Organizational Unit:

Scheller College of Business

Permanent Link

https://hdl.handle.net/1853/70690

Parent Organization

Organizational Unit

Office of the Provost and Executive Vice President for Academic Affairs

Includes Organization(s)

Organizational Unit

Institute for Leadership and Social Impact

ArchiveSpace Name Record

https://finding-aids.library.gatech.edu/agents/corporate_entities/255

Full item page

Publication Search Results

Now showing 1 - 10 of 92

The Potential Consequences of the Elimination of LIFO as a Part of IFRS Convergence

(Georgia Institute of Technology, 2008-12) Mulford, Charles W. ; Comiskey, Eugene E.

The SEC has proposed the full adoption of IFRS by U.S. filers by 2014, with larger firms adopting the international standards as early as 2010. One important change to U.S. accounting standards that would accompany a move to IFRS is the elimination of the Last-in First-out (LIFO) accounting method for inventory. Moreover, because of the LIFO conformity rule, a move away from LIFO for financial reporting purposes also means that the advantages of LIFO for tax purposes could be lost to these firms. The purpose of this study is to examine the income, balance sheet, cash flow and tax effects of a required move to FIFO from LIFO. Presently, approximately 36% of U.S. companies use LIFO for at least a portion of their inventories. We examine a sample of 30 such companies with the greatest LIFO exposure. We find that on average, had FIFO been used by these firms in 2007, pre-tax income and net income would be higher by 11.97% and 7.42%, respectively, the current ratio would be higher by 26.2% and shareholders’ equity would be higher by 34.2%. Of particular note is the significant amount of income taxes that these firms would owe, ranging up to the hundreds of millions if not billions of dollars, if they were required to adopt FIFO accounting. Accordingly, investors, lenders and other users of financial statements will want to watch developments on this front carefully.
Three essays on stock market seasonality

(Georgia Institute of Technology, 2008-11-17) Choi, Hyung-Suk

Three Essays on Stock Market Seasonality Hyung-Suk Choi 136 pages Directed by Dr. Cheol S. Eun In chapter 1, we examine seasonality in returns to style portfolios, which serve as important benchmarks for asset allocation, and investigate its implications for investment. In doing so, we consider monthly returns on the style portfolios classified by six size/book-to-market sorting and six size/prior-return sorting over the sample period 1927 - 2006. The key findings are: first, as is well documented in the literature, small-cap oriented portfolios are subject to the January effect, but also to the 'negative' September and October effects. Second, cross-style return dispersion exhibits a seasonal pattern of its own (it is largest in January and smallest in August), suggesting possibly profitable trading strategies. Third, our seasonal strategies indeed yield significant profits, as high as about 18.7 % per annum. This profit is mostly attributable to the seasonal autocorrelation in style returns. Lastly, we find substantial seasonal patterns in style returns not only in the U.S. but also in other major stock markets Germany, Japan, and the U.K. Our seasonal style rotation strategy yields economically and statistically significant profits in all of these stock markets. In chapter 2, we examine the abnormal, negative stock returns in September which have received little attention from academic researchers. We find that in most of the 18 developed stock markets the mean return in September is negative and in 15 countries it is significantly lower than the unconditional monthly mean return. This September effect has not weakened in the recent period. Further, the examinations of the various style portfolios in the US market show that the September effect is the most pervasive anomalous phenomenon that is not affected by size, book-to-market ratio, past performance, or industry. Our finding suggests that the forward looking nature of stock prices combined with the negative economic growth in the last quarter causes the September effect. Especially in the fall season when most investors become more risk averse, the stock prices reflect the future economic growth more than the rest of the year. Our investment strategy based on the September effect yields a higher mean return and a lower standard deviation than the buy-and-hold strategy. In chapter 3, we establish the presence of seasonality in the cash flows to the U.S. domestic mutual funds. January is the month with the highest net cash flows to equity funds and December is the month with the lowest net cash flows. The large net flows in January are attributed to the increased purchases, and the small net flows in December are due to the increased redemptions. Thus, the turn-of-the-year period is the time when most mutual fund investors make their investment decisions. We offer the possible sources for the seasonality in mutual funds flows.
University entrpreneurship: the role of U.S. faculty in technology transfer and commercialization

(Georgia Institute of Technology, 2008-10-27) Fuller, Anne W.

