Barton Research Connection - Summer 2019

Professor: Michael Imhof

The Barton School’s Dr. Michael J. Imhof, School of Accountancy, with co-authors Scott E. Seavey, Florida Atlantic, and Olena V. Watanabe, Iowa State, recently completed a research project focusing on the costs of public disclosure. Theory suggests that such costs, which Michael refers to as the proprietary costs of financial reporting, may lead to strategic financial reporting. The study found that financial statement comparability is decreasing in the proprietary costs of financial reporting. The results are robust to the use of alternative measures of comparability and alternative measures of proprietary costs of financial reporting. The study also explored the belief that financial reports will contain stronger signals of managers’ private information when information asymmetry is high.  Michael and his co-authors show that the negative relation between the proprietary costs of financial reporting and financial statement comparability is stronger for firms with poorer information environments. The findings suggest that through the discretion afforded in Generally Accepted Accounting Principles (GAAP), managers of firms with high levels of proprietary information report in a way that reduces the comparability of their financial statements, particularly when information asymmetry is high.

The article Competition, Proprietary Costs of Financial Reporting, and Financial Statement Comparability appeared in a recent edition of the Journal of Accounting, Auditing & Finance.

Professor: William Miles

Dr. William Miles, Department of Economics, recently completed a unique research project related to home prices and global imbalances.  He was the first to use endogenous break methods to explicitly test for whether the introduction of the euro has changed home value co-movement.  The research also employed informal correlation analysis.  Endogenous break results indicate no sustainable increase in co-movement attributable to the euro, while correlation analysis is suggestive of a decrease in synchronization since the currency’s introduction.  These results contradict previous claims on the impact of the common currency on house price synchronization.

Dr. Miles proposed a new approach to take account of the interactions between the current account and home prices. Nine countries-Australia, Germany, Ireland, Japan, The Netherlands, Spain, Switzerland, the UK and the US were examined. Some of these were “bubble” countries with current account deficits, while others such as Germany, Japan, The Netherlands and Switzerland ran trade surpluses and had more stable home values. After performing some largely descriptive exercises (correlation coefficients, Granger Causality tests) between the trade account and home values for these countries, he was able to find an “impact” of each variable on the other. The results presented here clearly indicate that that the trade balance has a palpable impact on home values, independent of any reverse effect of home values on the current account. This is important, as the interaction of external imbalances and home prices is an issue with importance beyond the real estate industry.

The complete research article will be published in an upcoming issue of KYKLOS. For more information about this article, you can email Dr. William Miles at william.miles@wichita.edu.

Professor: Christine Porter

Dr. Christine Porter, School of Accountancy, and her colleagues Adi Masli and Susan Scholz of the University of Kansas have recently unveiled a  model of the determinants of going concern reporting for banks. Their model draws on banking literature and industry sources to identify bank specific risk factors, including measures of capital adequacy, asset quality, liquidity, and regulatory concern. Christine and her co-authors discovered regulatory sanctions are a significant determinant of going concern opinions along with low capitalization, poor loan quality, and declining customer deposits and that these are incremental to characteristics drawn from studies of other industries. Also, going concern reports anticipate bank failures and provide descriptive evidence regarding Type I and Type II errors. Their research sheds light on the audit market for banks and add to the going concern literature by providing evidence on going concern reporting in this unique industry.

This research has appeared in a recent edition of Auditing: A Journal of Practice & Theory.

Professor: Stephen Porter

Dr. Steve Porter, Department of Marketing, former Barton School faculty member Dr. Fred Kraft, Grand Valley State, and Devdeep Maity, Delaware State, have recently completed a study of the effects of wellness on salesperson success.  In a recent published study they demonstrate the value of the salesperson wellness lifestyle by showing that it promotes the most adjustive form of coping strategy, problem-focused coping.

It is well known that job stress is major cause of salesperson job dissatisfaction and turnover. Salespeople require the resources to cope adequately with a multitude of job stressors, and the purpose of Dr. Porter’s study is to demonstrate that salesperson wellness promotes the ability of salespeople to use effective coping strategies in the workplace and as a result decrease their intentions of leaving the firm. The study demonstrated the influence of the wellness lifestyle on salespeople’s ability to cope effectively with job stress. It extends previous research by demonstrating the direct influence of salesperson wellness on coping behaviors and demonstrates the nomological validity of the wellness lifestyle construct by modeling its relationship with job satisfaction and the intent to leave the organization.

