Working Papers

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No. 187 Mary Ellen Oliverio and Bernard H. Newman
Contemporary Issues: Subject Matter for Accounting Courses: September 1999
Curriculum and course review is a common activity in accounting departments. The study of issues faced and emerging in the accounting profession is given minimal attention. The proposal discussed herein is not an empirically based analysis. Rather, a rationale for the study of issues as a relevant component of a university education in accounting is presented.
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No. 188 Peter Allan
The Temporary Workforce Is Here to Stay: November 1999
The temporary workforce has become increasingly important to modern business both in the United States and abroad. This article describes 11 forces and trends which have contributed to the growth in the temporary workforce and which are likely to continue in the foreseeable future.
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No. 189 Roy Girasa
The Assault on International Bribery: Global Regulatory Expansion: October 1999
For more than two decades, the United States has been acting virtually alone in combating international bribery of government officials by agents of domestic corporations. Twenty years after the enactment of the U.S. Foreign Corrupt Practices Act in 1977 (the "Act"), the Organization for Economic Cooperation and Development (the "OECD"), under pressure from the U.S. and other sources, adopted a Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the "OECD Convention"). In Latin America, the Inter-American Convention Against Corruption (the "IA Convention") was adopted and opened for signature on March 29, 1996, in Caracas, Venezuela. In addition, there are also other efforts to combat international bribery. This paper will review: (1) the major elements of U.S. law concerning bribery for foreign public officials; (2) the provisions of the OECD Convention and the IA Convention; and (3) other efforts underway to counteract the climate of dishonesty inherent in the international marketplace.
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No. 190 Ira J. Morrow
Defining a New Type of Organizational Leadership: The Heroic Leader: November 1999
In this paper the concepts of leadership and heroism are defined, discussed, and compared. The concepts are then integrated to form an orientation toward leadership known as heroic leadership. A model of heroic leadership consisting of five major dimensions including character, work orientation, risk-taking and reward orientation, relating to others, and organizational impact is then presented and discussed. Major sub-elements for each dimension are also identified and examined. The implications for leadership in non-heroic organizational settings are highlighted.
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No. 191 Jack Yurkiewicz
The Mystery of Linear Programming Explained: Second Edition: November 1999
Sir Arthur Conan Doyle's Sherlock Holmes explains to Watson and the reader how to use Solver, an application of Excel used to solve mathematical programming problems. Holmes walks his audience through modeling the problem in Excel, using Solver to get the optimal solution, a description of variables, a discussion of shadow prices and right-hand sensitivity analysis, and an explanation of reduced costs.
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No. 192 Joseph A. Russo, Jr.
The Effect of Auditor Knowledge Utilization in a Task on Observer Assessments of the Effect of Task Experience on Expert Potential: February 2000
The study of expertise and expert-development has been and continues to be a major focus of auditing behavioral research. This paper furthers studies of the evolution of auditor expertise by augmenting Russo's model of learning and expert-like behavior during performance of a field task to include observer assessments of the effect of the current task experience on an auditor's potential for expert development in the future.
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No. 193 James S. Gould and Raymond H. Lopez
Managing Credit Union Capital: A Strategic Planning Tool for the New Millennium: December 2002
This study provides a statistical tool for assisting credit union managers in planning capital/asset ratio strategies for optimum operating efficiency. Focus groups, personal interviews, and survey data from more than 165 randomly selected responses form the basis of our model. The survey solicited information concerning the relationship between nine independent variables and expected optimum gross and net capital/asset ratios. The most statistically significant variables were total loan/assets, real estate loans/total loans, unsecured and credit card loans, the operating expense ratio, and the delinquency ratio. Two multiple regression equations were derived from these data. They allow operating managers to enter their specific credit union data into the equations and generate target goals for optimizing their gross and net capital/asset ratios over the next two years.
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No. 194 Mary Ellen Oliverio
New Structure Proposed for International Accounting Standards Development: A Status Review: January 2001
On May 24, 2000, the members of the International Accounting Standards Committee (IASC) approved a new structure that provides for the establishment of an independent international accounting standard setter. The story of the recent efforts of the IASC to develop a new structure reveals a wise realization that globalization has imposed heightened demand for worldwide accounting standards. The status review that follows relates only to restructuring proposals of the IASC. The discussion includes: the rationale for a new structure; the current structure of the IASC; the general nature of the proposed restructuring; other initiatives in envisioning a global standard setter; an overview of responses in comment letters; the revised proposal of the SWP; implementation underway; and comments.
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No. 195 Peter Allan and John Dory
Understanding Doctoral Program Attrition: An Empirical Study: March 2001
This paper presents the results of a study of the experiences of graduates and non-graduates of the Pace University Doctor of Professional Studies program. The paper identifies obstacles toward completing the degree and offers recommendations to students, faculty, and universities to reduce doctoral student attrition.
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No. 196 Joseph A. Russo
Experience and the Potential for Expert Performance in the Future: March 2001
The broad issue addressed in this paper is the effect of experience on an auditor's potential for expert performance in the future. The specific aspect of this issue examined is the effect field experience has on certain measures of an auditor's knowledge that can be used to anticipate changes in the level of that auditor's expertise in performing future tasks. The paper builds on extensive prior research by Russo to further expertise research in auditing in two ways. First, it extends previous findings from the realm of realized expertise in a current task to that of an auditor's potential for greater expert performance in an arbitrary future task. Second, it examines the relationship between experience and its differential effects on the types of knowledge that drive an auditor's expert-like behaviors during performance of field tasks.

