TY - JOUR TI - Is an Emoji Worth a Thousand Words? The Effect of Emoji Usage on Nonprofessional Investors' Perceptions AU - Carrillo, Hilda E. AU - Pennington, Robin AU - Zhang, Yibo T2 - JOURNAL OF INFORMATION SYSTEMS AB - ABSTRACT Emojis act as non-verbal cues to disambiguate and communicate affect and are increasingly used in online corporate disclosures. Emotion work, a concept founded in social psychology, suggests that individuals adjust their behavior as emotions are evoked or suppressed. Despite the growing evidence that emojis may influence judgments and decisions due to their deliberate expression of context and affect, the accounting research community has yet to investigate emojis' impact. We experimentally explore whether emojis can soften nonprofessional investors' perceptions of bad news or enhance perceptions of good news. We find that emojis modestly suppress participants' positive emotions on positive news, influencing their investment-related judgments and decision-making. Subsequent data collection fails to replicate the initial findings in a less experienced participant pool, suggesting that investing experience may play a role. Our study enhances our understanding of the unintended consequences of emojis and introduces a sociology-based principle into the accounting literature. Data Availability: Please contact authors. DA - 2022/// PY - 2022/// DO - 10.2308/ISYS-2020-030 VL - 36 IS - 2 SP - 1-15 SN - 1558-7959 KW - emoji KW - social media KW - disclosures KW - emotion work KW - nonprofessional investors KW - judgments and decision making. ER - TY - JOUR TI - Incorporating Data Analytics into a Graduate Accounting Program AU - Showalter, D. Scott AU - Krawczyk, Kathy T2 - JOURNAL OF EMERGING TECHNOLOGIES IN ACCOUNTING AB - ABSTRACT Over the past several years, there have been numerous calls by the accounting profession, advisory boards, and the American Accounting Association to increase the incorporation of data analytics and related tools into the accounting curriculum. While the calls have been loud and clear for “what” needs to be included in the accounting curriculum, the accounting programs have struggled with “how” to incorporate data analytics. This paper describes how one Master's of Accounting Program (M.Acc.) modified its graduate accounting program in a unique way to incorporate data analytics. Led by faculty, the changes were identified and implemented within nine months. Additionally, data analytics was implemented throughout the program, rather than as a stand-alone class. While not a lasting solution, it enabled the M.Acc. program to incorporate substantive changes into the program in a quick and efficient manner, pending a more extensive revision of the M.Acc. curriculum. DA - 2022/// PY - 2022/// DO - 10.2308/JETA-2020-065 VL - 19 IS - 1 SP - 225-235 SN - 1558-7940 KW - data analytics KW - curriculum KW - emerging technologies ER - TY - JOUR TI - Can Your Audit Team Effectively Multitask? It Might Depend on How They Communicate AU - Brazel, Joseph F. AU - Brown, Veena Looknanan AU - Sidgman, Juergen T2 - CURRENT ISSUES IN AUDITING AB - SUMMARY This article summarizes Sidgman, Brown, and Brazel (2021) which demonstrates that, when multitasking, the performance of audit teams communicating in-person is greater than the performance of teams using computer-mediated communication (discussion boards and chatrooms). In the audit setting, multitasking is unavoidable and pervasive; in-person communication is not always an option. To facilitate multitasking, engagement team communications have extended in-person interactions to computer-mediated communication (CMC) technologies. However, little is known about the performance of multitasking teams under these alternative modes of communication (in-person, discussion boards, and chatrooms). Contrary to expectations, we find that participants' familiarity with, and preference for, chatroom features (similar to text messaging) may have offset the benefits previously attributed to discussion boards (similar to email). This finding is timely, given the pandemic-induced environment of remote and hybrid work, as it informs practitioners on audit teams' multitasking effectiveness while using CMC. DA - 2022/// PY - 2022/// DO - 10.2308/CIIA-2021-032 VL - 16 IS - 2 SP - P17-P23 SN - 1936-1270 KW - audit team performance KW - chatroom KW - computer-mediated communication KW - discussion board KW - in-person KW - multitasking ER - TY - JOUR TI - Do Different Data Analytics Impact Auditors' Decisions? AU - Brazel, Joseph F. AU - Ehimwenma, Efosa AU - Koreff, Jared T2 - CURRENT ISSUES IN AUDITING AB - SUMMARY Global stakeholders have expressed interest in increasing the use of data analytics