Important Clients Research Articles

Net Losses and the Relationship between Auditor Independence and Client Importance: Evidence from a Cubist Regression-Tree Model

ABSTRACT This paper uses a cubist regression-tree model to explore when and why auditors compromise their independence. Using data from companies in Taiwan, we study the association between client importance and auditor independence. The results show a positive relationship between client importance and auditor dependence when clients report net losses in the current year. We also find that auditors allow more important clients to manage their discretionary accruals slightly upward, but the clients still report net losses on their financial statements. This suggests that auditors may impair their independence for clients with certain characteristics and acceptable levels of audit risk.

Clients and Oncogenic Roles of Molecular Chaperone gp96/grp94.

As an endoplasmic reticulum heat shock protein (HSP) 90 paralogue, glycoprotein (gp) 96 possesses immunological properties by chaperoning antigenic peptides for activation of T cells. Genetic studies in the last decade have unveiled that gp96 is also an essential master chaperone for multiple receptors and secreting proteins including Toll-like receptors (TLRs), integrins, the Wnt coreceptor, Low Density Lipoprotein Receptor-Related Protein 6 (LRP6), the latent TGFβ docking receptor, Glycoprotein A Repetitions Predominant (GARP), Glycoprotein (GP) Ib and insulin-like growth factors (IGF). Clinically, elevated expression of gp96 in a variety of cancers correlates with the advanced stage and poor survival of cancer patients. Recent preclinical studies have also uncovered that gp96 expression is closely linked to cancer progression in multiple myeloma, hepatocellular carcinoma, breast cancer and inflammation-associated colon cancer. Thus, gp96 is an attractive therapeutic target for cancer treatment. The chaperone function of gp96 depends on its ATPase domain, which is structurally distinct from other HSP90 members, and thus favors the design of highly selective gp96-targeted inhibitors against cancer. We herein discuss the strategically important oncogenic clients of gp96 and their underlying biology. The roles of cell-intrinsic gp96 in T cell biology are also discussed, in part because it offers another opportunity of cancer therapy by manipulating levels of gp96 in T cells to enhance host immune defense.

The Influence of Institutional Investors on Analyst Earnings Forecast Properties

Analysts are motivated to fulfill client demand for information, and institutional investors are sell-side analysts’ most important clients. Following time allocation theory, analysts likely prioritize tasks and the firms they follow to maximize their overall utility. I posit analysts issue more accurate and informative earnings forecasts for firms that provide greater expected utility to the analyst. Using the firm’s exposure to institutional investors, as a measure of expected utility, I find that analysts report more accurate forecasts for firms with greater exposure to institutional investors. In addition, I find evidence that analysts issue more informative earnings forecasts for firms with greater exposure to institutions that rely on private information, specifically institutions with transient investment strategies. These findings suggest that analysts allocate greater forecasting resources to firms with more exposure to priority clients and issue more informative and accurate forecasts for these firms.

Auditor tenure and accounting conservatism: evidence from Greece

Purpose This study aims to examine the relationship between auditor tenure and conservatism for firms in Greece. Greece not only has a high incidence of earnings management but is also required under the new European Commission (EC) regulation to comply with mandatory auditor rotation. Therefore, Greece is an ideal setting in which to study the association between auditor tenure and accounting conservatism. Design/methodology/approach Similar to Jenkins and Velury (2008), this paper uses Basu’s (1997) asymmetrical timeliness of earnings as a measure of conservatism. Following Li (2010), the regression is re-estimated for subsamples based on client importance as measured by the ranking of client sales among all clients audited by the firm. Findings In contrast to Li (2010), the results of this study, which used a sample of firms in Greece, indicate that conservatism decreases as the auditor–client relationship lengthens. Client importance does not appear to affect the relationship between auditor tenure and conservatism, as measured by asymmetric timeliness of earnings. However, when using the accrual–cash flow measure of conservatism (Ball and Shivakumar, 2005), it is found that auditor tenure is positively (negatively) associated with conservatism for less (more) important clients. The results suggest that longer auditor tenure may have a negative impact on audit quality in certain countries where accounting quality has been found to be poor. Therefore, the new EC regulation requiring mandatory auditor rotation may in fact improve audit quality for firms in Greece. Research limitations/implications This study’s sample consists of firms on the Athens Stock Exchange for the period of 1998-2011. This sample was purposely selected because of the unique conditions of rampant earnings management and low incentive in Greece for the auditors to exert effort to detect such practices. Moreover, Greece is subject to the new EC regulations requiring mandatory auditor rotation beginning in 2014. Future studies could examine this issue in alternate settings and over different time periods. Also, other cross-sectional variations among firms which affect the association between auditor–client tenure and audit quality may exist. Practical implications The findings are important to regulators such as the EC and indicate that Greece may be an appropriate setting in which to require mandatory auditor rotation. These results are also useful to auditors who wish to improve the audit quality and the public’s perception of their work. Originality/value Auditor tenure has been the subject of considerable debate, and regulators contend that long auditor tenure reduces audit quality. There may be a valid argument in favor of mandatory auditor rotation in countries particularly susceptible to low accounting quality due to issues such as rampant earnings management. Greece appears to be one such example, and this study provides support in favor of that argument by demonstrating that longer auditor tenure may lead to lower accounting quality in terms of conservatism. Therefore, the recent EC regulation may result in improved audit quality for firms in Greece.