A descriptive model of auditor behavior and learning during performance of a field task is presented that shows how the effects of experience on an auditor's potential for further expert development can be quantified. Expectations of the future level of expertise are modeled as functions of the magnitude and pattern of change in knowledge properties induced by current task experience. The model is then applied to an analysis of the task behaviors of four first-year auditors who performed audit-related tasks in simulated environments. Findings reported reveal both the highly individualistic effects of experience on knowledge driving expert behavior and analytical differences between effects along the structural and substantive dimensions of knowledge. The findings also provide diagnostic information about the progress of expert development and insight into limits on the rate at which expertise is acquired.
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No. 197 William J. Coffey, Ph.D., CPA
Strengthening Treasury Direct: April 2001
Wise investors in Treasury securities can deal directly with the Bureau of the Public Debt by opening a Treasury Direct account with a Federal Reserve Bank, thus avoiding charges imposed by banks and brokerage firms that frequently act as intermediaries for Treasury securities investors. Although there are several advantages to investing in Treasury securities, certain practices followed by the Federal Reserve Bank reduce interest rightfully due investors.

This article cites examples of how the Federal Reserve Bank takes unfair advantage of its investors by avoiding full payment of interest. Investor record keeping problems also arise when the Federal Reserve Bank reopens a previously issued security. Recommendations are made for strengthening the Treasury Direct system with specific suggestions on how to achieve fair treatment for investors.
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No. 198 Martin H. Zern
Innocence in the Eyes of the Internal Revenue Service: April 2001
The filing of a joint return by a married couple usually results in overall tax savings. The downside of filing jointly, however, is that the parties to the joint return are together, and individually, responsible for the accuracy of the return, for the full tax liability, and for any interest or penalty relating to the return. This so-called joint and several liability extends not only to the tax shown on the return, but also to any tax that should have been but was not reported on the return. Consequently, each spouse becomes responsible for the tax infractions of the other. Because the joint and several liability rule was found to be overly harsh, since 1971, the tax law has contained a provision under which a spouse could seek relief from liability if he or she met the definition of an innocent spouse. As it turned out, however, the requirements that had to be met in order to obtain innocent spouse relief were very stringent and failed to protect spouses, in most cases the wife or ex-wife, where fairness dictated that relief was warranted. Accordingly, in 1998, Congress significantly liberalized the rules for obtaining innocent spouse relief by enacting a new section of the Internal Revenue Code and expunging the prior provisions. This paper analyzes the new Code section and also analyzes a recent Revenue Procedure, issued in 2000, that details the requirements for obtaining innocent spouse relief under one of the provisions of the new law, namely, equitable relief.
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No. 199 Robert A. Isaak and Raymond H. Lopez
New Economy Trends: Implications for Investment, Rotation Dynamics, and Growing Structural Inequalities: June 2001
This paper examines the evolution of the structure of the United States economy in the post-World War Two period. It identifies the drivers of the “New Economy” and their impact on major industries and companies. Finally, implications of these trends on investor portfolios are examined, with guidelines for enhanced performance over the next decade.
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No. 200 Ira J. Morrow, Associate Professor of Management
Instrumentation for the Evaluation of Business Students' Performance in Class Presentations: June 2001
This paper presents and discusses the use of two instruments that have been developed to provide students with structured and constructive quantitative feedback regarding their performance in class presentations that are frequently required in business school courses. The content of the instruments is described in detail, and suggestions for using and adapting the instruments to maximize student learning are discussed.
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No. 201 Samir M. El-Gazzar, Philip M. Finn and Rudy A. Jacob
Market Revaluations of Foreign Listings' Reconciliations to U.S. Financial Reporting GAAP: July 2001
