Management's Desire Research Articles

Auditors' response to management confidence and misstatement risk

Corporate managers display varying degrees of confidence, but investors appear to have difficulty distinguishing when management's high confidence is warranted (i.e., when it signals accuracy and/or future positive outcomes). Archival research finds that the managers associated with proxies for high confidence are actually “overconfident” because their choices ultimately resulted in personal and shareholder losses, on average. Auditors are experienced in evaluating management and are trained to be professionally skeptical, and users rely on them to reduce the information risk around noisy signals in financial reporting. Therefore, we investigate whether and how management confidence impacts auditors' response to the risk of material misstatement (RMM). Audit standards are explicit that auditors should increase testing and acquire more reliable evidence as RMM increases. Accordingly, we conduct an experiment, varying management confidence in their explanations about an accounting estimate and RMM at the client. We find, consistent with the thought-suppression literature, that although auditors universally believe relying on management's explanations without corroboration is inappropriate and that high confidence signals management's desire to induce auditor reliance, they do not distinguish their response to RMM when management confidence is high. When management confidence is low, auditors appropriately perform more testing for clients where RMM is higher than lower. Auditors' testing judgements moderate their likelihood of pursuing inquiry evidence for higher than lower risk clients when management confidence is high versus when it was low. Our finding is troublesome because deceitful managers can readily manipulate confidence and influence the explanations and inquiry evidence presented to auditors. Thus, our research offers evidence that auditors' tendency to be influenced by high management confidence can play a contributing role in the observed association between high management confidence and biased financial reporting.

A CONDUÇÃO EFICIENTE DE UM PROCESSO ADMINISTRATIVO DISCIPLINAR COMO APOIO À GESTÃO PÚBLICA

The article under the auspices of studies aims to elucidate issues pertinent to the Disciplinary Administrative Process (PAD), and an existing disparity with the Inquiry instrument, in order to conceptualize them as connected and opposing spheres. Therefore, the resolution of the project fails to comply with the search for an analysis of the effectiveness, importance and legal basis of the administrative instruments, considering the current legislation, jurisprudence and corresponding doctrines, in order to avoid formation of processes that present defects and nullities, being -the so-called unnecessary to public management. It was possible to obtain by design that the duty of managers in investigating disciplinary infractions, transcends the mere opening of the appropriate administrative procedure. This is because in addition to being associated with public management, the operator must maintain conduct in compliance with constitutional principles, in opening and judging unnecessary procedures. In a conclusive way, it appears that the Public Administration cannot, as an employer, relieve available absences practiced by its employees, even though its labor expression is of enormous quality. The resulting understanding promotes, finally, the opening of such procedures only when based on elements that make their continuity and useful completion essential, in order to satisfy Management's aspirations and desires. Thus, to encourage the study, the applied precept will be the deductive method and the dialectical hermeneutics, starting from a generalization to a particularized question, with the intention of considering the social practices, in the Administrative-Legal scope, in order to explore the means that use the Administration, to stigmatize its administrators.

A note on big data analytics capability development in supply chain

Big data analytics (BDA) are gaining importance in all aspects of business management. This is driven by both the presence of large-scale data and management's desire to root decisions in data. Extant research demonstrates that supply chain and operations management functions are among the biggest sources and users of data in the company. Therefore, their decision-making processes would benefit from increased use of BDA technologies. However, there is still a lack of understanding of what determines a company's ability to build BDA capability to gain a competitive advantage. In this study, we attempt to answer this fundamental question by identifying the factors that assist a company in or inhibit it from building its BDA capability and maximizing its gains through BDA technologies. We base our findings on a qualitative analysis of data collected from field visits, interviews with senior management, and secondary resources. We find that, in addition to technical capacity, competitive landscape and intra-firm power dynamics play an important role in building BDA capability and using BDA technologies.

