Scholars @Bentley (Bentley University)
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Auditors’ Use of Specialists in Audit Engagements: Implications for Audit Quality
Get PDFThe importance and role of specialists on audit engagements has recently increased. My dissertation comprises three studies that examine whether and how the use of specialists in audit engagements is associated with audit quality.
The first study synthesizes prior research on auditors’ use of valuation, tax, IT, and forensic specialists. I organize the literature by: (1) determinants of specialist use (including the nature, timing, and extent of use); (2) the process of using a specialist; and (3) outcomes of specialist involvement, and propose several directions for future study.
The second study reports findings from interviews with experienced auditors and tax specialists about the specialists’ involvement in the financial statement audit and non-audit tax services (NATS) to audit clients. Given that tax continues to be a risky audit area, it is important to understand how tax specialists contribute to audit quality. Further, archival research generally finds a positive association between NATS and audit quality. Yet, little is understood about what mechanisms might underlie this positive relationship. This study contributes to theory and practice by providing key insights about the variation in tax specialists’ role on audit engagements, factors that contribute to and impede effective communication between auditors and specialists, and how the information shared benefits audit and tax practices. The third study provides the results of an experiment investigating the effects of changes to the auditor’s reporting model on audit report users’ perceptions of audit quality and their investment decisions. A new PCAOB standard requires disclosure about the use of component auditors in the audit, but not about the use of specialists (while both disclosures were originally considered by the Board). The findings in this study suggest that information about these two audit participants affect investors’ perceptions of the audit and their investment decisions, but the impact of this information varies depending on the type of participant involved. This study contributes to research on the auditor’s reporting model and is important in informing regulators about the effects of their reporting changes.
Collectively, these results highlight the importance of specialists’ involvement on audits from three perspectives: auditors, specialists, and audit report users
Timelines of translational science: From technology initiation to FDA approval
Get PDFWhile timelines for clinical development have been extensively studied, there is little data on the broader path from initiation of research on novel drug targets, to approval of drugs based on this research. We examined timelines of translational science for 138 drugs and biologicals approved by the FDA from 2010±2014 using an analytical model of technology maturation. Research on targets for 102 products exhibited a characteristic (S-curve) maturation pattern with exponential growth between statistically defined technology initiation and established points. The median initiation was 1974, with a median of 25 years to the established point, 28 years to first clinical trials, and 36 years to FDA approval. No products were approved before the established point, and development timelines were significantly longer when the clinical trials began before this point (11.5 vs 8.5 years,
What to Do Amid Disruption? Ethical Climate and Trust as Determinants of Virtual Team Member Effort
Get PDFAlthough the effects of ethical climate and trust on individual behavior have been investigated within organizations, understanding how this relationship unfolds within virtual teams has been largely overlooked. In response to this gap, I use social exchange theory to integrate research on ethical climate and trust to develop a model of individual virtual team member effort. Specifically, when virtual teams experience an event that disrupts existing work procedures and workflow, this can negatively affect levels of trust between teammates and jeopardize member contributions to the team. I argue that virtual team member perceptions of a caring (i.e., other-focused) ethical climate encourage social exchange and help sustain team-oriented effort subsequent to a disruption. Based on qualitative data from interviews with virtual team members and quantitative data from a study on undergraduate virtual teams, this model provides important insights into issues pertaining to team disruption in a context that is increasingly present in today\u27s business settings. Further, the model offers theoretical insight into the roles of ethical climate and trust in the absence of face-to-face communication and provides practical alternative solutions for virtual team managers to optimize individual team member contributions
Environmental, Social, and Governance Risk and Performance: Implications for Audit and Corporate Governance Research
Get PDFThis dissertation examines oversight of environmental, social, and governance (ESG) related risk and performance. These considerations are a new piece of business language, and are crucial in monitoring and evaluating the sustainable impact of modern corporations. The dissertation is comprised of three archival studies, which together contribute to an emerging accounting literature at the intersection of audit and corporate governance. The first study uses hand-collected data on voluntary board-level committees that oversee ESG-related issues to investigate the performance implications of these committees. This paper presents a theoretical framework and methodology that incorporate the committee’s role in shared value creation and the heterogeneity of ESG-related issues. When this theoretical and methodological approach is applied, I find that committees with ESG-related responsibilities do have positive performance implications. The second and third studies use a new dataset to explore accounting-related consequences of negative media coverage of ESG practices. In the second study, I find that when audit client reputation is damaged via negative media coverage, auditors respond to protect against reputation loss spillovers. Specifically, results suggest that auditors avoid undue reputation risk by resigning from engagements and reduce/share undue risk by charging higher audit fees. This study is important because it documents auditor oversight of, and response to, ESG-related risks. Further, the study answers recent calls for U.S. evidence of auditor reputation risk as a component of auditors’ risk considerations. Finally, in the third study, I investigate whether corporate boards hold CEOs publicly accountable for negative media coverage of ESG practices. Understanding board sensitivity to ESG issues, measured by their turnover decisions, is important given a rising demand for sustainable business practices. Findings of this study suggest that when ESG issues are highly publicized, CEO dismissal likelihood is higher. Overall, findings support both the importance of these issues to modern corporations and the monitoring role of the media
