Anthony P. Curatola

Time‐based competition

This study reports the experience of management from 83 electronic plants located in the USA in dealing with time‐based performance. The general finding is that by managing time effectively, a firm is able to enjoy reductions in manufacturing cost, warranty cost, and more importantly increased market shares. Also, despite some prominent features offered by some of the more advanced quality related techniques, such as quality function deployment technique (QFD) and the Taguchi methods, our survey showed that very few electronic firms in the sample have actually adopted either of these two techniques. Yet consistent with the robustness of these theories, results indicate that those firms embracing these methods experienced a greater reduction in product development time. Thus, our study has important implications for manufacturing firms, particularly those which are still searching for better ways to improve their product development time. For example, according to Ray Stata, the president of Analog Device “The thing that hung us up for the longest time in the product development area is that we didn’t have anybody in the company who had a clue as to how to improve product development. It wasn’t that we didn’t think it was important, but how do you do it?”.

BEHAVIORAL IMPLICATIONS OF ALTERNATIVE GOING CONCERN REPORTING FORMATS

The generally accepted method of presentation with respect to going-concern reporting in a global context is to modify the auditor’s report with an explanatory paragraph in addition to having a separate note to the financial statements. In Canada, however, the auditor’s report is clean, and the going concern uncertainty is restricted to the endnotes. This research, using Canadian students as subjects and conducted as a between-subjects experiment, examines unsophisticated investor’s behavior to the signal conveyed by different reporting formats by auditors (U.S. versus Canadian). The results indicate that the form of the auditor’s report does significantly influence subjects’ decisions to invest and their perception of risk.

An experimental investigation of the intentions to accrue and disclose environmental liabilities

There is ample evidence that many firms do not fully disclose environmental liabilities. Since it is likely that full disclosure of these liabilities may lead to greater accountability by a firm, it is important to identify factors related to the treatment and disclosure of these specific liabilities. This study reports on factors found to be related to the intentions of 263 financial executives to accrue and disclose environmental liabilities based on scenarios developed for this research. Using the Theory of Planned Behavior, we find that intentions to accrue and disclose environmental liabilities are positively related to an executives attitudes, subjective norms, perceived behavioral control, and sense of obligation. We also provide evidence that the magnitude of the environmental and financial consequences has a positive, significant relation to these intentions and find that financial executives from privately held companies are less likely to accrue and disclose environmental liabilities than those from companies that are publicly traded. These findings suggest that encouraging positive attitudes toward environmental accruals and disclosures, enhancing the behavioral control of financial executives over the accrual decision, and heightening their moral obligation to disclosure these liabilities may lead to better accounting treatment and transparency of environmental matters.

Disclosure versus recognition in stock-option reporting: are sophisticated users’ perceptions and judgments influenced by the reporting format?

The recently passed Statement Financial of Accounting Standard (SFAS) 123R mandates that stock-option compensation costs be recognized in the income statement. This supersedes SFAS 148 and the earlier SFAS 123 which required only disclosure in the notes to the financial statements. The motivation of the Financial Accounting Standards Board (FASB) was to increase transparency in reporting of financial statements. The objective of this chapter is to test whether sophisticated users’ perceptions and judgments are affected by the different reporting format that has been mandated by SFAS 123R. Members of the Institute of Management Accountants (IMA) were used as the participants in this study. The study finds a (1) higher perceived risk, (2) lower expected accounting return, (3) more pessimistic overall perception, (4) more negative future stock price direction, and (5) lower stock price valuation by sophisticated users in the presence of recognition versus disclosure. These findings support the stance of the FASB and indicate that that information content is accentuated in the presence of recognition relative to disclosure.