The Business Review

Business/Accounting Course Design Preferences: Do Faculty and Students Agree?

Dr. Mark W. Rieman, Charleston Southern University, SC

Dr. Daniel L. Tracy, University of South Dakota, SD

Dr. John E. Knight, University of Tennessee at Martin, TN

ABSTRACT

Every semester business each professor must decide how each course is taught, often with little input from their students. Many business faculty members feel that students have little knowledge of course content or of teaching pedagogy. While students’ may have limited content knowledge, students do know which teaching methods suit their learning styles best. Students are key stakeholders in the educational process and have a significant interest in their success within it. Students decide on a business major to study and decide which specific courses they wish to take. These decisions are often affected by students’ perceptions about specific teachers and their teaching methods. Students also critique their professors’ teaching performances through student teaching evaluations, with the results often impacting professors’ merit pay, tenure, and promotion decisions. Fourteen controllable course design features were ranked in importance by large samples of business faculty and students. The analysis is intended to provide input for business faculty with respect to course design factors that have the potential to improve student satisfaction, while still balancing student and faculty goals. The differences between accounting faculty and their students as well as non-accounting faculty and their students are compared. When business faculty members design courses for the semester, a plethora of issues must be considered. Some of the more prominent issues might include their actual business experience prior to their teaching careers, the topics with which they are most familiar within their specific areas of teaching, different teaching methodologies they have learned, and consideration of their own personalities including both strengths and weaknesses.

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An Analysis of Corporate Social Responsibility (CSR) Across Firms, Industries, and Regions

Dr. Gordon W. Arbogast, Jacksonville University, FL

Julie Ankenbrand, Jacksonville University, FL

ABSTRACT

According to the United Nations Industrial Development Organization (UNIDO), Corporate Social Responsibility (CSR) is a management concept whereby firms within their various industries and regions integrate social and environmental concerns into their business operations and interactions with their stakeholders. Increasing public CSR visibility makes this integration more critical for companies to retain and improve their corporate/brand images. CSR, which consists of environment, social, and governance (ESG) focus areas, is coming more into the public spotlight as consumers become increasingly aware of how companies influence ESG- related activities. Companies that do not focus on improving their public images are likely to experience negative financial impacts in the form of brand degradation, decreased sales, and negative public perception. To address this challenge, companies are becoming more focused on CSR and are allocating increasing investment funds in this activity. An ever-growing base of socially conscious consumers may perceive those companies that ignore or pay little attention to CSR activity negatively. However, CSR is still a relatively new and abstract topic and companies do not have formulas that assist in guiding their CSR spending. This paper investigates what whether CSR varies across industrial firms, industries and regions. In a first study, data from companies on the 2017 Fortune 500 Global List, along with their associated CSR spending, was analyzed to determine if a relationship existed between the ratio of CSR spending in a firm with respect to its industry, geographic region and company size. In a second study, a random selection of 100 companies from the Fortune 500 was selected.

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Do Auditors Protect Shareholders Against Financial Expropriation by Corporate Insiders?

Dr. Edward B. Douthett, Jr., George Mason University, VA

ABSTRACT

We investigate whether empirical evidence exists to indicate that auditors can detect and deter shareholder expropriation by the parties in control of the company’s resources at the time of an initial public offering (IPO). We conduct our empirical tests on a sample of IPOs where regulators have explicitly identified financial expropriations in the form of spinning shares on IPOs. While a protectionist role against spinning is seemingly beyond the auditor’s primary attest responsibilities, performing this role is consistent with the auditor’s incentives of self-interest and avoidance of potential legal penalties associated with a client’s inappropriate resource diversion. We find that higher levels of IPO assurance services are associated with spinning suggesting auditors may be able to detect spinning expropriations. We also find that audit quality is not associated with spinning suggesting audit quality does not detect or deter spinning expropriations. The results provide some evidence that auditors can play a role in owner and investor protection. Our purpose is to test for evidence that auditors play a role in detecting and deterring opportunities for shareholder wealth expropriation. The expropriating cases under study are “spinning” arrangements where the primary decision-maker, such as the majority owner/entrepreneur or an influential agent, such as the investment banker underwriting the IPO, allocates the IPO shares in a way that expropriates the financial value of current shareholdings or the future value of the outside investment. While minority, or non-controlling shareholders are included as those being expropriated, the focus of our study is not specifically on whether auditors can completely resolve expropriation problems between minority shareholders and controlling agents, but rather whether auditors can detect and deter shareholder expropriation of any kind.

