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Open Access
A Dyadic Understanding of Trust in Negotiations: The Role of Congruent and Asymmetric Trust States
(2024-07-18) Ji, Mingshuang; Tasa, Kevin
This dissertation examines the role of trust congruence and asymmetry in negotiation using a dyadic perspective. Based on theories of trust congruence and social balance, I hypothesize that negotiation dyads are more likely to achieve favorable subjective outcomes when their trust levels are aligned rather than divergent, and this relationship will be mediated by integrative and distributive behaviors. Two studies were conducted to test the research model, and polynomial regression with surface analysis was used for data analyses. In Study 1, data was collected from 120 MBA students (60 dyads) using a conflict resolution exercise. Findings of this study provide preliminary evidence for the role of different dyadic trust states on negotiation, suggesting a positive effect of trust congruence and a negative impact of trust incongruence on subjective negotiation outcomes. With an enhanced research design, Study 2 manipulated different states of dyadic trust among 242 undergraduate students (121 dyads) using a negotiation exercise in which negotiators must overcome an apparent negative bargaining zone by sharing information. Results of Study 2 re-confirm the positive impact of trust congruence and the negative impact of trust asymmetry on negotiation outcomes, and these impacts are partially mediated by integrative behaviors. In general, findings of this dissertation enhance our understanding of the role of trust in negotiation, by suggesting that it is more about the dyadic ‘balance’ between two negotiators within the dyad, besides the absolute level of individual trust, which makes trust favorable in negotiation contexts. This dissertation fills a critical gap in the literature by empirically assessing the role of different dyadic states of trust in negotiation and validating the theory of trust congruence. Practically, findings of this dissertation inform negotiators of the temporal and interactive nature of trust and highlight the importance of adaptivity and alignment during negotiations.
Open Access
A Post-ANT Study of the Translation of a Performance Management System
(2021-07-06) Deng, Claire; Neu, Dean
This dissertation consists of three individual research papers that push the boundaries on the ontology, epistemology, and methodology of the actor-network-theory (ANT) pertaining to its mobilization in sociological and organizational accounting research. All three papers anchor on an ethnographic field study wherein a team of two consultants developed a new performance management system (PMS) in a subsidiary of a state-owned enterprise (SOE) in China. Chapter 1 introduces the overarching theses in this dissertation, which are characterized by the ontological boundaries of ANT that the three papers push and the new dimensions of accounting research it opens by pushing such boundaries. Paper 1 (Chapter 2) explores the ways in which accounting enacts multiple reality in the organization by mobilizing the notion of multiple reality contributed by Actor-Network Theorists Annemarie Mol (1999, 2002) and others (Dugdale, 1999; Law, 2002; Law & Singleton, 2005), and seek to extend our understanding of the roles of accounting by explicating how accounting practices enact, circulate, sustain, and erode multiple reality; how the multiple reality coexisted, relied on, opposed to, and were outside and inside one another; as well as how accounting translation is executed when the reality is multiple. Paper 2 (Chapter 3) probes the theoretical and methodological dilemma posed by ANTs flat ontology: how to approach institutionalized contexts with the vocabulary of ANT. Through examining the roles that SOE context plays in the translation processes of accounting technology, I identify context roles in the actor-network as black boxes, discursive resources, devices of interessement, and performative actants. Drawing on the Bakhtinian notions of genre and intertextuality, the third paper (Chapter 4) examines the role that linguistic gaps can play during the introduction and formation of management accounting practices. These linguistic gaps involve the cross-language gap between different languages, the generic gap between speech genres suitable for particular purposes or communicative situations, and the performative gap between text and verbal performance. These gaps, on the one hand, contribute to the incompleteness of performance measures by enabling interpretive and performative spaces; and on the other hand, can be mustered as a rhetorical strategy by actors to persuade and recruit others during the formation of accounting objects. Chapter 5 concludes the dissertation by bringing a critical spirit into ANT-inspired accounting research.