The Securities and Exchange Commission (SEC) requires foreign firms wishing to list their securities on the U.S. exchanges to convert their financial statements to U.S.-based generally accepted accounting principles (GAAP) in a reconciliation filing known as Form 20-F. This paper extends prior research analyzing the importance of the SEC requirement by examining the value relevance to U.S. capital markets of Form 20-F reconciliation information under two additional hypotheses related to: i) investors' anticipation of the reconciliation, and ii) investors' perception of foreign countries' enforcement and reliability in applying local accounting rules. We argue that the information content of the Form 20-F reconciliation data is preempted (at least partially) on the date of foreign earnings announcements because of investor anticipation of these reconciliations. Therefore, only significant unanticipated reconciliations exhibit value relevance on the date of filing. In addition, investor perception of the reliability of the reconciliations and the degree of confidence in foreign authorities enforcing local GAAP also affect the value relevance of the reconciliation data. We hypothesize that reconciliations made by firms from countries with mature and developed capital markets should be more value relevant to U.S. investors. Our results show that both unexpected foreign earnings and anticipated reconciliations to U.S. GAAP are significantly associated with unexpected market returns during the week of earnings announcements. The region of the foreign country is also significantly associated with market returns. However, unexpected reconciliations are not significantly associated with unexpected market returns during the week of Form 20-F filing.
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No. 202 Raymond H. Lopez, Professor of Finance
Credit Union Boards of Directors for the New Millennium: July 2001
The economy of the United States has recorded phenomenal performances in every segment of the nation over the last decade. The longest expansion in economic history, dating from March of 1991, is continuing as we enter the 21st century. The financial services industry has been in the forefront of dynamic change and expanding diversity of activities, institutions, and instruments during this period. The era of deregulation, which began in the 1980s, continued in the 1990s, culminating with the repeal of the Glass-Steagell Act in the year 2000.

This paper is an empirical analysis of the ways in which the credit union industry has both participated in the deregulation environment and also faced some of the strongest head winds to its historical growth performance in the approximately two-year battle over fields of membership expansion. With the passage of HR 1151 in 1998, the industry has been able to resume its record of growth in assets, loan and investment offerings, and membership. Consolidation of financial institutions of all kinds continues. By the end of the year 2000, approximately 10,000 credit unions were operating in the U.S., compared with a peak of over 23,000 in the 1970s.
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No. 203 Joseph A. Russo, Jr.
Patterns of Observable Strategic Behavior and Assessments of Expertise During Performance of Field Tasks: October 2001
This paper presents basic descriptive research regarding observed patterns of auditor strategic behavior during performance of field tasks. It is proposed that what are perceived as distinctive patterns of task behavior are actually observations taken from a continuum of possible patterns ranging from linear to micro-repetitive. Ceteris paribus, the point on that continuum at which an auditor's behavior pattern is characterized is dependent on the level (as defined) at which that auditor's behavior is examined—the lower the level, the more likely it is that the behavior pattern will be characterized as micro-repetitive. Sequential progress through a task, beginning with information acquisition and progressing to or terminating with "end-stage" execution, is characteristic of linear process. Micro-repetitive behavior, the iterative application of linear process, is a consequence of an auditor's perception of a task as a sequence of hierarchically related sub-tasks. It is argued that a high-level linear pattern that progresses toward a task end-stage in conjunction with a lower-level micro-repetitive pattern is more likely to indicate a (relative) expert, while a lack of progress toward a task end-stage, along with an absence of micro-repetitive behavior, is more likely to indicate a (relative) novice. These conclusions are applied to analysis of the task behaviors of four first-year auditors who performed audit-related tasks in simulated auditing environments.
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No. 204 Mary Ellen Oliverio, Professor of Accounting and Bernard H. Newman, Professor of Accounting
Use of Audit Firm for Non-audit Services: Is Independence Impaired?
Public accounting firms have increased their scope of services during the final two decades of the 20th century. The Securities and Exchange Commission's proposed July 2000 Revision of the Commissions' Auditor Independence Requirements included scope of services as related to non-audit services provided to audit clients. This is the subject which is the focus of this paper.

