Public and Private Forms of Opportunism within the Organization: A Joint Examination of Budget and Effort Behavior

We assert that some forms of opportunistic behavior within the organization are relatively transparent and, therefore, public in nature. Further , while organizations can tightly control such public opportunism, it may not be optimal for them to do so in the presence of private opportunism. To study how public and private forms of opportunism differ and interact, we jointly examine budget and effort behavior in a participative budgeting experiment. We group participants into producer /manager pairs and set the parameters such that the producer extracts the largest share of surplus from the manager by publicly setting the budget at zero and privately providing low effort. When the producer unilaterally sets the budget, the public opportunism of budgetary slack is higher and more affected by learning than the private opportunism of low effort. Giving the manager the power to reject the budget not only reduces budgetary slack by about 50 percent, but also generates reciprocity expectations and behavior. In particular, managers who allow more budgetary slack expect and receive higher effort from their producers on average. This reciprocity increases organizational performance by increasing the expected pay of the manager without decreasing the expected pay of the producer

Auditor Communication Provisions in Private Loan Agreements:Do They Matter?

We examine auditor communication provisions (ACPs) in private loan agreements, which are private contracting mechanisms between external auditors and audit clients which establish communication between lenders and their borrowers' auditors. We provide evidence that lenders value privately-contracted auditor communication and often specify multiple ACPs that facilitate lender monitoring. In terms of debt contracting outcomes, we find ACPs are associated with a lower ex ante likelihood of loan covenant violation. We also examine audit fee implications for the borrower and find that ACPs are associated with higher audit fees, which is consistent with auditors responding to the litigation risk these provisions impose. We corroborate this by providing evidence that this relationship is concentrated in samples where the risk of third-party litigation is greater. Finally, we find evidence that ACPs lead auditors to become more conservative as their clients exhibit lower signed discretionary accruals when the risk of third-party litigation is greater

HIL: designing an exokernel for the data center

We propose a new Exokernel-like layer to allow mutually untrusting physically deployed services to efficiently share the resources of a data center. We believe that such a layer offers not only efficiency gains, but may also enable new economic models, new applications, and new security-sensitive uses. A prototype (currently in active use) demonstrates that the proposed layer is viable, and can support a variety of existing provisioning tools and use cases.Partial support for this work was provided by the MassTech Collaborative Research Matching Grant Program, National Science Foundation awards 1347525 and 1149232 as well as the several commercial partners of the Massachusetts Open Cloud who may be found at http://www.massopencloud.or

Serotonin and Depression: A Disconnect between the Advertisements and the Scientific Literature

Many ads for SSRI antidepressants claim that the drugs boost brain serotonin levels. Lacasse and Leo argue there is little scientific evidence to support this claim

Cerebellar vermian hypoplasia in a Cocker Spaniel

An eight-week-old female Cocker Spaniel was presented with ataxia, dysmetria and intention tremor. At 16 weeks, the clinical signs did not progress. Investigation including imaging studies of the skull and cerebrospinal fluid analysis were performed. The computed tomography revealed a cyst-like dilation at the level of the fourth ventricle associated with vermal defect in the cerebellum. After euthanasia, a cerebellar hypoplasia with vermal defect was identified on necropsy. A polymerase chain reaction amplification of cerebellar tissue revealed the absence of an in utero parvoviral infection. Therefore, the cerebellar hypoplasia in this puppy was consistent with diagnosis of primary cerebellar malformation comparable to Dandy-Walker syndrome in humans

Genomic Dissection of Bipolar Disorder and Schizophrenia, Including 28 Subphenotypes

publisher: Elsevier articletitle: Genomic Dissection of Bipolar Disorder and Schizophrenia, Including 28 Subphenotypes journaltitle: Cell articlelink: https://doi.org/10.1016/j.cell.2018.05.046 content_type: article copyright: © 2018 Elsevier Inc

Exploratory Experimental Evidence on Independence Impairment Conditions: Aggregate and Individual Results

Auditor independence and ethical behavior are closely related and both are influenced by economic incentives. This paper reports some exploratory results from experimental markets that investigate three general economic conditions that have been identified by the theoretical literature as necessary for an impairment of independence. Consistent with predictions, a lower frequency of independence impairment (auditor misreporting) was observed when any of the necessary conditions was absent than when all three conditions were present. However, some subjects maintained their independence even when all three necessary conditions were present, while others exhibited an impairment of independence in the absence of one or two of the three necessary conditions. These results document that the joint existence of all three conditions cannot be interpreted as strictly sufficient for an impairment of independence, and that each condition cannot be interpreted as strictly necessary. One possibility is that the variation in individual behavior may be attributed to individual differences in moral reasoning. Future research could address this possibility by using the Defining Issues Test to measure individuals\u27 levels of ethical cognition in an attempt to explain variation in their reporting behavior in experimental markets

A Theoretical and Experimental Examination of Strategic Auditor-Client Interaction

Strategic behavior between an auditor and a client can significantly increase both audit cost and achieved audit risk. This paper tests the widely cited Fellingham and Newman (1985) analytic model of strategic auditor-client interaction in a series of controlled experiments. The Fellingham and Newman model is tested in both single-period and multiperiod settings, with parameter values chosen to yield either a pure or a mixed Nash equilibrium strategy that is Pareto dominated by a strategy of mutual auditor-client cooperation. The Fellingham and Newman model is best supported by auditor behavior in both the single- and mutiperiod experiments of the mixed strategy Nash equilibrium setting. Generally, the Fellingham and Newman model fails to predict a significant proportion of observed auditor and client behavior. Much of the observed non-Nash behavior involves the socially beneficial strategy of mutual cooperation. Client and auditor behavior is also found to be sensitive to both the time horizon and the asymmetric nature of the auditor and client payoffs. Limitations of the Fellingham and Newman model and implications for future modeling of strategic auditor-client behavior in multiperiod settings are discussed

A Re-Examination of Behavior in Experimental Markets: The Effects of Moral Reasoning and Economic Incentives on Auditor Reporting and Fees

This study uses experimental markets to investigate how moral reasoning influences auditor reporting under different levels of economic incentives. In each multiperiod market, auditor subjects could either (1) misreport low observed outcomes as high and thereby reap economic advantages at the expense of third-party investors, or (2) truthfully report low observed outcomes as low but thereby forgo the economic advantages of misreporting. We extend the Calegari, Schatzberg, and Sevcik 1998 experimental-markets setting to incorporate moral reasoning, and test hypotheses based on the economic model of Magee and Tseng 1990 and the neo-Kohlbergian moral reasoning framework of Rest, Narvaez, Bebeau, and Thoma 1999. We document a significant effect of moral reasoning on auditor behavior. Specifically, we find that misreporting and premium fees are more likely with higher than with lower moral reasoning subjects, and the moral reasoning effect diminishes as economic penalties increase in the market. These findings provide valuable insights for specifying the determinants of auditor misreporting, the observable behaviors that signal its existence, and the institutions that can prevent its occurrence in the market. We conclude that the relation between moral reasoning and behavior is more complex than commonly assumed in the accounting literature, and identify directions for future research