Loan Loss Provision, Good Corporate Governance Dan Manajemen Laba Bank di Indonesia dan Malaysia

The development of the banking sector in Indonesia and Malaysia is growing rapidly, fierce business competition encourages management's desire to improve performance and comply with banking regulations with earnings management reported by banks. The aimed of this study provides empirical evidence of the influence of Loan Loss Provision (LLP) and Good Corporate Governance (GCG) on Earnings Management in banks in Indonesia and Malaysia. The research method used is multiple linear regression analysis using a sample of six banks with the largest assets in each country during the 2015-2018 periods. The results of this study prove that (1) LLP and GCG affect earnings management at banks in Indonesia (2) LLP has no effect on earnings management at banks in Malaysia, while GCG affects earnings management at banks in Malaysia. The application of financial accounting standards IFRS 7 on financial instruments requires provision for impairment losses early so as to reduce the need for management in managing earnings; this further strengthens the need for PSAK 71 to be implemented in the banking sector in Indonesia effectively from 2020. In addition, the GCG mechanism in both countries also went well so as to be able to influence the practice of earnings management in banks. DOI: http://doi.org/10.26905/afr.v3i1.4555

Ambition Is a Fabulous Word.

Ambition Is a Fabulous Word.

FUNDRAISING ZAKAT PADA BAZNAS KABUPATEN TANAH DATAR PASCA PERATURAN BAZNAS NOMOR 02 TAHUN 2016 TENTANG PEMBENTUKAN DAN TATA KERJA UNIT PENGUMPUL ZAKAT

The purpose of this study was to explain the strategies and constraints of zakat fundraising on BAZNAS in Tanah Datar District after the BAZNAS Regulation Number 02 of 2016 concerning the Establishment and Administration of Zakat Collection Units. This type of research is field research with a descriptive qualitative approach. The results showed that the fundraising strategy implemented by BAZNAS in Tanah Datar District before and after or after the BAZNAS Regulation No. 02 of 2016 concerning the Establishment and Work Procedure of the Zakat Collection Unit was almost the same. The strategies are: first, a direct strategy, which includes: conducting zakat socialization, opening zakat outlets / counters, serving zakat consultations via telephone, serving picking up zakat, infaq, and almsgiving, and serving zakat receipts at the office. Second, the indirect strategy includes media campaigns and submission of BAZNAS reports in Tanah Datar District. Nevertheless there are emphases on several aspects after the issuance of these regulations. While the constraints faced by BAZNAS Tanah Datar District are: First, the derivation of regulatory uncertainty after the issuance of BAZNAS Regulation No. 02 of 2016 concerning the Establishment and Work Procedure of the Zakat Collection Unit. Second, the management's desire to focus on the ASN zakat that has not been managed 100%. Third, lack of human resources in the area of zakat fundraising.

Pengaruh Perencanaan Pajak Terhadap Manajemen Laba Pada Perusahaan Yang Termasuk Dalam Jakarta Islamic Index

Taxes have a direct impact on reduction of a company's profits. Tax levy which the government should do without harming the public. Given the management's desire to press and make the tax burden as small as possible, so the management tends to minimize tax payments.Earnings management is an effort made by the management to intervene in the preparation of financial statements in order to benefit himself, namely the related companies.This study aims toexamine and obtain empirical evidence on the influence of tax planning on corporate earnings management practices included in the Jakarta Islamic Index.Population research was all the companies joined in the Jakarta Islamic Index. Sampling technique using purposive sampling, the sample with criteria of company that have audited financial statements and ended on December 31 and published in full from 2012-2016. Selection of selected samples of 28 companies. Data analysis using linear regression analysis. The results showed thattax planning had a significant positive effect onearnings management practices of companies included in the Jakarta Islamic Indexwith a magnitude of influence of only 8.9%. Hypothesis testing states theeffect of tax planning on profit management practices. The value of the regression coefficient is positive which indicates that the higher from tax planning, will improve thepractice of earnings managementsignificantly. The influence of tax planning on earnings management practice is 8.9%. The implication of this research such as the management press and make the tax burden as small as possible, so the management tends to minimize the tax payment with various efforts, as long as the activity is still in the applicable taxation regulation.