A survey to secure opinions related to the non-audit services identified in Revision of Independence Requirements and to company policies was designed. A letter, memorandum, and questionnaire were mailed personally to the CEOs of 470 of the Fortune 500 companies. Usable responses were received from 89 companies (19.7 percent response of 451 assumed to have reached recipients.)

The responses revealed considerable range in policies and opinions. Companies appear concerned about the independence of their audit firms and the topic was discussed with their audit committees. There were five of the 10 services identified for which more than 50 percent of the respondents indicated that independence would be impaired if the audit firm provided the service. These were: bookkeeping and related services; appraisal or valuation services; management functions; broker-dealer, investment adviser, or investment banking; and legal services. The other five services listed, for which more than 50 percent of the respondents checked that independence would not be impaired, were: financial information systems design implementation; actuarial services; internal audit outsourcing; human resources; and expert services.

The final rules were issued in late 2000. The judgments of the SEC and of the respondents in this survey, which was completed prior to the final rules, were similar in relation to a number of the services. A brief postscript discusses the similarities.
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No. 205 Uzoamaka P. Anakwe, Claire Simmers and Murugan Anandarajan
Internet Usage in an Emerging Economy: The Role of Skills, Support, and Attitudes: April 2002
The Internet has revolutionized the business environment, enabling the conception of the e-economy. Irrespective of the technology divide between developed and developing countries, it is imperative for multinational corporations, their affiliates, and local businesses operating in these economies to use the Internet to sustain their competitive edge in a global market. Hence, this paper provides theoretical insights into Internet usage progression in an emerging economy.

Furthermore, the paper examines empirical factors that influence Internet usage in an organizational context. Data gathered from 224 employees who had access to the Internet at work in 33 organizations in Nigeria were used to examine the relationships between Internet skills, management support, and Internet usage. We also investigated the moderating effects of attitudes on the skills, support, and Internet usage relationships. The correlation and regression results provide strong support for the hypothesized relationships. The findings reveal that Internet skills (general and advanced) and management support contribute to Internet usage in organizations in the emerging economy. Some moderating effects of attitudes were also found. Implications and directions for future studies are discussed.
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No. 206 Ira J. Morrow
Delivering Effective Presentations: A Review of Techniques for Enhancing Audience Involvement Reflections on a Lifetime in the Securities Industry: April 2002
In this paper, the author reviews and discusses the use of several techniques to enhance the impact and interest of presentations delivered to an audience. Attention is given to those steps that can be taken to heighten the audience's sense of involvement and participation in presentations. The rationale underlying the use of each technique is explained and examples of the techniques are provided.
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No. 207 Mary Ellen Oliverio and Bernard H. Newman
International Accounting Standards: Opinions of U.S. Based Global Companies: September 2002
Do Global companies headquartered in the United States believe that there is value in having a single set of international accounting standards fir their financial reporting? This is the question for which an answer was sought in an inquiry-based study undertaken in late summer 2001. The value of an international set of standards was highlighted with the acceptance of a new international structure for accounting standard setting and the establishment of the International Accounting Standards Board(IASB), which began functioning in May 2001. A random sample of 100 of the Fortune Global 500 companies that were U.S. based was selected to participate.

