How Can Accounting Researchers Become More Innovative?

Accounting Horizons Vol. 26, No. 4 DOI: 10.2308/acch-10311 2012 pp. 851–870

How Can Accounting Researchers Become More Innovative?

Sudipta Basu

SYNOPSIS: This essay is based on a presentation at the American Accounting

Association Strategy Retreat in May 2011 on the assertion ‘‘Accounting research as of

2011 is stagnant and lacking in significant innovation that introduces fresh ideas and

insights into our scholarly discipline.’’ It poses the question ‘‘How can accounting

researchers become more innovative?’’ and discusses why accounting researchers may

have become less innovative. It also outlines some changes in incentive structures and

editorial processes needed to achieve greater innovation in accounting research.

Is sin always a sin? The interaction effect of social norms and financial incentives on market participants’ behavior

Accounting, Organizations and Society Volume 39, Issue 4, May 2014, Pages 289–307

Is sin always a sin? The interaction effect of social norms and financial incentives on market participants’ behavior

Yanju Liu^a, Hai Lu^b, , , Kevin Veenstra^c

Abstract

Using alcohol, tobacco, and gaming consumption data and people’s attitudes toward these sin products to proxy for social norm acceptance levels, we show a strong interaction effect between social norms and financial incentives, which significantly influence the behavior of market participants. Specifically, institutional investors’ shareholdings and analyst coverage of sin companies increase with the degree of social norm acceptance. The association between shareholdings/coverage and social norm acceptance is less pronounced for firms with higher future expected performance. Our results show that social norms and financial incentives have a powerful interaction effect in determining the behavior of market participants, suggesting that social norms can be crossed when motive and opportunity exist.

Fear and risk in the audit process

Accounting, Organizations and Society Volume 39, Issue 4, May 2014, Pages 264–288

Fear and risk in the audit process

Henri Guénin-Paracini^a, , ,

Bertrand Malsch^b, ,

Anne Marché Paillé^c, 

Abstract

Relying on an ethnographic study conducted in the French branch of a big audit firm and using a psychodynamic perspective to interpret the collected data, we show that auditors’ sense of comfort (Pentland, 1993) arises only at the end of the audit process, and that the rest of the time, public accountants are inhabited primarily by fear. Fear plays a crucial but ambivalent role in auditing. On one hand, auditors and audit firms cultivate this feeling through informal and formal techniques to stimulate vigilance, encourage self-surpassment, mitigate the anesthetizing effect of habit and maintain reputation. On the other hand, audit teams’ members strive to alleviate their fear in order to form and convey their conclusions with a certain degree of comfort. In the field, driven by fear, they manage to finally become comfortable either by mobilizing their ‘practical intelligence’ (an intelligence of the body which helps them handle that which, in their mission, cannot be obtained through the strict execution of standardized procedures) or by adopting defensive strategies (such as distancing themselves from work-related problems, mechanically applying audit methodologies or relaxing their conception of a job well done). Fear and risk are closely related phenomena. Michael Power (2007a, p. 180) notes that ‘the significant driver of the managerialization of risk management is an institutional fear and anxiety’. Yet the experience of fear and the role that fear plays in risk management processes is most often overlooked in the literature. In this respect, our study contributes to ‘emotionalize’ and challenge the cognitive and technical orientation adopted by most academics and regulators in their understanding of audit risks and auditors’ scepticism. We also discuss a number of avenues for future research with a view to encouraging further examination of the role that emotions play in the audit process.

The effect of rankings on honesty in budget reporting

Accounting, Organizations and Society 39 (2014) 237–246

The effect of rankings on honesty in budget reporting q

Jason L. Browna,⇑, Joseph G. Fisher a, Matthew Sooy b, Geoffrey B. Sprinklea

abstract

We conduct an experiment to investigate the effect of rankings, which are pervasive in

practice, on the honesty of managers’ budget reports, which is important for sound

decision making in organizations. Participants in our experiment are ranked in one of four

ways: (1) firm profit, (2) own compensation, (3) both firm profit and own compensation,

and (4) randomly, which serves as our baseline condition. None of the rankings affect

participants’ remuneration. Compared to our baseline (random rankings) setting, where

participants indeed exhibit honesty concerns, we find that rankings based on firm profit

significantly increase honesty and that rankings based on own compensation significantly

decrease honesty. Participants who received both rankings were significantly more honest

than participants in the own compensation rankings condition. We did not, however, find

significant differences in honesty between the both rankings and firm profit rankings

conditions. As such, participants in the both rankings condition seemed to focus more on

the firm profit metric than on the financially congruent own compensation metric. We also

find that our results are stable across periods, suggesting that the effects of rankings

neither increased nor dissipated over time. We discuss the contributions of our study

and concomitant findings to accounting research and practice.

OMG: In China, This Language Teacher Has Swag

Jun 2, 2014

OMG: In China, This Language Teacher Has Swag

Ms. Beinecke poses with fans in Beijing. Ms. Beinecke poses with a fan wearing a fake tattoo with the Chinese characters for ‘swag’

Jessica Beinecke gets this reaction a lot: She’s walking down the street in a Chinese city, and she’ll be recognized by one of her 400,000 Weibo followers or even one of the 40 million who have watched her videos. With platinum blonde hair and big blue eyes, the young woman who has taught Americans how to say “twerk” in Mandarin and students in China how to talk about “House of Cards” stands out. Read more of this post

Where the Father of the Ponzi Scheme Once Slept

Where the Father of the Ponzi Scheme Once Slept

By WILLIAM ALDEN

JUNE 2, 2014 12:34 PM 1 Comments

Rick Friedman for The New York TimesThe home in Lexington, Mass., where Charles Ponzi lived for just a few weeks before his arrest.