What Went Right: Interactional Strategies for Managing Crisis Negotiations during an Emergency Service Call
Get PDFThis article is a conversation analytic investigation of an emergency service call in which a hostage in a school shooting played a dual role during the ongoing emergency—the role of 911 caller and the role of de facto crisis negotiator. The analysis will show how the caller used techniques such as footing shifts, tone of voice shifts, self-disclosure, and active listening techniques (including continuers, questions, repeats, and paraphrases) to successfully keep the conflict from escalating, maintain the autonomy of the intruder, and negotiate his surrender while working in collaboration with the 911 call taker
As Technologies for Nucleotide Therapeutics Mature, Products Emerge
Get PDFThe long path from initial research on oligonucleotide therapies to approval of antisense products is not unfamiliar. This lag resembles those encountered with monoclonal antibodies, gene therapies, and many biological targets and is consistent with studies of innovation showing that technology maturation is a critical determinant of product success. We previously described an analytical model for the maturation of biomedical research, demonstrating that the efficiency of targeted and biological development is connected to metrics of technology growth. The present work applies this model to characterize the advance of oligonucleotide therapeutics. We show that recent oligonucleotide product approvals incorporate technologies and targets that are past the established point of technology growth, as do most of the oligonucleotide products currently in phase 3. Less mature oligonucleotide technologies, such as miRNAs and some novel gene targets, have not passed the established point and have not yielded products. This analysis shows that oligonucleotide product development has followed largely predictable patterns of innovation. While technology maturation alone does not ensure success, these data show that many oligonucleotide technologies are sufficiently mature to be considered part of the arsenal for therapeutic development. These results demonstrate the importance of technology assessment in strategic management of biomedical technologies
The Influence of Cognitive Factors on the Relationship between Accounting Standard Precision and Aggressive Financial Reporting
Get PDFThe U.S. SEC has formally advocated for the creation of a single set of global accounting standards. As the SEC considers converging U.S. GAAP with IFRS, there is heightened interest in how the precision of accounting standard influences the quality of the financial reporting process. My dissertation consists of three studies that seek to address how accounting standard precision interacts with different behavioral factors to influence aggressive financial reporting decisions and auditor judgment. Paper one presents evidence of a significant interactive effect of standard precision and preparer incentive horizon. Specifically, we find evidence that when the incentive horizon is long term, more precise standards are associated with decreased aggressive financial reporting. This is notable as it shows that the effects of standard precision are moderated by incentives and that standard precision cannot be fully understood when studied in isolation. Paper two reports the results of an experiment that investigates whether decision processing mode (either intuitive or deliberative) and standard precision impact the decision to report aggressively. While I do not find evidence that supports an interaction between standard precision and decision processing mode, I find evidence of two main effects. That is, consistent with prior literature, less precise accounting standards are associated with less aggressive financial reporting decisions. In addition, I also find evidence that intuitive processing is associated with less aggressive reporting decisions. Paper three reports the results of an experiment which investigates how the precision of an accounting standard influences auditor judgment. Opponents of the transition to IFRS argue that less precise standards threaten audit quality through their influence on several elements of audit judgment: reduced ability to constrain aggressive reporting, increased susceptibility to management influence and reduced comparability in auditor judgment. I find that less precise standards are associated with greater constraint of aggressive financial reporting. Further, I find no evidence that less precise standards are associated with greater influence by management or a reduction in comparability. These findings are important, as they suggest that the SEC’s proposed migration towards a less precise standard system may not necessarily have consequences for audit quality
The Influence of Corporate Social Responsibility Disclosure on Stakeholder Decision-Making
Get PDFAs part of the Disclosure Effectiveness Initiative, the SEC is seeking public comments on whether sustainability disclosures are important to investors’ decisions. The interest in sustainability disclosures by the SEC coincides with the recent increase in companies voluntarily publishing corporate social responsibility (CSR) reports. My dissertation consists of three studies that examine CSR disclosures, with an emphasis on how disclosure influences stakeholder decision-making.
