Showing papers in "American Journal of Business in 2005"
TL;DR: In this paper, the authors provide insights into the performance of surveyed firms across key components of working capital management by using the CFO magazine's annual Working Capital Management Survey, and discover that significant differences exist between industries in working capital measures across time.
Abstract: Firms are able to reduce financing costs and/or increase the funds available for expansion by minimizing the amount of funds tied up in current assets. We provide insights into the performance of surveyed firms across key components of working capital management by using the CFO magazine’s annual Working Capital Management Survey. We discover that significant differences exist between industries in working capital measures across time. In addition, we discover that these measures for working capital change significantly within industries across time.
320 citations
TL;DR: The authors explored the benefits of failures and used aspects of the analogy between death and business failure to analyze how failures in business economize upon resources and lead to better firms and greater efficiencies.
Abstract: Failures may lead to ultimate success in both nature and business. Just as dynamic ecosystems depend on death to replace senescent organisms with vigorous growth, the termination of uneconomic activities is essential to wealth creation. This paper explores the benefits of failures, and uses aspects of the analogy between death and business failure to analyze how failures in business economize upon resources and lead to better firms and greater efficiencies. A distinguishing feature of our work is the analytic use of competitive markets to provide insights into the processes of success and failure. Recognizable patterns of business failures are discussed in an effort to provide entrepreneurs and managers with a basis for understanding and acting upon changing circumstances.
92 citations
TL;DR: In this article, the authors identify a framework for implementation that an organization can undertake to create a market-oriented workforce, which relies on a performance management system that rewards behaviors appropriate for the establishment of a marketoriented culture.
Abstract: The strong link between a market orientation and performance in small organizations rests on the organization’s ability to use its market‐oriented culture to create a sustainable competitive advantage. To do this requires the firm to build and maintain a strong market orientation. Using an internal customer‐internal supplier perspective, this paper identifies a framework for implementation that an organization can undertake to create a market‐oriented workforce. The foundation for the framework is the development of dyadic relationships between internal customers and suppliers. The implementation structure relies on a performance management system that rewards behaviors appropriate for the establishment of a market‐oriented culture.
31 citations
TL;DR: This paper used the Lussier (1995) generic success versus failure prediction model to develop a real estate industry specific model (S/F = f[industry experience, age, advisors, planning, capital]).
Abstract: The purpose of this study was to use the Lussier (1995) generic success versus failure (S/F) prediction model to develop a real estate industry specific model (S/F = f[industry experience, age, advisors, planning, capital]). Using logistic regression analysis, the Lussier model (p = .028) and the real estate agency model (p = .001) are significant predictors of business success and failure. The Lussier model accurately predicted 84 percent of the surveyed successful and failed matched pairs agencies as being successful or failed and the real estate model predicted 74 percent. The Lussier model explained 68 percent of the variance of contributing factors to success versus failure and the real estate model explained 56 percent. Implications are discussed.
19 citations
TL;DR: In this article, the authors evaluate three plausible change model configurations using multivariate methods and find that they support a dynamic change process configuration over a direct effects model, and discuss the relationships thought to exist among change process variables.
Abstract: Planned organizational change has been viewed from a variety of conceptual perspectives, and a plethora of variables that impact the change process have been proposed. However, few empirical studies have investigated the relationships thought to exist among change process variables. Drawing from questionnaire‐based data obtained from managers involved in the implementation of change, we evaluate three plausible change model configurations using multivariate methods. Findings from the study support a dynamic change process configuration over a direct effects model. Results, discussion, implications and direction for further research are offered.
16 citations
TL;DR: In this paper, the authors argue that a triggering event or events needs to shock incumbent management into realizing that different action is called for, and that such triggering events or triggers also play a role in the turnaround process by influencing strategies and inducing management changes.
Abstract: Existing models of decline and turnaround assume an automatic initiation of a turnaround strategy when decline occurs. However, extended decline over time suggests that the turnaround strategy did not match the causality and severity of the situation. Borrowing from the crisis management literature, this paper argues that a triggering event or events needs to shock incumbent management into realizing that different action is called for. Such triggering events, or triggers, also play a role in the turnaround process by influencing strategies and inducing management changes. Incorporating the need for, and role of, triggers in understanding the decline/turnaround sequence helps explain the iterative and non‐sequential nature of this process.
16 citations
TL;DR: In this paper, the authors evaluate the success of the monthly withdrawal of funds from hypothetical retirement portfolios for the period January 1930 to December 2001, and examine both portfolio compositions using a variety of portfolio weights, fund withdrawal rates, and fund withdrawal periods.
