earnings announcement returns. The results reveal that the operating cash flows-to-price ratio does not subsume abnormal accruals in explaining future annual returns or future announcement returns. We also find that the operating cash flows-to-price ratio does not subsume total accruals in explaining future announcement returns. These results are not consistent with accruals being a manifestation of the value-glamour anomaly. Our study contributes to the current debate on the existence and the extent of the (abnormal) accrual anomaly. Moreover, the methodology employed can help researchers in exploring mispricing phenomena.
The Importance of Reporting Incentives: Earnings Management in European Private and Public Firms
Authors: Burgstahler David C. , Hail Luzi , Leuz Christian
Published: March 2008

This paper examines how capital market pressures and institutional factors shape firms' incentives to report earnings that reflect economic performance. To isolate the effects of reporting incentives, we exploit the fact that, within the European Union, privately held corporations face the same accounting standards as publicly traded companies because accounting regulation is based on legal form. We focus on the level of earnings management as one dimension of accounting quality that is particularly responsive to firms' reporting incentives. We document that private firms exhibit higher levels of earnings management and that strong legal systems are associated with less earnings management in private and public firms. We also provide evidence that private and public firms respond differentially to institutional factors, such as book-tax alignment, outside investor protection, and capital market structure. Moreover, legal institutions and capital market forces often appear to reinforce each other.
Uniformity versus Flexibility: Evidence from Pricing of the Pension Obligation
Authors: Hann Rebecca N. , Lu Yvonne Y. , Subramanyam K. R.
Published: March 2008

We functionally derive the discretionary component of the pension obligation (PBO) based on deviation of actuarial assumptions—discount rate and compensation growth rate—from their respective industry medians. We then examine the implications of allowing discretion in the choice of pension assumptions on the pricing of the PBO. We find no evidence that discretion—as currently allowed under U.S. GAAP—impairs the value relevance of the PBO. We also find that the discretionary component is incrementally value-relevant beyond the nondiscretionary component. Additional analyses suggest that these results are unlikely attributable to market fixation on reported PBO or measurement error in our discretionary component. Overall, we find that imposing uniformity in the choice of pension assumptions, on average, prevents communication of value-relevant information through the PBO.
The Role of Accounting in the Design of CEO Equity Compensation
Authors: Carter Mary Ellen , Lynch Luann J. , Tuna I˙rem
Published: March 2008

We examine the role of accounting in CEO equity compensation design. For a sample of ExecuComp firms in 1995–2001, we find that financial reporting concerns are positively related to stock option use and total compensation, and negatively related to the use of restricted stock. We confirm our findings by examining changes in CEO compensation in firms that begin expensing options in 2002 or 2003. We find that these firms reduce their option use and increase their restricted stock use after starting to expense options but exhibit no decrease in total compensation. Taken together, our analyses suggest that favorable accounting treatment for options led to a higher use of options and lower use of restricted stock than would have been the case absent accounting considerations.
Tax Benefits as a Source of Merger Premiums In Acquisitions of Private Corporations
Authors: Erickson Merle M. , Wang Shiing-wu
Published: March 2008

Scholes et al. (2005) predict that S corporations, and other conduit entities such as partnerships and LLCs, can sell for a tax-driven purchase price premium relative to C corporations. We test this conjecture by comparing purchase price multiples in a sample of taxable stock acquisitions of S corporations to purchase price multiples for a matched set of taxable stock acquisitions of privately held C corporations. Consistent with Scholes et al.'s (2005) predictions, we find evidence that the organizational form of the target influences acquisition tax structure and acquisition price. Specifically, the evidence supports the conclusion that conduit entities (S corporations) fetch a taxbased purchase price premium relative to similar C corporations. Furthermore, our estimates indicate that average tax benefits in S corporation acquisitions are equal to approximately 12–17 percent of deal value.
The Retention Effect of Withholding Performance Information
Authors: Ray Korok
Published: March 2008

It is a common practice for firms to conduct performance evaluations of their employees and yet to withhold this information from those employees. This paper argues that firms strategically withhold performance information to retain workers. In particular, if the worker enjoys high outside options and is tempted to quit, then the firm chooses not to reveal his performance information in order to keep him on the job. The firm's equilibrium strategy is to fire if performance is sufficiently low, reveal information if performance is sufficiently high, and withhold information otherwise. The pooling equilibrium is robust under a wide variety of settings, such as general cost functions, ability-contingent outside options, nonlinear contracts, nonverifiable output, and multiple stages of production.
Earnings, Cash Flows, and Ex Post Intrinsic Value of Equity
Authors: Subramanyam K. R. , Venkatachalam Mohan
Published: March 2008