Open Access
Accounting and Accountability in the Field of Social Services - A Multi-level Investigation
(2018-03-01) Chawla, Akhila; Neu, Dean
Roberts (1991, p.355) remarked that the analysis of accounting in systems of accountability (also) offers alternative ways to conceive of the transformation of accounting. This dissertation aims to improve multi-level understanding of accounting and accountability within the field of social services. Focusing on Indias Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), one of the worlds largest social services programs, I examine the role of accounting in accountability practices and change processes at macro, meso and micro levels. Current social services literature, straddling public, private and third sectors, reveals accounting-accountability research to be underexplored (Bracci & Llewellyn, 2012) and conspicuously lacking in diversity of research sites, yet undergoing significant change (Ebrahim, 2003; Brinkerhoff & Brinkerhoff, 2004; Llewellyn, 1997; Walz & Ramachandran, 2011). This facilitates a unique set of observations and understandings as program delivery and implementation evolve. This dissertation specifically uses Bourdieus notions of field, habitus and capitals, also linking to literatures on management control systems, budgeting, routines and sense-making. Following the unfolding of MGNREGS over eight years, I raise two main research questions: How are accounting practices and artifacts intentionally enlisted in MGNERGS towards notions of accountability across multiple levels of program governance? What role do accounting practices in MGNREGS play in larger organizational and social change processes? I examine accountings enlistment in an enabling role to frame and diffuse accountability and program structure on a macro level; in a strategical role, to construct accountability at the meso level; and in a learning and sense-making role to implement accountability at the micro level, where the programs accounting and accountability practices intersect with rural villages. My analysis argues that accounting can be mobilized towards emergent change processes both within public organizations and wider social practices to impact the daily lives of underprivileged rural citizens. In MGNREGS, accounting as an organizational and social practice is not only shaped by organizational objectives but also in turn shapes these objectives and the fields material structure, players, powers, logics and habitus. Accounting practices are, thus, an important part of the ordering, (re)organizing and multi-level change processes in the field of social services in India.
Open Access
Accounting and Money Laundering
(2020-05-11) Maharaj, Gajindranath; Neu, Dean
This study sheds light on some aspects of money laundering and the role of accounting by examining how does money laundering persist and continue to increase or go undetected for extended periods of time given the institutional settings of increasing regulation, increasing monitoring and control systems at financial institutions, and increasing attention by accounting professionals. The study consists of three individual papers all connected to the common theme of accounting and money laundering. This area of research is important for several reasons. First, the problem of money laundering is a global problem, it occurs in both developed and developing countries, and in some cases, money is moved across borders to be laundered. The propagation of money laundering facilities furthers criminal activity. One of the aims of this research program is to help shed light on the mechanisms and practices used to facilitate money laundering, with a focus on accounting techniques. Second, the research seeks to understand what happens within financial institutions, and how their systems and processes, given the tight controls, allow money to be laundered. Third, does anti-money-laundering regulation deter money laundering activity? This research agenda has implications beyond the research community. By understanding how money laundering strategies work, how accounting is implicated, and the impact of regulators and regulation, the research can be used to help prevent and detect money being launderedwhich can then lead to a reduction in the crimes that generate the proceeds to be laundered.
Open Access
Accounting and Performance Metrics in the Baseball Industry
(2021-11-15) Nappert, Pier-Luc; Neu, Dean
This doctoral thesis explores the roles of accounting and performance metrics in the baseball industry, a sport characterized by significant income inequalities amongst players. I entered the field with a broad research question, trying to understand how accounting mechanisms and technologies influence the decision-making processes of Major League Baseball organizations related to the evaluation, acquisition and monitoring of high-profile employees, namely baseball players. This work begins with Chapter II, which examines how new technologies, such as data analytics and camera-based tracking systems, have changed performance measurement and management control systems in the industry. It illustrates that these technological devices have impacted the temporality of performance metrics and have transitioned the industry toward a "society of control" (Deleuze, 1992). In Chapter III, I explore how baseball operations specialists translate player evaluations into player valuations, notably with financialized valuation methods. However, the chapter also illustrates that the valuations of players' contracts are debated by clubs' accounting executives, who claim that such valuations are not consistent with the "reality" of accounting. By exploring the interplay between valuation and accounting, this chapter illustrates how "hyperreality" (Baudrillard, 1994) is a core feature of sports accounting, which is strategically displayed by clubs' owners in their communications with key stakeholders. Finally, in Chapter IV, I explore the technologies and rationalities underlying human capital contracts, new financial products available to underpaid minor league players, and how these contracts change participants' subjectivity. I demonstrate that human capital contracts enable participants to foresee a brighter future and that they act as a coping device by providing an escapist form of imagination. Taken together, the three chapters show how baseball players are transformed into human "assets," in part by being financialized by their employer but also by contributing to their own financialization.
