Marianne M. Jennings

Social responsibility and supply chain relationships

Abstract We use the term purchasing social responsibility (PSR) to describe the involvement of purchasing managers in socially responsible activities. The purpose of the research is to examine the potential impact that PSR might have on supply chain relationships. Our findings suggest that PSR has a direct and positive impact on supplier performance, as well as an indirect, mediated effect through improved trust and cooperation. These findings hold important implications not only for purchasing managers but also logistics managers in the areas of customer service, distribution, and business-to-business marketing.

Why An International Code of Business Ethics Would Be Good for Business

Many international business training programs present a viewpoint of cultural relativism that encourages business people to adapt to the host countrys culture. This paper presents an argument that cultural relativism is not always appropriate for business ethics; rather, a code of conduct must be adapted which presents guidelines for core ethical business conduct across cultures. Both moral and economic evidence is provided to support the argument for a universal code of ethics. Also, four steps are presented that will help ensure that company ethical standards are followed internationally.

Causality as an influence on hindsight bias: An empirical examination of judges' evaluation of professional audit judgment

Abstract Evaluators often overestimate, ex-post, their ability to have predicted a known outcome. Arguably, judges and juries, in turn, blame external auditors for their failure to anticipate negative client outcomes and to disclose what in hindsight is outcome diagnostic information. The extent to which judges succumb to nonnormative hindsight bias may relate to the perceived feasibility (or ease) of reconstructing a causal relationship between the outcome and antecedent conditions. That is, hindsight bias arguably relies upon: (1) the ability of the evaluator, ex-post, to reconstruct a cogent causal series of related events leading up to the outcome, and (2) the tendency of overestimate the ex-ante likelihood of the reconstructed scenario. If ease of causal reconstruction of events is determined to enhance hindsight effects, remedial attention might be directed at this feature of the phenomenon. An experiment was conducted involving 96 general jurisdiction judges. We examined whether the nonsusceptibility of events to causal reconstruction would serve to moderate the magnitude of hindsight effects. Our hypothesis was that if an outcome could be attributed to a causal series of related events, judges would exhibit greater hindsight bias than if an outcome was perceived to be unforeseeable. That is, outcomes attributable in increasing degree to unforeseen causes were expected to be associated with decreasing hindsight effects. Results confirmed these expectations; implications for audit legal liability are also discussed.

An empirical examination of the influence of the “new” US audit report and fraud red‐flags on perceptions of auditor culpability

In 1988, the US standard form audit report experienced its first major modification in 39 years. Among the objectives of the “new” report were better auditor/user communications leading to, among other things, an abridgement of auditor liability. Nearly a decade later, this issue has yet to be addressed empirically and with rigour. The empirical research reported examines the ability of the “new” audit report to reduce perceptions of auditor responsibility/liability across two instances of alleged audit failure. It is argued that a jurist’s advantage of “perfect hindsight” may mitigate the effectiveness of revised communications contained in the audit report, in instances where audit risk at the time of the audit appears high. Accordingly, consideration of environments of both high and low perceived risk were provided in a behavioural experiment conducted with 81 investors serving as subjects. Findings reveal that the revised audit report language may provide relief for auditor liability, but the presence of red‐flags, or red‐flag related environmental conditions, may exacerbate negative perceptions.

The ethics of worker safety nets for corporate change

Corporate change and employee dislocation are inevitable in a free market. However, the current employment relationship in the U.S. that affords a perceived employment safety net is contrary to the natural canon of honesty. Employees cannot be guaranteed employment when a company fails or a product is no longer viable. Attempts to provide costly employment safety nets cause a firm to allocate resources to nonproductive programs that may ultimately cause a loss of competitiveness. These strategies to provide alternate employment may provide only short-term solutions. But even short-term safety nets against unemployment may be sending employees unrealistic messages ... a permanent safety net against unemployment. As a result, employees may lose incentive to be innovative in creating their own personal safety nets. The resolution is candor about the risk of employment. A false employment safety net is not what employees want or need and in the long run it may be detrimental to American competitiveness.

Just how much should a financial statement really disclose

Abstract Financial statements should provide the information that users need to make economic decisions. Traditionally its the auditor who decides what material facts must be presented. Not all preparers agree on what is material, however, and neither do the people who use the financial statements.