Social Psychology of Organizations

This paper presents a systematic and comprehensive meta-analysis of the literature on financial education interventions. The analysis focuses on financial education studies designed to strengthen the financial knowledge and behaviors of consumers. The analysis identifies 188 papers and articles that present impact results of interventions designed to increase consumers' financial knowledge (financial literacy) or skills, attitudes, and behaviors (financial capability). These papers are diverse across a number of dimensions, including objectives of the program intervention, expected outcomes, intensity and duration of the intervention, delivery channel used, and type of population targeted. However, there are a few key outcome indicators where a subset of papers are comparable, including those that address savings behavior, defaults on loans, and financial skills, such as record keeping. The results from the meta analysis indicate that financial literacy and capability interventions can have a positive impact in some areas (increasing savings and promoting financial skills such as record keeping) but not in others (credit default).

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Can You Help Someone Become Financially Capable? A Meta-Analysis of the Literature

In this systematic literature review, we evaluate the effectiveness of financial-literacy education programs and interventions for children and adolescents. Furthermore, the key characteristics of the design of a successful financial-education curriculum are described. The evidence shows that school-based financial-education programs can improve children’s and adolescents’ financial knowledge and attitudes. Studies that assess the intention to practice good behavior and studies based on self-reported behavior also report positive effects. However, studies that assess the effects of financial education on children’s and adolescent’s actual financial behavior are scarce, and show hardly any effect. A promising method to teach financial literacy to children and adolescents in primary and secondary school is “experiential learning.” In college, the focus should be on specific “life events” of students. The findings may be useful for designing an effective school-based financial education program.

A review of financial-literacy education programs for children and adolescents:

The majority of youth consistently receive failing scores on financial literacy tests—even those who have taken courses on personal finance or money management. Some specific programs, however, have demonstrated beneficial effects. Thus, it is imperative to identify the key considerations and promising delivery methods which may inform positive changes in financial literacy and/or behavior among youth. In the present study, we conducted a comprehensive review of the current literature on youth financial literacy education, with the goal of identifying characteristics of financial education programs which may influence positive changes. The findings from the literature on these key considerations and promising delivery methods are discussed in detail, with attention given to developmental considerations as appropriate.

Youth Financial Literacy: A Review of Key Considerations and Promising Delivery Methods

Training is a costly investment. As such, it is of great interest to know the extent to which that investment is yielding a positive return. Recent meta-analytic efforts have observed that ethics training programs are, indeed, having a positive effect, leading to the conclusion that the programs are working. However, they have also uncovered considerable variability in the effectiveness of ethics training programs, which leads to the purpose of the present study-to review current practices in ethics training evaluation. Through this review of 243 studies, consisting of 380 ethics trainings, we identified major themes in evaluation practices and training design. The tradeoffs associated with these evaluation procedures and designs are discussed, along with directions for future research.

How Do We Know What Works? A Review and Critique of Current Practices in Ethics Training Evaluation

: Community conflict has been the domain of social science researchers for decades. However, the systematic study of conflict on city councils has received scant attention in this literature. In this study the authors explore the extent to which conflict is present on city councils in Wisconsin communities with populations greater than 10,000. By using the literature on non-profit and local government boards, the authors develop a set of hypotheses for testing in the analysis of the survey data. The multivariate model used in the analysis reveals certain demographic characteristics of council members, community characteristics, and board practices and behaviors explain a significant amount of the variance in city council conflict in Wisconsin local governments.

Conflict on city councils in Wisconsin

The Sarbanes-Oxley Act of 2002 was intended to improve corporate governance and increase the transparency of financial audits. The legislation also could have significant effects on the public accounting industry. This study finds evidence of higher audit fees across all firms resulting from compliance with the law. However, after accounting for self-selection of auditors, we do not find evidence that the size of the audit firm affects the magnitude of the audit fee increase. Introduction and Background In July of 2002, Congress passed the Sarbanes-Oxley Act (SOX) in response to a wave of corporate governance scandals. This paper will investigate the impact that the SOX Act has had on the audit fees in the public accounting industry and will attempt to determine if that impact differs with the size of the audit firm. This legislation was designed to increase the oversight and regulation of the accounting profession. With the goals of strengthening corporate governance and increasing the transparency of financial audits, the Act aimed to restore public confidence in corporate America following the scandals at Enron, Arthur Andersen, Tyco, WorldCom, Global Crossing, among others. The major provisions of the SOX Act include: * The establishment of the Public Company Accounting Oversight Board (PCAOB) to set auditing standards. * A stricter definition of auditor independence that restricts the types of consulting services an auditing firm may provide their clients. * Stricter criminal penalties for corporate fraud. * More detailed and timely disclosures of financial information. Many researchers have noted that the SOX legislation was passed very quickly, perhaps too quickly, and that the law's costs of compliance may exceed its benefits. Zhang (2005), for example, estimates that the private costs of complying with the SOX Act total $1.4 trillion. A large proportion of this cost comes from the increased costs of audits in order to comply with the law. Studies have also found that the SOX law has motivated many public firms to go private (or reconsider going public) as a way of avoiding the costs of complying with this law (Hartman, 2005; Block, 2004; Engel, Hayes & Wang, 2004). One report also raised the concern that foreign firms may be shunning U.S. financial markets to stay clear of this new legislation (Marshall, 2006). The apprehension overseas firms feel toward SOX has been widely reported (Darned Sox, 2006). Recently, a committee, led by former White House economic advisor R. Glenn Hubbard and Goldman Sachs executive John Thornton, was initiated to propose changes to the law and correct the perceived flaws (Sissell, 2006). SOX legislation was passed at a time when the U.S. public accounting market was becoming increasingly concentrated. In fact, as part of the SOX legislation a United States General Accounting Office (GAO) study was mandated on the public accounting market (GAO, 2003). This study raised the concern that very few audit firms are capable of auditing large U.S. clients and that this problem raises potential choice, price, quality, and concentration risk concerns. The current public accounting market consists of a "Big 4", a middle tier and a lower tier. The Big 4 firms are Deloitte & Touche, Ernst & Young, PricewaterhouseCoopers and KPMG. As of the 2003 GAO study, these four firms audited over 78 percent of all U.S. public companies and 99 percent of all public company revenue. Big 4 firms have traditionally dominated the large company audit market due to a number of factors, including the auditors technical skills, reputation and capacity (Doogar, Fargher & Hong, 2005). Literature Review and Hypotheses The additional work required of an auditor to comply with Sarbanes-Oxley is likely to increase the cost, and therefore, price of audits. This additional work is primarily due to Section 404 of the Act, which requires firms to include an internal control report in their annual report (Rittenberg, Evenson, Martens, 2006). …

