P-01 Financial reporting fraud: How merger and acquisition complexity provide greater opportunities for CEOs to engage in wrongdoing

Using mergers and acquisitions (M&As) as a proxy to increase organizational complexity, we build upon Schnatterly et al.’s (2018) framework to addresses the gap in the management literature relating to how major firm disruptions, such as M&As, provide greater opportunities to entrenched CEOs for financial statement fraud due to higher levels of complexity. We extend the research on complexity-based information asymmetries (Ndofor et al. 2015) by empirically investigating whether accounting fraud is linked to M&As using a diverse set of variables. We propose the complex nature of M&A transactions result in higher information asymmetry, which provides a “veil” for self-interested CEOs who have an information advantage to engage in financial statement fraud. Comparing fraud firms with non-fraud firms during 1991-2016, we find evidence that fraud firms are more likely to be associated with M&As as compared to non-fraud firms using the Entrophy Balancing Method (EBM). We show similar results in Propensity Score Matching (PSM) analyses which controls for potential endogeneity to engage in M&As. Further analyses show that positive relationships between financial reporting fraud and M&As are more pronounced in more complex M&A transactions and that the positive relationship between M&As and frauds is more pronounced in M&As of a public target, stock-financed M&As, diversified M&As, larger M&As, multiple M&As, and M&As advised by investment bankers. These results also show that the positive relationship between reporting fraud and M&As is moderated post Sarbanes Oxley (SOX), for acquiring firms that engage Big N auditors and for firms with long tenured CEOs

Exploring Accounting Fraud in the Subsidiary Environment

This research explores accounting fraud in the subsidiary environment. Utilizing institutional theory, we propose that the subsidiary environment provides an opportune setting and vehicle for individuals to commit accounting fraud. While a growing body of literature exists on accounting fraud, minimal work has focused on the role of the subsidiary in accounting fraud, as reported by the Securities and Exchange Commission (SEC). We sample companies for which the SEC has documented accounting fraud in their enforcement releases. We then analyze the related SEC documents to determine to what extent, if any, a subsidiary is involved in the accounting fraud. Our preliminary results provide evidence related to the industries, circumstances and types of accounting fraud that take place in a subsidiary environment. These findings provide auditors, regulators, and designers of management control systems with additional insights as to the factors surrounding fraud when companies operate in a subsidiary environment

CEO Demographics and Accounting Fraud: Who is More Likely to Rationalize Illegal Acts?

This article proposes that key CEO demographic factors reflect alternative modes of rationalizing the choice to engage in and/or facilitate accounting fraud. Specifically the authors theorize that younger, less functionally experienced CEOs and CEOs without business degrees will be more likely to rationalize accounting fraud as an acceptable decision. Based on a sample of 312 fraud-committing and control firms, the study finds support for the authors’ predictions. It also finds that CEO stock options (a form of executive equity incentive) also predict fraud, and that this relationship is not moderated by CEO demographics. The study thus extends upper echelon theory by demonstrating how key demographic variables influence CEO decisions to rationalize accounting fraud

Economic Thought: A Biblical Perspective

The research contributes to the ongoing debate of capitalism or socialism as a Christian\u27s economic thought. Following Jesus Christ\u27s exemplary life, the research concludes that Jesus Christ is variously portrayed as a social reformer, revolutionary socialist and compassionate capitalist. Therefore, Christians must have the same economic thought

Leprosy at the edge of Europe-Biomolecular, isotopic and osteoarchaeological findings from medieval Ireland