throughout the audit process. While data analytics offer great promise in identifying audit-relevant information, auditors may not use this information to its full potential, resulting in a missed opportunity for possible improvements to audit quality. This article summarizes a study by Koreff (2022) that examines whether conclusions from different types of data analytical models (anomaly versus predictive) and data analyzed (financial versus non-financial) result in different auditor decisions. Findings suggest that when predictive models are used and identify a risk of misstatement, auditors increase budgeted audit hours more when financial data are analyzed than when non-financial data are analyzed. However, when anomaly models are used and identify a risk of misstatement, auditors' budgeted hours do not differ based on the type of data analyzed. These findings provide evidence that different data analytics do not uniformly impact auditors' decisions. DA - 2022/// PY - 2022/// DO - 10.2308/CIIA-2021-031 VL - 16 IS - 2 SP - P24-P38 SN - 1936-1270 KW - anomaly models KW - auditor decisions KW - data analytics KW - non-financial data KW - predictive analytics ER - TY - JOUR TI - A View from the CISO: Insights from the Data Classification Process AU - Bradford, Marianne AU - Taylor, Eileen Z. AU - Seymore, Megan T2 - JOURNAL OF INFORMATION SYSTEMS AB - ABSTRACT Data security is a critical concern for organizations. In a rush to protect data, some IT managers overlook the important first step of data classification and instead focus on implementing the strictest controls on all data to reduce risk. To investigate organizational processes surrounding data classification, we conduct interviews with 27 CISOs in 23 organizations. We develop a model that identifies the common themes of data classification and their interrelationships. The most common driver for data classification is compliance with data privacy regulations and security standards. Collaboration and employee education are essential to the process. Increases in employee awareness of data security risk and improvements in data hygiene are outcomes. Challenges to data classification include the increase in IT landscape complexity, maintenance of an accurate data inventory, immaturity of automated tools, limited resources, and user compliance. Our model provides insights for practitioners and identifies areas of interest for researchers. DA - 2022/// PY - 2022/// DO - 10.2308/ISYS-2020-054 VL - 36 IS - 1 SP - 201-218 SN - 1558-7959 KW - data classification KW - data security KW - data governance KW - data loss prevention (DLP) technology ER - TY - JOUR TI - Does task-specific knowledge improve audit quality: Evidence from audits of income tax accounts* AU - Goldman, Nathan C. AU - Harris, M. Kathleen AU - Omer, Thomas C. T2 - ACCOUNTING ORGANIZATIONS AND SOCIETY AB - Two forms of expertise can influence audit quality: industry and task-specific expertise. If tax knowledge is predominately task-specific, audit offices with increased exposure to complex tax issues will develop tax task-specific expertise. Using outcomes related to income tax account audits, we examine whether tax task-specific knowledge (TSK) accumulates at the audit office level and affects the income tax accounts’ audit quality. We find that tax TSK increases the income tax accounts' audit quality, suggesting individual tax TSK accumulates at the office level. Additionally, semi-structured interviews of partners/senior managers at Big 4 audit firms validate group information processing as a theory that explains TSK developing at the office level and confirms that tax knowledge is predominately task-specific with some industry-specific knowledge. We contribute to and extend the literature examining audit office expertise by providing evidence that exposure to complex tax issues develops TSK at the office level and enhances audit quality. These findings provide archival and qualitative evidence of how TSK develops at the office level. • Provide evidence that exposure to complex issues develops task-specific knowledge. • Show task-specific knowledge aggregates at the audit office level. • Conduct semi-structured interviews to support archival findings. • Contribute to the literature examining auditor competency and audit quality. • Extend the literature examining the auditing of income taxes. DA - 2022/5// PY - 2022/5// DO - 10.1016/j.aos.2021.101320 VL - 99 SP - SN - 1873-6289 KW - Income tax audit quality KW - Tax restatements KW - Task expertise KW - Income tax complexity KW - Task-specific expertise ER - TY - JOUR TI - The Decline of Substance over Form in Accounting: A Problematic Dichotomy AU - Williams, Paul F. T2 - ACCOUNTING