Knowledge that Transforms

We study how multiple firms voluntarily design inter-firm mechanisms to manage industry-level systemic uncertainty. Facing a threat of systemic uncertainty that cannot be addressed by any one firm, we explain how the Australian cotton industry mobilised hybrids and boundary spanners to develop an industry-level solution at the inter-firm level. We apply resource dependence theory to extend Miller, Kurunmaki and O'Leary (2008), and identify a broader range of hybrid characteristics (novel, inter-firm, public/private and open source) than currently acknowledged in accounting studies. We use these characteristics to explain how hybrid organisational forms and hybrid control processes operate at the inter-firm level to develop and share a solution to systemic uncertainty, which are subsequently applied at the firm-level. Our findings also show how boundary spanners can operate with less tension in larger industry-level collaborations, explained using our resource dependence conceptualisation. This responds to Dekker's (2016) calls for more inter-firm research clarifying how controls operate beyond the firm.

We build and argue for new visualizations of the Irish economy based on a stock flow consistent model of the national accounts. The 2007/8 Irish crisis came from the financial sector, and these visualisations capture the interconnections between the real and financial sectors of the economy. The visualizations increase the data-density thirty to fifty times more than line graphs typically used by policy makers to guide their decisions. The many connections between the real and financial sides of the economy are made more explicit.

Because of changes in tax regulations and increased political pressure, firms are reconsidering their practices of shifting manufacturing operations offshore to lower wage countries. Although outsourcing has been well researched, few studies examine managerial practices that influence offshore operations. We investigate the effects of choices regarding labor, suppliers, and outsourcing that influence firm longevity in the maquiladora industry in Mexico. We argue that firms are exposed to labor frictions, supply-chain constraints, and compliance and regulatory risks that if left unresolved can lead to plant closure attributable to labor or regulatory frictions and rising costs. We consider specific actions pursued by managers at maquiladora plants to mitigate the underlying constraints and then analyze factors that affect the likelihood of continuing operations, that is, the longevity of the plants. We find a positive relation between the likelihood of longevity in operations and the following plant characteristics: hourly wages, workforce stability, skill, and the decision to outsource regulatory compliance functions. We document a negative relation between longevity and total labor cost as a percent of total costs as well as using suppliers based in Mexico. We also find that high-tech plants have higher stability, pay higher wages, and experience greater longevity than low-tech plants. Overall, we identify key managerial choices that are related to longevity in offshoring production.

This paper investigates whether individuals that we identify as “connectors”—who possess a blend of innate traits and skills that predispose them to be personable, willing to relate to others, and able to influence others’ relationships—can serve as a catalyst for improving group outcomes. More specifically, we explore whether identifying connectors and placing them in work groups can serve as a control to help firms manage undesirable voluntary employee turnover by improving the group experience and reducing their fellow group members’ turnover intentions. We conduct an experiment to test our hypotheses that members in a group with a connector (versus without) have lower turnover intentions because their experiences are perceived as more positive, and that this turnover intention effect is more pronounced for group members who are demographically distinct from others in their group. Results are consistent with predictions, although the effect of connectors on lowering group members’ turnover intentions is driven by members who are distinct. Our findings broaden the understanding of who connectors are and how they affect group interactions, and further suggest that hiring and deploying connectors in work groups can be an effective component of a more comprehensive retention strategy.

Analysts and insiders increase price informativeness by revealing new information to financial markets, and prior work has shown that these parties hold both firm-specific and aggregate information. This study examines how the level of informational efficiency with respect to a stock price's firm and industry-level information environment can differently mediate the information content of analyst recommendations and insider trades. I find that (1) the decrease in information revealed by insider trades is larger than that from analyst recommendations when a stock's price is more efficient with respect to firm-specific information, while (2) the increase in information revealed by analyst recommendations is larger than that from insider trades when a stock's price is less efficient with respect to industry-level information. Taken together, my results indicate that analysts (insiders) may have relative informational expertise with regards to industry (firm) information, and that both appear to rely on their specific expertise when informing prices.

This study analyzes how accounting participates in the business of extortion. Using a combination of archival, interview and participant observation data, we consider the extortion activities of two criminal organizations—the Mara Salvatrucha and Barrio 18—that operate in the Northern Triangle countries of El Salvador, Guatemala and Honduras. Starting from the assumption that the repetitive extortion activities of street gangs require organizational devices that coordinate activities and facilitate decisionmaking, we examine how street gangs use accounting. We also analyze how business targets react to receiving extortion demands. The analysis illustrates that both street gangsters and their extortion targets have a pre-existing existential relationship to accounting that influences how street gangsters use accounting as well as how business targets respond.

The objective of this paper is to problematise the fundamental assumption, shared by standard-setters and extant literature, and one that is taken-for-granted in the recent debate on accounting financialisation, that “fair value is a market-based measurement, not an entity-specific measurement” (IFRS 13.2). The paper shows how it is both. This is done by stepping outside the conventional disciplinary resources of accounting – economics and finance – and mobilising an alternative value framework: Ferdinand de Saussure's semiology. Semiology's value is a two-dimensional constellation, i.e. a relational product of other values in the system (the market) and in the statement (the firm). With this framework, the paper analyses measurement practices prescribed by IASB's guidance to explicate its underlying implicit concepts as distinct from those formally proclaimed in IASB's recent Conceptual Framework Exposure Draft (CFED). Such analysis leads to two main insights. First, the entity-specific perspective is reframed as sensitivity to interrelations between value-bearers in the statement, thus avoiding the frequently assumed though contestable dichotomy between present objective facts (market) and subjective estimation of the future (entity-specific). Second, fair value measurement is shown to incorporate – in a manner that is inherent to the standard-setter's own perspective and not merely as a matter of imperfect implementation – both market-based and entity-specific dimensions. IASB's measurement practices are more in line with semiology's framework of two complementary inputs (the market and the entity), than with the CFED's two dichotomous outputs (fair value or value-in-use), and the market/entity contrast is thus conceptually fractured.

We examine the influence of rationalization on NYC taxi drivers’ decisions to cheat their customers. We find that cheating ramps up by an order of magnitude when taxi drivers are in settings where it is easier for them to view cheating as acceptable as opposed to dishonest. This finding provides field evidence support for the idea that self-concept maintenance plays an important role in preventing fraud, and that fraud in economic exchange multiplies when participants can rationalize cheating in a way that precludes it from affecting their self-concept.

Prior research generally presumes that auditors assess better-supported management estimates as more reasonable. By contrast, I find that auditor’s reasonableness assessments regarding an estimate are not entirely based on the degree of management support, but are instead conditional on the level of estimate uncertainty. Drawing on information processing theory, I predict that auditors will assess an estimate as more reasonable when there is alignment between the degree of management support and the level of uncertainty versus when there is misalignment. I test this prediction using an experiment with experienced auditors and find that the level of uncertainty interacts with the degree of management support. Auditors assessed management’s estimate as less reasonable and expected a larger adjustment when management obtained less evidential support for an extremely uncertain estimate. More notably, however, auditors assessed management’s estimate as more reasonable and expected a lower adjustment when management obtained less evidential support for a moderately uncertain estimate. These findings demonstrate how natural triggers, such as misalignment between support and uncertainty, can decrease auditors’ reasonableness assessments of management estimates.