Browsing by Author "Kelley School of Business"

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    Accounting education literature review (2020)
    (Elsevier, 2020-06) Apostolou, Barbara; Dorminey, Jack W.; Hassell, John M.; Kelley School of Business
    This review of the accounting education literature includes 88 articles published during 2020 in five accounting education journals: (1) Journal of Accounting Education, (2) Accounting Education, (3) Advances in Accounting Education: Teaching and Curriculum Innovations, (4) Issues in Accounting Education, and (5) The Accounting Educators’ Journal. We update 15 prior accounting education literature reviews by organizing and summarizing contributions to the accounting education literature made during 2020. Articles are categorized into five sections corresponding to traditional knowledge bases: (1) curriculum and instruction, (2) instruction by content area, (3) educational technology, (4) students, and (5) faculty. We summarize the research design of the empirical articles. Suggestions for research are presented. Articles classified as cases published in the same five journals during 2020 are tabulated in an appendix categorized by content area.
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    Aggregate Financial Misreporting and the Predictability of U.S. Recessions and GDP Growth
    (American Accounting Association, 2023-09-01) Beneish, Messod D.; Farber, David B.; Glendening, Matthew; Shaw, Kenneth W.; Kelley School of Business
    This study examines the incremental predictive power of aggregate measures of financial misreporting for recession and real gross domestic product (GDP) growth. We draw on prior research suggesting that misreporting has real economic effects because it represents misinformation on which firms base their investment, hiring, and production decisions. We find that aggregate M-Score incrementally predicts recessions at forecast horizons of five to eight quarters ahead. We also find that aggregate M-Score is significantly associated with lower future growth in real GDP, real investment, consumption, and industrial production. Additionally, our result that aggregate M-Score predicts lower real investment one to four quarters ahead partially accounts for why misreporting predicts recessions five to eight quarters ahead. Our findings are weaker when we use aggregate F-Score as a proxy for misreporting. Overall, this study provides novel evidence that aggregate misreporting measures can aid forecasters and regulators in predicting recessions and real GDP growth.
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    Assessing Intercultural Competence in The Digital World: Evidence from Virtual Exchange Experience in a Study Abroad Program
    (Frontiers, 2022-11-18) Zheng, Lin; Westerhaus-Renfrow, Charlotte; Lin, Stanley Zhiwei; Yang, Yifei; Kelley School of Business
    This study presents evidence of the impact of an innovative pedagogical practice that cultivates and develops the intercultural competence of undergraduate college students. 15 U.S. undergraduate students enrolled in a business study abroad course and 12 Chinese undergraduate students participated in a virtual student exchange project in spring 2019. Using global distance learning technology, the students collaborated on the project to provide a joint comprehensive investment recommendation report. A comparison of U.S. students’ Intercultural Effectiveness Scale scores at the beginning and end of the project revealed significant positive changes in their intercultural competence. Student self-evaluations and peer surveys confirmed improvement in students’ global mindset. Being one of the first studies to demonstrate student intercultural competence and learning through a virtual exchange experience, this study provides implications for study abroad and virtual global learning.
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    Association Between Actual and Perceived U.S. COVID-19 Policies and Preventive Behavior
    (Oxford UP, 2021-03-31) Li, Meng; Colby, Helen A.; Kelley School of Business
    BACKGROUND: COVID-19 related policies in the USA can be confusing: some states, but not others, implemented mask mandates mid-pandemic, and states reopened their economies to different levels with different timelines after initial shutdowns. PURPOSE: The current research asks: How well does the public's perception of such policies align with actual policies, and how well do actual versus perceived policies predict the public's mask-wearing and social distancing behaviors during the COVID-19 pandemic? METHODS: We conducted a preregistered cross-sectional study among 1,073 online participants who were representative of the U.S. population on age, gender, and education on Monday-Tuesday, July 20-21, 2020. We asked participants which locations they visited in the past weekend, and their mask-wearing and social distancing behaviors at each location. We also measured participants' beliefs about their state's policies on mask mandate and business opening and obtained objective measures of these policies from publicly available data. RESULTS: Perception about the existence of mask mandate was 91% accurate in states with a mask mandate but only 46% accurate in states without one. Perception of state reopening level did not correlate with policy. It was the perceived but not actual state mask mandate that positively predicted both mask-wearing and social distancing, controlling for state COVID-19 cases, demographic factors, and participants' numeracy and COVID-19 history. CONCLUSIONS: The public's perception of state-level mask mandates erred on the side of assuming there is one. Perception of reopening is almost completely inaccurate. Paradoxically, public perception that a mask mandate exists predicts preventive behaviors better than actual mandates.
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    Board Changes and the Director Labor Market: The Case of Mergers
    (ECGI, 2017-02) Becher, David A.; Walkling, Ralph A.; Wilson, Jared I.; Kelley School of Business
    We provide benchmarks for board changes over time and in response to the evolution of firm structure. Boards are more stable in the modern era. At the same time, shifts made around mergers are substantial and significantly different than those at non-merging firms. Changes to acquiring boards reflect firm needs, increased demand for executive and merger experience and bargaining between targets and acquirers, rather than agency motives. Conversely, director selection at non-merging firms is driven by general skills and diversity. Our analyses provide insight into the dynamic nature of board structure and characteristics demanded in the director labor market.
