Browsing by Author "Francia, Arthur J."
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Item A Multi-Product Individual-Level Model for New Product Sales: Forecasting and Insights(2013-08) Liutec, Carmen M.; Du, Rex Y.; Blair, Edward A.; Hu, Ye; Francia, Arthur J.; Kamakura, Wagner A.We develop a novel approach for modeling new product trial and early repeat purchase behavior, and we apply this approach in the context of consumer packaged goods. Our approach takes advantage of the cross-individual, cross-product, cross-time data that is increasingly available from retail customer relationship management programs as well as research panels. It enables us to account for differences in consumers’ intrinsic preferences for new products as well as for differences in their responsiveness to marketing variables, during both trial and early repeat purchases. By leveraging these uncovered individual differences, we attempt to achieve three goals. First, we aim to improve the accuracy of post-launch sales forecasts based on data from a period that can be as short as two to three months, tapping into the fact that each individual trial or early repeat purchase observed during the post-launch period sends a different signal about the new product’s sales potential. Second, we aim to provide more informative diagnostics for managers to act upon. (e.g., how to re-position the new product or target it for a particular consumer segment). Finally, we aim to investigate potential empirical regularities regarding consumer responses to new products (e.g., potential differences in responsiveness to marketing variables between early and late triers).Item A study of management consulting services and the decision factors used by financial executives in their retention(1981) Moore, John Oliver; Seiler, Robert E.; Francia, Arthur J.; Kretlow, William J.; Boockholdt, James L.The performance of management consulting services can be segregated into two groups: CPA (Certified Public Accountant) firms and non-CPA firms. Prior studies have dealt primarily with the nature of these services within CPA firms and its related effects on independence and the attest function. The primary purposes of this study are to determine: (1) the nature and differences between the management consulting services performed by CPA firms and non-CPA firms, and (2) the decision factors used by financial executives in retaining management consulting services. The information collected in this research was gathered using a mail questionnaire sent to selected samples of the groups of CPAs, non-CPAs, and financial executives. The data were analyzed using t-tests and factor analysis. The results clearly indicate a difference in the nature of management consulting services performed by CPA firms and non-CPA firms. Although some services performed were similar, the relative weighting scale indicated a difference in emphasis. [...]Item An evaluation of alternative cost variance investigation models(1983) Kim, Soon-Kee; Liao, Woody M.; Finley, David R.; Francia, Arthur J.; Kao, Edward P.The evaluation of alternative cost variance investigation models has received considerable attention in the past decade. In previous studies, only two types of investigation action have been considered: (1) full investigation, which assumes the acquisition of perfect information regarding an operation, and (2) no investigation. No previous study has considered a partial investigation as an alternative action. Due to time and budget constraints, decision makers may often be interested in only a partial investigation. Therefore, a need arises to incorporate a partial investigative action into the cost variance investigation models when their performances are compared and evaluated. This study is directed toward the examination of the effects of allowing a partial investigative action in the evaluation of four cost variance investigation models. To accomplish this purpose, two distinct decision rules are applied to each model: (a) the conventional decision rule, which allows only two types of investigative action (no or full investigation), and (b) the proposed decision rule, which allows three types of investigative action (no, full, or partial investigation). There are two major objectives of this study: (1) For each model, compare the relative performance of the proposed rule and conventional decision rule (the intra-model comparison); (2) Compare the performance of the four models under the proposed decision rule and compare the performance of the four models under the conventional decision rule (the inter-model comparison). The models selected for this study are: (1) the Simple Control Chart Model, (2) the Markovian Control Model, (3) the Decision Theory Model, and (4) the Dynamic Programming Model. [...]Item Benefits and Strategic Outcomes: Are Supplemental Retirement Plans and Safer Driving Related in the U.S. Trucking Industry?