Monitor objectivity with important clients: Evidence from auditor opinions around the world

We examine whether monitors are likely to compromise their monitoring objectivity in the face of economically important clients in international business settings. In the context of external auditing and assurance services, we measure monitor objectivity by whether auditors are more (or less) likely to issue to their important clients modified audit opinions, that is, audit opinions provided to outside investors about the firm that demotes explicit areas of concern. Using a large cross-country sample, we document that auditors are more likely to issue modified opinions to their economically important clients relative to other clients. Furthermore, we find that this association is stronger (1) for Big N auditors, (2) for multinational audit clients, and (3) in countries with stronger legal regimes. These results suggest that monitors prioritize the protection of their reputation over lucrative economic relationships, and such information certification function is more pronounced for international auditors, multinational client firms, and in strong legal regimes.

Attitudes of social work students towards older people

Demographic ageing is a challenge for many countries. Even though Turkey has a relatively younger demographic composition, the proportion of the older people (65+) within the population is rapidly increasing. Within this framework, older people are becoming more important clients for both social work students and social workers in Turkey. This study aims to reveal the attitudes of social work students towards older people and determine the various factors that affect their views on older persons. In the scope of the project, Kogan's Attitude Towards Old People Scale was applied to 419 social work undergraduate students at a university located in Central Anatolia. The findings showed that social work students scored a mean of 130.96 and they generally had positive attitudes towards older people. The correlation between year of study, gender and age was not statistically significant. However, having lived mostly in urban areas was positively correlated with the mean Kogan scores and this finding was found to be statistically significant. Exposure to personal contact with older people at both the personal and professional levels was influential in shaping attitudes about the older people.

Do Smarter Auditors Have More Important Clients? Archival Evidence Based on Unique IQ Data on Swedish Auditors

This study examines the role of an individual auditor’s cognitive ability in delivering high-quality audits and in creating value for clients. Our results from analyzing data from Sweden show that audit partners’ IQ scores obtained from psychological tests are positively related to both audit reporting accuracy and the financial reporting quality of their client firms. We moreover find that an audit partner’s IQ is associated with the audit fee premiums paid both for audit and consultancy services indicating that clients are willing to pay a premium for services of more capable audit partners. Combined, our results show that although audit services are standardized through various control mechanisms and audits are conducted by teams rather than by individual auditors, cognitive ability of audit partners responsible for the audit is still important in delivering high-quality audit services.

Pch2(TRIP13): controlling cell division through regulation of HORMA domains.

During meiotic and mitotic cell divisions, numerous chromosomal processes are essential for the faithful transmission of the genetic material. Pch2(TRIP13), a generally conserved member of the AAA(+) ATPase (AAA(+)--ATPases associated with diverse cellular activities) family of ATPases, is rapidly emerging as a key regulator of specific chromosomal events. During the meiotic program, it is involved in controlling G2/prophase processes such as DNA break formation and recombination, checkpoint signaling, and chromosome synapsis. Excitingly, recent work has also implicated a role for Pch2(TRIP13) in wiring of the checkpoint that guards the metaphase-to-anaphase transition. For several of these functions, the Hop1, Rev7, and Mad2 (HORMA) domain-containing proteins Hop1(HORMAD), Mad2, and p31(COMET) are important downstream clients or cofactors of Pch2(TRIP13). Here, I will discuss our current understanding of the function of Pch2(TRIP13) during meiotic and mitotic cell divisions, with a focus on its enzymatic role towards HORMA domain-containing clients.

