Freddie Choo

An “American Dream” theory of corporate executive Fraud

Abstract In this paper, we first describe a “Broken Trust” theory that was introduced by Albrecht el al. [Albrecht, W. S., Albrecht, C. C., & Albrecht, C. O. (2004). Fraud and corporate executives: Agency, Stewardship and Broken Trust. Journal of Forensic Accounting, 5, 109–130] to explain corporate executive Fraud. The Broken Trust theory is primarily based on an “Agency” theory from economic literature and a “Stewardship” theory from psychology literature. We next describe an “American Dream” theory from sociology literature to complement Albrecht el al.s (2004) Broken Trust theory. Like the Broken Trust theory, the American Dream theory relates to a “Fraud Triangle” concept to explain corporate executive Fraud. Finally, we provide some anecdotal evidence from recent high profile corporate executive Fraud to explore the American Dream theory. We conclude our thoughts on corporate executive Fraud from a teaching perspective.

Data availability in accounting research: Some evidence

The data availability policy of the American Accounting Association is examined to address two research questions: (1) Are data dependent results in The Accounting Review readily available for further inquiry and dissemination of accounting knowledge? (2) What are the potential factors that may account for the availability or the lack of data? Several potential factors including job rank, number of revisions before acceptance, source of data, and funding source are suggested to account for the lack of data availability. The results indicate that, in general, authors are not willing to make their data available to others. We conclude by suggesting some options that may ameliorate the situation.

Accounting Student Characteristics From 2005–2010 Archival Transcript Data

Prior studies have investigated the characteristics of accounting students using survey data. The authors use archival transcript data to investigate some characteristics of accounting students at one institution, such as trend in graduation rates, distribution of male versus female students, and distribution of transfer versus native students. The authors found the grade from the first intermediate accounting class to be a reliable predictor of accounting student success at graduation. Gender and transfer status were not found to be strong predictors.

The effect of fraud triangle factors on students’ cheating behaviors

This study explores the effects of fraud triangle behaviors (pressure, opportunities, and rationalization) on students’ self-reported propensity to cheat in class. We found each fraud triangle factor to be an influence on the students’ propensity to cheat. Additionally, we observed a statistically significant three-way interactive effect indicating that all three factors jointly influence the students’ propensity to cheat. These findings provide insights for accounting educators concerned with preventing classroom cheating. They also confirm the call by Statement on Auditing Standards No. 99 for auditor focus on fraud triangle variables. This exploratory study also suggests that future research is needed to examine the interactive effects of personality characteristics with fraud triangle factors to better understand student cheating behaviors.

A Commentary on Sample Design Issues in Behavioral Accounting Experiments

Behavioral research in accounting deals with the behavior of accountants. As such, it uses accounting subjects. Accounting subjects are very difficult to come by because of the nature of the accounting environment. First, professional accountants operate in a pressured environment in which they have little or no time to participate in behavioral research. Second, professional accountants operate in an environment of high service charges and have little or no interest in participating in behavioral experiments free or for a token remuneration. Third, professional accountants are usually inaccessible because behavioral researchers have few or no opportunities for contacts within a CPA firm. Finally, professional accountants operate in the real world in which they perceive behavioral research as too abstract to have practical value for them to participate in. Given the difficulties in getting accounting subjects, behavioral researchers often lament that the pool of available accounting subjects is very small. As such, they cannot rely on conventional research strategies that assume, among other things, normal distribution and homogeneity of variances. In this paper, we suggest a broad range of research strategies including sampling, design, measurement, and analysis to deal specifically with a very small pool of available accounting subjects. We cite some prior behavioral accounting studies and refer to some statistic textbooks deemed best for the application of these research strategies. Our suggestions should benefit anyone doing behavioral research in accounting.

The American Dream and Corporate Executive Fraud

In this paper, we first describe a “Broken Trust” theory that was introduced by Albrecht el al. (2004) to explain corporate executive fraud. The Broken Trust theory is primarily based on an “Agency” theory from economic literature and a “Stewardship” theory from psychology literature. We next describe an “American Dream” theory from sociology literature to complement Albrecht el al.’s (2004) Broken Trust theory. Like the Broken Trust theory, the American Dream theory relates to a “Fraud Triangle” concept to explain corporate executive fraud in America. We are motivated to explain corporate executive fraud because whenever corporate fraud has been studied, CEOs and CFOs are most involved. For example, the COSO-sponsored study by Beasley et al. (1999) found that CEOs were involved in 72% of the financial statement fraud cases. The next most frequent perpetrators in descending order of frequency were the controller, COO, vice presidents, and members of the board. In addition, we are motivated to provoke thoughts on corporate executive fraud in American society and to stimulate further empirical research on social variables of executive fraud.