Organizations as biomes of entrepreneurial life: Towards a clarification of the corporate entrepreneurship process

In 1983, Robert A. Burgelman published an influential paper in the field of strategic entrepreneurship, holding that the autonomous entrepreneurial initiative of employees and top management's desire for it might be simultaneously present, simultaneously absent, or go in opposite directions, yielding paradoxical results. To the best of our knowledge, this proposition, that translates into four types of organizations with regards to the process of corporate entrepreneurship, has however never been empirically tested before. Our results partially confirm Burgelman's ideas, while uncovering an unexpected transitional organizational archetype. Borrowing from Biology we metaphorically identify these archetypes as biomes of entrepreneurial life. This study takes an important step towards understanding the corporate entrepreneurial process, contributing not only to scholarship in the domain, but also rendering our conclusions particularly relevant for practitioners. The uncovering of a transitional archetype also holds significant implications for the main entrepreneurship literature in what refers to startup teams.

Real Earnings Management: A Threat to Auditor Comfort?

SUMMARYReal earnings management (REM) is an increasingly common method of manipulating financial results, yet little research examines auditors' perceptions of and responses to REM. Using the auditor comfort framework (Pentland 1993; Carrington and Catasús 2007), we examine the extent to which REM impacts auditor comfort and how, in the presence of REM, auditors rely on comfort-building strategies in trying to move from a state of discomfort (i.e., fear of failing to identify misstatements) to comfort. Based on in-depth interviews of 20 experienced auditors, we find that auditors are aware of REM and often identify REM through formalized protocols that include analytical procedures, discussions with management, or their knowledge of the business. Formal audit procedures play a role when trying to address, “rationally,” the risk of REM, but we also find that auditors use emotive phrases and references to body senses related to discomfort, indicating that there also is an emotional component to dealing with REM (Guénin-Paracini, Malsch, and Marché-Paillé 2014). Most of the interviewees have concerns about REM (i.e., it threatens comfort), largely because they believe that it is indicative of management's desire to meet short-term targets (i.e., poor management tone), and that it may signal the use of other, less acceptable earnings management methods (i.e., accruals-based earnings management) to meet those targets. Interviewees respond to the discomfort caused by REM in many ways, including engaging in discussions with the client, increasing skepticism, and altering audit procedures and risk assessments. Auditors may even go as far as resigning from an engagement because of REM. Our analysis reveals that REM is a significant source of auditor discomfort and that auditors use both their rationality and their emotions/body senses to identify and try to alleviate that discomfort.

This is Your Hometown: Collective Memory, Industrial Flight, and the Fate of Freehold, New Jersey

Established in 2012, the New Jersey Studies Academic Alliance (NJSAA) Graduate Student Award recognizes excellence in graduate writing about New Jersey history. It is presented for a paper written by a graduate student that best represents significant research and writing about any aspect of New Jersey history. The 2015 award went to Mr. Cohen.***Freehold, New Jersey faced two major moments of deindustrialization in the post-World War II period. In the late 1950s, the rug mill that sat at the center of the town's economic and cultural life began to close down. In 1986, a 3M audio-visual tape plant that had helped the town avoid economic ruin shut down as well. This paper illustrates the continuities between these closings, challenging the dogma in labor history that plant closings occur because of management's desire to avoid an entitled and demanding workforce. Though workers at both plants were unionized, neither the rug mill nor the 3M workers made major demands on their employers in the postwar period. This paper analyzes the conditions that prompted shutdowns in Freehold, illustrating the role of broader market forces as well as internal company dynamics in driving capital flight. Furthermore, a close look at the 3M closing reveals the importance of culture in workers' responses to deindustrialization. Following 3M's announcement of its plans to shut down the Freehold plant, workers began a national media campaign to save their jobs. At the heart of this campaign was the memory of the rug mill that had closed 25 years earlier, as represented by their campaign anthem, Bruce Springsteen's 1984 song "My Hometown." This paper demonstrates the role of memory and music in shaping workers' experience with deindustrialization as well as the struggles of unions to codify the relationship between capital and community in the twentieth century.