Part one reviews the CSR disclosure literature contained in accounting journals. I find an overlap between CSR disclosure issues and traditional accounting issues examined in the literature. Focusing on where the issues overlap, I separate the CSR disclosure literature into three main sections. First, I examine the characteristics and motives of companies that voluntarily report. Second, I review the studies examining CSR disclosure accuracy and the role of CSR assurance in improving perceptions of disclosure credibility. Finally, I review the studies examining stakeholder use of CSR disclosure.
Part two provides the results of an experiment that examines the influence of the type of CSR activity, independent CSR assurance and a company-specific negative event have on investors’ judgments. Our results show contingent effects not found by prior research. We confirm prior literature in finding that absent a negative event, investors’ judgments respond most positively to disclosures of strategic CSR activity that are assured. However, in the presence of a negative event, the disclosure of strategic or nonstrategic CSR activity provides similar insurance-like protection against investors’ negative adjustments to their judgments, regardless of assurance.
Part three consists of two studies that provide the results of an experiment examining whether the type of CSR activity and CSR assurance interact to influence jurors’ decision-making. Study 1 finds that jurors’ affective response to the defendant is more favorable when receiving disclosure of non-strategic CSR activities. However, neither the type of CSR activity nor CSR assurance directly influence jurors’ negligence assessments. Study 2 finds that non-strategic CSR activities only provides protection against compensatory and punitive damage assessments when the disclosure is assured. Overall, findings suggest that the insurance-like protection of CSR and the influence of CSR assurance extend to the litigation setting
Geoengineering, marine microalgae, and climate stabilization in the 21st century
Get PDFSociety has set ambitious targets for stabilizing mean global temperature. To attain these targets, it will have to reduce CO2 emissions to near zero by mid-century and subsequently remove CO2 from the atmosphere during the latter half of the century. There is a recognized need to develop technologies for CO2 removal; however, attempts to develop direct air-capture systems have faced both energetic and financial constraints. Recently, BioEnergy with Carbon Capture and Storage (BECCS) has emerged as a leading candidate for removing CO2 from the atmosphere. However, BECCS can have negative consequences on land, nutrient, and water use as well as biodiversity and food production. Here, we describe an alternative approach based on the large-scale industrial production of marine microalgae. When cultivated with proper attention to power, carbon, and nutrient sources, microalgae can be processed to produce a variety of biopetroleum products, including carbon-neutral biofuels for the transportation sector and long-lived, potentially carbon-negative construction materials for the built environment. In addition to these direct roles in mitigating and potentially reversing the effects of fossil CO2 emissions, microalgae can also play an important indirect role. As microalgae exhibit much higher primary production rates than terrestrial plants, they require much less land area to produce an equivalent amount of bioenergy and/or food. On a global scale, the avoided emissions resulting from displacement of conventional agriculture may exceed the benefits of microalgae biofuels in achieving the climate stabilization goals
Wanted: Positive Arguments for Markets
Get PDFMany people believe that some things, like kidneys or sex, should not be for sale. Let us call these things “contested commodities.” Against this, Brennan and Jaworksi defend “markets without limits” (hereafter: MwL). According to this thesis: “If you may do it for free, you may do it for money.” Since we can give away our kidneys for free and have sex for free, we should be able to do these things for money. Brennan and Jaworksi deftly blend rigorous philosophical argument with the latest research in social science to counter some of the most prominent against commodification. But, I will argue, their arguments stop short of establishing MwL. Brennan and Jaworksi do not say enough in favor of markets in contested commodities