The article focuses on the proceedings of the twelfth annual convention of the American Association of University Instructors in Accounting, held at Washington D.C., between December 28 and 29, 1927. After some introductory remarks by the organizers, papers were read by W. W. Nissley of the American Institute of Accountants, John R. Wildman of the company Haskins and Sells, David Himmelblau of Northwestern University, Evanston, Illinois, William A. Paton of the University of Michigan, Ann Arbor, Michigan, and J. L. Dohr of Greene and Hurd and of Columbia University, New York, New York. The second program meeting was given over to a discussion of various features of the federal income tax law. Johns Hopkins University's, Baltimore, Maryland, professor presided at the session and opened it with a brief statement introducing the speakers of the afternoon, all of whom were representatives of the Bureau of Internal Revenue. The third program session consisted of a joint meeting with the American Association of Collegiate Schools of Business. The general topic for discussion was "The Place of Accounting in Commerce Curriculum."

Although rapidly evolving, quality control (QC) systems are a poorly understood determinant of audit quality. We interview 27 QC system leaders to understand how they navigate the challenges they face in changing QC systems. We find that many challenges—including obtaining buy-in, evaluating costs and benefits, and advancing proactive over reactive changes—are caused by conflicting demands arising internally. Consistent with institutional theory, our data reveal that leaders respond to conflicting demands by seeking partial conformity (e.g., negotiating among stakeholders) or by altering the framing of the demands (e.g., using scientific logic to legitimize a QC change). Interviews of eight QC system users complement and corroborate our main results and suggest opportunities for future research. Our study sheds light on how firms update QC systems and informs practitioners, regulators, and academics of the forces that shape the evolution of QC systems. Data Availability: Our data are not publicly available to preserve participant anonymity.

Research indicates that auditors have an impoverished understanding of trial preparation factors that, independent of audit quality, can significantly elevate audit litigation risk. As the scholarly literature sheds little insight about the nature and implications of these factors, we identify what factors audit litigators consider in trial preparation, how they expect these factors to affect litigation outcomes, and how they attempt to leverage these factors. To do so, we interview 39 audit litigators, who identify factors germane to trial venues, jury pools, and case arguments. Guided by the elaboration likelihood model, we construct a framework that predicts these factors influence litigation outcomes by changing jurors’ motivation and/or capability to elaborate. Importantly, we find that litigators who defend (sue) auditors strategically maneuver these factors to increase (decrease) the likelihood of higher juror elaboration, because higher elaboration is favorable to auditors. We discuss implications of our results for practice and research.

This study examines two questions: When do firms make greater use of subjectivity in awarding bonuses? What are the effects of subjectivity on employee pay satisfaction and firm performance? We examine these questions using data from a sample of 526 department managers in 250 car dealerships. First, the findings suggest that subjective bonuses are used to complement perceived weaknesses in quantitative performance measures and to provide employees insurance against downside risk in their pay. Specifically, use of subjective bonuses is positively related to: (1) the extent of long-term investments in intangibles; (2) the extent of organizational interdependencies; (3) the extent to which the achievability of the formula bonus target is both difficult and leads to significant consequences if not met; and (4) the presence of an operating loss. Second, we find that the effects of subjective bonuses on pay satisfaction, productivity, and profitability are larger the greater the manager's tenure, consistent with the idea that subjectivity improves incentive contracting when there is greater trust between the subordinate and supervisor

Reviews several books. "Secrets of the Tax Revolt," by James Ring Adams; "Financial Statement Analysis: Theory, Application, and Interpretation," 3rd ed., by Leopold A. Bernstein; "Perspectives in Auditing," 4th ed., by D.R. Carmichael and John J. Willingham; "Tax Shelter Alternatives: Measuring the Risks," by Michael N. Fitzerald.

Oversight responsibilities for many audit committees (ACs) are evolving to include some of the hottest topics in the boardroom: enterprise risk management, cybersecurity, and environmental, social, and governance reporting. However, certain ACs avoid overseeing these evolving areas, creating significant variation across boards in the assignment of responsibilities. In this study, we seek to understand how ACs respond when environmental changes create new evolving risks that may extend the boundary of their traditional domain. To do so, we interview a diverse set of 29 AC members from U.S. publicly traded companies. We analyze our data through the theoretical lens of collaborative boundary work to identify how ACs respond by extending, blurring, or maintaining their perceived oversight boundaries, the related implications of these decisions, and their key tactics employed to manage AC workload. Our findings should be of interest to boards, investors, and regulators tasked with monitoring AC effectiveness.

Creativity drives profit in an idea economy, and many companies organize teams to facilitate creativity. This paper investigates the strategic deployment of individuals to boost a team’s creativity. More individualistic team members tend to generate highly original ideas yet are less likely to share these ideas. We theorize that adding a connector—an individual strongly predisposed to form and foster relationships—to a team will enable more idea sharing among individualistic team members, thus increasing the likelihood that the team’s creative potential will be realized. We leverage a new conceptualization of the “connector” construct to identify connectors and then use an experiment to study the impact of their presence or absence on team creative performance. Our results support these predictions and suggest that connectors improve team creativity by enabling others to share in the creative process and not because connectors themselves exhibit greater creative performance than their average peer. Data Availability: The data reported in the paper are available from the authors.

There is limited evidence about when, why, and which individuals incur costs to acquire nonpublic information about a firm, largely due to the difficulty of observing private information acquisition. To overcome this difficulty, we obtain data on Freedom of Information Act (FOIA) requests submitted to the Securities and Exchange Commission (SEC). We predict and find that perceived information asymmetry between managers and outsiders resulting from both proprietary and agency costs triggers FOIA search. We categorize organizations making FOIA requests using their business descriptions and find that many, including law and intellectual property firms, are not expressly interested in obtaining information for near-term equity trading. Instead, their search activity relates to determinants beyond financial characteristics, including patent litigation and executive turnover. Taken together, we provide evidence on private information search by a relatively unexamined set of organizations and shed new light on the function of the SEC’s Office of FOIA Services.

We investigate whether firms manage stock prices in anticipation of share issuance. Warrant exercise results in share issuance and warrant expiration dates are fixed years in advance, which precludes market timing. We predict firms manage stock prices to prevent (induce) warrant exercise when exercise is dilutive (anti-dilutive) to existing shareholders. To test our prediction, we examine stock returns around warrant expiration dates. We find that the difference between out-of-the-money (OTM) and in-the-money (ITM) firms' return patterns (i.e., post-expiration minus pre-expiration returns) is positive, and OTM (ITM) firms' return pattern is positive (negative). Return patterns of three sets of pseudo warrant firms differ from patterns of warrant firms. Return patterns are stronger when more feasible price changes are required to affect warrant expiration status, and firm-issued news items is a mechanism for price management. Thus, our findings provide evidence that firms engage in stock price management in anticipation of share issuance.

We investigate changes in the quality and cost of audit services surrounding PCAOB Rule 3211, which requires disclosure of audit partner names in Form AP. To isolate changes due to Rule 3211 from other confounding factors, we use difference-in-differences analyses with separate control groups, including a group of companies that disclosed partner identities prior to Rule 3211. Our study also incorporates several measures from prior literature to proxy for various dimensions of audit quality. Evidence from the difference-in-differences analyses reveals that any immediate impact of Rule 3211 on audit quality or fees is limited to specific dimensions of audit quality, specific control groups, and/or specific company characteristics. We reach this conclusion after considering alternative research designs and evaluating confidence intervals for statistically insignificant coefficients. We caution that our findings only provide initial evidence and further research is necessary to evaluate other potential impacts of Rule 3211.