Research Seminars

Convergent Creativity and Management Control Systems: Managing Stylistic Innovation in Fashion Companies

Accounting & Management Control

Speaker: Angelo Ditillo
Università Bocconi

19 December 2012 - HEC Campus, salle T004 - From 2:00 pm to 4:00 pm

The empirical findings of this study indicate that management control systems are deeply embedded in the work environment of creative people and play a significant role in the creative teams directed at developing new products characterized by stylistic innovation. Yet, they do not address traditional goal divergence concerns but rather activate dialogues around meanings to define, negotiate, and legitimize the objectives that emerge during creation. This purpose is achieved through mechanisms that inspire (inspirational controls) these dialogues and mechanisms that configure (directional controls) the way they happen. Our research is based on a multi-case research design structured around an in-depth case study where the main traits of these systems are identified, followed up by five additional cases that reinforce, reshape, and enrich the findings. The study suggests that creativity and control do not have contradictory purposes and both are deeply integrated in organizations competing on creativity.

Speaker: Christian HELLWIG
Université Toulouse 1

6 December 2012

Director Independence and Insider Trading

Accounting & Management Control

Indiana University

30 November 2012 - HEC Campus, salle T004 - From 2:00 pm to 4:00 pm

While prior work establishes criteria for assessing director independence by scrutinizing outside directors’ professional and social connections, we examine the conditions under which outside directors’ trading and ratification decisions are incrementally useful in assessing their independence. Because crises test the independence of boards, we investigate the CEO replacement decision in firms caught intentionally misreporting earnings. We predict and find that outside directors’ selling that emulates selling by the CEO and inside directors makes them less willing to replace the CEO. Our findings derive from opportunistic rather than routine selling, and from collusive selling involving inside and outside board members rather than from selling by outside directors alone. We also predict and find that outside directors who ratify one or more value-destroying mergers in the misreporting period are less effective monitors. These results are robust to alternative measurements of opportunistic selling and to a comprehensive set of controls for the CEO replacement decision

Speaker: ANDY KING

29 November 2012 - SALLE T033 - From 1.30 PM to 3.00 PM

Strategy & Business Policy

Speaker: ANDY KING

29 November 2012 - SALLE DU CONSEIL - From 1:30 pm to 3:00 pm

Accounting Choices under IFRS and their Effect on Over-investment in Capital Expenditures

Speaker: Professeur Mohamad MAZBOUDI
American University of Beirut

23 November 2012 - Salle T004 - From 14h00 to 16h00

Emerging Research in Relationship Marketing

Speaker: Robert W. Palmatier
Associate Professor of Marketing, Foster School of Business, University of Washington

23 November 2012 - T 015 - From 13:00 to 14:30

Relationship marketing effectiveness at improving a firm’s financial performance varies widely, which suggests a need to understand better how relationship marketing works and what determines its efficacy. Theory and empirical results from multiple studies will be discussed that provide insight into relationship marketing’s effectiveness. The first study demonstrates that gratitude plays an important role in understanding how relationship marketing investments increase purchase intentions, sales growth, and share of wallet. The project identifies a set of managerially relevant factors that alter customer gratitude, which can make relationship marketing programs more effective. The second study integrates social network and exchange theory to develop a model of customer relationship performance based on three drivers: relationship quality, contact density, and contact authority. The results suggest the value generated from interfirm relationships derives not only from the quality of customer ties (e.g., trust, commitment, norms), as typically modeled, but also from the number and decision-making capability of interfirm contacts and the interactions among relational drivers. The final study investigates the role of relationship velocity—or the rate of change in relational constructs with respect to time—in driving exchange outcomes. The study findings highlight the importance of tapping into the dynamic nature of relational constructs (e.g., velocity) to provide insights into future sales growth.

Accounting Choices under IFRS and their Effect on Over-investment in Capital Expenditures

Speaker: Professor Mohamad MAZBOUDI
American University of Beirut

23 November 2012 - Room T004 - From 2.00 pm to 4.00 pm

IFRS allows firms to choose between fair-value accounting and historical cost accounting with impairment testing for property, plant and equipment (PPE). This study examines the effect of firms’ accounting choices for this group of non-financial assets on over-investment after IFRS mandatory adoption in the European Union (EU). My results indicate that over-investment in PPE (or capital expenditures) is lower following IFRS adoption among EU firms that used historical cost accounting with impairment testing in the post-IFRS period, consistent with EU firms having more timely loss recognition for PPE under IFRS strict impairment rules. In my analysis of United Kingdom (UK) firms, I find that most UK firms elected to use historical cost accounting with impairment testing for PPE after IFRS mandatory adoption. I also find that UK firms that previously used fair-value accounting under UK GAAP and then switched to historical cost accounting with impairment testing under IFRS exhibit greater reductions in over-investment relative to other EU firms that used historical cost accounting with impairment testing prior to IFRS adoption. Additional analysis suggests that the reductions in over-investment after IFRS mandatory adoption are greater as the severity of agency conflicts increases, consistent with outside shareholders demanding timely loss recognition as a means of addressing agency conflicts with managers.



23 November 2012 - SALLE DU CONSEIL - From 1.30 pm to 3.00 pm


Error management in audit firms: Error climate, type and originator

Accounting & Management Control

Speaker: Steven SALTERIO
Professor , Queen's University, Canada

21 September 2012 - Campus HEC, Room T027 - From 2:00 pm to 4:00 pm

Audit standard setters and regulators are increasingly focusing on the management context within which the audit firm conducts the audit for its effects on audit quality. We examine a key, but little understood facet of organizational life in audit firms, how audit staff who discover and report errors in audit files are routinely treated in response to such reporting such errors. This construct, denoted as audit office error management climate, can be characterized on a continuum between a relatively “blame” oriented climate to a relatively more “open” climate. The former is one where errors are not tolerated and those reporting or committing errors are punished whereas the latter characterizes error commitment as a normal, albeit unfortunate aspect of organizational life, where the error discovery is used an opportunity for the organization to learn and without sanctions being imposed on the originator as long as similar errors are not repeated. We examine audit office error-management climate in the context of audit specific contextual factors that might affect the decision to report the discovered errors: audit error type (conceptual/mechanical) and who committed the error (the individual who discovered it or a peer). We find an overall main effect for office error-management climate however; error management climate interacts as predicted with these contextual factors (error type and originator). Specifically, an open error-management climate results in an increase in the reporting of mechanical errors and an increase in reporting of peer errors versus a blame climate. Our findings suggest that standard setters and regulators need to understand their standards and inspections can affect the nature of audit firm error management climates and how the differences in such climates can affect audit quality by encouraging or suppressing the reporting by staff of errors in working paper files. Further, audit firm management needs understand how what may appear to be innocuous differences in management style at the individual audit office can affect audit quality by considering how individual audit management practices at the local level can defeat formal policies that reflect a desire for an open error management climate at the firm.