Research seminars

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We study the nature and consequences of outliers in archival research, as well as the merits and limitations of robust regression estimators in identifying and downweighting their influence. Using simulated and actual data, we demonstrate how outliers can arise non-randomly from the data-generating process, research design choices such as scaling, and model misspecification. We find that robust regression estimators generate more precise estimates than OLS in common archival data. At the same time, these estimators can bias inferences due to their downweighting of substantial and nonrandom proportions of the data. We further demonstrate that model misspecification (e.g., a failure to account for nonlinear relations) can induce biases in robust regression estimates that are more severe than with OLS. Based on our analyses, we recommend researchers to carefully evaluate the causes and consequences of the nonrandom nature of outliers in their samples, to implement and interpret robust regression estimators with care, and to evaluate and disclose the sensitivity of robust estimators to key design choices.

Business Negotiation, with a focus on Korean conglomerates" is a session that introduces the Harvard Negotiation Model, which centers around the concept of “principled negotiation.” At the end of this session, participants will:

·      Understand the pitfalls of positional negotiation and learn the systematic framework of principled negotiation

·      Learn robust negotiation strategies that work over time

·      Come to understand their own strengths and weaknesses as negotiators

·      Learn to delve for underlying interests and create value, leading to deals that provide mutual gain

Entrepreneurial failure is a fact of life, with the vast majority of start-ups failing. Explorations of the topic have considered it from a phenomenological perspective (Cope, 2011), the emotional response to failure (Byrne & Shephered, 2013), learning from failure (Ucbasaran, Shepherd, Lockett, Lyon, 2013), and most recently as a multi-faceted phenomenon (Khelil, 2016). Despite this work, there is an argument that the it remains under-conceptualised (Jenkins & McKelvie, 2016). Similarly, it is not a subject that has gained a great deal of analysis from business historians beyond systemic conceptualisations of the failure of British and French entrepreneurship in the nineteenth and twentieth centuries (Nicholas, 2004; Jones & Wadhwani, 2006).

This paper considers the attempts by George Bennie in the 1920s and 30s to launch and sell his futuristic railplane – a propeller driven train that hung above existing train tracks that was proposed to be cheaper than most existing forms of transport to build. Bennie had all the ingredients that are often posited as being essential for entrepreneurial success – he came from a wealthy engineering background with a successful family business behind him, he had money, entrepreneurial capital, a strong social network, domain expertise in engineering, creativity, global ambition, and a disruptive technology. Despite all this, he failed to make a commercial success of his venture and eventually died penniless in obscurity. Nonetheless, he is still subject to a great deal of interest, museum exhibits, news stories, and positive treatments of his attempts to envisage a high-speed transport future.

Utilising archival materials drawn from the National Records of Scotland, the Scottish Business Archive , Kelvingrove Museum, Kirkintilloch Library, company records, and related industry and newspaper materials, the paper considers Bennie’s attempts at establishing and scaling his technology, set against the institutional embdeddedness of existing transport infrastructure. In doing so, it calls for a reconceptualization of how we understand failure, moving on from the current overt focus on commercial failure to considering how legacy and retelling of entrepreneurial endeavour affects what failure means. Bennie’s idea was not a commercial success, but a number of similar versions of his technology exist around the world in the current day and much of the narrative surrounding his attempts at establishing his technology is being repeated with, for example, Elon Musk’s hyperloop idea. To this end the story also speaks to a recent calls for more research on the connections between history and entrepreneurship (Jones & Wadhwani, 2015), and greater plurality in qualitative research methods in entrepreneurship (Van Burg, Cornellisen, Stam & Jack, 2020).

Profit warnings (large negative earnings surprises) are important financial reporting documents and a distinctive corporate communication genre. The COVID-19 exogenous shock in 2020 highlighted their importance. COVID-19 provides a unique context for company disclosure of bad news. 

The research develops a genre-based typology/analytical framework for assessing the quality of COVID-19 profit warnings comprising two components and 12 sub-components: (1) Quality characteristics of the profit warning/forecast itself (four quality characteristics) and (2) Disclosures in the profit warning/forecast (eight disclosures). For a sample of 160 profit-warning documents, the research manually analyses their content against the typology/analytical framework, culminating in a disclosure quality score/index. The research tests a model of the factors influencing disclosure quality. 

