SOX 404(b) exemption effects on auditor changes

2016 ◽  
Vol 31 (4/5) ◽  
pp. 387-402 ◽  
Author(s):  
Benjamin W. Hoffman ◽  
Albert L. Nagy
Keyword(s):  
Positive Association ◽  
Negative Effects ◽  
Significant Positive Association ◽  
Public Companies ◽  
Content Type ◽  
Sarbanes Oxley ◽  
Sensitivity Tests ◽  
Prior Literature ◽  
Pros And Cons ◽  
Practical Implications

Purpose This paper aims to investigate whether the Sarbanes-Oxley Act: Section 404(b) exemption caused an increase in auditor changes due to changes in expectations for both auditors and their clients. Design/methodology/approach This paper predicts that this exemption caused a significant amount of auditor changes post-exemption, due to a change in expected future economic rents (audit scope demands) for auditors (clients). Logistic regression analysis is used to examine whether auditor changes increased for non-accelerated filers (public companies with less than $75 million in public float), who were affected by this exemption, compared to auditor changes for accelerated filers (public companies with greater than $75 million in public float), who were not affected by this exemption. Findings The results show a significant positive association between the exemption and auditor dismissals for non-accelerated filers compared to that of accelerated filers. This finding is robust when sensitivity tests are used. Practical implications Prior literature finds that an increase in auditor changes can have various positive and negative effects on the affected companies. Thus, investors will be interested in the results of this paper when making their investment decisions with regard to non-accelerated filers. Social implications The results of this paper will aid policymakers as they consider the pros and cons of this exemption, as it pertains to the affected companies. Originality/value This paper is the first to study the effects of this exemption on auditor turnover for the affected companies.

scholarly journals Audit fee discounting in the post-SOX environment

2017 ◽  
Vol 32 (7) ◽  
pp. 715-730 ◽  
Author(s):  
Benjamin W. Hoffman ◽  
Albert L. Nagy
Keyword(s):  
Positive Association ◽  
Audit Fees ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Audit Pricing ◽  
Significant Positive Association ◽  
Content Type ◽  
Sarbanes Oxley ◽  
Sensitivity Tests ◽  
Audit Fee

Purpose This paper aims to investigate whether the expected implementation of Section 404(b) of the Sarbanes-Oxley Act (SOX 404(b)) (the integrated audit requirement) caused auditors to discount their audit fees for non-accelerated filers in anticipation of expected increased future economic rents (DeAngelo, 1981) from those clients. Design/methodology/approach This paper predicts that auditors charged their non-accelerated filer clients lower audit fees during the years 2005-2007 (in anticipation of increased expected future economic rents from the implementation of the SOX 404(b) requirement) compared with the years 2010-2012 (when it had been determined that non-accelerated filers were permanently exempt from complying with SOX 404(b)). The authors use ordinary least squares regression analysis to examine whether audit fees increased significantly for non-accelerated filers after the permanent exemption announcement. Findings The results show a significant positive association between the exemption announcement and audit fees, supporting the theory that auditors discounted their audit fees for non-accelerated filers in the pre-exemption announcement period. This finding is robust when sensitivity tests are used. Practical implications The findings of audit fee discounting literature related to the post-SOX period are mixed. This study adds to this stream of literature by supporting the notion that audit fee discounting is being practiced post-SOX and is a potential unintended consequence of SOX 404 and the exemption. Thus, investors will be interested in the results of this paper when making their investment decisions with regard to non-accelerated filers. Social implications The results of this paper show that, even in the post-SOX environment, auditors will employ the use of audit fee discounting if a change in regulation incentivizes it. This commentary on the present state of the audit pricing market should be of interest to audit pricing policymakers. Originality/value This paper is one of the first to study audit fee discounting outside the realm of initial audit engagements.

The Association between IT Material Weaknesses and Earnings Management

2017 ◽  
Vol 32 (3) ◽  
pp. 53-64 ◽  
Author(s):  
William G. Heninger ◽  
Eric N. Johnson ◽  
John R. Kuhn
Keyword(s):  
Earnings Management ◽  
Internal Control ◽  
Positive Association ◽  
Future Research ◽  
Significant Positive Association ◽  
Material Weakness ◽  
Public Companies ◽  
Financial Condition ◽  
Sarbanes Oxley ◽  
Material Weaknesses