Relatively little is known of leprosy in Medieval Ireland; as an island located at the far west of Europe it has the potential to provide interesting insights in relation to the historical epidemiology of the disease. To this end the study focuses on five cases of probable leprosy identified in human skeletal remains excavated from inhumation burials. Three of the individuals derived from the cemetery of St Michael Le Pole, Golden Lane, Dublin, while single examples were also identified from Ardreigh, Co. Kildare, and St Patrick's Church, Armoy, Co. Antrim. The individuals were radiocarbon dated and examined biomolecularly for evidence of either of the causative pathogens, M. leprae or M. lepromatosis. Oxygen and strontium isotopes were measured in tooth enamel and rib samples to determine where the individuals had spent their formative years and to ascertain if they had undertaken any recent migrations. We detected M. leprae DNA in the three Golden Lane cases but not in the probable cases from either Ardreigh Co. Kildare or Armoy, Co. Antrim. M. lepromatosis was not detected in any of the burals. DNA preservation was sufficiently robust to allow genotyping of M. leprae strains in two of the Golden Lane burials, SkCXCV (12-13th century) and SkCCXXX (11-13th century). These strains were found to belong on different lineages of the M. leprae phylogenetic tree, namely branches 3 and 2 respectively. Whole genome sequencing was also attempted on these two isolates with a view to gaining further information but poor genome coverage precluded phylogenetic analysis. Data from the biomolecular study was combined with osteological, isotopic and radiocarbon dating to provide a comprehensive and multidisciplinary study of the Irish cases. Strontium and oxygen isotopic analysis indicate that two of the individuals from Golden Lane (SkCXLVIII (10-11th century) and SkCXCV) were of Scandinavian origin, while SkCCXXX may have spent his childhood in the north of Ireland or central Britain. We propose that the Vikings were responsible for introducing leprosy to Ireland. This work adds to our knowledge of the likely origins of leprosy in Medieval Ireland and will hopefully stimulate further research into the history and spread of this ancient disease across the world.</p

Scriptural Foundations for Accounting

Accounting—seeking to keep trustworthy records to benefit others—is an honorable endeavor for a committed Christian. A Christian accountant reliably keeps the books so the financial reports faithfully represent the business activities of the company.https://digitalcommons.andrews.edu/faith-and-learning-books/1003/thumbnail.jp

Examining External Validity Criticisms in the Choice of Students as Subjects in Accounting Experiment Studies

This paper addresses choice of subjects in experiments with particular attention paid to the use of students. We first review the literature concerning internal and external validity concerns with respect to subject type choice followed by a discussion of experimental design. We then review six of the leading accounting journals, evaluating and comparing subject types used in published articles employing experiments during the period 1994-2007 inclusive. Our results show that many accounting researchers have used student subjects, both undergraduate and graduate, in their research while making relative(v significant contributions to the accounting literature. Jn designing and conducting experiments, extant literature provides guidance whereby researchers employing students, particularly undergraduate students, can mitigate potential external validity concerns. Researchers should conduct manipulation checks with at least some "real world" subjects to compare with student subjects. If differences are found, then researchers will need to redesign their experiments in order to address external validity concerns

Linking data analytics to real-world business issues: The power of the pivot table

One challenge facing accounting graduates and practitioners is acquiring sufficient data analytic skills. Using a moderately large and complex dataset from a privately owned company, the case illustrates how data analytics can help illuminate and resolve business issues. Special emphasis is placed on using pivot tables, which enable users to summarize and group large datasets into condensed reports quickly and in a variety of ways. Upon completing the case, you will be able to (a) identify appropriate parameters and criteria needed to address the concerns of senior managers, (b) create appropriate pivot tables using Microsoft Excel, (c) prepare written memorandums that summarize managers’ concerns, explain the usefulness of the findings, and make recommendations based on critical thinking to enhance their understanding of business issues. Optional instructions for data visualization using Tableau are included. The case is appropriate for undergraduate and graduate accounting information systems, business analytics courses, and professional training

Business Ethics – Deontologically Revisited

In this paper we look at business ethics from a deontological perspective. We address the theory of ethical decision-making and deontological ethics for business executives and explore the concept of “moral dutyâ€\x9D as transcending mere gain and profit maximization. Two real-world cases that focus on accounting fraud as the ethical conception. Through these cases, we show that while accounting fraud – from a consequentialist perspective – may appear to provide a quick solution to a pressing problem, longer term effects of fraud and misconduct make ethical implications more apparent. Widely used compensation schemes also may have the tendency to fuel unethical behavior. We argue that an ethical reinvigoration of the business world can only be accomplished by encouraging the business realm to impose upon itself some measure of self-regulating along the lines of deontological ethics. Principles of deontology should guide executive decision-making particularly when executives are tempted to operate outside of codified legislation or are bound to act under judicial-free conditions. Copyright Springer Science+Business Media, Inc. 2007Deontological ethics, Business ethics, Consequentialism, Utilitarianism, Accounting fraud,