Influential Observations and Inference in Accounting Research

2016 ◽  
Vol 94 (6) ◽  
pp. 337-364 ◽  
Author(s):  
Andrew J. Leone ◽  
Miguel Minutti-Meza ◽  
Charles E. Wasley
Keyword(s):  
Robust Regression ◽  
Extreme Values ◽  
Data Availability ◽  
Influence Coefficient ◽  
Influential Observations ◽  
Coefficient Estimates ◽  
The Public ◽  
Influence Diagnostics ◽  
Sensitivity Tests ◽  
Data Points

ABSTRACT Accounting studies often encounter observations with extreme values that can influence coefficient estimates and inferences. Two widely used approaches to address influential observations in accounting studies are winsorization and truncation. While expedient, both depend on researcher-selected cutoffs, applied on a variable-by-variable basis, which, unfortunately, can alter legitimate data points. We compare the efficacy of winsorization, truncation, influence diagnostics (Cook's Distance), and robust regression at identifying influential observations. Replication of three published accounting studies shows that the choice impacts estimates and inferences. Simulation evidence shows that winsorization and truncation are ineffective at identifying influential observations. While influence diagnostics and robust regression both outperform winsorization and truncation, overall, robust regression outperforms the other methods. Since robust regression is a theoretically appealing and easily implementable approach based on a model's residuals, we recommend that future accounting studies consider using robust regression, or at least report sensitivity tests using robust regression. JEL Classifications: C12; C13; C18; C51; C52; M41. Data Availability: Data are available from the public sources cited in the text.

The Search for Order in Municipal Administration: Herman A. Metz and the New York City Experience, 1898–1909

2020 ◽  
Vol 47 (1) ◽  
pp. 55-74
Author(s):  
Ryan P. McDonough ◽  
Paul J. Miranti ◽  
Michael P. Schoderbek
Keyword(s):  
New York ◽  
New York City ◽  
Internal Control ◽  
York City ◽  
Internal Controls ◽  
Data Availability ◽  
Financial Reports ◽  
The Public ◽  
Operational Activities ◽  
The City

ABSTRACT This paper examines the administrative and accounting reforms coordinated by Herman A. Metz around the turn of the 20th century in New York City. Reform efforts were motivated by deficiencies in administering New York City's finances, including a lack of internal control over monetary resources and operational activities, and opaque financial reports. The activities of Comptroller Metz, who collaborated with institutions such as the New York Bureau of Municipal Research, were paramount in initiating and implementing the administrative and accounting reforms in the city, which contributed to reform efforts across the country. Metz promoted the adoption of functional cost classifications for city departments, developed flowcharts for improved transaction processing, strengthened internal controls, and published the 1909 Manual of Accounting and Business Procedure of the City of New York, which laid the groundwork for transparent financial reports capable of providing vital information about the city's activities and subsidiary units. JEL Classifications: H72, M41, N91. Data Availability: Data are available from the public sources cited in the text.

Tax-Advantaged Trust Use Among IPO Executives: Determinants and Implications for Valuation and Future Performance

2019 ◽  
Vol 95 (3) ◽  
pp. 145-175 ◽  
Author(s):  
Michael J. Dambra ◽  
Matthew Gustafson ◽  
Phillip J. Quinn
Keyword(s):  
Stock Price ◽  
Relevant Information ◽  
Data Availability ◽  
Market Prices ◽  
The Public ◽  
Future Performance ◽  
Estate Taxes ◽  
Price Appreciation ◽  
One Year ◽  
Jel Classifications

ABSTRACT We examine the prevalence and determinants of CEOs' use of tax-advantaged trusts prior to their firm's IPO. Twenty-three percent of CEOs use tax-advantaged pre-IPO trusts, and share transfers into tax-advantaged trusts are positively associated with CEO equity wealth, estate taxes, and dynastic preferences. We project that pre-IPO trust use increases CEOs' dynastic wealth by approximately $830,000, on average. We next examine a simple model's prediction that trust use will be positively related to IPO-period stock price appreciation. We find that trust use is associated with 12 percent higher one-year post-IPO returns, but is not significantly related to the IPO's valuation, filing price revision, or underpricing. This evidence is consistent with CEOs' personal finance decisions prior to the IPO containing value-relevant information that is not immediately incorporated into market prices. JEL Classifications: D14; G12; G32; M21; M41. Data Availability: Data are available from the public sources cited in the text.