(Human Resource Management, 9/13/2016) Werner, Steve; Kuiate, Christian S.; Noland, Thomas R.; Francia, Arthur J.We suggest that a firm's benefits can relate to important organizational outcomes that have strategic implications. We propose a number of mechanisms that could relate benefits to strategic outcomes, including the notion that benefits can help attract and retain the type of employees who are most likely to perform in ways consistent with the firms’ strategies. We illustrate this with the case of supplemental retirement benefits in an actual setting, the long‐haul trucking industry. We report positive organization‐level relationships associated with the management choice of offering these benefits. Our results show that firms offering supplemental retirement plans engage in significantly safer driving practices, as measured by the proxy of driver insurance costs, as hypothesized. These findings show that benefits can be related to outcomes that have strategic implications for the firm. By showing that retirement plans may be of value to organizations, we help to bridge the academic‐practitioner divide and provide motivation and guidance for additional work on this important but underresearched topic.Item Capital Structure Choices and Survival in a Deregulated Environment(Academy of Accounting and Financial Studies Journal, 4/1/2013) Francia, Arthur J.; Kuiate, Christian S.; Noland, Thomas R.; Porter, Mattie C.We examine the impact of capital structure choices for survival in a deregulated industry. Financial leverage in particular has been identified by numerous prior studies as a major determinant of the probability of survival in most industries. In the course of a deregulation, the debt overhang effect stemming from high leverage negatively affects the ability of existing firms to survive when a regulatory shock occurs (Zingales, 1998). Following such a regulatory shock, and consistent with the tradeoff and debt overhang theories of capital structure, firms are more likely to reduce their level of leverage (Ovtchinnikov, 2010). This causes the expected costs of financial distress to rise higher and we can expect a negative association between leverage and survival in a deregulated industry. However, in a highly competitive setting, firms may signal their level of quality by contracting for more debt instead of equity (Ross, 1977). This signaling perspective can therefore induce the existence of a positive association between leverage and survival in a deregulated context. Using a sample of private trucking firms, we test this hypothesis and find a negative association between leverage and survival. In a refined analysis aimed at distinguishing high “quality” versus low “quality” firms, we adopt the “excess capacity” approach of De Vany and Saving (1977). Consistent with our initial findings, we find that the negative association between leverage and survival increases with the level of excess capacity.Item Cognitive dissonance, selective perception and the self-fulfilling prophecy in the examination of audit evidence(1981) Parker, Larry M.; Francia, Arthur J.; Parks, Michael S.; Porter, Mattie C.; Finley, David R.The problem addressed by this study was one aspect of the audit process: how accurately auditors perceive evidential matter. The study involved an experiment with practicing auditors which used a case concerning dispositions of confinnations of accounts payable. The experiment was designed to test for the possible effects of selective perception, cognitive dissonance and the Self-Fulfilling Prophecy on the auditors perception of audit evidence. These three theories imply, generally, that investigators, perhaps even auditors, tend to find what they expect to find. Distinctions were made between auditor perceptions and auditor judgments because the experiment was directly related to auditor perceptions and only secondarily related to auditor judgments. A case containing identical information concerning dispositions of exceptions to confirmations of accounts payable was administered to two hundred and fourteen practicing auditors from thirteen offices representing seven of the "Big Eight" firms, one national firm, one regional firm, and two local firms. The subjects were randomly divided into three experimental groups and, prior to working the actual case, were given different information concerning internal control related to the case. Group 1 received no information on internal control; Group 2 received information indicating weak internal control; and Group 3 received information indicating strong internal control. The experiment was to determine if the expectations built by the prior information on internal control influenced the subjects perceptions of the evidential matter in the case. The study explained that prior information can be properly used in judgments, but prior information should not influence perceptions. This experiment involved auditor perceptions, not judgments. Selective perception, cognitive dissonance and the Self-Fulfilling Prophecy implied that, although all subjects had exactly the same evidential material in the case. Group 2 (weak internal control) should have perceived significantly more unsatisfactory dispositions than Group 1 (no internal control information), and Group 1 should have perceived more unsatisfactory dispositions than Group 3 (strong internal control) if the effects related to these theories existed in the experiment. If expectations did not affect the subjects perceptions, no significant differences should have existed. Statistical analysis of the results of the experiment