My dissertation research focuses commercializing university related technology. My first essay investigates whether patents assigned to U.S. universities largely represent the totality of faculty inventions patented. In contrast to prior work that identified faculty patents by searching for patents assigned to the university, I find in a sample of patents with US faculty as inventors, 26% are assigned solely to firms rather than universities. This initially seems to conflict with US university employment policies and Bayh-Dole. I relate assignment to patent characteristics, university policy, inventor field and academic entrepreneurship. Patents assigned to firms (whether established or start-ups with inventor as principal) are less basic than those assigned to universities suggesting these patents result from faculty consulting. The second essay examines the growing phenomena of U.S. academic entrepreneurship. Building on prior work demonstrating the embryonic state of science and engineering research that is licensed through the university (Jensen & Thursby 2001), I extend this framework to university inventions commercialized by new technology-based firms (NTBFs). I posit that the presence of faculty inventor founders will be beneficial to the NTBF. This is tested with a uniquely constructed dataset representing a variety of university and industry settings. Results indicate firms with faculty founders have a higher likelihood to experience an IPO or become acquired than other similar new firms. Second, faculty members with highly cited publications have incrementally more impact on the likelihood of the firm having an IPO. Thus I discern that while faculty founders matter, 'star' scientists matter more. The third essay identifies significant variables in the observed career level patent assignment patterns of academic serial inventors. Existing life cycle models test the idea that consulting occurs later in the career span of academic scientists. I find that indeed the proxy for consulting (firm assignment of patents) is more likely the later the patent application is from the year of Phd for the faculty inventors. I found strong evidence that faculty performing industry consulting are more likely to continue consulting in subsequent work. However the use of rolling lag variables based on transition probability matrices increased the variance explained in the regression model by a factor of three indicating factors other than life cycle may be significant.
The Non-designation of Derivatives as Hedges for Accounting Purposes

(Georgia Institute of Technology, 2008-09) Mulford, Charles W. ; Comiskey, Eugene E.

The FASB recently issued Proposed Statement of Financial Accounting Standards, Accounting for Hedging Activities: An Amendment of FASB Statement No. 133. The proposed standard simplifies the accounting for hedging activities and generally increases the appeal of hedge accounting. In this report we survey firms’ reporting practices and examine hedges and hedge accounting generally and seek to determine why firms may decide not to designate derivativesas hedges for accounting purposes. In reviewing the reports of a large sample of firms, we find the following four explicit reasons why companies may decide not to designate derivatives as accounting hedges: (1) the substantial cost of documentation and ongoing monitoring of designated hedges; (2) the availability of natural hedges that can be highly effective; (3) a new accounting standard that broadens the applicability of natural or economic hedges; and (4) qualifying hedges are not available or are too costly or documentation is untimely, inadequate, or unavailable. In addition, a fifth reason, not offered as such by the surveyed firms, is the increased risk of restatement that accompanies hedge accounting. The proposed standard combined with the recently-released SFAS 159, The Fair Value Option for Financial Assets and Liabilities, offer companies a welcome relief to the onerous accounting and reporting requirements of SFAS 133.
Essays on the economics of electronic commerce

(Georgia Institute of Technology, 2008-08-20) Luo, Jifeng

This dissertation examines the innovations in electronic commerce and their managerial impacts. In the first essay, we investigate the importance of product and retailer uncertainty in a customer's online purchase decision as well as the uncertainty-reduction effects of retailer characteristics. In the second essay, we examine online pricing strategies of B2C retailers, with an aim to understand whether and how the driving factors of price dispersion evolve over time. Based on the theories of resource-based view (RBV), IT business value, and competitive dynamics, the third essay examines the factors that affect cross-channel capabilities and competitive actions in the apparel industry in the U.S.
Zigzagging across the boundary: examining the interplay of marketing activities within and between firms

(Georgia Institute of Technology, 2008-07-08) Murtha, Brian Robert

This thesis consists of two central Parts. Part 1 examines the extent to which an agent s transaction-specific investments (TSIs) in a customer relationship increase his/her concerns for opportunism by his/her own co-workers. Thus, unlike prior research in marketing that examines opportunism by the recipient of TSIs, I show that agents become concerned with opportunism by non-recipients of TSIs. I then introduce novel moderators that shape the relationship between TSIs and concerns for internal opportunism. Importantly, I also show that in response to concerns for internal opportunism, agents will engage in internal safeguarding behaviors. Notably, unlike external safeguards between firms which tend to benefit firms (e.g., relational norms), I show that internal safeguarding has a deleterious effect on performance. I test the set of hypotheses with data collected from two sources: account managers and their supervisors. In Part 2, I advance the emerging view on customer solutions by simultaneously examining the networks within and between selling and buying teams involved in the development and deployment of complex customer solutions. Such a concurrent within-and-between perspective helps to bridge research on buying and selling teams, which prior research tends to examine only in isolation of each other. This research also extends the literature by showing how within-team network characteristics interact with between-team network characteristics to affect solution effectiveness. Notably, I advance the literature by moving beyond firm-level and individual-level dyads to team-level dyads and introduce a new network characteristic mirrored ties to help our understanding of the interactions between these dyads. I develop my hypotheses in the context of a sales team selling a complex customer solution to a buying team and test the hypotheses using an innovative, picture-based conjoint field experiment from 233 purchasing managers.
Accounting-based earnings management and real activities manipulation