Corporate reporting of intellectual capital: evidence from the Bangladeshi pharmaceutical sector

Purpose– The purpose of this paper is to provide an understanding of the intellectual capital (IC) reporting practices of the Bangladeshi pharmaceutical industry, one of the most significant industries to the Bangladeshi economy. It investigates the extent and qualitative characteristics of IC disclosures made by listed pharmaceutical companies in Bangladesh.Design/methodology/approach– Data are gathered through a content analysis of the 2006 annual reports of 16 pharmaceutical companies quoted on the Dhaka Stock Exchange. The content analysis is performed by IC topic (i.e. categories and subcategories) and three semantic properties of IC disclosure: first, format (i.e. discursive, numerical but non-monetary, numerical-monetary and visual); second, news-tenor (i.e. positive, neutral and negative); and three, time-orientation (i.e. forward-looking, non-time-specific and past-oriented).Findings– Results suggest a clear awareness among the Bangladeshi pharmaceutical companies of the significance of IC in corporate value creation and a commitment to publicly communicating IC. Some evidence is found of the need to manage stakeholder relationships, and legitimacy and impression management motives underpinning the management's desire to disclose IC. Also, proprietary cost theory explains the variation in the disclosure of types of IC. The Bangladeshi pharmaceutical companies did not adopt a consistent framework for IC reporting. A lack of consistency in reporting IC was also evident as the extent and subcategories of IC disclosures varied among companies. The findings indicate the Bangladeshi pharmaceutical companies may not have properly measured and managed their IC.Research limitations/implications– There are two main limitations specific to this study. First, it only provides a snapshot of IC disclosure practices of Bangladeshi pharmaceutical companies in 2006. Changes may have taken place since then that would have affected the IC-intensity and IC utilisation of these entities. Second, the study's sample is limited due to its focus on one industry. However, it is representative of the population as it includes more than two-thirds of Bangladeshi pharmaceutical companies. This limitation affects the ability to conduct statistically meaningful analyses for testing any hypotheses relating to IC disclosure.Originality/value– This is the first study on IC reporting practices of Bangladeshi pharmaceutical companies. Unlike most prior studies on IC disclosure practices, this study measures the quality of disclosures by analysing their semantic properties. The paper highlights the need for building organisational competencies in managing, measuring and reporting IC in Bangladesh.

Interrogating ‘Digital Korea’: Mobile Phone Tracking and the Spatial Expansion of Labour Control

This study investigates the realistic conditions of ‘digital Korea’, especially as they are exemplified by the Samsung SDI scandal in South Korea. Samsung SDI, the world's largest plasma TV maker and a subsidiary of the Samsung Group, has fallen under suspicion due to using illegally cloned mobile phones to track the location data of some activist workers who tried to organise a union. The study stresses that this example of mobile tracking represents the shady side of mobile phone use created by management's excessive desire for labour control, and confirms that mobile tracking techniques make possible the spatial expansion of the scope of power. The spatial vocabulary of power is not totalitarian, but dispersed and nomadic in action, and resides in the space of ‘flows’ constructed by electronic impulses. This study discloses that, for private corporations, mobile tracking facilitates a form of efficient, invisible labour control over ‘targeted’ workers, even outside the workplace. It concludes that the control of labourers in Korea has been reinforced by the confluence of business interests, the under-developed political system and a societal lack of interest in privacy.