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The Effects of the Sarbanes-Oxley Act of 2002 on Audit Fees

An Evaluation of Learning, Earning and Investing: A Model Program for Investor Education

When highly visible lapses in ethics occur, education gets some of the blame. Principals in the U.S. subprime mortgage crisis and the Enron scandal had been educated at Harvard and other elite business schools, where professional and moral ideals had arguably been replaced by a focus on profits at the expense of ethics. (1) A long-standing tradition in ethics education, however, holds that by college or graduate school it is "too late" to teach ethics. (2) A natural question arises: Can we teach ethics earlier, possibly at the high school level? This article reports on a curricular effort titled Teaching the Ethical Foundations of Economics by the National Council on Economic Education (NCEE) with just that goal. After several years of development and assessment, materials for teaching ethics in social studies classrooms have been prepared and tested. The early results suggest that in fact students can successfully be taught about ethical issues in economics and other social studies classes. The Templeton Project NCEE's ethics project began with a grant from the John Templeton Foundation naming Jonathan B. Wight of the University of Richmond as principal investigator. "Infusing ethical and moral dimensions into economics cannot wait until students attend college," the original 2004 grant proposal stated. A design and writing team met in 2005, consisting of a philosopher, a business ethicist, two economists, two university-level economic educators and a high school economic educator. The team developed a series of 10 lessons with visuals and activities. Lessons were class-tested in 2006 and revisions followed. The materials debuted at train-the-trainers institutes in 2007 and were published in 2007. An assessment of student learning was completed in 2008. The Lessons The lessons resulting from the NCEE project are suitable for social studies classrooms in general, with only one of them (Lesson 7 on organ transplantation) requiring knowledge of the basic supply and demand model. The other lessons would be suitable for a range of social studies classes including government, psychology, and sociology. The first lesson in the series is entitled "Does Science Need Ethics?" In this lesson, students examine how preconceptions affect observation and how ethical judgments affect economic analysis. In the second lesson, "What Is the Difference between Self-Interest and Greed?", students make, accept, and reject ultimatum offers with candy pieces to distinguish healthy self-interest from greed. The opening lessons are followed by three lessons specifically concerning the operation of markets. In the first of these, "Do Markets Need Ethical Standards?", students play the roles of doctors and patients to see how enlightened self-interest, duty, and virtue improve economic efficiency. Paired lessons then show the usefulness of markets in rewarding virtuous character traits and the moral limitations of markets for solving resource allocation problems. Two applied lessons then lead students through controversial social topics: "What Should We Do about Sweatshops?" and "Should We Allow a Market for Transplant Organs?" By the eighth lesson in the series, students are learning about efficiency as an ethical concept through role-playing involving the critical shortage of a life-saving serum. In the ninth lesson (reprinted in this issue), students debate the role of business in directly pursuing policies aimed at promoting social justice, the environment, and other causes. The final lesson, "What is Economic Justice?", has students play a Veil of Ignorance game to reveal how altering people's self-interest transforms their vision of economic justice and their positions on government policy issues. Assessment of Learning The 2008 learning assessment of the lessons employed a pre- and post-test design with a treatment group (those who used Ethical Foundations) and a control group (other students who did not participate). …

M. Scott Niederjohn

Papers

Conflict on city councils in Wisconsin

The Effects of the Sarbanes-Oxley Act of 2002 on Audit Fees

An Evaluation of Learning, Earning and Investing: A Model Program for Investor Education

Teaching Ethics to High School Students: Virtue Meets Economics.

Your Credit Counts Challenge: A Model Program for Financial Education for Low and Moderate Income Adults