The research finds poor quality disclosure, coy ambiguous language, possibly reflecting minimal regulatory guidance on this form of financial report and companies regressing to silence when investors most need guidance. Two variables are significant in a multivariate model – fully listed companies disclose better quality COVID-19 profit warnings, while profit warnings disclosed following Financial-Reporting-Council guidance are of higher quality. Given market sensitivities to profit warnings, the paper concludes with recommendations for policymakers on improvements required to enhance the quality of these highly important corporate documents.

The desire to have an impact on different stakeholders including researchers, students, and society at large is a long-term aspiration of most academics—a sort of search of the “Holy Grail.” What is scholarly impact? How should we measure it? How can we enhance the impact of our research and teaching activities? The goal of this webinar is to address these questions by describing the latest research. The webinar will be of interest to researchers and educators aiming to enhance the impact of their work.

We assess the effect of hostile takeover susceptibility on narrative disclosure. We predict that firms use narrative disclosures as a takeover defence mechanism. Our results show that managers of firms with higher likelihood of receiving an unwelcome bid use more negative and pessimistic tone in their 10-K reports. Further, we show that the main result is in the subsample of firms with higher probability of experiencing a hostile takeover. We also show that firms using more negative and pessimistic disclosure tone are less likely to experience takeover threats. Our results are robust to the use of Constituency Statutes enactment as a plausible exogenous decrease in the need of firm-initiated internal antitakeover provisions.

The Chartered Association of Business Schools' report asks how, and how much, do business schools support businesses to become a force for good? Is this a legitimate part of the purpose of business schools? How effective are they in helping business tackle issues like climate change, poverty and social division? And how could they be more effective?

Academic publishing is both a science and an art, and it is critical to consider both aspects when writing a paper. In this presentation, I will share my experiences gathered over the last two decades in academic publishing, highlighting some best practices I have derived over the years that have resulted in successful publications. I will couple this with my experience serving as a co-editor-in-chief for the International Journal of Operations and Production Management, as well as my role as Associate Editor for several other journals, including the Journal of Operations Management and Decision Sciences. For the IJOPM perspective, I will share our editorial philosophy, and provide insight which features of a paper increase the likelihood if it navigating the review process successfully.

Accounting disclosure classification is of central importance in trying to understand the dynamic of the corporate information environment and the economic consequences of firms’ disclosure choices. The empirical literature on the accounting reporting environment explores the provision of both mandated and voluntary disclosures. Often, however, voluntary disclosure has not been defined rigorously or has been mislabelled and is based on a strict dichotomy. We advance a non-dichotomous approach based on a continuum of disclosure from voluntary and innovative at one end, to mandatory at the other, that may help to reduce misclassifications. Firms’ voluntary disclosures cannot be properly interpreted without reviewing their interrelationship with mandatory disclosures and vice versa. Definitions of voluntary disclosure that have been used in empirical studies are examined, including the mislabelling of voluntary disclosures, and we provide examples of truly voluntary and innovative disclosures by companies

Interest in sustainability has fueled venture creation worldwide. These ventures increasingly rely on crowdfunding as a means of financing their operations. I will discuss the reasons for the growing popularity of crowdfunding as a funding approach and the types of sustainability-based new ventures it supports as well as their performance relative to traditional new firms. I will also discuss the factors that influence this performance and the market vs. institutional logics at play. To do so, I will use a dataset comprised of 290,126 crowdfunding campaigns, launched by 244,739 entrepreneurs located across 139 countries, with 29.87 million individual pledges from backers in 226 countries and territories, over the span of nine years. The results highlight that crowdfunding is fast emerging as an important means of transferring concern for sustainability across international borders, especially into environments with weak formal institutions.