We reexamine the relative importance of earnings and operating cash flows in equity valuation. In contrast to previous studies that use stock returns (Dechow 1994) or future operating cash flows (Barth et al. 2001), we use ex post intrinsic value of equity as the criterion for comparison. We determine ex post intrinsic value of equity by discounting future dividends over a three-year horizon and market price at the end of the horizon by industry cost of equity. The advantage of the ex post intrinsic value measure over stock returns is that it is not contaminated by the stock market's fixation on reported earnings (Sloan 1996). Also, unlike finite horizon future operating cash flows, ex post intrinsic values better reflect the magnitude, timing, and uncertainty of investors' future cash flows (SFAC No. 1, FASB 1978). Our results suggest that accrualbased earnings dominate operating cash flows as a summary indicator of ex post intrinsic value.
Value Creation in Public Enterprises: An Empirical Analysis of Coordinated Organizational Changes in the Veterans Health Administration
Authors: Thibodeau Nicole , Evans John H. (Harry) , Nagarajan Nandu J. , Whittle Jeff
Published: March 2008

As part of a federal government initiative to increase efficiency and quality, in 1996 the United States Veterans Health Administration (VHA) radically restructured its organizational design and management processes. This study uses 1992–1998 clinical, workload, and financial data to examine the effect of this reform on performance. Several previous government attempts to introduce private sector management practices, such as management by objectives (MBO) or program planning and budgeting system (PPBS), have been largely unsuccessful. In contrast to prior reforms, the current restructuring introduced coordinated changes in the VHA organizational structure, performance measurement, and reward systems. Our results document that, following the reorganization, the VHA cost per patient declined significantly and various quality measures improved. Our analysis suggests that reduction in excess capacity and the more intense use of remaining capacity are among the primary explanations for the VHA achieving the observed cost reductions. These findings suggest that coordinated changes in organizational structure, performance measures, and incentives can create value for public enterprises even though control mechanisms are generally more limited in these environments than in the private sector.
Investors' Reactions to Management Guidance Forms: The Influence of Multiple Benchmarks
Authors: Han Jun , Tan Hun-Tong
Published: March 2008

In this study, we investigate underlying mechanisms for the effects of management guidance forms on investors' judgments. We do so by comparing effects of point and range guidance with those associated with a hybrid management guidance form that combines the attributes of both point and range guidance. With respect to investors' earnings reestimates made after actual earnings announcements, we find that both the number and type of benchmarks associated with the guidance forms matter. High-knowledge investors use both primary (explicitly stated) and secondary (implicitly stated) benchmarks, whereas low-knowledge investors attend only to primary benchmarks. We also find that investors have greater confidence in their earnings estimates when management guidance explicitly provides best estimates.
Interacting Supply Chain Distortions: The Pricing of Internal Transfers and External Procurement
Authors: Arya Anil , Mittendorf Brian
Published: March 2008

This paper examines the impact of distortions wrought by transfer pricing when a firm is engaged in both internal production and external procurement of inputs. In particular, we demonstrate that a firm can actually glean benefits from often-discussed transfer-pricing problems in dealing with an external supplier. Though transfer prices above marginal cost introduce inter-division coordination problems, they also introduce a lower willingness to pay to outside suppliers. Knowing that costly internal transfers will eat into demand, the supplier is more willing to set lower prices. Such supplier discounts can make decentralization worthwhile for the firm. This benefit of decentralization is shown to be robust to variations in both downstream and upstream competition.
Management Control Systems in Early-Stage Startup Companies
Authors: Davila Antonio , Foster George
Published: March 2008

This paper uses a multi-method, multi-case field research design to study the evolving portfolio of the management control systems (MCSs) of 78 early-stage startup companies. We examine 46 individual systems from eight different MCS categories—financial planning, financial evaluation, human resource planning, human resource evaluation, strategic planning, product development, sales/marketing, and partnerships. We report analysis of the following: (1) The speed of adoption of financial planning and financial evaluation systems in relation to six other MCS categories. These systems are considered key MCSs associated with management accounting. We find financial planning to be the most widely adopted MCS category at an early stage, followed by the human resource planning and strategic planning categories. Financial evaluation systems are typically adopted at a later stage. (2) Variables associated with the rate of adoption of MCSs. Our results indicate that number of employees, presence of venture capital, international operations, and time to revenue are positively associated with the rate of adoption. Furthermore, the rate of adoption simultaneously affects company size. (3) CEO turnover and the rate of adoption of MCSs. We find that CEOs who have adopted fewer MCSs have shorter tenures. This is consistent with the hypothesized difference between entrepreneurs and managers. Overall, the evidence strongly supports the relevance of MCSs to the growth of early-stage startup companies.
The Cascading of Contrast Effects on Auditors' Judgments in Multiple Client Audit Environments
Authors: Bhattacharjee Sudip , Maletta Mario J. , Moreno Kimberly K.
Published: March 2008

