Browsing by Author "Noland, Thomas R."
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Item An Analysis and Comparison of Bankers' Perceptions of Stock Options in 1999 and 2005(Academy of Banking Studies Journal, 2008) Gamble, George; Geddie, Mary F.; Noland, Thomas R.; Tollerson, CynthiaResearch to date on accounting for stock options has focused the analysis on a single group of corporate stakeholders, stockholders. This paper reports the results of a survey administered to another group of stakeholders, creditors. Commercial bankers were surveyed regarding the accounting treatment for stock options and the perceived impact of stock options on financial statements, firm valuation, and the loan decision. A unique aspect of our study is that we surveyed bankers during two distinct periods. We first surveyed bankers in 1999, well after the debate surrounding SFAS 123 (FASB, 1995), but before the resurgence of the debate leading up to SFAS 123(R) (FASB, 2004). We surveyed again in 2005, as companies were implementing SFAS 123(R). This allows us to comment on the impact of public debate preceding the rule revision on the perceptions of a group of well-informed financial statement users. We find bankers in both periods view stock options as compensation. The method of accounting does not matter if relevant information is disclosed. More experienced loan officers from 1999, and those who deal with stock options frequently from 2005, are less negative than others about the impact of stock options on shareholder interest in company assets.Item An Introduction to the U.S. Municipal Bond Market(International Journal of Governmental Financial Management, 2008) Summers, George; Noland, Thomas R.With a market value exceeding $2.6 trillion, the U.S. municipal securities market offers state and local governments many capital investment-financing opportunities. Many readers, however, may lack an understanding of the issuance process, the quality of the available information, or the inherent risks associated with these instruments. We describe the traditional municipal bonds process beginning with the initial offering preparations and the methods of sale. We discuss the types of interest costs and the use of the bond proceeds. We identify typical bond types and call provisions. We then turn to a discussion of the investment characteristics of municipal bonds. We explain credit ratings, credit enhancements, potential risks, and oversight and reporting. Our discussion is supplemented with data from the municipal bond market from 2001-2007. Our paper provides the reader with a basic understanding of the institutional structure, available information, and potential risks for this economically significant market.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 The Effects of Mandatory Audit Firm Rotation and Mandatory Audit Firm Retention on Opinion Shopping(2017-05-17) Lee, Beu; Gamble, George O.; Noland, Thomas R.; Zhao, Yuping; George, Thomas J.This paper examines the impact of mandatory audit firm rotation and mandatory audit firm retention on opinion shopping. Both regulations place statutory restrictions on a client’s authority to switch auditors with the aim to curb opinion shopping. However, one strand of the literature has argued that one of these regulations, namely mandatory audit firm rotation, could worsen opinion shopping by disguising client’s intent. This study predicts that these regulations may bring seven major changes to the dynamics of the audit market: (1) financial incentives, (2) detection risks, (3) litigation risks, (4) reputation effects, (5) auditor competency, (6) market competition, and (7) switching costs. These changes, in turn, may affect auditors’ incentives to compromise and clients’ willingness to engage in opinion shopping. Using hand-collected data based on the unique Korean setting where both mandatory audit firm rotation and mandatory audit firm retention have been implemented for all the listed companies, and where each regulation was adopted in a staggered manner, this paper finds that the level of opinion shopping for affected Korean firms during the mandatory audit firm retention period has decreased. Furthermore, this study finds that opinion shopping has increased once the Korean government started implementing mandatory audit firm rotation in the presence of mandatory audit firm retention. This study adds to the literature by examining whether regulations have a significant impact on opinion shopping and by highlighting the unintended consequences of regulatory attempts.Item The sum-of-years’ digits depreciation method: use by SEC filers(Journal of Finance and Accountancy, 2011) Noland, Thomas R.The sum-of-years’ digits depreciation method is an accelerated depreciation and amortization technique that is acceptable for financial reporting under U.S. and IASB accounting rules. Until 1981, it was an acceptable method for tax reporting in the U.S., and the aggressive nature of the method was an appealing characteristic for tax returns. Since 1981, little attention has been paid to its continued use in financial reporting. Academic research tends to group all accelerated depreciation methods together. However, declining balance depreciation methods are more appealing because they are more flexible, are easier to apply to partial periods, and have common characteristics with current U.S. tax depreciation law. This paper reports how SEC filers over the past four years have used the sum-of-years’ digits method. It shows what type of companies use this method, what types of assets it is applied to, and what length of asset life is typically chosen. Sum-of-years’ digits sees its most frequent use in the banking and regulated industries. It is primarily applied to intangible assets, such as acquired customer relationships. What is surprising for the non-regulated companies is that they are amortizing the assets more aggressively for financial reporting than they are for tax reporting. Possible motivations are discussed.