The Business Review, Cambridge

The Journal of American Academy of Business, Cambridge

Vol. 25 * Number 1 * September 2019

The Library of Congress, Washington, DC   *   ISSN: 1540 – 7780

Online Computer Library Center, OH  *  OCLC: 805078765

National Library of Australia  *  NLA: 42709473

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The Challenge of International Politics and Legal Structures on Business

Dr. Michael Ba Banutu-Gomez, Professor, William G. Rohrer College of Business, Rowan University, NJ

Dr. Harold W. Lucius, Professor, William G. Rohrer College of Business, Rowan University, Glassboro, NJ

 

ABSTRACT

Through research, we have found the most important aspects of political and legal structures that affect businesses that are, or are planning to operate on a global scale. The issue of political risk is one of the main factors behind businesses deciding to enter a new market in a new country.  It is also one of the deciding factors for a business when looking to make deals with another business in a foreign country.  This, coupled with the legal structure of the country, is two factors that weigh heavily on companies while making decisions about international business opportunities. Today’s current political and legal climate can be a very questionable one for businesses to make decisions in.  International business is heavily affected by this climate.  With this paper, we strive to gain a better understanding of the political and legal issues that affect businesses operating on an international scale.  We also wanted to know more about what people in the business field feel about certain situations that they could be put into, regarding international business, and how they would react.  With this research we hope to garner a better understanding of what legal and political aspects of doing business abroad affect how businesses operate.   When looking at the political and legal environments facing business it is important to understand all of the aspects involved.  We are first going to be investigating the political environment that businesses must endure when dealing on an international scale. When looking at the political environment we must first examine political systems on a macro scale. Essentially, the argument comes down to individualism versus collectivism.  This argument is based off of balancing the rights of the individual with that of the community.  The question is posed, how should society balance individual rights with respect to the needs of a community to create a balanced society? (Daniels et al, 2009) We will investigate this balance further in our pursuit of uncovering what aspects affect businesses that want to operate on the international level.  The ideal of individualism is one that promotes the freedom of the individual.  This system allows individuals to do what they want and the government will protect their freedoms as long they do not infringe on the freedoms of others. (Daniels et al, 2009) When relating this concept to businesses, the individualistic approach to business is often referred to as a laissez faire approach. 

 

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Training and Development Issues for Employees in Rural and Culturally Diverse Settings

Dr. Jacqueline N. Hood, University of New Mexico, NM

 

ABSTRACT

This paper uses a case study approach to investigate the factors relevant to professional development and training programs in rural and culturally diverse areas in the United States. Focus groups were utilized for qualitative data collection with grounded theory as the methodological basis for developing a model for training of employees in a large state department in rural and culturally diverse settings. Three areas of consideration emerged from the data. First, learning styles of ethnically and geographically diverse employees need to be addressed by training program developers. Second, issues related to pedagogy need to be considered including whether the training should be formal or informal, the quality of instructors, whether the training should be internet-based or use a classroom setting, and the training level appropriate for the skill level of the employee. Third, two major organizational issues should be addressed in training program development, including the cost of the training and assessment of learning outcomes. The paper provides suggestions for future research.  Research has indicated that there is a significant correlation between an employee’s level of workplace skills and their productivity and success on the job (Kuchinke, Brown, & Anderson, 1998). Enhancing workplace skills leads to more usage of these skills on the job as well as greater employee participation in ratings by supervisors (Bergmann, 1995). Recent data indicates that the spending on training in the U.S. rose 32.5% in 2017 to a new high of $90.6 billion (2017 Training Industry Report). Given the size of the training efforts and the positive outcomes of successful training, methods to identify and assess the skills needed and to provide requisite education and training should be of paramount concern to organizations. This research investigates training issues in rural and culturally diverse settings. A qualitative study of program development in a rural and culturally diverse setting is discussed along with suggestions for future research. Most professional development and training initiatives are carried out on the assumption that a mono-cultural environment exists for the participants (Cox, 1993). In a mono-cultural environment, it is expected that individuals conform to the norms of the dominant group. A mono-cultural environment is one in which all individuals’ beliefs, values, and behaviors are similar. In most professional development and training designs, some thought is given to differing learning styles of participants, but few consider cultural differences, including the formal and informal practices and processes that affect an individual’s ability to understand and internalize the learning. Rural areas of the United States are unique cultural milieus. One researcher in rural settings noted, “The American mainstream is pitifully ignorant of and indifferent to its rural population” (Keizer, 1988).  Furthermore, professional educators have noted that there is little specialized training for educators who work in rural areas (Herzog & Pittman, 1995). 

 

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Perceived Learning from a Business Simulation:  Does Gender Matter?