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Leading Organizations by the Values Journey Model of Adult Bio-Psycho-Social Behaviour

Dr. David A. Robinson, Professor, Holmes Institute, Australia

ABSTRACT

Individuals and firms are engaged in a journey that is navigated by their responses to problems of existence. The journey typically follows a trajectory defined by three stages and six value stations. Transitioning between value stations occurs naturally but may be impeded by inertia or organizational pathologies. This article defines the three stages and six value stations, explains how transitioning occurs, what can go wrong, and the leadership challenges associated therewith. A model of human values, explaining psycho-social behavior among adults, originated with the work of Prof Clare Graves of New York University in 1959. It was later promoted by Dr Don Beck of Baylor University and Christopher Cowan under the title, Spiral Dynamics and further developed by the current author, formerly of Rhodes University, South Africa and subsequently professor in several universities in Australia and Asia, currently at Holmes Institute, Australia. The essential principle of the Values Journey is that life may be perceived as a journey of personal development in which each individual develops their unique set of human values along the way. The values, being the underlying motives that pattern behaviors in response to given circumstances, are so formed by coping with challenges of existence. Firstly, that we as humans attempt to develop in two directions concurrently, along the X axis by increasing our capacity for rational and considerate conduct, and up the Y axis by improving our capacity for autonomous thought and action. Secondly, the journey is progressive, yet step-wise, i.e. people advance alternately in the X or Y plain. Thirdly, each pair of stations represent a ‘stage’ of development, thus there are three distinct stages, portrayed here as pre-orderly, orderly, and post-orderly. The divide between stage 1 and 2 is known as the ethical divide, a kind of discipline that must be mastered to give purpose and to bring consistency and allow control (whether by self- or externally-imposed).

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Corporate Governance in the wake of the Royal Commission into Misconduct in the Banking,

Superannuation and Financial Services Industry in Australia: The Call for Reform

Carlo Soliman, LLM, CEO, Soliform Property, Australia

Anurag Kanwar, LLM, The Institute of International Studies, Deputy Covenor Admissions and Compliance Working Group, IEAA, Australia

Gautam Dahima, CPA, Australia

ABSTRACT

The aftermath of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has cast a spectre of doubt over the efficacy of the legal system to adequately cope with the regulatory challenges that emanated from the high level of systemic misconduct observed. This paper will examine the scope of the Royal Commission’s Inquiry and its recommendations in light of the current legal framework and the consequences of any change. The implications of the current protections are considered as well as the likely government response. It is postulated that the present regulatory system provides effective legislative protections. However, the problem lies with the investigative willingness and enforcement inclination to implement the law in a consistent manner. This in turn is best achieved through a multi-modal approach that focuses on a stronger culture of compliance. Given the proliferation of companies in Australia, any amendment to the law will have a profound impact on all stakeholders in how corporations are monitored and audited in the future. The genesis of the Corporation dates back to the reign of Elizabeth 1 (1) where Crown Monopolies and Charter Companies emerged to undertake high risk enterprises. Such ventures were legally separate from their investors and managers in an effort to overcome risky commercial and speculative investments and by spreading the risk, and, with it, the minimisation of failure. In the English Westminster System, the notion of the separate legal entity, that underpins the very existence of the Corporation, arose from the common law. Cases such as Salomon v Salomon, (2) for example, oxygenate the idea that a totally abstract entity could attain all the powers of a natural person and be utilised to protect those managing its affairs. In modern times, whilst the corporation remains relevant, its scope has changed. In fact there has emerged a more sinister use which has seen this abstract device used to cloak fraud and other forms of misconduct.

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Why is the Value Estimated from the Constant Dividend Growth Model not an Equilibrium Value?

Dr. Joseph Cheng, Pepperdine University, CA

Ellen Jiao, Lingnan University, Hong Kong

ABSTRACT

For dividend discount models, the intrinsic value of stock is estimated by discounting all the future cash dividends of the stock. The Constant Dividend Growth Model formula, also known as the Gordon Model, is expressed as P = D1 / (k-g). (Gordon 1963). This classical formula is founded on the simple assumption that the firm will pay future dividends that grow continually at a constant rate forever. Such assumption renders the dividend discount model a long-run equilibrium model. In this paper, we show that this formula to be inconsistent with long run equilibrium in most cases. In the long run where capital can be varied, firms will have the incentive to boost share value by issuing shares if the return on equity ROE > required return k or to buy back shares if ROE < k. Thus, capital level reaches the long run equilibrium state only when the return on equity is equal to the required return (k = ROE). In such case, the Constant Dividend Growth Model can be simplified even further to : V = EPS1 / k. This newly derived valuation formula is based on only EPS and required return, thus broadening its application to even stocks which pay no dividends. In sum, this paper reveals the inconsistency of the Constant Dividend Growth Model with long-run equilibrium that leads to mispricing and proposes an alternative model for pricing stocks in long-run equilibrium, for both dividend and non-dividend paying stocks. The Constant Dividend Growth Model has been the classical model for valuing equity for many years. It is appealing because of its simple application. The value of the stock is derived by discounting future dividends which are assumed to grow at a constant rate forever. All future dividends are discounted by the required return adjusted for the time period. One drawback of this model is that it is only applicable to firms which pay dividends. In this paper, we not only point out the inconsistency of the Constant Growth Model, but also present a corrected version of the Dividend Discount Model that can be applied to also firms which pay no dividends. John Burr Williams proposed that asset price should be based on estimates of the future income in The Theory of Investment Value (1938).

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