indicated that the subjects in Group 2 did perceive significantly more unsatisfactory dispositions than Group 3. Further analysis suggested that the confidence level of the subjects evaluation of internal control (a surrogate for the strength of the subjects expectations) was related to significant differences in subject group responses. These results supported the existence of selective perception in the experiment. Initial and final evaluations of internal control by the subject groups were examined to determine if cognitive dissonance and the Self- Fulfilling Prophecy existed in the experiment. The changes in measures of variability supported the existence of cognitive dissonance, but results related to the Self-Fulfilling Prophecy were ambiguous and the existence of the Self-Fulfilling Prophecy was not determinable for this experiment. Tests for randomness, subject consistency in internal control evaluation, and principal investigator bias all strongly supported the internal validity of the experiment.Item Organization size, technology, and formalization in professional accounting organizations(1977) Ballew, Van Bennett; Willingham, John J.; Francia, Arthur J.; Szilagyi, Andrew D., Jr.The issues addressed by this study were the relationships between routineness of technology and formalization at the micro level and organization size, routineness of technology, and formalization at the macro level in professional accounting firms. The basic objective was to determine whether previous studies of the role of organization size and technology in the description of variations in organization structure would replicate in highly professional organizations which ranged widely in terms of organization size. At the micro level of analysis, hypotheses were developed that predicted: 1) a positive association between routineness of technology and formalization for professional practitioners in CPA firms, and 2) differential strengths in this relationship as a consequence of the three major specialization areas within CPA firms. This relationship was expected to be strongest for audit specialists, weakest for management advisory services specialists, and between these two for tax services specialists. At the macro level of analysis an interactive model to describe formalization in CPA firms was developed. Organization size and routineness of technology were expected to influence jointly levels of formalization in CPA firms. However, these influences were expected to interact in opposing directions and thereby to mask any bivariate association between either independent variable and formalization. Data on routineness of technology, formalization, and a set of control variables were collected by means of a questionnaire instrument. These measures were gleaned from earlier studies concerned with similar phenomena. The sample was comprised of 196 practicing professionals drawn from 20 CPA firms. The micro level hypotheses were initially tested by correlation analysis. Support for the hypothesized positive relationship between routineness of technology and formalization was not forthcoming; in fact, the evidence tended to support a negative association between the two variables. The hypothesized differences in the technology/formalization relationship between the three functional areas were not supported either. Differences between the three functional areas in perceived routineness of technology and perceived formalization were explored with analysis of variance methods. These constructs were not found to be effective generally in detecting significant differences between functional areas. At the macro level, the interactive model describing formalization in CPA firms was tested with correlational analysis. The hypothesized relationship between organization size and technology was supported; larger CPA firms employ less routine technologies. However, the research expectation of an interactive relationship between organization size and technology in the description of formalization was not fulfilled. The association between formalization measures and either independent variable did not appear to be influenced by the values assumed by the other independent variable. An exploratory search for a linear model was executed with regression analysis. This exploration indicated that technology and organization size possessed moderate explanatory power for certain dimensions of formalization. The data suggested that formalization as a mechanism for control in CPA firms was applied with great selectivity. Taken together the research findings support a conclusion that CPA firms are anomolous organizations. The social structures of these organizations do not exhibit the interrelationships found in other types of complex organizations.Item Power base attribution and the perceived legitimacy of managerial accounting(1980) Bartlett, Roger Wallace; Seiler, Robert E.; Francia, Arthur J.; Montanari, John R.; Weiss, Ira R.The related concepts of power and legitimacy are well developed in social science literatures. However, accounting researchers in particular have devoted little effort toward understanding the role that these concepts play in the utilization of accounting information for control and decision making. Work by Cyert