Auditors and the Principal-Principal Agency Conflict in Family Controlled Firms

2020 ◽  
Vol 39 (4) ◽  
pp. 31-55
Author(s):  
Chiraz Ben Ali ◽  
Sabri Boubaker ◽  
Michel Magnan
Keyword(s):  
Risk Assessment ◽  
Negative Relationship ◽  
Audit Fees ◽  
Data Availability ◽  
Audit Risk ◽  
Controlling Shareholder ◽  
Voting Power ◽  
The Public ◽  
Agency Conflict ◽  
Jel Classifications

SUMMARY This paper examines whether multiple large shareholders (MLS) affect audit fees in firms where the largest controlling shareholder (LCS) is a family. Results show that there is a negative relationship between audit fees and the presence, number, and voting power of MLS. This is consistent with the view that auditors consider MLS as playing a monitoring role over the LCS, mitigating the potential for expropriation by the LCS. Therefore, our evidence suggests that auditors reduce their audit risk assessment and audit effort and ultimately audit fees in family controlled firms with MLS. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: G32; G34; M42; D86.

Does Investment-Related Pressure Lead to Misreporting? An Analysis of Reporting Following M&A Transactions

2012 ◽  
Vol 87 (3) ◽  
pp. 839-865 ◽  
Author(s):  
Daniel A. Bens ◽  
Theodore H. Goodman ◽  
Monica Neamtiu
Keyword(s):  
Financial Reporting ◽  
Large Body ◽  
Financial Statements ◽  
Probability Of Detection ◽  
Data Availability ◽  
The Public ◽  
Announcement Returns ◽  
Reporting Decisions ◽  
The Face ◽  
Near Term

ABSTRACT This study examines whether managers alter their financial reporting decisions in the face of investment-related pressure. We define investment-related pressure as the increased pressure managers feel to retain their job following an M&A poorly received by the market. We hypothesize that managers attempt to assuage pressure by delivering strong performance post-merger, creating incentives for misreporting. Our findings indicate that acquirers with more negative M&A announcement returns are more likely to misstate financial statements in the post-investment period and the issuance of misstated financials mitigates this pressure, at least in the near term. Our study contributes to the literature on the relation between corporate investing and financial reporting by showing how investment-related pressure leads to misreporting, even in a setting where the costs (e.g., greater probability of detection) are high. Our study also has implications for the large body of research that evaluates various consequences of M&As using post-merger performance. Specifically, researchers should be careful to distinguish real from misstated financial performance in the post-investment period. Data Availability: Data are available from the public sources indicated in the text.

Application of GIS technology in public health: successes and challenges

Parasitology ◽  
2016 ◽  
Vol 143 (4) ◽  
pp. 401-415 ◽  
Author(s):  
STEPHANIE M. FLETCHER-LARTEY ◽  
GRAZIELLA CAPRARELLI
Keyword(s):  
Public Health ◽  
Control Strategies ◽  
Health Sector ◽  
Remote Sensing Data ◽  
Environmental Data ◽  
Data Availability ◽  
Parasitic Diseases ◽  
Gis Technology ◽  
The Public ◽  
Application Of Gis

SUMMARYThe uptake and acceptance of Geographic Information Systems (GIS) technology has increased since the early 1990s and public health applications are rapidly expanding. In this paper, we summarize the common uses of GIS technology in the public health sector, emphasizing applications related to mapping and understanding of parasitic diseases. We also present some of the success stories, and discuss the challenges that still prevent a full scope application of GIS technology in the public health context. Geographical analysis has allowed researchers to interlink health, population and environmental data, thus enabling them to evaluate and quantify relationships between health-related variables and environmental risk factors at different geographical scales. The ability to access, share and utilize satellite and remote-sensing data has made possible even wider understanding of disease processes and of their links to the environment, an important consideration in the study of parasitic diseases. For example, disease prevention and control strategies resulting from investigations conducted in a GIS environment have been applied in many areas, particularly in Africa. However, there remain several challenges to a more widespread use of GIS technology, such as: limited access to GIS infrastructure, inadequate technical and analytical skills, and uneven data availability. Opportunities exist for international collaboration to address these limitations through knowledge sharing and governance.

scholarly journals Measuring Global Awareness of Nature

2021 ◽  
Author(s):  
Gabriel Henrique de Oliveira Caetano ◽  
Uri Roll ◽  
Diogo Veríssimo
Keyword(s):  
Global Awareness ◽  
Online Data ◽  
Biodiversity Crisis ◽  
The Public ◽  
Use Patterns ◽  
The Past ◽  
Conservation Actions ◽  
Data Points ◽  
Effective Use ◽  
Digital Channels