The aim of this study is to investigate the determinants that affect banks financial risk disclosure readability. Readability can be defined as the degree to which a document is easy to understand, not only for its textual style, but also in terms of composition (i.e. Courtis, 2004; Merkl-Davies & Brennan, 2007; Lougran & McDonald, 2014). For the purposes of this paper we refer to the domain of impression management behaviours. Indeed, literature warns that, managers may adopt reporting bias policies that influence the style, the content or the way information are narrated, to opportunistically manipulate public impression (Brennan et al., 2009). The current paper contends that any impression management strategy may well influence banks’ financial risk disclosure readability, due to the nature of these institutions’ activity and the relevance of financial risk management by adopting a twofold perspective. We contend that the quantity of financial risk information items may unfold any impression management policy adopted by preparers to pursue objectives of completeness thus positively shaping the readability of the report. We argue that banks may provide a less readable risk disclosure to obfuscate unfavourable measures of performance, by means of earnings manipulation. 

When implemented effectively, interdisciplinary research has the potential to generate novel insights that advance our thinking about a particular phenomenon, as well as produce practical impact. Despite decades of calls for such research, research communities are becoming more siloed and less impactful (especially in accounting research). We propose that an unexamined reason for this problem is the diffusion of a particular mode of interdisciplinary research. Specifically, we observe researchers who are trained in accounting, work in accounting departments and publish in accounting journals, yet label themselves as ‘interdisciplinary researchers’ because they import theories from other fields. This mode, that we term ‘identity-based’ interdisciplinary accounting research (IAR), is a selective interpretation of what interdisciplinary means, that is, one that capitalizes upon calls for impactful, boundary-spanning work without incurring any of the costs and penalties associated with true interdisciplinary research. This paper aims to highlight the dangers of identity-based IAR, and instead argue that interdisciplinarity should be more of a practice. We argue that IAR can be best achieved through the collaboration of researchers from different fields by integrating the members of a research team’s background and training. Our purpose is to demonstrate how the intersection of perspectives from different fields (and different career stages) can enrich scholarly output for multiple stakeholders. We show this ‘practice-based IAR’ may unfold through different channels, allowing for meaningful and impactful research, effective diffusion and dissemination and an IAR community that encourages interdisciplinary research practices.

Anthropogenic global warming (AGW) requires net-zero human greenhouse gas (GHG) emissions to stabilize the climate. As achieving zero emissions is unrealistic, offsetting is necessary to achieve net-zero (emissions minus offsets). Organizations need to become carbon-neutral, both by reducing emissions and by removing atmospheric CO₂. However, much of the language used in discourse surrounding carbon-neutrality and net-zero is vague; more rigorous definitions are required. Currently, emissions are “neutralized” through “deemed offsets,” which can include GHG sinks, reductions, and allowance schemes. Metrics are employed to determine offsetting amounts. We extend current practice using a “do no harm” principle to better account for different GHGs’ climate impacts. We examine emissions reduction and the appropriate use of offsetting (Rayer, Ethical and Sustainable Investing and the Need for Carbon-Neutrality. In T. Walker, N. Sprung-Much, & S. Goubran (Eds.), Environmental Policy: An Economic Perspective (pp. 213–232). Wiley-Blackwell, 2020), including challenges such as carbon storage robustness (Broekhoff et al., Securing Climate Benefit: A Guide to Using Carbon Offsets. Stockholm Environment Institute & Greenhouse Gas Management Institute. Retrieved June 25, 2021 from Offsetguide.org/pdf-download/, 2019; Joos et al., Carbon Dioxide and Climate Impulse Response Functions for the Computation of Greenhouse Gas Metrics: A Multi-model Analysis. Atmospheric Chemistry and Physics, 13, 2793–2825, 2013). We illustrate these guidelines using the PAS 2060 carbon-neutrality standard (BSI, PAS 2060:2014 Carbon Neutrality. Retrieved February 5, 2020 from https://www.bsigroup.com/en-GB/PAS-2060-Carbon-Neutrality/, 2014). In summary, while offsetting is required for climate stabilization, schemes differ in their capacity to halt AGW. High-quality offsetting is required to stabilize warming; herein we discuss key physical considerations.