(Georgia Institute of Technology, 2008-06-24) Yu, Wei

In the first essay, I examine the association between auditor industry specialization and earnings management choices. Prior research suggests that industry specialist auditors constrain accounting-based earnings management. But such actions may cause client companies to seek alternative means to manage earnings. Specifically, companies that hire industry specialist auditors may alter operating decisions to meet earnings targets, referred to as real activities manipulation. This essay investigates whether clients of industry specialist auditors that have an incentive to manage earnings are constrained from managing earnings through accruals manipulation and, therefore, are more likely to engage in real activities manipulation. Further, I examine whether operating performance declines for firms suspected of real activities manipulation. My findings indicate that clients of industry specialist auditors with incentives to manage earnings have lower absolute value of accruals relative to firms with incentives to manage earnings that do not hire industry specialist auditors. These clients of industry specialist auditors are also more likely to engage in real activities manipulation, suggesting this is a possible unintended consequence of hiring an industry specialist auditor. I also document evidence that firms suspected of real activities manipulation have lower future operating performance relative to firms not suspected of real activities manipulation. In the second essay, I examine the association between the tightness of accounting standards and earnings management choices. Prior studies suggest that managers switch from accounting-based earnings management to real activities manipulation in response to tightening accounting standards. My study investigates this line of reasoning. I develop an analytical model and conduct an experimental examination of the effect of flexibility of accounting standards under different institutional environments. I find that managers switch from accounting-based earnings management to real activities manipulation with tightening accounting standards only when the institutional investors have a short-term investment horizon. In contrast, when managers are monitored by institutional investors with a long-term investment horizon, they do not engage in such behavior.
Three essays on the economics of information technology innovation

(Georgia Institute of Technology, 2008-06-24) Qu, Zhe

There are three essays on the economics of information technology innovation in my dissertation: 1. Procurement contracting strategies in a hierarchical supply network; 2. R and D offshoring and technology learning in emerging economies firm level evidence from the information technology industry; 3. Software design strategies in markets with open source competitors. The first essay addresses the impact of an information technology enabled hierarchical supply structure on a firm s procurement strategies. The second essay investigates information technology hardware innovation. I examine R and D offshoring of information technology hardware firms and its impact on R and D effort of firms in host countries. The third essay focuses on software innovation. I investigate open source software and its impact on the design of proprietary software in terms of number of features bundled in the software.
The FASB's Basic Ownership Approach and a Reclassification of Preferred Stock as a Liability

(Georgia Institute of Technology, 2008-06) Mulford, Charles W. ; Chadalavada, Saritha

In Preliminary Views: Financial Instruments with Characteristics of Equity, the FASB expresses a preference for a basic ownership approach for distinguishing between liabilities and equity. Under this approach, preferred stock, long considered a component of shareholders’ equity, would be reported as a liability. If this change takes place, the impact on the balance sheet and income statement, including measures of leverage and interest coverage will be great, especially for companies that have relied heavily on preferred stock for financing. In this study, consistent with the proposal, we revise balance sheet and income statement measures of leverage, interest coverage and pretax income and seek to identify sectors and some companies where the effects will be greatest. Debt covenants for companies that use significant amounts of preferred stock may need to be revised. There may also be pressure to refinance outstanding preferred stock with debt or common equity. Overall, we find that the median firm with outstanding preferred stock would see its liabilities to equity ratio increase by 4.17%. The median company would see a decline of 5.99% in times interest earned and a 6.37% decline in pretax income.
The Effects of Recent Accounting Changes for In-process Research and Development

(Georgia Institute of Technology, 2008-05) Mulford, Charles W. ; Yang, Lisa

The newly-revised SFAS No. 141 (R), Business Combinations, offers some important changes in accounting for in-process research and development (IPR&D). Long expensed at the time of acquisition, IPR&D will henceforth be capitalized and subsequently amortized, though abandoned projects will be written off. The expectation is that earnings in years following an acquisition will be lower, though the impact is entirely dependent on whether new acquisitions result in additional amounts of capitalized IPR&D and the amortization period for previously-capitalized amounts. In this study we look at the significance of IPR&D over the period 1998 through 2006 relative to selected measures, including net sales and total assets, for a large cross-section of firms and within five technology industries. We then recast pretax income in 2006 for our sample and for fifteen firms from the five industries assuming IPR&D incurred over the 2003 – 2005 time period had been capitalized and subsequently amortized. Across our sample period we find that the median firm that incurs IPR&D spends about 1.47% of sales and .91% of assets on those acquired projects. The effects, however, in certain industries and at selected companies were much greater. We also find that pretax income in 2006 is reduced by approximately 1.12% if IPR&D were capitalized and amortized over afive-year period. What is unclear is the extent to which companies may need to take charges for IPR&D projects abandoned in the future. Analysts and investors will want to be prepared for all of these changes as they begin to review financial statements for technology firms in 2009 and beyond.