and March (1964), Pettigrew (1967), and others, suggests that information and information control can be key elements in decision making and sources of influence extending beyond mere transmission of data. Nevertheless, accounting researchers continue to focus attention on information characteristics such as relevance and accuracy and decision maker characteristics such as cognitive style and familiarity with accounting as the principal factors in decisions to utilize accounting information. There are two basic theses advanced in this dissertation. The first suggests that information and information providers can be perceived by decision makers to possess characteristics which serve to increase/decrease their ability to influence decisions. These characteristics have been well developed in the social sciences as "power resources." The present work develops a series of scales designed to measure the attribution of these resources by organizational participants to three aspects of the accounting function. The second basic thesis advanced is that the accounting function, as a key element in organizational control processes, can be evaluated in terms of the level of legitimacy attributed to it by organizational members. A review of social science literature regarding legitimacy produced four possible bases for this legitimization process. A scale measuring the level of perceived legitimacy is developed. As a test of these two theses, a mail survey was conducted of a sample of middle managers selected from the employees of four manufacturing companies. Responses from 116 people were analyzed using correlational and multiple regression techniques. The analysis of data provided support to reject 27 of 33 null hypotheses developed about the relationships between power resources, perceived legitimacy, exposure to accounting, and satisfaction with accounting services. The results of the study are seen to provide substantial support for the theorized relationships. Strong positive correlations were found to exist between expertise, charisma, perceived legitimacy, and satisfaction. This suggests that a person's satisfaction with accounting data, and hence, their propensity to utilize it in decision making and control, is strongly related to their perceptions that the information possesses the characteristics of power and legitimacy.Item RISK SHIFTING AND FAIR VALUE ACCOUNTING IN THE BANKING INDUSTRY(2014-08) Kuiate, Christian; Lobo, Gerald J.; Francia, Arthur J.; Kilic, Emre; Susmel, RaulI examine whether and how the improvements in fair value disclosures resulting from the adoption of Statement of Financial Accounting Standard No. 157, Fair Value Measurement,s affect banks’ investment decisions. Using a sample of the largest one hundred publicly-traded bank holding companies, I find that, SFAS 157 does not affect the extent to which banks invest in high or low liquidity risk securities. Further cross-sectional analyses reveal that, following the adoption of SFAS 157m banks with high (low) funding liquidity needs reduce (increase) their holdings of high liquidity risk securities. These findings are consistent with the improved fair value disclosures contributing to mitigating the risk shifting incentives of banks with high funding liquidity needs and having no effect on a liquidity risk arbitrage strategy for banks with low funding liquidity needs. Consistent with the risk overhang hypothesis, I also find that banks with high funding liquidity needs use their discretion in fair value measurements to conceal the losses on their investment securities.Item The auditor's report and banker's credit decisions : a field experiment(1984) Jennings, David M.; Porter, Mattie C.; Francia, Arthur J.; Gamble, George O.; Kretlow, William J.The focus of the study was the effect of the auditor's report on the credit decision behavior of senior bank commercial loan officers. The mathematical Theory of Communication indicates that the message received may have a different meaning and result in a different response by the recipient than the meaning intended and response expected by the sender. The auditor's report represents a significant, if not the only, vehicle for the transportation of the auditor's intended message to the user of audited financial statements. To obtain evidence that the auditor's report influences credit decisions and that different forms of the report are differential in their effects on credit decisions, a field experiment was conducted. A posttest-only control group design was used to structure the field experiment. A sample of 600 senior bank commercial loan officers was randomly selected and then the subjects were randomly assigned to six groups. All of the subjects received identical case materials concerning a hypothetical firm representative of a medium size growth company in the electronics industry. The case materials Included a description of the company, a five-year financial summary, and a complete set of financial statements, including notes at December 31, 1982. The six groups were differentiated only by the inclusion of one of five forms of the auditor's report or the exclusion of the auditor's report entirely. Group 1 did not receive an auditor's report; Group 2 received an unqualified