Programs for Partner-Violent Men: Shared Goals With Different Strategies

Currently, the most popular intervention in the problem of intimate partner violence (IPV) are shelter-based services for victims and the group program model for perpetrators. Since its establishment in the 1970s, the perpetrator group format has been adopted throughout the world, in various settings. Most services are directed at partner-violent men; however, there are initiatives for offering interventions for partner-violent women, lesbians, and gays (e.g., Hamel, 2014). Some smaller scale studies have indicated that these programs result in important changes and help clients stop their violent behavior; however, the effectiveness of these programs has yet to be demonstrated by research using the most rigorous experimental designs. Because there is currently no conclusive evidence on the effectiveness of these interventions, or best practices, many programs face challenges in justifying their work. In addition, many ideological disputes have characterized the development of the group programs. Given the many controversial viewpoints on these interventions, the aim of this article is to discuss some key issues concerning these programs’ history, development, and current challenges in both practice and research.

The Association between Audit-Partner Quality and Engagement Quality: Evidence from Financial Report Misstatements

SUMMARY We study whether audit-partner quality influences the probability of annual report misstatements (measured by restatements) and whether various levels of quality control attenuate such influences. We measure audit-partner quality with audit failure rate (i.e., the total number of audit failures associated with an audit partner divided by the total number of audit reports signed by the same partner). We report the following key findings. First, an audit partner's past audit failure rate is positively associated with the probability that the current year annual report that he/she audits is subsequently restated. This positive association is more pronounced for engagement partners (i.e., partners who actually conduct the audits) than for review partners (i.e., partners who review the audits). Incorporating audit-partner audit failure rates substantially increases the predictive power for future financial report restatements. Second, neither engagement-team-level nor audit-firm-level quality controls consistently attenuate engagement audit partners' influence on the probability of future restatements. Third, engagement audit partners' influence on the probability of future restatements becomes stronger for audits of more important clients. Taken together, the evidence suggests that, despite various levels of quality control, audit-partner quality significantly influences engagement quality and that such influences are exacerbated by the audit partners' own economic incentives. JEL Classifications: M42. Data Availability: Data used in this study are available from public sources.

E3 ubiquitin ligase Cullin-5 modulates multiple molecular and cellular responses to heat shock protein 90 inhibition in human cancer cells.

The molecular chaperone heat shock protein 90 (HSP90) is required for the activity and stability of its client proteins. Pharmacologic inhibition of HSP90 leads to the ubiquitin-mediated degradation of clients, particularly activated or mutant oncogenic protein kinases. Client ubiquitination occurs via the action of one or more E3 ubiquitin ligases. We sought to identify the role of Cullin-RING family E3 ubiquitin ligases in the cellular response to HSP90 inhibition. Through a focused siRNA screen of 28 Cullin-RING ligase family members, we found that CUL5 and RBX2 were required for degradation of several HSP90 clients upon treatment of human cancer cells with the clinical HSP90 inhibitor 17-AAG. Surprisingly, silencing Cullin-5 (CUL5) also delayed the earlier loss of HSP90 client protein activity at the same time as delaying cochaperone dissociation from inhibited HSP90-client complexes. Expression of a dominant-negative CUL5 showed that NEDD8 conjugation of CUL5 is required for client degradation but not for loss of client activity or recruitment of clients and HSP90 to CUL5. Silencing CUL5 reduced cellular sensitivity to three distinct HSP90 inhibitors, across four cancer types driven by different protein kinases. Our results reveal the importance of CUL5 in multiple aspects of the cellular response to HSP90 inhibition.

Office-Level Characteristics of the Big 4 and Audit Report Timeliness

SUMMARY: Recent changes in the audit and financial reporting environment have resulted in longer audit report lags and have increased the importance of identifying factors associated with a timely audit. We examine timeliness implications of office-specific attributes of the audit firm. Specifically, we examine whether office-specific industry expertise, office size, and the importance of the client to the local office are associated with audit delay (i.e., the time between fiscal year-end and the audit report date). We explore the sensitivity of our results to various measures and consider the impact of earnings quality. We examine two types of industry expertise and whether the aforementioned audit firm attributes are associated with a propensity to issue an early earnings announcement. We find that office-specific industry expertise is negatively associated with audit delay (for all but the largest quartile of firm offices) while office size and client importance are both positively associated with audit delay; however, the most important clients are associated with a more timely audit. Office-specific industry expertise is positively associated with the propensity to announce earnings substantially early and such expertise garnered via a product-specialist strategy is positively associated with audit delay relative to a low-cost specialist strategy. Our study provides further support for the importance of office-specific characteristics on audit and financial reporting outcomes and provides evidence of the benefit of office-specific industry expertise.