ABSTRACT In this paper, we examine the relationship between (1) information technology-related internal control material weaknesses (ITMWs) as reported by public companies between 2004 and 2012, and (2) earnings management. Prior research suggests that companies with internal control deficiencies are more likely to manage earnings; however, no study has specifically examined the incremental effect of ITMWs on earnings management tendencies. Based on a sample of 268 firm-years of ITMWs disclosed by U.S. public companies in their annual SEC filings (pursuant to Section 404 of the Sarbanes-Oxley Act of 2002), we find a significant positive association between ITMWs and income-increasing abnormal accruals. In addition, we find a positive relation between poor financial condition and material weaknesses in these companies. These results are robust with respect to two control samples of firms with non-IT-related-only material weaknesses (non-ITMWs) and firms with no material weakness disclosures. Implications of these findings for investors, regulators, and future research are discussed.

Empirical analysis on corporate environmental performance and environmental disclosure in an emerging market context

2020 ◽  
Vol 15 (6) ◽  
pp. 1061-1082 ◽  
Author(s):  
Merve Acar ◽  
Hüseyin Temiz
Keyword(s):  
Environmental Performance ◽  
Emerging Market ◽  
Positive Association ◽  
Corporate Environmental Performance ◽  
Tobit Regression ◽  
Environmental Reporting ◽  
Environmental Disclosure ◽  
Significant Positive Association ◽  
Content Type ◽  
Environmental Disclosures

PurposeThe purpose of this study is to investigate the association between environmental performance of firms and the level of voluntary environmental disclosure in emerging markets.Design/methodology/approachWe used tobit regression OLS and t-test methods to reveal the association between environmental performance and the level of voluntary environmental disclosure.FindingsWe find a significant positive association between the level of discretionary environmental disclosures and corporate environmental performance. The result is in line with the arguments of economics disclosure theory that argues environmentally good performers disclose more.Practical implicationsMany of the environmentally good firms in Turkey are also listed in the “BIST Sustainability Index,” and this situation can be the result of the relative power of external regulations. Accordingly, it can be suggested to increase the community and governmental pressures for environmental reporting but also gives importance to increase intrinsic motivations for companies to engage in disclosure practices.Originality/valueThis study shed light on relation between environmental performance and environmental disclosure in an emerging market context. Also, it is revisited that the relation between environmental performance and the level of environmental disclosure by testing two different predictions on the level of environmental disclosures.

Digital competences of the workforce – a research topic?

2017 ◽  
Vol 23 (3) ◽  
pp. 721-734 ◽  
Author(s):  
Matthias Murawski ◽  
Markus Bick
Keyword(s):  
Research Topic ◽  
Future Research ◽  
Digital Competence ◽  
Content Type ◽  
Research Activities ◽  
Starting Point ◽  
Pros And Cons ◽  
Definition Of ◽  
The Individual ◽  
Practical Implications

Purpose Considering working in the digital age, questions on the consequences for the individual workers are, so far, often neglected. The purpose of this paper is to deal with the question of whether the digital competences of the workforce is a research topic. The authors argue for the thesis that it is indeed a research topic. Design/methodology/approach In addition to a literature analysis of the top IS, HR, and learning publications, non-scientific sources, as well as the opinions of the authors, are included. The authors’ thesis is challenged through a debate of corresponding pros and cons. Findings The definition of digital competences lacks scientific depth. Focussing on the workforce is valid, as a “lifelong” perspective is not mandatory for research. Digital competence research is a multidisciplinary task to which the IS field can make a valuable contribution. Research limitations/implications Although relevant references are included, some aspects are mainly driven by the opinions of the authors. The theoretical implications encompass a call for a scientific definition of digital competences. Furthermore, scholars should focus on the competences of the workforce, including occupations, roles, or industries. The authors conclude by providing a first proposal of a research agenda. Practical implications The practical implications include the alignment of multiple stakeholders for the design of “digital” curricula and the integration by HR departments of the construct of digital competences, e.g. for compensation matters and job requirements. Originality/value This paper is one of very few contributions in the area of the digital competences of the workforce, and it presents a starting point for future research activities.