opinion; Group 3 received a "subject to" qualified opinion; Group 4 received an "except for" qualified opinion; Group 5 received an adverse opinion; and Group 6 received a disclaimer of opinion. Each subject was asked to complete and return a two-part questionnaire which included fourteen questions designed to obtain demographic data about the respondent and seven questions structured to determine the respondent's credit decision reaction to the case materials from different perspectives. The seven aspects of the credit decision probed were: 1) amount of the seven million dollar loan requested that was approved, 2) confidence in the credit decision, 3) interest rate appropriate for the loan approved, 4) estimate of the hypothetical firm's 1983 net income, 5) an evaluation of the firm's management, 6) an evaluation of the risk of fraud in the firm, and 7) an evaluation of the company's past success. [...]Item The Data Decision-Usefulness Theory: An Exploration of Post-1998 Reported Products and Services Segment Data Decision Usefulness(2012-05) Tollerson, Cynthia; Gamble, George O.; Francia, Arthur J.; Noland, Thomas; Chin, Wynne W.; Singer, RonaldThis study sets forth a conceptual theory–the Data Decision-Usefulness Theory–and explores it by surveying fundamental-equity analysts, to assay their decision-usefulness perceptions of post-1998 reported products and services segment data. Accordingly, a two-phased sequential exploratory mixed methods research design is employed. The initial phase is qualitative in nature comprising theory generation and questionnaire and taxonomy development. The conceptual theory is generated by drawing on prior accounting literature and two paradigms: formal classical grounded theory and value-focused thinking. The former is the theory development methodology and the latter is the over arching abstract model. The mail questionnaire is developed with the aid of Dillman’sTailored Design Method. Our fundamental-equity analyst taxonomy is developed, by drawing on: the descriptive literature about investment professionals, the United States security exchange regulations, and a non-public database, as well as the grounded theory paradigm. The second phase is quantitative in nature. One hundred and sixty-three questionnaire recipients mailed back their questionnaires (10% response rate). Fifty-five answered questions that measured their decision-usefulness perceptions. Overall, the measurement model findings for the questionnaire measures of the materiality and decision-usefulness models are moderately to highly reliable, exhibit both convergent and discriminate validity, and each has predictive relevance. In comparing our results for the two models, our most significant finding is that Ease of Comparing is the most important predictor for both Materiality and Decision Usefulness. However, surprisingly the relative importance of Relevance and Reliability shifts dramatically. Our Materiality model predicts that Relevance is the second most important predictor and Reliability is the least important. In contrast, our Decision Usefulness model predicts just the opposite Our results suggest that to have an impact on analysts’ understanding of firms, relevant disclosures are more important than reliable disclosures. However, to increase analysts’ understanding of firms, reliable information is more important than relevant information. Furthermore, the amount of post-1998 reported products and services segment data being disclosed is insufficient to improve analysts’ understandings of firms. These findings seem to support the dissenting FASB board member’s assertion that post-1998 reported segment disclosures are unlikely to facilitate better understanding firms’ performance, better assessing their prospects for future net cash flows, and making more informed judgments about firms as a whole.Item The information content of the exposure draft of Accounting Principles Board opinion no. 31 and Accounting series release no. 147 : (an empirical investigation)(1984) Alam, Pervaiz; Khumawala, Saleha B.; Crockett, John H.; Gamble, George O.; Kretlow, William J.; Francia, Arthur J.Both the Exposure Draft of APB Opinion No. 31 and ASR No. 147 required the reporting of long term financial lease obligations in the general purpose statements of lessees. The economic consequences of these pronouncements have been debated since their issuance. This study assumes an efficient market; therefore, the economic effects of the accounting change resulting from the issuance of the Exposure Draft of APB Opinion No. 31 and ASR No. 147 are measured by examining security prices and changes in bond ratings. There is no prior research on the information content of the Exposure Draft of APB Opinion No. 31. Moreover, existing research on ASR No. 147 does not provide definite conclusions as to the effect of the disclosure requirements on lessee firms. The inconclusiveness of prior research on ASR No. 147 suggests that some of the information which it required may have been available in the securities market prior to the release of ASR No. 147. Hence, this study investigates security price reaction resulting from the earliest pronouncement of the new accounting change, the Exposure Draft of APB Opinion No. 31. [...]