Bibliometrics and Research Data Management Services: Emerging Trends in Library Support for Research

Developments in network technologies, scholarly communication, and national policy are challenging academic libraries to find new ways to engage with research communities in the economic downturn. Librarians are responding with service innovations in areas such as bibliometrics and research data management. Previous surveys have investigated research data support within North America and other research services globally with small samples. An online multiple-choice questionnaire was used to survey bibliometric and data support activities of 140 libraries in Australia, New Zealand, Ireland, and the United Kingdom, including current and planned services, target audiences, service constraints, and staff training needs. A majority of respondents offered or planned bibliometrics training, citation reports, and impact calculations but with significant differences between countries. Current levels of engagement in data management were lower than for bibliometrics, but a majority anticipated future involvement, especially in technology assistance, data deposit, and policy development. Initiatives were aimed at multiple constituencies, with university administrators being important clients and partners for bibliometric services. Gaps in knowledge, skills, and confidence were significant constraints, with near-universal support for including bibliometrics and particularly data management in professional education and continuing development programs. The study also found that librarians need a multilayered understanding of the research environment.

Navigating conflict and power at work: the effects of power and interdependence asymmetries on conflict in organizations

AbstractMany of the most difficult conflicts people face at work are up and down; with bosses, supervisors, and important clients, or with direct reports, staff, or other employees who differ from them in terms of their power and interests. However, much of the research on power differences and conflict tends to be piecemeal, decontextualized, and focused on negative consequences. This paper presents 2 studies that investigated a new situated model of conflict and power at work. They build on classic areas of research on social conflict, power, and interdependence; and integrate them into a coherent framework for organizational conflict research. The study methods and findings are presented, and their implications for research on work conflict are discussed.

Mammalian iRhoms have distinct physiological functions including an essential role in TACE regulation

Loss of iRhom2, a catalytically inactive rhomboid-like protein, blocks maturation of TACE/ADAM17 in macrophages, resulting in defective shedding of the cytokine tumor necrosis factor. Apart from the resulting inflammatory defects, iRhom2-null mice appear normal: they do not show the several defects seen in TACE knockouts, suggesting that TACE maturation is independent of iRhom2 in cells other than macrophages. Here we show that the physiological role of iRhoms is much broader. iRhom1 knockout mice die within 6 weeks of birth. They show a severe phenotype, with defects in several tissues including highly penetrant brain haemorrhages. The non-overlapping phenotypes imply that iRhom 1 and 2 have distinct physiological roles, although at a cellular level both promote the maturation of TACE (but not other ADAM proteases). Both iRhoms are co-expressed in many contexts where TACE acts. We conclude that all TACE activity, constitutive and regulated, requires iRhom function. iRhoms are therefore essential and specific regulators of TACE activity, but our evidence also implies that they must have additional physiologically important clients.

Economic Dependence and Reputation Concern for the Audit Firm, Audit Groups, and Individual Auditors — The Case of Taiwan

Using a sample of 3,274 firm-year data from an internationally renowned accounting firm, we investigate the effects of auditor–client relationship on auditor quality (measured by absolute discretionary accruals (ABSDA)) from the perspectives of audit firm, audit group, and individual auditor, respectively. Our empirical results show that after taking account of the client size effect, the client's fee contribution to audit firm and to audit group is positively related to the client firm's ABSDA. The finding that audit firms and audit groups allow their important clients a higher level of ABSDA supports the economic-dependence hypothesis. Moreover, the economic dependence effect is more saliently found prior to the enactment of 2002 Sarbanes–Oxley Act. Furthermore, the other finding that senior individual auditors require their clients a lower level of ABSDA holds the reputation-concern hypothesis. A synopsis of the overall findings indicates that the argument of economic dependence prevails in the analysis of the audit firm and audit group, while the reputation concern prevails in the analysis of the individual auditor.

Hedge Funds and Analyst Conflicts of Interests

Are sell-side analysts reluctant to go against the investment views of their hedge fund clients? We show that analysts tend to upgrade stocks recently bought and downgrade stocks recently sold by hedge funds. Relative to other buy and strong buy recommendations, similar recommendations on stocks predominantly held by hedge funds parlay into poorer three-month and six-month stock returns. Hedge funds concurrently offload their stock holdings when analysts issue flattering reports. In line with an agency based explanation, our results are more pronounced for important brokerage clients such as high dollar turnover hedge funds and hedge funds who are prime brokerage clients of the analyst’s investment bank.