Open Access
Accounting, Accountability, and Open Data
(2023-12-08) Walsh, Leigh Ellen; Saxton, Gregory
Widely accepted as central components of good governance, accountability and transparency underpin calls for ‘open’ approaches to organization, including ‘open data’ (OD). But rhetorical use of these catchwords tends to blur important distinctions – and tensions – between them. This dissertation examines the relationships between open data and accountability in democratic governance, specifically as mobilized within public financial management (PFM) systems. The chapters build on one another to answer two overarching questions. First, how does OD combine with and/or extend existing arrangements for public financial management? And second, (how) does OD deliver on its promise to increase accountability? A combination of qualitative research methods including literature review, theory development, and empirical analysis are employed. The theoretical development draws on accountability and transparency literature to propose a framework that situates OD as both an object and instrument of accountability. This framework provides a theoretical lens through which organizational practices can be studied from an accountability perspective and guides the empirical study of OD in local government presented in this dissertation. Empirical materials including documents, interviews, and observations were gathered following a case study method and analysed to offer two distinct yet complementary views of OD in PFM. First, by adopting a data ‘producer’ perspective and theorizing OD as an informing practice, the study finds that OD has been adopted as a new type of informing practice and constitutes an aspect of conduct for which organizational actors are accountable. Two transparency orientations – usability and understandability – are identified and used to explain tensions and/or barriers that arise in OD implementation. Second, data ‘user’ perspectives are considered by theorizing OD as an instrument of accountability used in debating processes. The findings suggest that while there is a clear alignment between ‘open’ and ‘dialogic’ principles, OD is at best considered a partial tool that, used dialogically and in combination with other information sources, may encourage dialogic forms of engagement and accountability. Drawing attention to the absence of accounting in the burgeoning field of ‘open’ practice and research, this dissertation encourages Further research at the intersection of accounting, accountability, and open data.
Open Access
Ambidexterity in Strategic Alliances: How do Firms Manage Exploration and Exploitation Alliances? An Examination of U.S. High Technology Industries from 1985 to 2009
(2015-08-28) Li, Wan; Tan, Justin
This dissertation examines the antecedents and consequences of exploration and exploitation in the context of strategic alliances. Research interest in the framework of exploration-exploitation has increased significantly with much progress made in current literature, yet many questions remain open. In this dissertation, I examine how environmental force (i.e., market uncertainty) and organizational features (i.e., innovative capacity and slack resources) drive organizations’ decisions on forming exploration versus exploitation alliances. In addition, I investigate the performance outcome of balancing exploration and exploitation alliances, by examining multiple approaches including the balance versus focus perspectives, the temporal separation approach, and the domain separation approach. My study of the antecedents reveals that firms with higher innovative capacity are more likely to form more exploitation alliances than exploration alliances; in contrast, those with more slack resources are inclined to engage in more exploration alliances than exploitation alliances. Under market uncertainty, firms tend to be risk adverse and reduce forming both types of alliances. Furthermore, higher innovative capacity and more slack generally mitigate the negative impact of market uncertainty on alliance formation. My findings regarding performance outcome of exploration and exploitation alliances suggest that balancing them simultaneously may hurt performance. Instead, balance can be executed via temporal separation (i.e., balancing through sequential emphasis on exploration and exploitation over time), or domain separation (i.e., balance through focus on exploration in one domain while exploitation in another), which is particularly important for smaller firms. Organizational ambidexterity does benefit firm performance, given that it is achieved tactically. On the aggregate, my findings confirm that exploration and exploitation are in tension. Organizational features may trigger a firm’s choice between exploration and exploitation in diverse directions; superior performance tends to be more dependent on effective management of the tension. In Previous research, inconsistent conclusions have been drawn regarding the antecedents of exploration and exploitation, and few studies have demonstrated how balance between exploration and exploitation alliances generates favorable outcomes. I have examined both the antecedents and consequences of this framework in the context of strategic alliances, in hope of contributing to a more coherent and complete body of work on this phenomenon.
