Woody M. Liao

Professionalism, organizational‐professional conflict and work outcomes: A study of certified management accountants

This study examines the relationships among professionalism, organizational‐ professional conflict and various work outcomes for a sample of Certified Management Accountants. We assessed professionalism using Hall’s Professionalism Scale, and tested the relationships among professionalism, organizational‐professional conflict, organizational commitment, job satisfaction and turnover intentions using a structural equations model. The results indicate that two dimensions of professionalism (dedication to the profession and autonomy demands) were positively associated with perceptions of organizational‐professional conflict. As hypothesized, individuals who perceived higher levels of organizational‐professional conflict were less committed to the organization, had lower levels of job satisfaction and also had higher turnover intentions.

The Effects of Public Venture Capital Investments on Corporate Governance: Evidence from IPO Firms in Emerging Markets

This study examines the impact of public venture capital (hereafter PVC) investments on corporate governance of initial public offering (hereafter IPO) firms in emerging markets. Using data collected from Taiwan PVC investments during 1996–2005, we analyse three corporate governance features in IPO firms: earnings management, board characteristics, and excess control by controlling shareholders. We find that PVC-backed firms use fewer accounting accruals in their IPO financial statements than non-PVC-backed firms. This result suggests that PVC-backed IPO firms engage in less earnings management than non-PVC-backed IPO firms. We also find PVC-backed firms tend to set up their boards with fewer non-independent directors and supervisors at IPO. This result indicates that PVC-backed IPO firms have better board structures than non-PVC-backed IPO firms. Finally, we find that controlling shareholders are less likely to exert excess control in PVC-backed firms than in non-PVC-backed firms. Overall, our results indicate that PVC investments add value to new IPO firms not only in financing their capital needs but also in creating better corporate governance structures in emerging markets.

EFFECTS OF RESPONSIBILITY AND COHESIVENESS ON GROUP ESCALATION DECISIONS

This paper reports the results of an experimental study examining the joint effect of two group characteristics, responsibility and cohesiveness, on escalation of commitment in an ongoing unsuccessful project. Two levels (high/low) of group responsibility and group cohesiveness were manipulated to examine their effects on group escalation decisions. Forty-eight 3-member decision groups were formed and randomly assigned to four treatment cells with 12 groups in each cell. The results of a 2×2 ANOVA reveal a significant main effect of responsibility on escalation of commitment, as well as a significant interaction of responsibility and cohesiveness. Specifically, groups with both high responsibility and high cohesiveness committed the largest amount of resources to an ongoing unsuccessful project. These results provide support for the proposition that group responsibility and cohesiveness exert significant joint effects on group escalation of commitment in an ongoing unsuccessful project. The findings suggest that periodic changes of group membership to shift responsibility and cohesiveness may generate new attitudes and views to reduce group escalation of commitment.

An investigation of market response to earnings announcements : multinational firms versus domestic firms

Abstract Capital market responses to accounting earning annoucements have been well documented in the accounting literature. These responses may vary with firm size, analyst following, and other variables. This study investigates the effect of multinational operations as a proxy for operational and informational complexity on market responses to earnings announcements. The results show that multinational operations provide significant explanatory power for market responses to earnings announcements after controlling the factors of firm size and analyst following.

Financing policy, executive stock options and cash flow forecasts

This article investigates the relationship between management voluntary disclosures of cash flow forecasts and external financing policy, earnings management, earnings forecasts and executive stock option compensation. We find that management is more likely to issue cash flow forecasts when a firm has external financing needs or when a firm has more executive stock option compensation. However, management is less likely to disclose cash flow forecasts when a firm has more earnings management. Consistent with the prior research, we document that a firm with high dividend payout, large asset value and high profitability tends to disclose cash flow information to convey good news. Further, if analysts have released earning forecasts, management is likely to issue cash flow forecasts to complement those analyst earnings forecasts. If analysts release cash flow forecasts, management is less likely to disclose cash flow forecasts to avoid issuing repeat forecasts. Our results, therefore, suggest that different incentives drive management disclosure decisions regarding cash flow forecasts in actual practice.

An Experimental Examination of Perceptions of Fairness on Transfer Pricing Decisions and Firm Profit

Transfer pricing is an important managerial decision in a decentralized firm. Analytical research has proposed that different transfer pricing methods are better for different information circumstances in a firm. For example, when information asymmetry is high, the information advantage of the negotiated method generates higher firm profits than the cost-based method. But, when information asymmetry is low, the cost-based method provides more firm profits. Yet so far little empirical evidence exists that identifies when a particular scheme performs better than others in practice. The main challenge remains that it is difficult to apply analytical prescriptions without proper considerations of managerial behavior issues. For example, perceptions of fairness may influence a manager’s decisions, willingness to trade and thus the firm’s performance. This study develops a model that examines the potential influences on willingness to trade (transfer pricing method, information asymmetry and perceived fairness) and then the influence of willingness to trade on company profit. Overall, we find that transfer pricing methods, information asymmetry and perceived fairness influence willingness to trade and that willingness to trade is positively associated with company profit. Finally, perceived fairness was a significant variable when perceptions of fairness, willingness to trade, transfer pricing method and information asymmetry were regressed on firm profits, indicating that perceptions of fairness had the most significant influence on firm profits in this study.