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2757 items in total found

Working Papers | 2016

Impact of Continuous Auditing on Earnings Quality and Audit Fees

Naman Desai, Joshy Jacob, and Arindam Tripathy

The use of continuous auditing (CA) has been promoted as a means to improve the governance mechanisms of companies. Prior experimental research also indicates that external auditors tend to rely more and spend relatively lower audit effort on the CA based IA functions compared to traditional periodic audit (PA) based IA functions. If CA could improve corporate governance mechanisms it should result in superior quality of reported earnings. Additionally, if the auditors rely more and spend relatively less effort on CA based IA functions then it should result in lower audit fees for companies employing CA based IA functions. Therefore, we examine the impact of employing CA on the quality of reported earnings as evidenced by the magnitude of discretionary accruals and on the fees charged by the external auditors. The results indicate that there is no significant difference in the level of discretionary accruals between companies employing CA versus PA. However, we find that, the companies employing CA do pay significantly lower audit fees than companies employing PA. This result provides external validity for the results of prior experimental research.

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Working Papers | 2016

Does Working for a Not-For-Profit Organization Affect the Psychology of Corruption? Evidence from India

Naman Desai

The primary purpose of this study is to examine if volunteering for Not-for-Profit Organizations (NPO) which are involved in providing social welfare services and which actively promote socio-behavioral factors like social responsibility, leadership and self-confidence among its volunteers, reduce an individual's likelihood of engaging in corrupt practices. We identify two psychological traits: ability to rationalize one's unethical actions and an external Locus of Control (as compared to an internal Locus of Control) that affect unethical behavior. Then with the help of an NPO, we investigate if engaging in social welfare activities organized by such NPOs, would create awareness about the adverse consequences of corruption faced by large segments of the society which, in turn would make it difficult to rationalize unethical and corrupt acts. NPOs also actively strive to develop self-confidence and leadership skills among its volunteers. Prior literature indicates that individuals possessing such qualities are more likely to possess an internal Locus of Control and also that individuals possessing an internal Locus of Control are less likely to act in a corrupt manner. The results of our study using a between subjects design indicate that greater experience with such NPOs leads to a significant reduction in ability to rationalize and leads to a higher likelihood of having an internal Locus of Control. Based on these results it can be inferred that volunteering with certain types of NPOs mitigates two major behavioral factors leading to corrupt behavior.

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Working Papers | 2016

Auditors' Consideration of Material Income-increasing versus Material Income-decreasing Items: Are Conservatism and Risk affected by Company Level Information?

Naman Desai

Auditors tend to focus more on income-increasing items compared to income-decreasing items because they are trained to be more conservative and also because the risk of litigation is significantly higher for failing to detect material income-increasing items compared to material income-decreasing items. Auditors' consideration of transaction level items is also affected by their evaluation of company level information. In this study we examine how the interaction between company level information and sign of the material items affect auditors' evaluation of income-increasing and income-decreasing items. The results indicate that in the absence of company level information, auditors intuitively associate a higher risk and audit effort to income-increasing items. When the company level information indicates that management is under pressure to inflate earnings, auditor conservatism and risk associated with income-increasing items gets amplified leading to an increase in the difference in assessed risk and audit effort between income-increasing and decreasing items. However, when the company level information indicates that management is not under pressure to inflate earnings, there are no significant differences in assessed risk and audit effort between income-increasing and income-decreasing items. These results indicate that auditor conservatism is affected by company level information

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Working Papers | 2016

Is Marketing a Science: Debate Revisited

Dheeraj Sharma

In pursuance of determining the scientific status of marketing, this article first determines what constitutes science. Thereafter, the article conducts a formal analysis of various schools of thought of science. Specifically, the article offers a comparison between historical relativism, scientific realism, logical empiricism, and logical positivism. Furthermore, in view of analysis, this article examines if marketing qualifies to be a science. Finally, the article attempts to offer a resolution to the ongoing debate on scientific status of marketing by proposing resource advantage theory as a general theory of marketing.