Open Access
Analysts' Risk Discussions and the Use of Valuation Models: A Content Analysis of Sell-Side Equity Analyst Reports
(2021-11-15) Yu, Changqiu; Kanagaretnam, Kiridaran
This dissertation consists of three research studies on sell-side equity analysts based on textual analysis of analyst reports from Investext. In the first study, I examine whether analysts' geographic location is associated with their discussions about risk. Using textual analysis of analysts' reports to extract their risk discussions for firms globally, I find that foreign analysts present more risk discussions than local analysts. Foreign analysts' more extensive risk discussions are associated with their unfamiliarity with the underlying firms. Analysts' risk discussions are incrementally informative to investors. The informativeness of risk discussions is similar for foreign analysts and local analysts. The second study examines whether comparability of the underlying firms to their peers affects the informativeness of discounted cash flow (DCF) models and price-to-earnings (PE) models used by analysts. I hypothesize that analysts are more likely to be subject to anchoring and adjustment bias when using PE models compared with using DCF models. The bias is more severe when the underlying firms are not comparable to other firms. Consistent with this argument, I find that market reactions to analysts' investment opinions based on DCF models are stronger than their opinions based on PE models. Furthermore, the incremental effect of DCF models on market reactions to analyst investment opinions is mainly restricted to firms with less comparability. In the third study, I use textual analysis to detect analysts' use of valuation models for a large sample of analyst reports on firms around the world. I classify these models into accrual models and cash flow models. Given the fact that accrual models are the default models used in analyst reports, I examine whether the firm country's institutional factors are associated with analysts' choice of cash flow models. I find that analysts are more likely to use cash flow models to value firms in countries with stronger investor protection, better information environment, and greater economic freedom. The market reactions to target price changes based on cash flow models are stronger, particularly in countries with a stronger institutional environment. The findings suggest that countries with sound institutions facilitate analysts' use of cash flow models.
Open Access
Antecedents, Wide-Spread Consequences, and Strategic Implications of Organizational Corruption
(2019-03-05) Mohammad, Shoeb; Matten, Dirk
Antecedents, Wide-spread Consequences, and Strategic Implications of Organizational Corruption
Open Access
Beyond Backlash: Reducing Resistance and Generating Support in Response to Diversity Initiatives Through Opening Identity Tactics
(2023-08-04) Bryan, Camellia Sison; Lyons, Brent
Although researchers are recognizing that dominant social identity threat towards diversity initiatives can result in backlash, researchers have paid limited attention to how dominant social identity threat can be in service of support for diversity. This dissertation considers how identity exploration after dominant social identity threat can facilitate responses that move members of dominant social identity groups towards diversity support rather than diversity resistance. First, I I bridge theory on identity threat and uncertainty regulation to birth a comprehensive model of how identity threat can lead employees belonging to dominant social identity groups to engage in closing and opening identity tactics. Closing identity tactics re-affirm one’s hierarchy-maintaining knowledge about membership to dominant social identity groups, while opening identity tactics transform one’s understanding of membership to dominant social identity groups, so that the focus becomes one that is less about maintaining hierarchy and more about challenging inequalities. Then, I document in Study 1 that participants show greater engagement in opening identity tactics after reading about an organization’s diversity initiatives when they complete an opening identity tactics intervention, which in turn, came to explain why participants were more likely to report valuing of diversity and organizational identification toward the organization. Finally, I further document in Study 2 that White employees of organizations with existing diversity initiatives showed a stronger relationship between their engagement in opening identity tactics and valuing of diversity after completing a six-week opening identity tactics intervention (versus a control condition). Overall, my dissertation challenges a widely held assumption that dominant social identity threat is only a roadblock to the advancement of diversity and inclusion in organizations. Rather, I show how dominant social identity threat can also trigger positive identity changes that translate into support for diversity. In doing so, my research has implications for understanding the benefits and costs of diversity initiatives and dominant social identity threat.
Open Access
Citizen Use and Comprehension of Government Accounting Information: Applications of Design Science Research Methodology
(2023-08-04) Kurpierz, John Richard; Everett, Jeffery S.