Imperfect produce: retailer actions and service outcomes

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Atmadeep Mukherjee ◽  
Amaradri Mukherjee ◽  
Pramod Iyer
Keyword(s):  
Purchase Intention ◽  
Design Methodology ◽  
Well Being ◽  
Societal Implications ◽  
Negative Effects ◽  
Content Type ◽  
Service Outcomes ◽  
Patronage Intention ◽  
Practical Implications

Purpose Food waste is a big problem where millions of pounds of produce are discarded every year because they are imperfect or unattractive. Despite the societal implications of selling unattractive produce, limited research has been directed toward understanding the effect of imperfect produce on consumers’ evaluations of the produce and retailer outcomes. This paper aims to investigate why consumers tend to discard imperfect produce and how retailer interventions (i.e. anthropomorphized signage and packaging) can alleviate these negative effects. Design/methodology/approach Three experiments were conducted to examine the postulations. Study 1 highlights the role of consumers’ embarrassment in the purchase decision of imperfect produce and retailer patronage intention. Studies 2 and 3 provide managerially relevant boundary conditions of anthropomorphic signage and opaque packaging. Findings Convergent results across three studies (n = 882) indicate that imperfect produce increases purchase embarrassment and reduces purchase intention and retailer patronage intention. Retailer interventions (i.e. anthropomorphic signage and opaque packaging) can allay this feeling of embarrassment and lead to an increased retailer patronage intention and higher service satisfaction. Practical implications This research provides guidance to retailers for effectively promoting imperfect produce. Social implications Retailers’ actions can benefit the well-being of farmers, suppliers, customers and the overall environment. Originality/value This research adds to the literature on unattractive produce by identifying new moderators, namely, anthropomorphic signages and opaque packaging. The research also shows that purchase embarrassment is a key process mechanism.

Cooperatives: an alternative to water privatization in Greece

2014 ◽  
Vol 10 (2) ◽  
pp. 135-154 ◽  
Author(s):  
Ifigeneia Douvitsa ◽  
Demosthenis Kassavetis
Keyword(s):  
Design Methodology ◽  
Water Distribution ◽  
Water Privatization ◽  
Negative Effects ◽  
Content Type ◽  
Negative Results ◽  
Viable Solution ◽  
Water Provision ◽  
First Time ◽  
Practical Implications

Purpose – The aim of this article is to investigate the organization of water cooperatives in Greece for the first time, as promoted by a spontaneous social mobilization called Initiative 136. The above attempt appears as an alternative proposition as opposed to the state-driven full privatization of EYATH S.A. Design/methodology/approach – This article presents previous work on water cooperatives and the negative effects of water privatization worldwide, relating it to water privatization in Greek reality through the prism of the current recession. Findings – While full privatization under the pressure of the economic crisis is very likely to yield significantly negative results, a transformation into a water cooperative might provide a viable solution. Research limitations/implications – Water cooperatives provide a solution for water distribution that is friendly for the consumer, the society and the environment. Practical implications – Application of a cooperative method of water provision in Greece could be a springboard for the use of the model in other areas. Originality/value – The article evaluates the privatization and cooperativization attempt of EYATH S.A. based on previous related research and considering Greece ' s current conditions.

Differences in implementing corporate social responsibility through SA8000 and ISO 26000 standards

2017 ◽  
Vol 28 (4) ◽  
pp. 438-457 ◽  
Author(s):  
Andrea Chiarini ◽  
Emidia Vagnoni
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Manufacturing Companies ◽  
Content Type ◽  
Iso 26000 ◽  
Pros And Cons ◽  
Corporate Social ◽  
First Time ◽  
Financial Issues ◽  
Practical Implications

Purpose There are different ways of implementing a corporate social responsibility (CSR) system. One interesting way of implementing a CSR system is based on standards such as SA8000 and ISO 26000. The purpose of this paper is to investigate the differences brought by the two standards in European manufacturing in CSR implementation using a survey. Design/methodology/approach Eight hypotheses were derived from an analysis of the implementation pattern for a CSR management system revealed from a review of the literature as well as from the actual two investigated standards. A questionnaire based on these hypotheses was administered to the CSR managers of 326 European manufacturing companies. A χ2 and Cramer’s V-tests were used to validate the results. The CSR managers also added comments to their responses. The qualitative results gathered from the respondents’ comments helped the authors’ to better understand the quantitative data. Findings The results showed differences in how the standards affect strategies, economic and financial issues, stakeholders involved, environmental management, customer and market issues, supply chain management and CSR key performance indicators. The results indicated that it is not clear how production and technical departments can be involved in and committed to such standards or, in general, to a CSR system. Research limitations/implications The research is based on a sample of European manufacturing managers and limited to the implementation of two specific CSR standards. Practical implications The differences between the standards should be interesting to practitioners who are thinking of implementing a CSR system in a manufacturing context and weighing the pros and cons of each standard. Originality/value This research analyses, for the first time, the differences in CSR implementation brought by SA8000 and ISO 26000 in manufacturing and, in particular, in production and technical departments.