Accountability and Control as Catalysts for Strategic Exploration and Exploitation: Field Study Results

This paper reports the collective finding from 102 field studies that look at the relationship between two organization design variables: span of control and span of accountability. Clustering the data yields propositions suggesting that the relationship between these variables may be an important determinant of strategic exploitation and exploration activities. Data from the field studies suggest that, in accordance with the controllability principle, accountability and control are tightly aligned for exploitation activities. However, this result was found in only a small number of tasks and functions. In the majority of situations, spans of accountability were wider than spans of control. This Entrepreneurial Gap is posited to be a result of management's desire for innovation and exploration-and used as a catalyst for changing strategy, creating high levels of customer satisfaction, or motivating people to navigate complex matrix organizations.

Accounting change as relational drifting: A field study of experiments with performance measurement

This paper narrates attempts to manufacture performance measures, including a balanced scorecard (BSC). Throughout the field encounter with a business unit of an Australasian telecommunications organisation, various performance measurement approaches were trialled in an effort to obtain a stable suite of metrics. However, in spite of management's desire to improve performance through measurement, the considerable amount of time and resources committed to this project, as well as the intermittent assistance of ‘experts’, such desires remained unfulfilled. Instead, the performance agenda retained an unsettled quality. This unsettledness is argued to be a product of the relationally-dependent and experimental nature of accounting change. Through this account of performance measures ‘in the making’, we engage with recent debates about the nature of accounting change and augment the concept of ‘drift’ introduced by Quattrone and Hopper [Quattrone, P., Hopper, T., 2001. What does organizational change mean? Speculations on a taken for granted category. Manage. Acc. Res. 12(4), 403–435]. We offer the notion of ‘relational drifting’, thus highlighting the situated and experimental means through which accounting inscriptions are fabricated. We also highlight the inherent unsettledness of accounting as a ‘knowledge object’—an object which reflects partial and changing ‘ontologies’, (re)shaped by the variegated and shifting collectives of elements tied to it.

Outsourcing: Pros and cons

Overseas outsourcing of jobs is far more complicated than is generally understood. Pressures to outsource range from better-serving overseas markets to increasing the competitiveness of American business. Outsourcing—domestic and international—responds to management's desire to focus the firm's in-house activities on its core competence. A negative side to outsourcing results from companies doing so simply because “everybody is doing it.” They may be surprised by accompanying factors such as unexpected costs and complications, as well. Governmental policymakers need to realize that foreign companies outsource more business services to the United States than American firms send overseas.

A Simple Matter of Control? NHS Hospital Nurses and New Management*

ABSTRACT Over the past two decades the National Health Hospital Service has been subjected to considerable changes in is organization. ‘New’ public sector management (NPM) has been given the task of changing hospital culture and making service provision more efficient. Nurses, as the largest occupational group within the National Health Service (NHS), have attracted considerable management attention and there are two distinct accounts concerning how NPM has supposedly gained control of the nursing labour process. Firstly, it is proposed that the physical division of labour of health care professionals is now firmly in the hands of hospital management through the use of Tayloristic techniques. Secondly, alternative accounts suggest that public sector organization cultures have been successfully orientated toward a customer service ethos, and that the convincing discourse of ‘quality’ is achieving some success as a normative control device.This paper investigates the responses of nurses to NPM, whichever form this may take, and presents data collected as part of a longitudinal study carried out in an NHS Trust hospital. It charts the changes which have occurred in the nursing labour process over a six year period, but especially draws upon more recent data to show how nurses, over a period of time, develop their own ways of reinterpreting management's desires. It argues that management is more likely to continue to rely on nurses’ traditional autonomy in the delivery of health care in recognition that nurses may resist some but accommodate many of the demands made of them.

Supervising Unethical Sales Force Behavior: How Strong is the Tendency to Treat Top Sales Performers Leniently?