This dissertation seeks to explore how accounting can alleviate, but also aggravate, the tensions of informed democratic participation. The behavior of accountants and the format of disclosures in governmental accounting have a powerful effect upon how citizens perceive and make decisions about their community. Because accounting research has only recently begun considering citizens as a central actor, there has been limited synthesis of this knowledge between researchers and practitioners. This dissertation seeks to bridge the gap between governmental accounting practitioners and researchers, and employs the theoretical lens of design science to do so. Design science, originally developed by accounting researchers, is used in other disciplines to bridge similar gaps. This dissertation provides three contributions to the existing literature. First, this dissertation contributes an epistemological innovation by using a design science perspective to examine this research topic and show how design science remains a valuable tool for accounting research. Second, this dissertation finds evidence supporting Baber & Gore’s (2008) supposition of governmental GAAP compliance in a novel context. Third, this dissertation uses design science methodology to become the first research that shows how practitioners developed and implemented Citizen-Centric Reporting (CCR) and how this has negatively impacted CCR effectiveness. These contributions begin in Chapter II with a genealogical literature review to show how the earliest uses of design science involved synthesizing the governmental accounting knowledge of both researchers and practitioners. In Chapter III, a design science paradigm synthesizes practitioner behavior around disclosures with correlational evidence from Washington State that school districts may be forced to choose between GAAP compliance and better performance on citizen-salient metrics, in keeping with Baber and Gore’s (2008) resource-constraint prediction. Finally, in Chapter IV, the design science DAGS Framework is used to analyze the CCR and its creators’ design goals. The CCR was deployed based on practitioner experience rather than an explicit design model, and there has been limited study of the CCR’s intent or effectiveness. Chapter IV involves interviewing the surviving creators of the CCR to determine the implicit design decisions, and judging whether the CCR fulfills its intended purpose under the constraints of those design decisions.
Open Access
Creation and Resilience of Decentralized Brands - Bitcoin & the Blockchain
(2020-08-11) Humayun, Syeda Mariam; Belk, Russell W.
This dissertation is based on a longitudinal ethnographic and netnographic study of the Bitcoin and broader Blockchain community. The data is drawn from 38 in-depth interviews and 200+ informal interviews, plus archival news media sources, netnography, and participant observation conducted in multiple cities: Toronto, Amsterdam, Berlin, Miami, New York, Prague, San Francisco, Cancun, Boston/Cambridge, and Tokyo. Participation at Bitcoin/Blockchain conferences included: Consensus Conference New York, North American Bitcoin Conference, Satoshi Roundtable Cancun, MIT Business of Blockchain, and Scaling Bitcoin Tokyo. The research fieldwork was conducted between 2014-2018. The dissertation is structured as three papers: - Satoshi is Dead. Long Live Satoshi. The Curious Case of Bitcoin: This paper focuses on the myth of anonymity and how by remaining anonymous, Satoshi Nakamoto, was able to leave his creation open to widespread adoption. - Tracing the United Nodes of Bitcoin: This paper examines the intersection of religiosity, technology, and money in the Bitcoin community. - Our Brand Is Crisis: Creation and Resilience of Decentralized Brands Bitcoin & the Blockchain: Drawing on ecological resilience framework as a conceptual metaphor this paper maps how various stabilizing and destabilizing forces in the Bitcoin ecosystem helped in the evolution of a decentralized brand and promulgated more mainstreaming of the Bitcoin brand.
Open Access
CSR, Big Data, and Accounting: Firms' Use of Social Media for CSR-Focused Reporting, Accountability, and Reputation Gain
(2016-11-25) Saxton, Gregory Douglas; Neu, Dean
The rise of Big Data, particularly social media, is engendering considerable disruptions in the ways in which firms and stakeholders communicate about firm-relevant issues. The effect of social media appears to be particularly strong in the domain of corporate social responsibility (CSR). This thesis presents three empirical studies on Fortune 200 firms use of social media to engage in CSR-related activities. All three studies rely on original 2014 data related to the 42 CSR-focused Twitter accounts maintained by the US-based Fortune 200 companies comprising 18,722 firm messages and 163,402 messages sent by members of the public. This thesis first examines the outcomes of firms social media-based CSR engagement, building a theoretical argument about the reputational benefits, or reputational capital, acquired by firms through the messages they send on social media. It then turns to an investigation of the publics discussion of the companies CSR activities; this second study relies on inductive analyses to build insights into the nature of the firm-centered CSR messages sent by members of the public, the nature of firms reactions to these public messages, and the relationship between the two. The third and final study refines and then empirically tests the causal model developed in the second study. Collectively, these three studies shed light on the nature of the micro-reporting and micro-accountability behaviors that appear to characterize firms CSR efforts on social media sites. The thesis concludes with a summary of the implications of these new behaviors for the accounting and CSR literatures.