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    The Commitment to Income-Decreasing Accounting Choices as a Credible Signal to Reducing Information Asymmetry: The Case of Asset Revaluations
    (Wiley, 2020) da Costa, Fábio Moraes; Liu, Carol; Cavalier Rosa, Gina; Tiras, Samuel L.; Kelley School of Business
    Bagnoli and Watts (2005) proposed that a manager could reduce information asymmetry by choosing an income-decreasing accounting choice that signals the firm's relatively good future prospects. A limitation in testing this theory is that most income-decreasing accounting choices over time reverse such that aggregated earnings would be the same, regardless of the choice. One income-decreasing accounting choice that never reverses is the choice of upward asset revaluation, where the resulting gains are recognized through other comprehensive income and reduce future earnings by increasing future depreciation expense. In the United Kingdom, prior to FRS15, firms had the option to upwardly revalue on a one-time basis. FRS15, and subsequently International Financial Reporting Standards, however, require those firms that upwardly revalue precommit to revalue on a consistent basis. This precommitment sacrifices future reporting discretion, which, according to the aforementioned study, serves as a costly signal of a firm's relatively good future prospects that reduces information asymmetry. The choice not to upwardly revalue, therefore, serves as a signal of a firm's relatively poor future prospects and also reduces information asymmetry, but this choice does not require precommitment such that the reduction in information asymmetry would be less than the choice to precommit to upward revaluations. Using a propensity-score matched-pair design on a sample of United Kingdom firms to test our predictions during the period requiring precommitment, we find lower forecast dispersion, lower return volatility, and a lower cost of capital for firms that precommit to upward asset revaluations, relative to those firms that choose not to upwardly revalue their operating assets.
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    The Consequences of Limiting Shareholder Litigation: Evidence from Exclusive Forum Provisions
    (Elsevier, 2020-08) Wilson, Jared I.; Kelley School of Business
    In response to an explosion of shareholder litigation, many firms have adopted exclusive forum provisions which limit lawsuits to courts in a firm's state of incorporation. This paper examines the consequences of a required venue for shareholder litigation. Delaware-incorporated companies experience significant increases in firm value around exogenous events that confirmed the use of a specified forum. Reduced legal costs and the designation of the domicile court as the sole forum to hear shareholder claims contribute to the increase in firm value. Overall, these findings suggest that a required venue for shareholder litigation benefits firms by eliminating multi-jurisdictional lawsuits and reducing the threat of claims with little merit.
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    Contingent Effects of Humor Type and Cognitive Style on Consumer Attitudes
    (Springer, 2016) Mayer, James Mark; Peev, Plamen; Kumar, Piyush; Kelley School of Business
    In the spirit of examining humor contextually, we consider a basic question in this essay: do different humor types “play by the same rules,” cognitively speaking? We examine the relationship between humor and cognitive processing style, as operationalized through Need for Cognition. We find that humor based on disparagement processes “breaks through” the cognitive differences inherent in incongruity humor. Rather than exhibiting incongruity-based humor’s affective response transferring to attitude for low-NFC subjects, and more centrally-employing high NFC subjects’ higher tendency to dismiss the humor’s effect on overall attitude, disparagement based humor is processed the same by both low- and high-NFC respondents. Overall, our findings suggest that the relationship between cognitive processing (as operationalized through Need for Cognition) and resultant attitudes is a complicated one, strongly contingent on humor type. Were only incongruity-based humor utilized, our findings would have reinforced Zhang’s (Psychol Mark 13:531–545, 1996b) assertion that a person’s Need for Cognition will play a key role in the evaluation of humor, but our results suggest that a more complex conceptualization of the relationship between humor and attitude formation is required when humor is treated as a potentially more complicated, context-dependent construct.
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    Curriculum and Program Development Initiatives
    (MMA Global, 2019) Donahue, Kim; Knight, Peter; Kelley School of Business
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    Decision Making Can Be Improved Through Observational Learning
    (Elsevier, 2021-01) Yoon, Haewon; Scopelliti, Irene; Morewedge, Carey K.; Kelley School of Business
    Observational learning can debias judgment and decision making. One-shot observational learning-based training interventions (akin to “hot seating”) can produce reductions in cognitive biases in the laboratory (i.e., anchoring, representativeness, and social projection), and successfully teach a decision rule that increases advice taking in a weight on advice paradigm (i.e., the averaging principle). These interventions improve judgment, rule learning, and advice taking more than practice. We find observational learning-based interventions can be as effective as information-based interventions. Their effects are additive for advice taking, and for accuracy when advice is algorithmically optimized. As found in the organizational learning literature, explicit knowledge transferred through information appears to reduce the stickiness of tacit knowledge transferred through observational learning. Moreover, observational learning appears to be a unique debiasing training strategy, an addition to the four proposed by Fischhoff (1982). We also report new scales measuring individual differences in anchoring, representativeness heuristics, and social projection.