Accounting decisions often involve similar types of judgments regarding different clients, projects, or employees. These tasks may use similar information items and be performed within the same work session. While independent consideration of the information for each respective decision may be desired, psychology research on contrast effects suggests that the information from a previous decision may be retained and compared to the information provided for a current judgment. Such contrast effects are potentially critical to accounting judgments because they suggest that the information associated with a given decision task will be evaluated differently depending on the nature of the prior contextual information. Using a multi-client audit context, we find that auditors are susceptible to contrast effects such that their judgments on a current client are influenced by their exposure to similar judgment information on a prior client. We also extend prior psychology and accounting research by examining and finding that for a current client, the magnitude of the contrast effect from an initial judgment task cascades to influence indirectly related subsequent judgment tasks for which no information from the prior client is available for comparison. We also find auditors' documentations of evidence are systematically affected by the contrast and cascading of contrast effects. Thus, our results provide support for contrast effects and, most important, the cascading of contrast effects to subsequent decisions.
Commitments and Disclosure in Oligopolies
Authors: Hughes John S. , Williams Michael G.
Published: March 2008

In this paper, we examine the welfare effects of pre-production commitments made by firms competing in oligopoly markets and disclosure of such commitments. By commitments we refer to any device that provides a strategic incentive to alter production choices. Examples include forward contracts, capital structure, research and development investment, terms of compensation, and cost allocation. If the only purpose underlying commitment is to gain a strategic advantage in product market competition, then the result with disclosure can be characterized by Stackelberg warfare. Many potential commitments have non-strategic effects, implying a trade-off when optimizing, with imperfect achievement of both strategic (deterring rival production) and non-strategic goals. However, given disclosure, we show that in the limit as the number of commitment devices becomes large, firms achieve full Stackelberg warfare and total realization of non-strategic goals. Disclosure in this context is social welfare enhancing.
Does ABC Information Exacerbate Hold-Up Problems in Buyer-Supplier Negotiations?
Authors: Drake Andrea R. , Haka Susan F.
Published: March 2008

Negotiations between buyers and suppliers that require sharing cost details to identify profitable relationship specific investments often fail and result in hold-ups. Based on inequity aversion, strategic uncertainty, and risk dominance criteria, we expect negotiators to be more reluctant to share fine information than coarse, less detailed information, which suggests that fine information systems can exacerbate hold-ups. When negotiators share fine information they achieve more efficient bargaining agreements. However, we find that strategic concerns about inequitable outcomes (fear of opportunistic behavior) lead fewer negotiating pairs to share fine information (where inequitable outcomes can be larger) than coarse information (where inequitable outcomes are smaller). Our results demonstrate that information fineness leads negotiators to trade-off potential utility losses due to fairness considerations and potential monetary gains. Fewer (more) negotiators chose to share fine (coarse) information and thus minimize fairness based utility losses (maximize monetary gains).
Metformin Decreases the Adipokine Vaspin in Overweight Women With Polycystic Ovary Syndrome Concomitant With Improvement in Insulin Sensitivity and a Decrease in Insulin Resistance
Authors: Tan Bee K. , Heutling Dennis , Chen Jing , Farhatullah S. , Adya Raghu , Keay Stephen D. , Kennedy C. Richard , Lehnert Hendrik , Randeva Harpal S.
Published: March 2008

OBJECTIVE—Polycystic ovary syndrome (PCOS) is associated with insulin resistance and obesity. Vaspin (visceral adipose tissue–derived serine protease inhibitor) levels increase with hyperinsulinemia and obesity. Currently, no data exists on vaspin in PCOS women. We therefore assessed mRNA and protein levels of vaspin, including circulating vaspin, from subcutaneous and omental adipose tissue of PCOS women and matched control subjects. Ex vivo regulation of adipose tissue vaspin and the effects of metformin treatment on circulating vaspin levels in PCOS subjects were also studied.

RESEARCH DESIGN AND METHODS—Real-time RT-PCR and Western blotting were used to assess mRNA and protein expression of vaspin. Serum vaspin was quantified by enzyme-linked immunosorbent assay. The effects of d-glucose, insulin, and gonadal and adrenal steroids on adipose tissue vaspin were analyzed ex vivo.