The financial reporting standards for private companies in the UK have been relaxed over several decades, so that administrative burdens are proportionate to the benefits they bring. Therefore, it is important to check whether or not their reporting meets the needs of stakeholders. We assess a key aspect of UK private companies’ financial reporting between 2002- 2017, specifically the accuracy of predictions of future cash flows from their accounting data, using public companies for comparison. Overall, we find that the future cash flows of the smallest of private companies have greater predictability than those of public companies. The less rigorous accounting regulations for this group are appropriate. In contrast, the largest of private companies have forecast errors substantially greater than those of public companies. Although these results are largely driven by situations when there is moderate or high uncertainty about future cash flows and when future cash flows are negative, this is exactly the time when there is a high demand for financial information. Accruals and discretionary accruals contribute to these results supporting prior work on private companies.

This study addresses the role of peers in healthcare deficit reporting in the municipal sector. The study uses hand-collected data on health expense reporting of Finnish municipalities in 2016-2020. The lack of prior research on healthcare cost reporting in a Nordic country type of setting motivates the study. It set three hypotheses: (1) there is a positive association between non-compliance in recognising health care expenses and proximity of the crisis municipality indicator, (2) there is a positive association between the compliance choice of other municipalities and that of the health district centre regarding health care expense accruals, and (3) there is a positive association between compliance in recognising health care expenses and the audit performed by the same auditor both at the municipality and the respective health care district. Our empirical results suggest non-compliance with health care cost reporting is widespread in municipalities. The results also show that the decision by a municipality to comply with the applicable accounting requirement is positively associated with the reporting choice of the health care district centre. We do not find, however, an association between non-compliance with health care reporting requirements and proximity of the crisis municipality indicator. Distressingly, the empirical results also suggest that having the same auditor in the municipality and the respective healthcare district does not improve the quality of the reporting. We contribute to the studies on the determinants of healthcare reporting quality in local governments

This paper investigates the relationship between the characteristics of the two-tier board structure (board of directors and supervisory board) and the disclosure of key audit matters (KAMs) in the expanded audit report. Using a sample of 10,857 firm-year observations of Chinese listed firms spanning the 2017-2020 period, we offer two main results. First, with regard to the board of directors, we find that the auditor discloses a greater number and lengthier content of KAMs when there is a CEO duality and the board meetings are more frequent. Second, conversely, we find that the size and independence of the supervisory board are related to a lower number and length of KAMs disclosure. When we distinguish between account-level KAMs and entity-level KAMs, our further analysis shows that our results are principally associated with account-level KAMs rather than entity-level KAMs. Specifically, we find that CEO duality and the frequency of board of directors meetings are positively related to account-level KAMs. We also find that the size and independence of the supervisory board are negatively related to account-level KAMs. Our findings are robust and address endogeneity problems. Overall, our results suggest that the characteristics of the two-tier board structure drive KAMs disclosure, which should be of interest to regulatory bodies, policymakers, auditors, multinational firms, and users of financial reports.

The key issues in extractive accounting under International Financial Reporting Standards (IFRS) are sparsely regulated under a long-running ‘temporary’ standard, IFRS 6. We provide comprehensive empirical evidence on the varied international practice in accounting for exploration and evaluation (E&E) costs under IFRS 6. We distinguish 10 different polices by hand-collecting data from the reports of 301 firms from 10 countries on two dimensions: the scope of costs capitalized and the size of the impairment pool. Firms frequently use the policy labels ‘successful efforts’, ‘area of interest’ or ‘full cost’ when disclosing their E&E policies but none of these labels is defined in IFRS. We compare the policy methods (as assessed by us) with the policy labels disclosed, and show that the labels do not generally comply with the methods as defined in any authoritative literature. We then analyze the determinants of E&E policy choice under IFRS. First, we hypothesize and find that policy methods differ between countries, that mining firms use more conservative policies than oil & gas firms, and that (for mining firms) more conservative policies are used by producing firms than by firms whose only activity is E&E. Second, we analyze E&E policy choice by examining the labels disclosed by firms instead of their policy methods (as assessed by us). As many firms do not disclose policy labels, analyses based on labels (as in previous research) generate biased samples and misleading results. Finally, we hypothesize and find that the US version of the successful efforts method is more likely to be used by oil & gas firms and by firms with a US listing. Our findings, especially those on undefined labels, are relevant for the IASB’s current research program on extractive activities.