Your Former Employees Matter: Private Equity Firms and Their Financial Advisors*

This article shows that former investment bankers become important clients for their previous employers and also provide access to profitable business opportunities to their new private equity employers through their previous employment networks. I observe 1,326 individuals directly involved in 1,285 transactions, of whom a large majority have changed their occupation from financial advisor to private equity professional. The social networks arising from these labor market movements affect private equity firms’ choices of financial advisors, as well as the sourcing, pricing, and performance of deals.

About The Artist: Emilio Gil

About The Artist:Emilio Gil Dr. Malcolm Allan Compitello, Executive Editor The collages that grace the cover and content of this issue of the Arizona Journal of Hispanic Cultural studies are by Emilio Gil, Artistic Director of Tau Diseño one of one of Spain’s pioneering and most distinguished graphic design firms. They form part of a collection of 51 works titled “Mapas que no lo son” which was first on display in the Quintanar Palace Cultural Center in Segovia Spain in May 2013. “Mapas” opens up a new direction in the career of this seasoned design professional. It challenges the relationships between art and design in a way that fuses the disciplines and results in exciting new cultural creations based on a fascinating compilation of colors, techniques, textures and artistic conceptions any of which use elements of cartography in their construction. You can see an interview with Emilio Gil on the collection here: http://www.youtube.com/watch?v=wUm3h9quVXo Emilio Gil founded Tau Diseño in 1980. Since then Tau Diseño has produced work for a number of important private and public sector clients including UNICEF, El País Aguilar, Alfaguara, and Santillana publishing groups, Aldeasa, SGAE, Indra, Banco NatWest, Gesinar, Logista Osborne, Tabacalera, The City of Madrid, The Spanish Ministry of Culture and Ministry of Foreign Affairs, the International Monetary Fund (IMF) the World Bank Group and the Reina Sofía Museum and centennial celebrations of Felipe II y Carlos V, Goya 96 among many others them. Mr. Gil’s work has appeared in a number of studies and anthologies of design work and important national and international exhibitions and has garnered numerous Spanish awards for design as well as international honors from the New York Type Directors Club and the Donside Prize in Great Britain. Emilio Gil has lectured widely around the world and has offered a number of courses on such suggestive topics as Design or Propaganda? The Administrative Image of the State, Design in ‘Three Times’ From Guttenberg to Virtual Design, and Art=Design=Art? His work has also won the Premio a la Calidad en el Sistema Nacional de Salud in 2009 from Spain’s Ministry of Health for the inclusive signage system that TAU designed for the Hospital Virgen de las Nieves. Mr. Gil, who has been President of the Spanish Association of Design Professionals (AEPD) since 2009, has curated important exhibitions including the groundbreaking “Signo del Siglo, 100 años de Diseño Gráfico Español,” at Reina Sofía Museum in Madrid; “¿Dissenyes o diseñas?” [on Spanish and Catalan design], at the de la Generalitat de Catalunya’s [End Page 7] Blanquerana Cultural Center in Madrid, which later traveled to Barcelona and Berlin; “Cámera Panorámica: 120o Aniversario de la Cámera de Comercio e Industria de Madrid,” at the Centro de exposiciones El Aguila in Madrid; “24x365, Diseño Gráfico para la Comunicación Pública,” at the Círculo de Bellas Artes in Madrid; “FotoCAM.,” at Correos in Madrid; and “Grafistas, Graphic Design in Spain 1939-1975,” which was held at the National Museum of Decorative Arts in Madrid. He also was the editorial coordinator of the catalogues these exhibitions. Pioneers of Spanish Graphic Design: Constructing a Profession—Mr. Gil’s groundbreaking study of the 20th century foundations of Spain’s graphic design industry—has been published in both English and Spanish to great critical acclaim. He is currently working on a second volume of his book. Emilio Gil has also lectured and taught widely about graphic design in Spain and around the world, has served on the juries for important design prizes and has been a technical advisor on design issues to a number of private and public sector entities. [End Page 8] Dr. Malcolm Allan Compitello, Executive Editor The University of Arizona Copyright © 2013 The Board of Regents of the University of Arizona

A concept of student relationship management in higher education

Introduction The paper will present a novel marketing concept of relationship management in higher education and a justification of its application based on the specific character of educational services. The definitions of relationship and relationship management in higher education will be given. The paper will highlight key relationships that should be built by an educational institution with special emphasis placed on students as the most important clients of a school. The paper will proceed to elaborate on the concept of loyalty as the aim of building sustainable relationships with students and its specificity due to the special nature of an educational environment. A student relationship management model will be proposed and discussed as comprising three basic stages of the educational services provision: pre-sales, sales and after-sales stages. The presented model may serve as a basis for further theoretical research or may be applied in practice as it is.