The results indicate that wellness programs may be introduced or improved following an assessment of coping resource weaknesses of the sales force.

This study was published in a recent edition of the  Journal of Business and Industrial Marketing. 

Professor: Steve Farmer

Dr. Steve Farmer, Department of Management, has continued his study of creativity and innovation in the workplace in a recently published article exploring how a passion for innovation can pay off for small and large organizations.  Steve with colleagues Mark Schenkel and John Maslyn of Belmont University have explored the factors that compel individuals in small businesses to engage in innovation activity. One of these factors, harmonious passion, was addressed in the study.  The findings suggest that harmonious passion toward being entrepreneurial leads to innovative activities and outcomes.  Harmonious passion is also a predictor of time spent on innovation and creative activity. 

The study illustrates the need for organizations to recognize that certain types of employees are more apt to engage in innovative activity.  This is true at all levels of the organizations including the CEO-level.  Steve and his colleague assert that harmonious passion reflects the capacity to serve as a unique and vital source of innovative process suggestions.  Thus, leveraging employee passion for innovation and entrepreneurial activity can prove fruitful.  This is especially true for SMEs (small/medium enterprises) that complete with larger, more resource-wealthy organizations.  The study’s results indicate that SMEs should work to recruit and retain employees with a harmonious passion for innovation and creativity.

This study was recently published in the Journal of Small Business Strategy.

Professors: Michael Imhof and Semih Tartaroglu

Drs. Michael Imhof, School of Accountancy, and Semih Tartaroglu, Finance, Real Estate and Decision Sciences, along with Olena V. Watanabe of Iowa State recently concluded a study of the changes in stock price informativeness following the European Union’s Transparency Directive (TPD). The TPD, implemented by EU countries between 2007 and 2009, enhanced corporate transparency through mandating regular firm financial disclosures and facilitating the dissemination of financial reports. Using stock return synchronicity as a proxy for stock price informativeness, they found that price informativeness improved following implementation of the TPD. This improvement was more pronounced in countries with strong regulatory environments than those with weak regulatory environments. The study also examined a later amendment to the TPD that eliminated the requirement of quarterly financial disclosures and document an increase in stock return synchronicity following the amendment. The findings confirm prior research suggesting that transparency regulations improve financial information.

The article “Transparency Regulation and Stock Price Informativeness: Evidence from the European Union’s Transparency Directive” was recently published in the Journal of International Accounting Research.

Professor: Khawaja Saeed

A recent study by Dr. Saeed examines factors that influence belief formation about perceived task control

and its influence on use intentions in the context of a mobile service related to financial life domain. Khawaja argues that users will evaluate the value of a mobile service from the perspective of achieving and maintaining an orderly situation with respect to a life domain. In terms of the practical implications of this study, financial institutions need to expand the scope of services delivered through mobile banking in order to enhance utilization. Features such as remote check deposit, account opening, loan application and processing, micro payments, and incorporating technologies such as Near Field Communication (NFC) can further strengthen the users’ perception regarding mobile banking as an enabler of control related to financial matters. The capability of the smartphones is expanding. When these capabilities are combined with expansion of services offered through the mobile channel, it provides the opportunity to not only get better engagement but also shift the traffic from physical locations to virtual space.

The article "Mobile Services as a Means to Control: An Empirical Assessment" appeared in a recent edition of the Journal of Computer Information Systems.

Professor: Theodore R. Bolema

Dr. Bolema suggests that if the current Congress is looking to increase federal protections for privacy on the Internet, itis important that any future proposals start from a firm foundation. Specifically, any privacy protection regime should be based on two key principles: that it will (1) be applied equally across platforms, and (2) be overseen by a single lead federal agency with the expertise and capability to protect broadband consumers.

Dr. Bolema posits that it is important that any future proposals to improve consumer protections in the Internet ecosystem start from a firm foundation so that the resulting policy will be applied equally across platforms and be overseen by the Federal Trade Commission, the only federal or state agency with the expertise and capability to protect broadband consumers. These two guiding principles generally apply to current federal policies aimed at protecting consumer privacy and should be preserved regardless of whether policymakers keep privacy regulatory authority unchanged or seek to strengthen the enforcement powers of the FTC.

The article "Protecting Privacy on the Internet: Key Principles for Any Reform" was published in The Free State Foundation Perspectives from FSF Scholars.