Open Access
Debt, Neoliberalism, and Accounting
(2020-08-11) Gilbert, Christine; Everett, Jeffery S.
The present doctoral thesis aims to explore the roles and limitations of accounting, in the broadest sense and including auditing, in financialized neoliberalism where indebtedness, through personal and public debt, has become central to governing the population. To achieve this objective, this research explores these two levels of debt, namely personal and public, and addresses the following research question: What are the roles of accounting and its impacts on the phenomenon of debt as a disciplinary and control device? This work begins with Chapter II, which examines one way of constructing indebted subjects and illustrates that, at the individual level, vague and imprecise accounting processes can play a determining role in disciplining them to become financially responsible and financialized subjects, through the generation of emotions such as fear, shame, and anxiety. Subsequently, Chapter III shows the construction of a discourse advocating the absolute priority of debt repayment (over the needs of the population), and demonstrates how organic intellectuals who want to resist this dictate are trying to organize themselves to defuse it. This study reveals that accounting can make their task more difficult given its complexity, especially in regards to debating public debt in the public space. The paper invites organic intellectuals to get out of the accounting complexity trap, either by drawing on the common sense as highlighted by Sikka (2000), or by translating accounting concepts into other fields, such as in the environment, in order to also get in touch with the population on an emotional level rather than just a rational level. This thesis ends on a more positive note in Chapter IV, which examines a case where accounting, and more specifically auditing, helped a small Third World country to reverse the power dynamic with international holders of financial capital. The audit, which was mobilized in the Ecuadorian governments strategy to renegotiate its public debt at its advantage, offered an alternative narrative to create an accountability relationship that did not previously exist, contributed to creating a sense of fear among investors, and provided legitimacy in the eyes of some stakeholders regarding the renegotiation of the countrys debt.
Open Access
Determinants of Success of the Open Source Selective Revealing Strategy: Solution Knowledge Emergence
(2018-11-21) MacAulay Abdelwahab, Mekki Robert; Auster, Ellen R.
Recent research suggests that firms may be able to create a competitive advantage by deliberately revealing specific problem knowledge beyond firm boundaries to open source meta-organisations such that new solution knowledge is created that benefits the focal firm more than its competitors (Alexy, George, & Salter, 2013). Yet, not all firms that use knowledge revealing strategies are successful in inducing the emergence of solution knowledge. The extant literature has as of yet not explained this heterogeneity in success of knowledge revealing strategies. Using a longitudinal database spanning the period from 1998 to end 2012 with more than 2 billion data points that was obtained from the Mozilla Foundation, one of the top open source meta-organisations, this dissertation identifies and measures the antecedent factors affecting successful solution knowledge emergence. The results reveal 35 antecedent factors that affect solution knowledge emergence in different ways across three levels of analysis. The numerous contributions to theory and practice that follow from the results are discussed.
Open Access
Digitization of Financial Services and Firm Performance
(2022-12-14) Cao, Ting; Rungtusanatham, M. Johnny
This dissertation focuses on the digitization of financial services in financial institutions (FIs) and investigates whether and how digitization efforts can help firms improve their performance. We conduct two studies each answering key questions from a different angle. Study 1 starts with the increasing digital investments of FIs and investigates whether FIs can gain positive returns from their investment in emerging digital technologies. Given the lack of proper tools to measure how well FIs have utilized their digital investments, we propose a new approach using data envelopment analysis to capture returns on investment in digital technologies. Additionally, we adopt a two-stage analysis to further investigate the factors that could potentially improve the returns. Our findings show that FIs have had decreasing returns on investments in digital technologies over time. Particularly, it is the inefficient resource management, rather than the invested technologies themselves, that prevent FIs from realizing the benefits of digital investment. We suggest that it is essential for FIs to continuously assess and monitor the implementation of their digital investments and learn how to optimally deploy technological resources internally. Our study also shows that FIs can gain better performance by actively enhancing their innovation capability and collaborating with FinTech firms. Study 2 turns to the digitization of existing services that FIs provide to individual customers and examines whether elevating digitization capability would improve performance. We first define a new construct to capture the ability of FIs to actively utilize emerging digital technologies to digitize service offerings. We then propose a new theoretical model in which the drivers and outcomes of building digitization capability are linked together. To empirically test the model, we collect both primary data from a well-designed, web-based survey and secondary data from FI annual reports. We first show that elevating digitization capability is indeed beneficial for FIs to gain better performance. We also show that focusing on digital-savvy customers and aligning the front-office back-office process are two important drivers for FIs in the development of their digitization capability, and these efforts also indirectly help improve performance.