Tribe and village in African organizations and business

2016 ◽  
Vol 45 (1) ◽  
pp. 51-66 ◽  
Author(s):  
Simon Ulrik Kragh
Keyword(s):  
Rural Communities ◽  
Sociological Theory ◽  
Cultural Patterns ◽  
Negative Effects ◽  
African Countries ◽  
Content Type ◽  
Organizational Behaviour ◽  
Analytical Perspective ◽  
Anthropological Literature ◽  
Practical Implications

Purpose – The purpose of this paper is to show that organizational behaviour and business relations in African countries reflect preindustrial social norms typical of kinship based, rural communities such as in-group/out-group differentiation, reliance on kinship and the use of gift-exchange to create and strengthen social bonds. Design/methodology/approach – Two books on African management are interpreted using anthropological and sociological theory as the analytical perspective. Findings – The analysis of the two works suggests that the preindustrial patterns described in the anthropological literature play a central role in African management and business. Practical implications – The paper concludes that manager should recognize the negative effects that may follow from a rejection of these socio-cultural patterns of behaviour. Originality/value – It introduces Marshall Sahlins’ theory of social distance and reciprocity showing how this theory explains behaviours in and between African organizations.

Self-concept, product involvement and consumption occasions

2017 ◽  
Vol 119 (6) ◽  
pp. 1362-1377 ◽  
Author(s):  
David Roe ◽  
Johan Bruwer
Keyword(s):  
Positive Association ◽  
Self Esteem ◽  
Self Concept ◽  
Purchase Decision ◽  
Product Choice ◽  
Product Involvement ◽  
Content Type ◽  
Store Environment ◽  
Practical Implications ◽  
Sydney Australia

Purpose The purpose of this paper is to examine the extent to which consumer self-concept (self-esteem) and product involvement influences the wine purchase decision at the retail level given the anticipated consumption occasion. The predictive effects of self-concept on this interaction were also explored. Design/methodology/approach Data collection was in the independent specialist fine wine store environment in Sydney, Australia. Central to the study was the development of a 33-item multi-dimensional fine wine involvement scale (Cronbach’s α =0.846 for 26 final items) for measuring consumers’ involvement. Findings Wine product involvement deepens with age but low involvement consumers perceiving risk in making the wrong product choice may well purchase fine wines for situations where self-concept is a moderating factor. In the case of low involvement wine consumers a positive association exists between situational wine choice and self-concept but no significant differences exist for self-concept across any of the consumption occasions. Age and self-concept were both confirmed as linked to levels of consumption. The findings support the notion that wine consumers aged 45 years and older are significantly more disposed to purchase fine wine products. Practical implications For self-concept to be relevant to purchase it follows that the wine consumption occasion must be conspicuous. Originality/value This study is the first to examine the extent to which consumer self-concept and product involvement influences the wine purchase decision at the retail level given the anticipated consumption occasion.

The Yin and Yang of smartphones: an interview study of smartphone use and its effects

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Naresh Kumar Agarwal ◽  
Wenqing Lu
Keyword(s):  
Negative Effects ◽  
Content Type ◽  
The Real ◽  
Uses And Gratification ◽  
Uses And Gratification Theory ◽  
Frequency Of Use ◽  
Yin Yang ◽  
Yin And Yang ◽  
Pros And Cons ◽  
Smartphone Use

Purpose The purpose of this paper is to study smartphone use and its positive and negative effects and to provide recommendations for balanced use. Design/methodology/approach To study phone use, this paper applies the uses and gratification theory and gathered interview data from 24 participants on the participants’ frequency of use, mode of communication, people contacted and the reasons for using their phones. This paper analyzes the pros and cons of using smartphones using the Yin-Yang worldview. Findings This paper finds that people use their smartphones for communication, entertainment and other specific functions. Ease of communication and multitasking are the key benefits, and overuse and disconnect from the real world are the detriments in smartphone use. Research limitations/implications The findings can enable future researchers and practitioners to view smartphones and their effects more holistically, rather than seeing it only from the negative or the positive lens. Practical implications The proposed framework can help the reader to consider their daily use of smartphones and their ways of balancing their presence in the virtual and the real worlds. Originality/value This paper proposes the Yin-Yang framework of smartphone use and provides recommendations for effective usage.

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