Dr. Nancy Haskell, Professor, Laval University, Quebec, Quebec, Canada

Dr. Donald Béliveau, Professor, Laval University, Quebec, Quebec, Canada

 

ABSTRACT

This paper focuses on learning during a business simulation as perceived by students, and more specifically on differences in perceived learning between female and male students. The study measures students’ perceptions of achievement on learning objectives grouped into seven goals used by a major business school to guide program development. Precisely, we focus on gender differences in perceived learning based on progress measured at three points in time during participation in a complex business simulation. Analysis indicates a pattern of greater perceived achievement on seven program learning goals by female than by male participants, with significant differences on two of these: Decision making and Information and communication technology.  Interestingly, although early scores are quite variable for both females and males, mean scores for female respondents consistently reflect somewhat lower perceived achievement on baseline measures than males but greater progression and perceived achievement on objectives by the end of the simulation experience. Limitations include measures based on student perceptions of achievement and progressive learning, the potential difficulty for participants to identify simulation-specific learning, and sample size. Future longitudinal research could explore the impact of self-confidence, prior preparation, and the correlation of perceptions and grades. Findings deepen our understanding of the impact on learning of complex business simulations in general and suggest that gender may be an important factor to take into account when designing simulation courses. To our knowledge, this is a first attempt to explore differential learning responses by gender in a business simulation.  Concern for the effectiveness of education in general and of management education in particular is the subject of much debate in the face of the imperatives of global competitiveness, economic difficulties, severe budget constraints, and the shrinking population of potential candidates due to demographic shifts. The business community requires competent graduates with the appropriate knowledge and skills to rapidly contribute to the success of the organizations that hire them, and these organizations have increased their scrutiny of business schools (1) (Michlitsch and Sidle, 2002).  The Association to Advance Collegiate Schools of Business (AACSB) (2) was created to ensure the relevancy and the quality of management education by the accreditation and the periodic renewal of accreditation of its business school members.  

 

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What are the Primary Contributing Factors to Economic Development in a US Community?

Dr. Gordon W. Arbogast, Jacksonville University, FL

Leinesa Adams, Jacksonville University, FL

Holly Decardenas, Jacksonville University, FL

Dr. Vikas Agrawal, Jacksonville University, FL

 

ABSTRACT

Economic development is the goal of every community in the country.  This research paper is an estimate of the relationship between economic growth of a community (cluster) versus a number of independent variables including STEM (Science, Technology, Engineering and Math) Employment, Violent Crime, Housing and Educational attainment.  The selected dependent variable was a measure of economic development using its local Global Domestic Product (GDP) growth within a Metropolitan Statistical Area (MSA) over the 5-year period (2012-2016). It was hypothesized that economic growth is a complex variable with multiple factors that may affect growth.  The Independent variables employed were either a change (delta) between 2011 and 2015 or an indexed value to a reference year.  The dependent variable was lagged one year to allow for proper impact.  A stepwise analysis was performed to select the most relevant variables.  A final multiple linear regression was performed on the variables identified as significant in the stepwise analysis.  This output data was analyzed for both fit and outliers. The analysis showed that there was a likely relationship between local GDP growth and education attainment of a baccalaureate or higher degree and median housing price growth.  The United States is a vast country with many metropolitan statistical areas. A metropolitan statistical area (MSA) is a geographical region defined by the United States Census Bureau with a relatively high population density at its core and close economic ties throughout the area.   However, each city has its own microeconomic characteristics.  For instance, New York City’s GDP dwarfs that of Jacksonville, FL, and as such, average incomes and housing expenses are very different between those two metropolitan areas. It is predicted that 70% of humanity will live in urban areas by the year 2050 (Saunders, 2011).  As people move into cities, they bring their education, skills and businesses with them.  This migration will most likely affect the economic development of a given metropolitan area by both population and GDP. The question of how to generate successful economic development in a community has been considered by a number of researchers over the past 40 years.  Certainly, the dynamics of microeconomic development is complex.  This study proposes different factors that may be related to local economic growth.  A range of objective measures was considered in this study to contribute to the understanding of economic development.  Prior to selection of these factors, the following literature was reviewed to gain insight from the theoretical framework and empirical findings of other researchers.

 

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Dividend Payout Ratio, Investment opportunities, and the Pecking Order Theory: Evidence from Taiwan

Dr. Joe Ueng, Professor, University of St. Thomas, Houston, TX

Dr. Vinita Ramaswamy, University of St. Thomas, Houston, TX

 