While there is general skepticism regarding the progress made towards the 20 CBD targets set in 2010, there has been no comprehensive analysis of the progress towards this first target at the global and the national levels. We harnessed vast and readily available online data to gain insight into trends of people’s interest towards biodiversity and potential conservation actions to sustain it. Specifically, we analyzed people’s Google use patterns in the past decade, across 193 countries globally, exploring about 550 terms relating to wildlife; biomes; biodiversity concepts; and conservation actions. This yielded about 2 million data points from 2013 to 2020. We found that when combined across terms and averaged across countries internet searches for biodiversity have increased worldwide in the last decade. However, this is predominantly driven by an increase in interest in a small number of charismatic animals. The interest in conservation actions has however not shown a similar overall increase in the past decade. Nevertheless, 29 countries, harboring 35% of the world’s population, did show increases for both awareness of biodiversity and the actions needed to safeguard it, thus showing progress towards this CBD target. Our results show that there was some success in achieving the first part of Aichi target 1 — “people are aware of the values of biodiversity”. However, the second part of target 1 — “people are aware of the steps they can take to conserve and use it sustainably” — has been largely missed. These results suggest that we need new ways to better communicate the importance of biodiversity and the ongoing biodiversity crisis to the public. These are likely to include more effective use of more future proof digital channels, such as mobile games and social media, which can have a wide reach while retaining the ability to target.

The Role of Web Assurance Seals in Nonprofit Giving

2019 ◽  
Vol 34 (2) ◽  
pp. 131-148
Author(s):  
Joseph Canada ◽  
Erica E. Harris
Keyword(s):  
Nonprofit Organizations ◽  
Positive Relationship ◽  
Data Availability ◽  
Charitable Contributions ◽  
The Public ◽  
For Profit ◽  
Donor Support ◽  
The U.S ◽  
The Web

ABSTRACT Using a sample of the 2,000 largest nonprofit organizations in the U.S., we document that the use of web assurance seals is not as commonplace as for-profit e-commerce websites. In particular, we find that only about 14 percent of sample organizations invest in web assurance seals. Those that do provide web seals are larger, less efficient, and spend more on fundraising and information technology. Interestingly, however, our size result weakens for the very largest organizations in our sample. In addition to our contribution to the web assurance literature, we also contribute to donations research in identifying another feature important to donors in the decision to give. Specifically, we find a positive relationship between web seals and donations, indicating that providing this type of assurance attracts more donor support. We believe this is particularly interesting given the relatively few organizations adopting this type of signal in the marketplace for charitable contributions. Data Availability: Data are available from the public sources cited in the text.

Compensation Disclosures and Corporate Governance through Shareholder Voting

2019 ◽  
Vol 32 (3) ◽  
pp. 27-48 ◽  
Author(s):  
Brian Cadman ◽  
Richard Carrizosa ◽  
Xiaoxia Peng
Keyword(s):  
Corporate Governance ◽  
Fair Value ◽  
Data Availability ◽  
Shareholder Voting ◽  
Compensation Committee ◽  
The Public ◽  
Equity Compensation ◽  
Ceo Pay ◽  
Jel Classifications

ABSTRACT There are several measures of equity compensation that may provide shareholders with distinct and useful information for evaluating CEO pay. We examine whether shareholders consider additional disclosures of equity compensation measures beyond the grant date fair value when participating in corporate governance. We find that CEO equity compensation expense, a distinct measure of equity compensation, is a determinant of shareholder voting for management sponsored equity plans and voting for directors that serve on the compensation committee. After controlling for ISS recommendations, we find that voting outcomes remain significantly related to abnormal equity compensation expense. Consistent with shareholders considering the equity compensation expense, we document that firms shorten equity compensation vesting periods when they are no longer required to disclose the equity compensation expense. Our findings suggest that shareholders rely on multiple, distinct measures of equity compensation when participating in corporate governance. JEL Classifications: M12; M52; G34. Data Availability: Data are available from the public sources cited in the text.

Hiring Auditors with a Part II Quality Control Report: An Opportunity for Increased Earnings Management or Lower Audit Fees?

2020 ◽  
Vol 5 (1) ◽  
pp. 73-93
Author(s):  
Jared Eutsler ◽  
D. Kip Holderness ◽  
Megan M. Jones
Keyword(s):  
Quality Control ◽  
Audit Quality ◽  
Audit Fees ◽  
Data Availability ◽  
Fiscal Year ◽  
The Public ◽  
Audit Firms ◽  
Public Company ◽  
General Demand ◽  
Systemic Quality

ABSTRACT The Public Company Accounting Oversight Board's (PCAOB) Part II inspection reports, which disclose systemic quality control issues that auditors fail to remediate, signal poor audit quality for triennially inspected audit firms. Auditors that receive a Part II inspection report typically experience a decrease in clients, which demonstrates a general demand for audit quality. However, some companies hire auditors that receive Part II inspection reports. We examine potential reasons for hiring these audit firms. We find that relative to companies that switch to auditors without Part II reports, companies that switch to auditors with Part II reports have higher discretionary accruals in the first fiscal year after the switch, which indicates lower audit quality and a heightened risk for future fraud. We find no difference in audit fees. Our results suggest that PCAOB Part II inspection reports may signal low-quality auditors to companies that desire low-quality audits. Data Availability: Data are available from the public sources cited in the text.

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