ECONOMICS AND LAW-A CONVIVIUM AB - Abstract This essay is a comment on the paper authored by Fischer, Ellman and Schocet (2021, The decline of substance over form in accounting. Accounting, economics, and law: A convivium . (2023)) who argue that the trend in financial reporting regulation involves de-emphasizing the important of economic substance relative to form in how auditors are to perceive their role. The danger foreseen by the authors is the further shrinking of the leeway for professional judgment, which is an important hallmark of a true professional. Agreeing the authors have raised a crucial issue for any group claiming professional status, I try to add to the discussion by pointing out that form and substance in the realm of financial reporting regulation are not antipodes but complementary parts of a process of continuous redefining of what economic substance is. Social reality is socially constructed and as such choices of form made by humans effectively shape substance. Given the capture of accounting by economics during the 1960s, accountants have lost an appreciation for the tentativeness of economic substance and now serve not as participants in shaping economic substance but as enforcers of an imaginary economic substance that derives from the assumptions and values in the ideology of neoclassical economics. DA - 2022/5/27/ PY - 2022/5/27/ DO - 10.1515/ael-2021-0119 SP - SN - 2152-2820 KW - economic substance KW - auditor judgment KW - FASB KW - concepts ER - TY - JOUR TI - Tax haven incorporation and financial reporting transparency AU - Lewellen, Christina M. T2 - REVIEW OF ACCOUNTING STUDIES DA - 2022/4/27/ PY - 2022/4/27/ DO - 10.1007/s11142-022-09676-2 SP - SN - 1573-7136 KW - Tax havens KW - Corporate governance KW - Transparency KW - Tax avoidance ER - TY - JOUR TI - Unreliable Accounts: Governing behind a Veil AU - Williams, Paul F. T2 - ACCOUNTING ECONOMICS AND LAW-A CONVIVIUM AB - Abstract This paper serves as a commentary to Professor Ramanna’s paper, “Unreliable Accounts: How Regulators Fabricate Conceptual Narratives to Diffuse Criticism.” The case analyzed by Professor Ramanna is the case of CON 8 in which the FASB changed the qualitative characteristics originally identified in CON2 to eliminate the concept of reliability from those qualities accounting data must possess before such data is decision useful. This commentary intends to add some historical depth to the particular case analyzed by Professor Ramanna to demonstrate that conceptual veiling has been a continuous process since the FASB’s original concepts statements that created a conceptual framework made up of two conflicting narratives, i.e. a mixing of the language of two metaphors for accounting. These two metaphors are “accountability” and “information.” The fateful error that has plagued the concepts statements with incoherence since the FASB began was the repurposing of accounting to that of “decision usefulness.” Decision usefulness as defined by FASB had to contain the property of prediction, explicitly predicting the timing, amount and uncertainty of cash flows. However, information is always “about something;” it is not a free-floating abstraction. Since knowledge about the future in economic affairs has eluded the ability of economists and likely always will, FASB is allegedly providing information about the future for which is has not any noteworthy expertise. CON 8 is just another stage of the growing incoherence of the concepts project. The norms of double entry accounting that developed over centuries and shaped accounting’s fundamental concepts served the purposes of accountability for which information to be information must be reliable. The entire edifice of science would collapse if scientific information were not reliable. Without reliability, the boundary between information and misinformation is blurred to the point of invisibility. Professor Ramanna’s analysis provides great insight into the absurdity standard setters now endorse that information does not have to reliable! DA - 2022/5/9/ PY - 2022/5/9/ DO - 10.1515/ael-2021-0107 SP - SN - 2152-2820 KW - FASB KW - conceptual veiling KW - accountability KW - decision usefulness ER - TY - JOUR TI - Aggressive Tax Planning and Labor Investments AU - Traini, Simone AU - Goldman, Nathan C. AU - Lewellen, Christina M. T2 - JOURNAL OF ACCOUNTING AUDITING AND FINANCE AB - We examine the association between aggressive tax planning and labor investment efficiency among U.S. firms. Labor is an important input to production that is material to many firms, and prior research suggests that inefficient labor investments can negatively affect future profitability and growth. We provide evidence that firms