Joanna L. Y. Ho

Hope: An empirical study of attitude toward the timing of uncertainty resolution

Hope is experienced when there is enjoyment in delaying the resolution of uncertainty. The main objective of this article is to identify the phenomenon of hope. In addition, we empirically test several axiomatic theories of temporal preferences which have implications for attitudes toward the timing of uncertainty resolution. Overall, the data support the extension of recursive expected utility specification to incorporate a weighted utility model of attitude toward future uncertainty. We find that the instances where hopefulness are more prevalent tend to be associated with a small probability of occurrence of a large gain. Interestingly, the degree of hopefulness is not correlated with risk attitude.

Effects of Outcome and Probabilistic Ambiguity on Managerial Choices

Information ambiguity is prevalent in organizations and likely influences management decisions. This study examines, given imprecise probabilities and outcomes, how managers make choices when they are provided with single-figure benchmarks. Seventy-nine MBA students completed two experiments. We found that, in a decision framed as a decision under certainty involving an ambiguous outcome, the majority of the subjects were ambiguity prone in the loss condition and switched to ambiguity aversion in the gain condition. However, in the presence of probabilistic ambiguity in a decision under risk, this expected switching pattern was shown only when the difference in riskiness between the two choice options (in the loss condition) was perceived to be relatively small. In a companion study, we used a written protocol approach to identify factors that affect decision makers investment choices when faced with ambiguous outcomes. Protocols frequently mentioned that the ambiguous outcome option was risky, even in the case which was framed as a decision under certainty in the problem statement. In a decision under risk with ambiguous outcomes, the combination of probabilistic risk and outcome ambiguity was seen as even more risky.

Opportunism in Capital Budget Recommendations: The Effects of Past Performance and Its Attributions*

This study uses an experiment to examine the separate and combined effects of managers loss aversion and their causal attributions about their divisions performance on tendencies to make goal-incongruent capital budget recommendations. We find that managers recommendations are biased by their loss aversion. In particular, managers of high-performing divisions are more likely than managers of low-performing divisions to propose investments that maximize their divisions short-term profits at the expense of the firms long-term value. We also find that managers recommendations are biased by their causal attributions. In particular, managers are more likely to propose investments that maximize their divisions short-term profits at the expense of the firms long-term value when they attribute their divisions performance to external causes (e.g., task difficulty or luck) rather than to internal causes (e.g., managerial ability or effort). Further, the effects of causal attributions are greater for managers of high-performing divisions than for managers of low-performing divisions. The studys findings are important because loss aversion and causal attributions are often manifested in firms. Thus, they may bias managers decisions, which in turn may be detrimental to the firms long-term value.

Exploring the Extent and Determinants of Knowledge Sharing in Audit Engagements

Audit firms are faced with increasing demands for audit efficiency and effectiveness. Increasing knowledge sharing in audit engagements can help them respond to this challenge, and this study seeks to advance understanding of the extent and determinants of such sharing. Data collected from auditors of two Big Four audit firms suggest that both firms have high, but far from complete, levels of knowledge sharing. The factors identified as affecting such sharing range from characteristics of the client to attributes of the audit firm, audit team and individual auditors. A framework is proposed for organizing these factors and relationships.

Seeking Value Through Deviation? Economic Impacts of IT Overinvestment and Underinvestment

This study addresses the economic impacts of information technology IT overinvestment and underinvestment decisions. Based on the view of Red Queen competition in conjunction with institutional theory, we hypothesize that overinvestment and underinvestment in IT have nonlinear performance impacts. Drawing on the idea of management control mechanisms, we further hypothesize that the performance impacts are conditional on ownership concentration. Using a sample of S&P 500 firms, we find that, on average, there is a positive relationship between a firms overinvestment in IT and Tobins q, although that relationship attenuates at higher levels of overinvestment. However, there is, on average, no relationship between a firms underinvestment in IT and its Tobins q. Importantly, the payoff for underinvestment becomes positive for companies with founding-family ownership. Implications for research and practice are discussed. n nThe online appendix is available at https://doi.org/10.1287/isre.2017.0710 .

The Impact of Management Control Systems on Efficiency and Quality Performance —An Empirical Study of Taiwanese Correctional Institutions

Management control systems (MCS) have been widely suggested as a key framework with which organizations can increase the probability that people make decisions and take actions congruent with the entire goals of the organizations. Most of the previous studies have mainly focused on efficiency performance, and we have little knowledge of the impact of MCS on both quality and productivity performance. In this study, we use both non-parametric data envelopment analysis (DEA) and parametric stochastic frontier analysis (SFA) to examine how MCS affects efficiency and quality performance in correctional institutions. Our results show that correctional institutions in Taiwan have considerable technical inefficiency, which is attributable to their unfavorable resource usage. We also find that correctional institutions with tight MCS have higher efficiency and quality performance. Our overall results support the argument that tight control systems can be used to achieve efficiency and quality performance.

The effects of culture and contextual information on resource allocation decisions

Purpose - This study examines resource allocation behaviors of U.S. and Taiwanese managers to help multinational firms understand the potential for divergence in resource allocations under different contextual conditions by managers from different national cultures. Design/methodology/approach - The experimental design was developed as a 2 (national culture) x 2 (degree of project completion) x 2 (nature of market information) factorial design. The first two were between-subject factors. Since we would investigate subjects’ responses to both favorable and unfavorable conditions, the nature of market information was designed as a within-subject factor. Also, to avoid an order effect, half of the subjects first received favorable information and then unfavorable information, and the other half received the market information in the opposite order. Questionnaires were distributed randomly to subjects. Findings - Our results show that Taiwanese managers are less willing than U.S. managers to continue a project in the presence of favorable information, but that both groups are equally willing to continue the project when receiving unfavorable information. Furthermore, Taiwanese managers allocate more funds than U.S. managers do when the project is near completion. We use uncertainty avoidance and individualism to explain the different judgment and decision behaviors of these two cultural groups. Research limitations/implications - In this study, we examine only two contextual factors in resource allocation contexts. There are other important contextual factors associated with national culture that should be scrutinized, such as risks involved in each project, incentive plans related to performance evaluation, and information asymmetry between central managers and division managers. It would be interesting for future studies to examine these factors in conjunction with different dimensions of national culture. Originality/value - This study provides empirical evidence of the impact of different aspects of national culture (i.e., uncertainty avoidance and collectivism/individualism) on managerial resource allocation in light of different degrees of project completion and different types of market information. The results of our experiment add to both practice and theory of management. The findings of this study help top-level managers better understand the effects of national culture on division managers’ resource allocations. Hence, it may be possible to design incentive schemes and decision aids to mitigate the divergence in judgments and decision making that can be attributed to cultural differences. This study also contributes to the management literature by extending our knowledge of complex managerial resource allocation decisions by incorporating the role of national culture with contextual factors.