Open Access
Distinct outside forces influencing firm outcomes: Social media and city crime
(2024-07-18) Ahmed, Tahmina; Saxton, Gregory
Business entities face a multitude of external influences such as social, economic, and environmental factors. These outside forces have the capacity to instigate meaningful financial outcomes, emphasizing their importance for both the firms themselves and external stakeholders, namely, investors and regulatory authorities. In my dissertation, I explore two such outside yet discrete forces – social media engagement and city crime. Building on the concept of “online firestorms” that tweets can entice, I investigate a set of tweets sent by the S&P500 firms and their CEOs that the Twitterverse considers controversial. Consistent with social media’s cancel culture, I find evidence that the perceived controversial CEO tweets are associated with significant negative stock market reactions. The detrimental impact of CEOs’ controversial tweets is intensified for firms with “Star CEOs” and reversed for firms with high individual ownership. Using the same concept of “controversy” in firm tweets, I find contrasting outcomes that imply a positive significant reaction of controversial tweets on the stock market. This evidence complements inferences from previous studies that documented price-distortion behavior of social media messages firms post. Sentiment analyses of these firm-tweets reveal when the tweet contents are positively oriented, the market reacts more optimistically no matter the perceived controversy in the tweets. My dissertation expands the influence of outside forces by investigating crime rate in the city in which firms are headquartered. Using the Accounting and Auditing Enforcement Releases issued by the SEC to firms for fraudulent financial reporting and the city crime rates in the USA, I show evidence that indicates the higher the crime rate in the city in which firms are headquartered, the higher the likelihood of fraudulent reporting. Further, with subsample analysis, I demonstrate a nuanced influence of CEO compensation and of proximity to the SEC’s headquarter, on the relationship between crime and fraudulent financial reporting.
Open Access
Empirical Essays on Entrepreneurial Finance
(2018-08-27) Zhang, Yelin; Cumming, Douglas J
This dissertation contains three chapters, covering analyses on crowdfunding, mutual fund, and entrepreneurial ecosystem. The chapters are connected at a theoretical level by the study of information asymmetries among financial intermediaries and the value added (or lack thereof) that intermediaries provide in different contexts. The first essay on crowdfunding focuses on platform due diligence. Crowdfunding platform due diligence comprises background checks, site visits, credit checks, cross-checks, account monitoring, and third party proof on funding projects. I conjecture that due diligence is associated with the busyness of platform employees and sophistication of platform service indicated by fee structure. Due diligence screens lower quality projects and mitigates information asymmetries between project issuers and funders; it is associated with higher percentage of successful campaigns and larger amount of capital raised on platforms. I test these propositions with platform-level data and find strong supportive evidence. The second essay on mutual fund studies agency problems associated with fund fee structure. Distinguishing between switches, pre-authorized contributions, systematic withdrawal plans, reinvestments, and distributions, I find that different types of flow exhibit distinct characteristics to retail fund flow with respect to fund fees and past performance. I argue that the positive correlation between retail fund inflow and switch-out reflects information asymmetry between incoming investors and current unitholders. I further show that this information asymmetry, attributed to biased purchase advice, is negatively associated with fund performance. A large sample of proprietary Canadian data from 2003 2014 support the findings. The third essay on entrepreneurial ecosystem studies the joint impact of venture capitalist and technology parks on small business development. I argue two alternative routes that lead entrepreneurial start-ups to acquisition outcomes instead of liquidation. On one hand, acquisitions can come about through the control route with external financers such as venture capitalists (VCs). On the other hand, acquisitions can come about through more advice and support provided to the start-up, such as that provided by a technology park. Empirical analyses on a sample of 251 Crunchbase companies in the U.S. strongly support these propositions.