engaging in aggressive tax planning are associated with deviations from expected labor investments, which is indicative of labor investment inefficiency. We find that our results are concentrated in labor underinvestment, consistent with risks and uncertainties from aggressive tax planning making firms more cautious when investing. Our findings are strongest among firms with greater tax risk, higher labor costs, and weaker corporate governance. Our study contributes to the literature examining tax planning consequences by providing evidence that a tradeoff exists between aggressive tax planning and investments in labor. Therefore, our results suggest that managers should carefully consider the cash flow benefits of tax planning in conjunction with the potential effects of lower labor investments to ensure that the overall long-term effect of the tax strategy is value-increasing. DA - 2022/4/5/ PY - 2022/4/5/ DO - 10.1177/0148558X221089638 SP - SN - 2160-4061 KW - tax planning KW - tax uncertainty KW - labor investment ER - TY - JOUR TI - Integrated Reporting and Integrated Thinking: Proposing a Reporting Model That Induces More Responsible Use of Corporate Power AU - Aras, Guler AU - Williams, Paul F. T2 - SUSTAINABILITY AB - The obligations of corporations to members of society have been problematic since the corporate form came into existence. Under different rubrics, reporting firms’ socially responsible behavior has been extensively debated, and researched, for at least the past half century. The latest incarnation of corporate social reporting is labeled integrated reporting—the blending of the traditional financial report with a report on the firms’ achievements as socially responsible beings. In this paper, we provide a brief history of corporate social reporting to provide sufficient context for our discussion of a model of integrative reporting that provides for a better representation of just how socially responsible firms are. Progress so far in achieving meaningful integrated reporting that produces more socially responsible corporate citizens is disappointing. The structured narrative of financial performance still dominates the unstructured narrative about social performance. We argue this is partially attributable to two intellectual constraints limiting our ability to imagine systems that could produce better social outcomes from corporate behavior. One constraint is the dominance of “decision usefulness” as the purpose of accounting. The second intellectual constraint is the reluctance to seriously consider that the problem of corporate social responsibility (CSR) lies in the corporate form itself. Thus far, the integration of these reports to give equal status to financial and social performance is not close to achievement. We propose that a first step to developing an integrated report is to adopt a governmental reporting model for corporations. If the six capitals model proposed by IIRC is to be a movement toward more ethical corporate behavior, then the six capitals must be deemed as equally valuable ends and certainly not subservient to only financial ends. The current financial reporting model strongly mitigates against this happening. We argue that each of the capitals is analogous to what in governmental parlance is a “program” or “function,” which require the commitment of financial resources for accomplishment. Thus, a truly integrated report will disclose to all stakeholders what resources are committed to enhancing each of the six capitals as ends in themselves. DA - 2022/3// PY - 2022/3// DO - 10.3390/su14063277 VL - 14 IS - 6 SP - SN - 2071-1050 KW - integrated reporting KW - sustainability KW - content analysis KW - long-term value creation KW - six capitals KW - agency theory KW - voluntary disclosure theory ER - TY - JOUR TI - Foreign Employment, Income Shifting, and Tax Uncertainty AU - Drake, Katharine D. AU - Goldman, Nathan C. AU - Murphy, Francis T2 - ACCOUNTING REVIEW AB - ABSTRACT We examine the effect of foreign employment on two outcomes—income shifting and the tax uncertainty of foreign transactions. Using a hand-collected sample of employment disclosures, we partition our sample into firm-years with a higher or lower degree of foreign employment. Using two distinct income shifting models, we document that, on average, a high degree of foreign employment is associated with greater tax-motivated income shifting out of the U.S. We also posit and find that a high degree of foreign employment enhances the economic substance of foreign transactions, reducing the tax uncertainty associated with foreign income. We conduct additional analyses to mitigate selection bias concerns, and we use exogenous changes to the