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Working Papers | 2016

Incorporating gender and age in genetic algorithms to solve the indexing problem

Diptesh Ghosh

In this paper we propose new genetic algorithms for the tool indexing problem. Genetic
algorithms are said to be nature-inspired, in that they are modeled after the natural process of
genetic evolution. The evolution process that they model is asexual in which individuals can
potentially live forever. In this paper, we propose a genetic algorithm in which solutions are of
two genders, reproduction happens by a combination of solutions with dierent genders, and
each solution has a nite life. We compare our genetic algorithms with the best known genetic
algorithm for the tool indexing problem and report our computational experience.
Keywords: Genetic algorithm, permutation problem, crossover, mutation

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Working Papers | 2016

Ownership Structure and Internationalization of Indian Firms

Chitra Singla, Rejie George, and Rajaram Veliyath

This paper examines the relationship between ownership structure and the firm internationalization, in a longitudinal sample of Indian firms. Drawing from principal-principal (PP) agency theory and the resource-based view (RBV) of the firm, we argue that divergent motivations among the firm's owners affect the firm's inclination to pursue internationalization, while resource heterogeneity among the firm's owners affects the firm's capability to pursue internationalization. Since both motivation and capability are required for a firm to pursue any strategic initiative, we argue that differences in ownership, which influences both the motivation and the capability of firms, impact firm's internationalization strategies in different ways. In addition, through examining two modes of internationalization, i.e., outward foreign direct investment (FDI) and exports from a prominent emerging economy, we uncover an interesting dichotomy. While family and other domestic owners favor exports (and not FDI), foreign owners favor both exports and FDI. Further, we find that family owners have a dominant influence on internationalization and their preferences appear to supersede those of the other owners.

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Working Papers | 2016

Impact of Board and CEO characteristics on Firms' Performance

Chitra Singla

Corporate governance characteristics like board composition and leadership impact a firm's performance. Researchers have attempted to explain the relationship using different theoretical perspectives like agency theory, resource dependence theory, and stewardship theory. However, the literature presents ambiguous results where some empirical findings support negative impact and other support positive impact. In this paper, we argue that ambiguity in results could be due to the context specificity of the nature of this relationship. In some contexts, agency theory might be more valid than other theories and in others stewardship theory or resource dependence theory might be more valid. Building on this context specificity, we look at the relationship between board and CEO characteristics on firm's performance in a longitudinal sample of Indian firms. Our findings suggest that none of the above mentioned theories are completely valid in the India context because we get mixed support for these theories. This calls for a mid-range theory to explain the relationship between corporate governance characteristics and firm's performance.

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Working Papers | 2016

Impact of Independent Directors' Resignations on Firm's Governance

Preet Deep Singh and Chitra Singla

Directors are liable for any act of omission or commission. They have a reputation to protect. While Independent directors might engage in passive monitoring; when apprised of a decision where the probability of detection of negligence is higher, they might prefer to abandon ship rather than suffer consequences. Under such circumstances, directors' resignations could lead to some consequences on firm's governance. We test this using a sample of more than 2300 resignations during 2006-2014 from firms listed on National Stock Exchange, India. We specifically identify clustered resignations, i.e., when 2 or more people leave the board within the same year for company-specific reasons and see its association with earnings management in the following year.

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Working Papers | 2016

A THEORY OF TAX EVASION IN DEVELOPING COUNTRIES

Errol D'Souza

The literature on tax evasion assumes that taxpayers wish to evade their taxes entirely and the only reason they do not do so is that there is some non-zero probability of being caught by the government. Also, it is assumed that government uses the taxes and fines from caught evaders on goods that it consumes which produce no utility to taxpayer-citizens. In a developing country, however, we argue that taxpayers use tax evasion to compensate for imperfect financial markets as well as government expenditure patterns that do not benefit them. We demonstrate that imperfect financial markets result in situations where when individuals find the chance of earning high returns from investments, it causes them to overcome their aversion to risk and participate in actuarially unfair tax evasion gambles. Also, tax evasion increases when either public goods are underprovided, or the government is sufficiently predatory , or the government directs policies at groups that the taxpayer is not a member of. In such a situation tax evasion is viewed by the taxpayer as a means of shifting the allocation of his income in favor of investments and away from government expenditure policies that give little benefit to him.

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Working Papers | 2016

Understanding Coefficient Alpha: Assumptions and Interpretations

Dheeraj Sharma

A procedure is developed for determining appropriate levels of scale reliability by examining coefficient alpha in conjunction with the standardized regression coefficient for each variable. Present study aims to examine the effect of addition and deletion of items on coefficient alpha. Also, necessary assumptions for appropriate interpretation of coefficient alpha are examined. Present research suggests that deleting scale items to increase coefficient alpha may result in an under specification of the construct the scale attempts to measure. Furthermore, this research offers prescriptive and descriptive insights for appropriate use of coefficient alpha.

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