LEXINGTON, Mass. – This postcard-perfect town near Boston was where the first patriots died in the Revolutionary War.

It was also where Charles Ponzi, the financial con artist who pioneered the category of swindle that now bears his name, made his last stand.

Mr. Ponzi, a hardscrabble Italian immigrant whose fraudulent scheme allowed him to guzzle cash and briefly taste luxury, was only a short-term resident of Lexington, buying a mansion here in 1920 just weeks before his arrest. Read more of this post

Four Stand-Out College Essays About Money

Four Stand-Out College Essays About Money

MAY 9, 2014

Clare Connaughton with her mother Maritza Vargas at a Housing Works thrift store in Sunset Park, Brooklyn. Clare Connaughton, a high school student from Mineola, N.Y., reads from her college application essay about how shopping at thrift stores with her mother has gone from necessity to cherished pastime.

Thrift Store Shame, Then Pride

Talking about money is hard. Writing well about yourself may be harder still. So trying to do both at once, as a teenager, while addressing complete strangers who control your future, would seem to be foolhardy.

But each year, plenty of high school seniors who are applying to college give it a go. Many skip the story of the sports team triumph or the grandparent’s death and write essays about weighty social issues like work, class and wealth, or lack thereof. Perhaps that’s what affects them most. Or maybe those are the subjects that they think will attract an admissions officer’s eye.

In any case, for the second year, we put out a nationwide call for the best college application essays about these topics. With the help ofJennifer Delahunty, the dean of admissions and financial aid at Kenyon College in Gambier, Ohio, and an accomplished essayist and editor herself, we picked four to share here. They are a diverse lot, touching on topics ranging from work at McDonald’s and thrift store shopping to homelessness and reckoning with a parent’s job loss. What they share, however, is a quality that admissions officers crave but don’t see as often as they’d like: The applicant’s brain, laid bare on the page, wrapping itself around a topic that most people don’t write enough about or don’t write about in a deep or moving way. Read more of this post

The Teen Whisperer: How the author of “The Fault in Our Stars” built an ardent army of fans

THE TEEN WHISPERER

How the author of “The Fault in Our Stars” built an ardent army of fans.

by Margaret TalbotJUNE 9, 2014

Green wanted to write “an unsentimental cancer novel” that offered “some basis for hope.” Illustration by Bartosz Kosowski.

In late 2006, the writer John Green came up with the idea of communicating with his brother, Hank, for a year solely through videos posted to YouTube. The project wasn’t quite as extreme as it sounds. John, who was then twenty-nine, and Hank, who was three years younger, saw each other about once a year, at their parents’ house, and they typically went several years between phone calls. They communicated mainly through instant messaging.

Hank was living in Missoula, where he’d started a Web site about green technology. John was living on the Upper West Side while his wife, Sarah Urist Green, completed a graduate degree in art history at Columbia. He had published two young-adult novels, “Looking for Alaska,” in 2005, and “An Abundance of Katherines,” in 2006, and was working on a third. Like the best realistic Y.A. books, and like “The Catcher in the Rye”—a novel that today would almost certainly be marketed as Y.A.—Green’s books were narrated in a clever, confiding voice. His protagonists were sweetly intellectual teen-age boys smitten with complicated, charismatic girls. Although the books were funny, their story lines propelled by spontaneous road trips and outrageous pranks, they displayed a youthfully insatiable appetite for big questions: What is an honorable life? How do we wrest meaning from the unexpected death of someone close to us? What do we do when we realize that we’re not as special as we thought we were? Read more of this post

Kepler space telescope spies a ‘Mega-Earth’

Kepler space telescope spies a ‘Mega-Earth’

By Joel Achenbach, Published: June 2

Astronomers have discovered a surprising planet, a rocky world with 17 times the mass of Earth. There have been “Super-Earths” discovered before, but this one is in a league of its own. The scientists call it a “Mega-Earth.”

Discovered by NASA’s Kepler space telescope and announced Monday at an astronomy meeting in Boston, this planet, officially named Kepler-10c, scrambles the equations that dictate how massive a rocky planet can be without ballooning into a Jupiter-like gas giant.

The theorists didn’t see this coming. The orthodoxy was that, beyond about 10 Earth masses, a planet would hold on to so much hydrogen gas that it would become like Jupiter or Saturn. Kepler-10c suggests that plus-size planets can stay rocky, with clearly defined surfaces, rather than becoming gaseous and bloated.

That means there’s more real estate out there for life as we know it on Earth.

Kepler-10c is also very old, having formed about 11 billion years ago, less than 3 billion years after the birth of the universe. Rocky worlds weren’t believed to have existed that long ago.

“Nature will do what she wants, regardless of earthling theorists,” said Sara Seager, a Massachusetts Institute of Technology planetary scientist who was not involved in the new discovery but said by e-mail that she finds it “incredibly exciting.” Read more of this post

Devil’s Advocate: The Most Incorrect Beliefs of Accounting Experts

Devil’s Advocate: The Most Incorrect Beliefs of Accounting Experts

Sudipta Basu 

Temple University – Department of Accounting
December 1, 2013
Accounting Horizons, Vol. 27, No. 4, 2013
Fox School of Business Research Paper No. 14-005

Abstract: 
This commentary reflects the views of a panel of six experts tasked with writing an essay on the most incorrect beliefs of accounting experts. The title provides ample motivation for this discussion – to document the views of some thought leaders in accounting research on a seldom-debated and mostly ignored issue – incorrect beliefs. While each essay offers a thoughtful message on its own, in combination they reflect an even stronger view, and offer sound advice for accountants of all stripes and persuasions.