costs and benefits of income shifting using foreign employment to strengthen identification. Our results highlight firms' use of employees as part of a tax-efficient supply chain and how foreign employment enhances income shifting opportunities between jurisdictions. DA - 2022/3// PY - 2022/3// DO - 10.2308/TAR-2019-0047 VL - 97 IS - 2 SP - 183-212 SN - 1558-7967 KW - foreign employment KW - income shifting KW - tax uncertainty ER - TY - JOUR TI - Out of Control: The (Over) Use of Controls in Accounting Research AU - Whited, Robert L. AU - Swanquist, Quinn T. AU - Shipman, Jonathan E. AU - Moon, James R., Jr. T2 - The Accounting Review AB - ABSTRACT In the absence of random treatment assignment, the selection of appropriate control variables is essential to designing well-specified empirical tests of causal effects. However, the importance of control variables seems under-appreciated in accounting research relative to other methodological issues. Despite the frequent reliance on control variables, the accounting literature has limited guidance on how to select them. We evaluate the evolution in the use of control variables in accounting research and discuss some of the issues that researchers should consider when choosing control variables. Using simulations, we illustrate that more control is not always better and that some control variables can introduce bias into an otherwise well-specified model. We also demonstrate other issues with control variables, including the effects of measurement error and complications associated with fixed effects. Finally, we provide practical suggestions for future accounting research. Data Availability: All data used are publicly available from sources cited in the text. JEL Classifications: M40; M41; C18; C52. DA - 2022/5/1/ PY - 2022/5/1/ DO - 10.2308/TAR-2019-0637 UR - https://doi.org/10.2308/TAR-2019-0637 KW - accounting research methods KW - controls KW - measurement error KW - fixed effects ER - TY - JOUR TI - On Controlling for Misstatement Risk AU - Moon, James R., Jr Jr AU - Shipman, Jonathan E. AU - Swanquist, Quinn T. AU - Whited, Robert L. T2 - AUDITING-A JOURNAL OF PRACTICE & THEORY AB - SUMMARY Ex ante misstatement risk confounds most settings relying on misstatements as a measure of audit quality, but researchers continue to debate how to effectively control for this construct. In this study, we consider a recent approach that involves controlling for prior period misstatements (“Lagged Misstatements”). Using a controlled simulation and a basic archival analysis, we show that a lagged misstatement control can significantly bias coefficient estimates. We demonstrate this bias using audit fees as a variable of interest but also show the same issue manifests for other measures that respond to the restatement of misstated financial statements (i.e., internal control material weaknesses and auditor changes). We conclude by discussing alternative approaches for controlling for ex ante misstatement risk and providing guidance for future research. Data Availability: All data used are publicly available from sources cited in the text. JEL Classifications: M40; M41; M42. DA - 2022/5// PY - 2022/5// DO - 10.2308/AJPT-2021-004 VL - 41 IS - 2 SP - 191-210 SN - 1558-7991 UR - https://doi.org/10.2308/AJPT-2021-004 KW - misstatement risk KW - restatements KW - audit quality ER - TY - JOUR TI - Audit Office Industry Diversity and Audit Quality AU - Beardsley, Erik L. AU - Goldman, Nathan C. AU - Omer, Thomas C. T2 - JOURNAL OF ACCOUNTING AUDITING AND FINANCE AB - This study examines the association between the industry diversity of an audit office and audit quality, where industry diversity is the extent to which clients differ by industry classification. We find a negative association between industry diversity and audit quality that is robust to controlling for other audit office and client characteristics. We observe this association while holding the level of audit office specialization or expertise in a particular industry constant. The association is most apparent at the low end of the distribution of industry diversity, where audit offices with the least diverse client portfolios have the highest audit quality. We also find that the association exists for both small and large audit offices as well as both industry specialists and non-industry specialists. However, we do not observe the association when the office audits clusters of clients, where clusters are three or more clients in the same industry. DA - 2022/10// PY - 2022/10// DO - 10.1177/0148558X20942618 VL - 37 IS - 4 SP - 777-805 SN - 2160-4061 KW - audit quality KW - industry diversity KW - industry expertise KW - knowledge management KW - restatements ER -