The chief executive officer was addressed by name and provided with a memorandum and inquiry form to forward to the person responsible for consolidated financial reporting in the company. Two subtopics were identified for inquiry. One was related to assessment of international accounting standards; the second to current global financial reporting practices. There were eight questions with a ninth question that merely stated: “Comments?” Thirty-four responses from two mailings were received, for a response rate of approximately 35 percent (of the 98 that were assumed to have been received). Approximately 65 percent reported either limited or extensive review of the core set of International Accounting Standards. Of these, 65 percent, a majority believed that the core set of International Accounting Standards appeared adequate in relation to some of the guidance, but appeared inadequate in other respects. None felt the core set was adequate overall. Notwithstanding the extent of their review of the core set of accounting standards, all respondents expressed an opinion of ultimate usefulness, with approximately 74 percent of them noting that U.S. GAAP requirements would persist for the foreseeable future. Information about their global reporting practices was also obtained. The paper provides some ideas for further studies.
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No. 208 Peter M. Edelstein
Teaching the Realities of Small Business Financing: December 2002
Our business courses may teach our students the theoretical matters relating to institutional financing of a new or small business but the realities of obtaining such financing are sometimes learned only through experience. This paper addresses the practical and meaningful steps an entrepreneur can take to enhance the ability to obtain a loan commitment and to close the loan as expeditiously as possible.
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No. 210 Samir M. El-Gazzar, Alexander J. Sannella, and Afaf A. Shalaby
The Information Content of Earnings Announcements in Regulated and Deregulated Markets: The Case of the Airline Industry: August 2003
Most of the accounting research examining the information content of earnings assumes a competitive market framework. Little research has been devoted to the value relevance of earnings announcements in regulated markets. This paper examines the information content of earnings releases under two economic conditions facing the airline industry: regulation and deregulation (i.e., competition). We hypothesize that in a deregulated (competitive) environment, there is greater competition, causing more risk and uncertainty for the investor in setting security prices. Therefore, earnings' releases provide more useful information in resolving uncertainties and in formulating and revising the investor's beliefs regarding future earnings and prices in deregulated than for regulated markets.

Three critical event periods are examined: the regulation period (1973 - 1975), the transition period (1976 - 1978), and the deregulation period (1979 - 1981). A revaluation index (RI) and a standardized revaluation index (SRI) are used to examine the extent of airline stock price revaluation in response to quarterly accounting earnings releases during the three critical event periods. The results indicate that earnings announcements have value relevance in setting security prices in both regulated and deregulated market conditions. However, the level of the market revaluation to earnings releases is dependent on market structure. The market revaluation to earnings releases is greater in a deregulated (competitive) period than in a regulated one. This result confirms the hypothesis that earnings have more value relevance in competitive markets than in regulated ones. The findings of this research have direct implications for the level of accounting disclosure and the extent of financial reporting in a given market structure. Since financial reporting is a costly process, it becomes important to identify the circumstances under which the level of financial disclosure should be expanded or reduced.
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No. 211 Samir M. El-Gazzar and James M. Fornaro
An Empirical Investigation of Corporate Voluntary Disclosure of Management's Responsibilities for Financial Reporting: August 2003
The Sarbanes-Oxley Act of 2002 mandates senior management to certify under oath that information contained in SEC filings is accurate and complete, and attest to the effectiveness of the internal control system. This study examines the factors that influenced senior management to voluntarily issue a statement of responsibilities in annual reports for a five-year period prior to this legislation. Exploring these factors sheds light on three major issues: (1) identifying the environment under which the new legislation would better achieve its objectives; (2) probing into the concerns of firms that must comply with the new legislation; and (3) highlighting implications for the external auditor in planning the audit and assessing audit risk. We hypothesize that confidence in internal control and monitoring mechanisms at larger firms, corporate profitability, business risk and volatility, ownership structure, leverage, and governance monitoring are critical factors in management's decision to report on its responsibilities in financial statements.

The results reveal that senior management at larger firms were more likely to voluntarily disclose its responsibilities, ostensibly to maintain credibility with third parties and mitigate sensitivity to political costs. Moreover, management presiding over more-profitable firms were forthcoming with such disclosures, demonstrating a desire to signal its successful stewardship and organizational success. Lastly, senior management of firms in more volatile or uncertain environments displayed an aversion to risk that negatively influenced its disclosure decision. Monitoring by institutional owners, audit committees, and independent auditors displayed little influence on management's disclosure decision.
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No. 212 James S. Gould, Surendra K. Kaushik and Raymond H. Lopez
Credit Union Industry Consolidation in the 1990s: August 2003
The financial services industry has been consolidating for more than two decades. This study examines the extent and affects of the deregulation movement on the credit union industry. It identifies a number of operational factors that have contributed to growth of the average size credit union in the 1990s and benefits to members that have resulted from this consolidation trend.
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