Findings from prior research show that there is a general tendency to discipline top sales performers more leniently than poor sales performers for engaging in identical forms of unethical selling behavior. In this study, the authors attempt to uncover moderating factors that could override this general tendency and bring about more equal discipline for top sales performers and poor sales performers. Surprisingly, none were found. A company policy stating that the behavior in question was unacceptable nor a repeated pattern of unethical behavior offset the general tendency to treat top sales performers more leniently than poor sales performers. In an attempt to dig deeper to find a significant moderating effect, two follow-up experiments were conducted. In the first follow-up experiment, a specific training program designed to communicate top management's desire to treat ethical matters equally based on the severity of the act had no effect on equalizing the discipline between top sales performers and poor sales performers. In the second follow-up experiment, a stronger company policy that specified a prescribed level of punishment also failed to equalize the discipline. A superior sales performance record appears to induce more lenient forms of discipline, despite the presence of other factors and managerial actions that are specifically instituted to produce more equal forms of discipline. The answer to the question posed in the article title is, "apparently very strong!"

RAISING CONTINGENT CAPITAL: THE CASE OF CEPHALON

In early 1997, Cephalon, Inc., a biotechnology firm, purchased 2.5 million capped call options on its own stock, with a potential value of as much as $45 million, in exchange for $9.8 million worth of its common shares. Cephalon's first major drug, Myotrophin, was under review by the U.S. Food and Drug Administration, and Cephalon's management reasoned that, upon FDA approval, the company's stock would rise in value to reflect the future value of the drug, in which case the call options would pay off and the firm could use the proceeds to help fund commercialization of the drug. The managers thus viewed the call options as a form of “contingent capital,” capital that would be available only if and when the firm needed it.The availability and cost of financing constitute major uncertainties for any company and perhaps even more so for a biotech firm. But was the options transaction a cost‐effective way to raise capital? The authors' analysis suggests that the cost of the capped calls—underwriting fees, expenses, underpricing, and market impact—was quite high compared to alternative sources of financing that may have been available to Cephalon in the wake of a favorable decision by the FDA. An equally interesting aspect of this case is that the size of Cephalon's funding requirements was determined in large part by accounting rules and management's desire to report higher (non‐cash) earnings.

EBM in healthcare: management and policy.

The nature of policymaking often precludes a significant role for formal evidence-based practice. Management practice is also bereft of formal evidence and appears unlikely to change because of the methodological constraints on collecting good evidence. Despite this, policymakers and managers are keen to promote evidence-based clinical practice. This, in part, reflects rational management's desire to standardise the clinical process and develop the profession's accountability to the management hierarchy. To the extent that clinical practice is dependent on organisational settings, this push is inevitable. Widespread and persistent small-area variation in clinical practice, and concern over apparent high levels of avoidable error, make doctors vulnerable to these efforts to standardise clinical practice.

Capture and transfer: improving the performance of the pharmaceutical sales rep

This article presents research findings from a case study of a company's pharmaceutical sales force working in the UK and Ireland. We explore how changes in the nature of the customer and the competitive environment are impacting on the way management are structuring the work process and the nature of skills required. A central focus is whether these changes are pushing management to increase the skills and knowledge of sales reps or are encouraging the use of a more rigid and less autonomous form of work organization. Can we identify a shift of this occupational group either towards the 'knowledge' worker end or towards the routinized service worker end of the skill/control spectrum? By analysing the relationships between customer, employer and employee, we evaluate how changes in the pharmaceutical industry and the reorganization of the UK's national health service (NHS) have led management to re-evaluate the balance between control and autonomy in managing sales reps' work. We argue that management's desire to empower and upskill reps, through the 'capture and transfer' of knowledge and the recruitment of higher qualified individuals, was being undermined by the use of forms of control which reduced autonomy and routinized the work process. The routinization approach was more pervasive, despite the beliefs by many reps that it was inappropriate for successful selling within the particular customer environment and its negative impact on job satisfaction and labour turnover. Our evidence would refute any assertion of a general trend towards more skilled and autonomous work, showing that there remain considerable pressures on management to control and downskill their workforce, despite the benefits of autonomous working.