Showing papers in "Accounting and The Public Interest in 2012"

Impression Management in Sustainability Reports: An Empirical Investigation of the Use of Graphs

Abstract: The purpose of this paper is to investigate whether firms use graphs in their sustainability reports in order to present a more favorable view of their social and environmental performance. Further, because prior research indicates that companies use social and environmental disclosure as a tool to reduce their exposure to social and political pressures (the legitimacy argument), we also examine whether differences in the extent of impression management are associated with differences in social and environmental performance. Based on an analysis of graphs in sustainability reports for a sample of 77 U.S. companies for 2006, we find considerable evidence of favorable selectivity bias in the choice of items graphed, and moderate evidence that where distortion in graphing occurs, it also has a favorable bias. Our results regarding the relation between impression management and performance are mixed. Whereas we find that graphs of social items in sustainability reports for companies with worse socia...

The Role of eGovernance in Mitigating Corruption

Abstract: This paper presents a model that illustrates the enablers of corruption, and delineates how eGovernance, based on the principles of transparency and accountability, can dismantle the enablers of corruption. Key enablers of corruption, such as economic rents, discretionary power of bureaucrats, and weak institutions, are identified from the extant literature to argue that these enablers undermine the public interest through unequal access to basic goods and services. The critical role of accounting and accounting information systems is highlighted by examining selected eGovernance initiatives that enhance transparency and accountability in dismantling corruption. Reduction of the discretionary power of bureaucrats, enforced consequences, and the demand for accountability enables equal access to information and public goods and services that could result in a bridging of the economic divide in a developing country such as India. Hence, a case study of India is utilized to analyze and assess the su...

The Effects of Public Pressure on CSR Behavior in a Capital Market Experiencing Excessive Moral Debt

Abstract: The events surrounding the passage of the Sarbanes-Oxley Act of 2002 (Sarbanes) offer an opportunity to reflect on the influences of public pressure and possible public policy shifts on CSR behavior in a capital market experiencing excessive moral debt. Using the passage of Sarbanes to symbolize a potential public policy shift driven by public pressure, we examine the influence of social legitimacy variables on corporate social responsibility (CSR) behavior before (1991–2001) and after (2002–2005) the passage of the Sarbanes-Oxley Act of 2002. We posit that changes in CSR strategies surrounding the passage of Sarbanes were used to maximize stakeholder interests by addressing social legitimacy involving corporate accountability issues. Our findings support that CSR behaviors were significantly influenced by the public pressure variables of Sarbanes and company size, but were not significantly influenced by our economic legitimacy control measures, with the exception of a positive significant inter...

Auditor Tenure and the Pricing of Discretionary Accruals in the Post-SOX Era

Abstract: This study empirically examines the public policy implications of mandatory audit firm rotation in the context of the relation between auditor tenure and the market's perception of discretionary accruals quality in the pre- and post-SOX periods. Consistent with prior research, the pre-SOX results support the effects of auditor learning and auditor closeness on the relation between auditor tenure and audit quality. We further demonstrate that in the post-SOX period, there is no significant relation between auditor tenure and the pricing of discretionary accruals. The post-SOX results indicate that the market's perception of auditor tenure as a significant determinant of audit quality may have diminished in the environment of increased regulation under SOX. The findings further imply that ongoing consideration of a policy that mandates periodic audit firm rotation may no longer be essential with the passage of SOX. Data Availability: Data used in this study were obtained from publicly available sou...

The Election of Auditors in Government: A Study of Politics and the Professional

Abstract: Although in many countries government auditors are appointed, often in an all-party process designed to emphasize a preference and hope for accounting information to be prepared in an independent manner, many such office holders in U.S. state governments are directly elected. This paper examines one such election, which occurred in the State of Ohio in 1994, and uses this case to explore how the electoral process fosters an interaction between the professional claim and political platforms. The paper follows earlier work concerning “special” government audits in using Weber's discussion of formal and substantive rationality to interpret events. The election of government auditors is seen as providing an unusual opportunity to consider the mixture of auditing and politics. The paper provides observations on the proximate operation of professional claims and political dynamics, and discusses these in terms of the roles of government auditing and of accountancy as a profession. Further research is...

Rights, Needs, and Equality of Opportunity for Health Care: A Financial Analysis of Morality

Abstract: To decide where to open and close hospitals in the U.S., our society considers community needs for access to health care. Yet a hospital's choice of location is often a financial decision. We examine the conflict between concerns about access to care and financial considerations that occurred in one not-for-profit (NFP) hospital system that closed hospitals in poor, minority neighborhoods to open new hospitals in affluent suburban communities. A small-sample, empirical study shows that hospitals in this particular system were significantly more likely to close in areas with a high minority population and sicker patients. In a case study, we explain that the hospital offered reasons for relocation based on its NFP status, to better meet community needs and provide lower costs of care. In the end, the relocation proved to be a positive financial decision for the NFP system. Data Availability: Data are available upon request.

National Heuristic Shift toward Saving Any Form of Tax Rebate

Abstract: Using surveys for the 2008, 2009 and 2011 federal tax rebates, this study tests whether taxpayers (1) noticed the rebates, and (2) spent, rather than saved, a high percentage of each. Results add further evidence that behavioral economics and mental accounting are relevant in predicting tax rebate behavior. It also indicates that rebates distributed in small amounts in take-home pay accomplish stimulus much more effectively than a lump sum, which is critically important for effective public policy. Many taxpayers did not realize they received the 2009 tax rebate, and those who knew spent a higher average percentage than for the 2008 rebate. The results also indicate the need to control for (shifting) savings heuristics during an economic crisis, because this heuristic apparently did change on a national scale. The national economic crisis—particularly unemployment—was smaller and slower to hit the city sampled in this study than for the nation as a whole. The results with the smaller, localized ...