The Chief Information Officer: Impact on Organizational Forecasting Outcomes

Management earnings forecasts are essential sources of information for organizational shareholders. However, many companies remain in a quandary about how to develop an appropriate governance structure within top management to produce high-quality forecasts. This study investigates how firms with chief information officers (CIOs) impact organizational outcomes in terms of both the frequency and the bias of management earnings forecasts. We integrate the following theories to formulate our hypotheses: upper echelons theory, agency theory, and information processing theory (in conjunction with strategic management literature). Using a sample of firm-years (2000 to 2010), we find robust support for the proposition that firms with CIOs are associated with reduced opportunistic bias in earnings forecasts. In addition, we find that, as information uncertainty increases, firms with CIOs generate management forecasts less frequently and exhibit a reduction in optimistic forecasting bias. Collectively, these findings provide a theory-based understanding of how firms with CIOs can influence forecasting outcomes

Economic consequences of firms' depreciation method choice: Evidence from capital investments

This study identifies several interrelated reasons why firms' depreciation method choice is likely to influence managers' capital investment decisions. We find that firms that use accelerated depreciation make significantly larger capital investments than firms that use straight-line depreciation. Further, we find that there has been a migration away from accelerated depreciation to straight-line depreciation over the past two decades. Firms that make such accounting changes make smaller capital investments in the post-change periods than in the pre-change periods. These results suggest that a choice made for external financial reporting purposes influences managers' capital investment decisions.Depreciation method choice Capital investments Straight-line depreciation Accelerated depreciation