Abstract: This study evaluates the success of the monthly withdrawal of funds from hypothetical retirement portfolios for the period January 1930 to December 2001. The objective of this research is to provide an empirical examination of the historical effect of global diversification on the withdrawal of funds from a retirement portfolio. We compare portfolios consisting of U.S. stocks and U.S. corporate bonds, and portfolios consisting of global stocks and U.S. corporate bonds. We examine both portfolio compositions using a variety of portfolio weights, fund withdrawal rates, and fund withdrawal periods. The results of the study indicate that, in general, portfolios with a higher equity portion had a greater likelihood of sustaining a given number of withdrawals over this time. Additionally, for much of the 1930 to 2001 period, including international stocks in a withdrawal portfolio decreased the likelihood the withdrawals lasted for a given period. However, the inclusion of international stocks does increase the terminal value of retirement portfolios after withdrawals during the latter part of the period under study. The results of this study can be used for retirement planning since it provides a historical perspective on the success of various withdrawal rates. The results can also be used to determine the value of the portfolio an individual needs at retirement to fund a given level of withdrawals. This can assist in the retirement timing decision.
13 citations
TL;DR: This article examined the role of past litigation in the selection of independent auditors and found that any litigation announcement alleging audit improprieties greatly reduces the auditor's likelihood of hire regardless of the type of legal action announced or the degree of direct involvement by the auditor.
Abstract: We examine the role of past litigation in the selection of independent auditors. Using a sample of persons typically involved in auditor selection, we find that any litigation announcement alleging audit improprieties greatly reduces the auditor’s likelihood of hire regardless of the type of legal action announced or the degree of direct involvement by the auditor. Based on these findings, litigation imposes an indirect (and potentially substantial) cost by impeding the CPA’s ability to attract new clients.
8 citations
TL;DR: The study finds that, for more extensively trained individuals, systems modeling with the UML are better able to communicate information about the data in the system while systems modeled with traditional languages are better ability to communicate Information about the process used by the system.
Abstract: The Unified Modeling Language has become an alternative to traditional modeling languages such as data flow diagrams for use in systems analysis. A modeling language is used to represent an information system so that analysts can use the model to make decisions about the design of the system and to communicate with stakeholders about the system. This study examines the comparative effectiveness of the UML and traditional modeling languages in communicating information about a system design. The study examines this on three types of individuals: individuals with no knowledge of either modeling language, individuals with no knowledge of either language that were provided training in one of the languages, and individuals that have had more extensive training in one of the languages. The study finds that there is no difference in the ability to communicate system design information between the languages for the first two types of individuals. However, the study finds that, for more extensively trained individuals, systems modeled with the UML are better able to communicate information about the data in the system while systems modeled with traditional languages are better able to communicate information about the process used by the system.
6 citations
TL;DR: In this article, the authors examined the impact of IBBEA on the performance of small banks in the period preceding and following its implementation and concluded that small banks' profitability was significantly less than that of large banks in post-IBBEA period.
Abstract: The enactment of Riegle‐Neal IBBEA in 1994 encouraged bank mergers and acquisitions. Empirical evidence indicates that large banks benefited from IBBEA enactment. However, there is little, if any, evidence of the impact of the act on small banks’ profitability relative to large banks. This study examines the impact of IBBEA on the performance of small banks in the period preceding and following IBBEA implementation. Evidence is presented that indicates the return on assets of small banks was significantly less than that of larger banks in the post‐IBBEA period. This is contrary to the results of the pre‐IBBEA period when small banks’ profitability was competitive with and in some cases even better than large banks’ profitability. It is concluded that the enactment of IBBEA has placed small banks at a competitive disadvantage which could eventually lead to their demise.
6 citations
TL;DR: In this article, the authors determine how the users of the letter to shareholders that appears in the annual report numerically interpret the qualitative expressions of magnitude used by top management (e.g. a significant increase in earnings) and then use the numerical interpretations of these qualitative expressions are then used to guide auditors in making the determination of when the use of a qualitative expression may be materially inconsistent with the information appearing in the accompanying financial statements.
Abstract: Publicly traded firms issue annual reports with significant portions that contain non‐numerical information (i.e., written expressions). AU Section 550 of the professional standards (AICPA 2003) refers to this type of non‐numerical information that accompanies the financial statements as “other information.” AU Section 550.04 clearly indicates that the auditor should read this other information and consider whether such information is materially inconsistent with information, appearing in the financial statements or the manner of its presentation. This paper determines how the users of the letter to shareholders that appears in the annual report numerically interpret the qualitative expressions of magnitude used by top management (e.g., how users would numerically interpret the phrase “a significant increase in earnings”). The numerical interpretations of these qualitative expressions are then used to guide auditors in making the determination of when the use of a qualitative expression may be materially inconsistent with the information that appears in the accompanying financial statements.
TL;DR: In this paper, the authors test the generalizability of an existing model for classifying information-intensive services that can be globally disaggregated to Internet services and find partial support for the model.
Abstract: In this research we test the generalizability of an existing model for classifying information‐intensive services that can be globally disaggregated to Internet services. This categorization allows us to judge which types of Internet Initial Public Offerings (IPOs) are likely to have superior performance. Specifically, we hypothesize that Internet firms with higher information intensity, lower physical presence and lower customer contact needs will have a greater probability of generating larger risk‐adjusted returns. We test these hypotheses on 340 Internet IPOs and find partial support for the model. In particular, Internet firms with high information intensity and low customer contact need yield superior performance. However, firms with low physical presence underperform in our sample.