RESULTS—There were significantly higher levels of circulating vaspin (P < 0.05), vaspin mRNA (P < 0.05), and protein (P < 0.05) in omental adipose tissue of PCOS women. Interestingly, in omental adipose tissue explants, glucose significantly increased vaspin protein levels and secretion into conditioned media (P < 0.001). Also, after 6 months of metformin treatment, there was a significant decrease in serum vaspin levels in PCOS women (P < 0.001). Furthermore, multivariate regression analysis revealed that following metformin therapy, changes in circulating glucose levels were predictive of changes in serum vaspin levels (P = 0.014).

CONCLUSIONS—We report, for the first time, elevated serum and omental adipose tissue levels of vaspin in overweight PCOS women and ex vivo regulation of vaspin, predominantly by glucose. More importantly, metformin treatment decreases serum vaspin levels, a novel observation.
Selection of Suitable Data Sets Improves 230Th/U Dates of Dirty Material
Authors: Geyh Mebus
Published: March 2008

230Th/U dating of dirty material such as fen peat and secondary carbonates depends on the ability to select suitable and to discard unsuitable data sets before the calculation of 230Th/U ages. This means that open system conditions with respect to uranium during ageing are excluded and solely one source of detrital contamination was present in the samples. Three kinds of selection approaches of suitable data sets were applied: (1) isotope ratio plots, (2) the isotope-ratio evolution plot and the iterative determination of the decay-corrected initial detrital 230Th/232Th activity ratio (AR) as well as (3) depth profiles of the uranium concentration and the 234U/238U AR and the ash content. For reliable 230Th/U age dating of dirty material all selection procedures have to be commonly applied because none of them works perfectly.
New Markers of Oxidative Damage to Macromolecules
Authors: Čolak Emina
Published: March 2008

New Markers of Oxidative Damage to Macromolecules

The presence of free radicals in biological material has been discovered some 50 years ago. In physiological conditions, free radicals, in the first place the ones of oxygen and nitrogen, are continuously synthesized and involved in the regulation of a series of physiological processes. The excess of free radicals is efficiently eliminated from the body in order to prevent their toxic effects. Toxic effects of free radicals may be classified into three groups: a) change of intracellular redox potential, b) oxidative modification of lipids, proteins and DNA, and c) gene activation. Lipid peroxidation involving cell membranes, lipoproteins and other molecules leads to the production of primary high-reactive intermediaries (alkyl radicals, conjugated dienes, peroxy- and alkoxyl radicals and lipid hydroperoxide), whose further breakdown generates the secondary products of lipid peroxidation: short-chain evaporable hydrocarbons, aldehydes and final products of lipid peroxidation: isoprostanes, MDA, 4-hydroxy-2, 3-transnonenal and 4,5-dihydroxydecenal which are important mediators of atherosclerosis, coronary disease, acute myocardial infarction, rheumatoid arthritis, systemic sclerosis and lupus erythematodes. Oxidative modification of proteins is manifested by changes in their primary, secondary and tertiary structures. Proteins have a specific biological function, and therefore their modification results in unique functional consequences. The nature of protein modification may provide valid information on the type of oxidants causing the damage. Chlorotyrosyl is a specific marker of oxidative damage to tyrosine caused by HOCl action, which most commonly reflects the involvement of neutrophils and monocytes in oxidative stress, while nitrotyrosyl indicates the presence of higher peroxy-nitrite synthesis. Methyonin and cysteine are the amino acids most sensitive to oxidative stress, carbonyl groups are markers of severe damage caused by free radicals, and di-tyrosyl is the most significant and sensitive marker of oxidative modification made by γ rays. >Carbonyl stress< is an important form of the secondary oxidation of proteins, where reducing sugars non-enzymatically react with amino groups of proteins and lipids and give rise to the production of covalent compounds known as advanced glycosylated end products (AGE-products). A hydroxyl radical damages the DNA, leading to a loss of base and the formation of abasic sites (AP sites), break of DNA chain and sugar modification. Final lipid peroxidation products (MDA) may covalently bind to DNA, producing the >DNA radicals< which are responsible for mutations. Measurement of an adequate oxidative stress biomarker may not only point to an early onset of disease, its progression and assessment of therapy effectiveness, but can also help in the clarification of the pathophysiological mechanisms of tissue damage caused by oxidative stress, prediction of disease prognosis and choice of appropriate treatment in the early stages of disease.