ABSTRACT This article explores how accounting ideas travel to unfamiliar environments and instigate new modes of calculation therein. The empirical focus is on the food balance sheet, a key calculative technology in the realm of food security. Drawing on Said's four‐stage schema for analyzing the movement of theories and ideas, this investigation traces the journeying of the balance sheet to the field of food security from the First World War, culminating in the institutionalization of the food balance sheet as a standardized and universal practice from the late 1940s. The study reveals the conditions that facilitated acceptance of the balance sheet idea in a new field—specifically, its alignment to the problem of managing the national and global supply of food, as well as the presence of individual actants who recognized its utility for communicating and addressing the problem of food insecurity during periods of global conflict and humanitarian crisis. These key individuals emanated from the United States, the dominant power in an age of internationalism. It is shown that conceptual traveling involved the jettisoning of core elements of the accounting construction of the balance sheet, but also their selective reimportation once the balance sheet became domesticated in its new location. The article offers original insights to the forces that generate calculative innovations in epistemic communities beyond accounting.

Abstract This paper examines earnings management in response to changes in tax planning and financial reporting incentives around the corporate income tax rate decrease from 35% to 21% enacted by Tax Cuts and Jobs Act (TCJA) of 2017. Given the higher level of book-tax conformity of real activities manipulation (RAM) relative to accrual-based earnings management (AEM), we hypothesize that firms concertedly use these techniques for different purposes. Specifically, we predict and find that firms use RAM to reduce taxable income prior to the TCJA with firms in our sample saving between $9.1 billion and $11.0 billion in taxes by shifting taxable income from the high-tax to the low-tax period. We also predict and find that firms use AEM, which has lower book-tax conformity than RAM, to simultaneously increase book income in the high-tax period. These results inform policymakers, regulators, and researchers on the economic effects of corporate tax reform.

ABSTRACT Complex accounting estimates are becoming increasingly important to financial statements. Yet, such estimates create ample opportunities for bias. Although both management and independent auditors are tasked with ensuring these estimates are free from error and bias, evaluating the appropriateness of these measures can be quite difficult. Drawing on unconscious thought theory, we predict and find across three experiments that engaging in unconscious thought can improve accounting practitioners’ evaluations of accounting estimates. In Experiment 1, we use practicing auditors as participants and find that unconscious thought improves less‐experienced auditors’ ability to recognize income‐decreasing patterns of bias. In contrast, more‐experienced auditors respond similarly to both incoming‐increasing and income‐decreasing bias, regardless of whether they use conscious or unconscious processing. In Experiments 2 and 3, we provide evidence that prompting managers to engage in unconscious thought also improves their recognition of patterns of bias within estimates. Overall, our findings demonstrate how unconscious processing can be intentionally prompted to improve accounting professionals’ ability to recognize subtle patterns of bias that they might otherwise overlook.

We examine how ETF adoption affects retail investor performance using a comprehensive panel of 524,181 Finnish investors tracked from 2007 to 2022. ETF adopters tend to be older, predominantly male, and more active, holding smaller but better-diversified portfolios. Importantly, first-time use of ETFs yields statistically significant improvements in risk-adjusted returns. ETF users also demonstrate greater portfolio resilience during financial crises. Our findings confirm that ETFs serve as effective tools for enhancing performance and managing risk for retail investors.

Abstract We formulate a tractable model of pricing under directed search with heterogeneous firm demands. Demand characteristics drive bids in a position auction and enable us to bridge insights from the ordered search literature to those in the position auction literature. Equilibrium pricing implies that the marginal consumer’s surplus decreases down the search order, so consumers optimally follow the firms’ position ordering. A firm suffers from “business stealing” by firms that precede it and “search appeal” from subsequent firms. We find rankings that achieve the maximal joint profit or consumer surplus by constructing firm-specific scores. A generalized second price auction for positions endogenizes equilibrium orders and bids are driven by position externalities that impact incremental profit from switching positions. The joint profit maximization order is upheld when firm heterogeneity concerns mostly their mark-up potentials. But the consumer welfare order is robust when firms differ mostly over their potential market sizes.

ABSTRACT We study how auditors prioritize tasks and how variations in task order influence auditors' performance. Drawing on conservation of resources theory, we develop and test our hypotheses through three experiments involving over 350 professional auditors. The first two experiments assess the impact of task order on performance. Across two settings, we manipulate task order and find that prioritizing an easier task generally results in lower performance compared with prioritizing a difficult task. In the third experiment, auditors are given autonomy over task ordering. We observe a tendency to prioritize easier tasks, particularly under heightened time pressure. We do not find any evidence that psychological ownership weakens the effect of time pressure on easy task prioritization.

Abstract We prove a central limit theorem for network formation models with strategic interactions and homophilous agents. Since data often consists of observations on a single large network, we consider an asymptotic framework in which the network size diverges. We argue that a modification of “stabilization” conditions from the literature on geometric graphs provides a useful high-level formulation of weak dependence which we utilize to establish an abstract central limit theorem. Using results in branching process theory, we derive interpretable primitive conditions for stabilization. The main conditions restrict the strength of strategic interactions and equilibrium selection mechanism. We discuss practical inference procedures justified by our results.