We examine how firms search, or solve problems, to create new products. According to organizational learning research, firms position themselves in a unidimensional search space that spans a spectrum from local to distant search. Our findings in the global robotics industry suggest that firms' search efforts actually vary across two distinct dimensions: search depth, or how frequently the firm reuses its existing knowledge, and search scope, or how widely the firm explores new knowledge.

http://web.stanford.edu/~rkatila/new/pdf/KatilaSomethingold.pdf

Something Old, Something New: A Longitudinal Study of Search Behavior and New Product Introduction

Earnings Management and Investor Protection: An International Comparison

We examine the relation between the cost of equity capital and seven attributes of earnings: accrual quality, persistence, predictability, smoothness, value relevance, timeliness, and conservatism. We characterize the first four attributes as accounting‐based because they are typically measured using accounting information only. We characterize the last three attributes as market‐based because proxies for these constructs are typically based on relations between market data and accounting data. Based on theoretical models predicting a positive association between information quality and cost of equity, we test for and find that firms with the least favorable values of each attribute, considered individually, generally experience larger costs of equity than firms with the most favorable values. The largest cost of equity effects are observed for the accounting‐based attributes, in particular, accrual quality. These findings are robust to controls for innate determinants of the earnings attributes (firm siz...

Costs of Equity and Earnings Attributes

Contextual influences on the corporate entrepreneurship-performance relationship: A longitudinal analysis

The authors develop a conceptual framework of the marketing–finance interface and discuss its implications for the theory and practice of marketing. The framework proposes that marketing is concern...

/pdf/market-based-assets-and-shareholder-value-a-framework-for-1nvpn4mjgp.pdf

Market-Based Assets and Shareholder Value: A Framework for Analysis

We document that the quality of earnings reported by politically connected firms is significantly poorer than that of similar non-connected companies. Our results are not due to firms with ex-ante poor earnings quality establishing connections more often. Instead, our results suggest that, because of a lesser need to respond to market pressures to increase the quality of information, connected companies can afford disclosing lower quality accounting information. In particular, lower quality reported earnings is associated with a higher cost of debt only for the non-politically connected firms in the sample.

/pdf/the-quality-of-accounting-information-in-politically-3rbdpwoieo.pdf

The Quality of Accounting Information in Politically Connected Firms

https://docs.lib.purdue.edu/cgi/viewcontent.cgi?article=1052&context=ciberwp

Although many mechanisms exist for the evaluation of new products, none have specifically examined the role that financial markets can play in measuring the impact of new products on firms. Using traditional event-study methodology, the present research provides a financial market-based analysis of the impact of new product introductions on the market value of firms. Copyright 1991 by University of Chicago Press.

The Impact of New Product Introductions on the Market Value of Firms

Prior research has examined audit pricing for publicly held firms and provided some evidence of a Big 8 premium in pricing. We investigate audit pricing among private firms, and provide evidence that private firms do not pay such a premium on average. The relatively greater degree of dispersion in auditor choice (between Big 5 and non-Big 5 auditors) in our large sample of privately held audit clients allows us to predict the auditor choice for each firm and to control for potential self-selection. We reject the null hypothesis that clients are randomly allocated across Big 5 and non-Big 5 auditors. Consistent with the extant literature, we document a Big 5 premium; however the premium vanishes once we control for self-selection bias. Moreover, we find that client firms choosing Big 5 auditors generally would have faced higher fees had they chosen non-Big 5 auditors, given their firm-specific characteristics. Our results are consistent with audit markets for private firms being segmented along cost-effective lines. Further, our results suggest that auditees in our setting do not, on average, view Big 5 auditors as superior in terms of the perceived quality of the services provided to a degree significant enough to warrant a fee premium.

Self-Selection of Auditors and Audit Pricing in Private Firms

In this article we investigate the impact of the Enron audit failure on auditor reputation. Specifically, we examine Arthur Andersen’s clients’ stock market impact surrounding various dates on which Andersen’s audit procedures and independence were under severe scrutiny. On the three days following Andersen’s admission that a significant number of documents had been shredded, we find that Andersen’s other clients experienced a statistically negative market reaction, suggesting that investors downgraded the quality of the audits performed by Andersen. We also find that audits performed by Andersen’s Houston office suffered a more severe decline in abnormal returns on this date. We are not able to show that Andersen’s independence was questioned by the amount of non–audit fees charged to its clients.

Paul K. Chaney

Papers

The Quality of Accounting Information in Politically Connected Firms

The Quality of Accounting Information in Politically Connected Firms

The Impact of New Product Introductions on the Market Value of Firms

Self-Selection of Auditors and Audit Pricing in Private Firms

Shredded Reputation: The Cost of Audit Failure