Open Access
Empirical Essays on Finance and Innovation
(2018-08-27) Peter, Rejo Joby; Cumming, Douglas J.
This dissertation consists of three empirical studies in finance and innovation. I study various financial factors affecting innovation such as stock market manipulation and public to private transaction. I also investigate the effect of ownership structure on these public to private transactions. The first study finds that the End-of-day price manipulation is associated with short-termism of the firms orientation, long-term harm to a firms equity values, and commensurate with reduced incentives for employees to innovate. Insider trading, by contrast, enables innovators to achieve exacerbated profits from innovation. Using a sample of suspected manipulation events for all stocks from nine countries over the years 2003-2010, I find evidence consistent with these real impacts of market manipulation on innovation. These findings are not attributable to bad firms innovating less and manipulating more, since the average firm subjected to manipulation in the sample is more innovative during the pre-manipulation period. The second study investigates the effect of going private buyout transactions on the investments in innovation using an international sample of buyout transactions from 36 countries over 1997 to 2011. Patent counts and citations are used to proxy for quantity, quality and economic importance of innovation. The data indicate that the effect of buyouts on innovation is quite sizable in terms of quantity and quality, as both patent counts and citations drop following a buyout. I also find that the number of radical patents (i.e. more scientific) drop as well. When we split the sample into institutional and management buyouts the negative association is only confirmed for institutional buyouts. We find that the negative effect of buyouts on innovation is aggravated in post-2006 period, suggesting that the nature of deals has worsened for innovation over time. The data also show that buyouts have a negative effect on innovation efficiency. The third study considers ownership structure of target firms that are subject to going private buyout transactions, which are often highly leveraged and give rise to potential agency conflicts among existing shareholders. In this study, I examine ownership structure prior to going private transactions in 33 countries around the world from 2002 to 2014.The data indicate strong and consistent evidence that pre-going private ownership is characterized by higher institutional and corporate ownership. Family ownership lowers the probability of a public to private transaction. Stronger creditor rights increase the probability of going private particularly for whole company and institutional buyouts.
Open Access
Empirical Studies in International Entrepreneurial Finance
(2018-03-01) Zhang, Minije; Cumming, Douglas J.
This dissertation consists of three empirical studies in entrepreneurial finance around the world. The first essay empirically compares the impact of entrepreneurship on GDP, unemployment, exports, and patents by examining three international datasets. The findings of this essay point to institutional and cultural impediments to the effectiveness of entrepreneurship around the world. The impact of entrepreneurship is significantly mitigated by excessively strong creditor rights that limit entrepreneurial risk taking. Furthermore, the data indicate that cultural attitudes associated with low risk taking limit the effectiveness of entrepreneurship. The results of this essay also show how different definitions of new business entry matter for empirical analysis of entrepreneurship across countries. The second essay documents angel investors investment behaviors and performances around the world as compared with private equity (PE) and venture capital (VC) funds. Angel investors finance small high growth entrepreneurial firms in exchange for equity. Unlike PE/VC funds, which invest capital from institutional investors, angels invest their own money. We compare the impact from legal and cultural conditions on disintermediated angel finance versus intermediated PE/VC finance. The data indicate that, relative to PE/VC funds, angel investors are more sensitive to stock market conditions, legal environments, and Hofstedes cultural conditions. The data further indicate that investee firms funded by angels are less likely to successfully exit in either an IPO or acquisition, on average, whether those angels are involved in the first round or later stages. iii The third essay studies the different effects of legal and institutional factors on private equity divestment strategies of IPOs and acquisitions in the emerging markets. The data indicate that PE fund managers have a higher probability of successful exits in countries with better business and legal environments. We also find that PE investors are better able to mitigate the potential costs associated with inefficient and corrupt business environments to increase the probability of exits by IPOs in countries with higher levels of corruption. Moreover, our findings suggest that market shocks arguably concentrated in the developed markets result in a negative ripple effect as the probability of successful exits decreases for PE investors in emerging markets.