ABSTRACT

This paper applies the two-stage least square (TSLS) method to test the prediction of the pecking order theory that there is a negative interaction between dividend payout ratio and investment by a Taiwanese pooled sample for the period 2002-2007, before the global financial crisis. The result is supportive of this prediction. It also observes that there is a positive interaction between dividend payout ratio and financial leverage over the same period. This paper adds to the previous studies by using the TSLS method. The results accord, in general, with the previous evidence as far as the effect of dividend payout ratio and investment, and the effect of dividend payout ratio on financial leverage. The only inconsistence with the previous evidence is the interactive effect of financial leverage and investment.  How should firms finance their investment projects? The pecking order theory is the central theory of this financing decision. According to Myers (1984), due to adverse selection, firms are predicted to prefer internal finance as their main source of funds for investment. Next in order of preference is debt, and last comes external equity financing. There are at least two other predictions of the pecking order theory. (1) Internal finance is first used to undertake investments prior to dividend payouts. Thus, investments are predicted to have a negative influence on dividend payouts. (2) Investments will be forgone or postponed since internal finance has been used to pay dividends. It follows that dividend payouts have a negative influence on investments. These predictions were refined into a testable prediction that there is a negative interaction between dividend payout ratio and investment by Adedeji (1998). Adedeji (1998) observed a support for this prediction in the UK over the period 1993-1996. He also observed that there is a positive interaction between dividend payout ratio and financial leverage. These results are valuable. The pecking order is an empirical model of financing hierarchy that is found to be reasonable. However, he observed that there is no significant interaction between investment and financial leverage. This result is inconsistent with Baskin’s (1989) observation in the USA. He explained the inconsistence by emphasizing the institutional context differences between the USA and UK. Because Taiwan has different institutional contexts from the USA or UK, this paper is motivated by whether the empirical results may be different from what obtained in the USA or UK. In Taiwan, the tax system is an important institutional factor that encourages firms to undertake investments.

 

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IBM Pension Accounting Reexamined

Dr. Lianzan Xu, Professor, William Paterson University of New Jersey, NJ

Dr. Francis Cai, Professor, William Paterson University of New Jersey, NJ

Dr. Ge Zhang, William Paterson University of New Jersey, NJ

 

ABSTRACT

This paper reexamines IBM’s pension accounting in 2001 in particular, and before and after 2001 in general, as reported in its annual financial statements. We compare the discount rates and expected rates of return used by IBM in 2001 with the average rates by S&P 500 companies and IBM’s own rates in 2000 respectively. We found that IBM lowered its discount rate and raised its expected rate of return in 2001 as compared to S&P 500 and IBM 2000, resulting in additional hundreds of millions of dollars of paper profit in IBM’s 2001 reported net income. IBM’s manipulation of earnings through pension accounting dates back prior to 2001 and continues after 2001 till today.  In this study, we look at how IBM uses pension accounting to manipulate its earnings. IBM did it in 2001 and caused quite a stir in Wall Street and among its investors. As a matter of fact, IBM did it way before year 2001 and keeps playing the same trick ever since. It is really amazing to see companies like IBM can do it over such a long span of time and with such a magnitude as billions of dollars of non-exiting profit are pumped into its annual report year after year, and get away with it easily and unscathed.  The primary components are service cost, interest cost and expected return on plan assets (PA). Service cost is estimated by actuarial and firms have little discretion over it. What management can really manipulate is twisting the discount rate and expected rate of return (ERR) on plan assets. If a company’s projected benefit obligation (PBO) and pension plan asset are small, the impact can be insignificant. If, on the contrary, a company has huge projected benefit obligations and pension plans, the difference can be huge as well. IBM belongs to the latter. Over the years, IBM has projected benefit obligation and pension plan in the range of 50 to 70 billion dollars. Lower discount rate by 1% and up expected rate of return by 1%, and the net income for IBM will be more than $1 billion higher. YES it is $1billion, NOT $1million!  Another area of contention and worth discussion is where pension expense, or pension income in the case of IBM, belongs. Again for firms with small projected benefit obligation and pension plan, the impact can be minimal. But for firm with bit projected benefit obligation and pension plan, the impact is highly significant, often a big percentage of its reported income.

 

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Physicians’ Intention to Leave Their Jobs: Validation of a New Model

Dr. Caroline A. Mathieu, Université Laval, Canada

Dr. Nabil Amara, Université Laval, Canada

Dr. Caroline Biron, Université Laval, Canada

 

ABSTRACT

Physician retention presents a challenge in several countries. This study applies structural equation modeling to verify the performance of a proposed new physician retention model, the Conflict Demands-Resources model. This is an extension of the Job Demands-Resources model and was validated with a population of 1,069 family physicians in Canada. The variables used to perform the analyses included job resources, job demands, exhaustion, work engagement, work-family conflict, and intention to leave. The results show that the proposed new model (CD-R) is efficient.  Shortage of doctors is a problem in many countries, including the United States, Finland, the United Kingdom, Sweden, and Canada (Latour, 2003). Whether physicians leave because of the considerable demands of the profession (Salsberg & Grover, 2006) or the attractiveness of private practice and leaving publicly funded clinics (Statistics about Physicians, 2004), physicians leaving their current practices present a real problem in any country. Renewing a workforce that is leaving voluntarily represents a source of potential costs for organizations in terms of loss of human resources and disruption of continuous activities.  Evaluating a model for intention to leave requires researchers to adapt to the specific environment in which a given group of workers has evolved in order to understand the complexity of their situation (Holtom et al., 2008). One limitation of the current models is that they are not adapted to the study population, which seems particularly problematic with regard to physicians’ intention to leave, given the rarity of studies to which this population has been subjected (Baltagi et al., 2005). This study proposes to fill this gap by testing a new physician retention model (Conflict Demands-Resources model or CD-R), proposed by Mathieu and her colleagues (Mathieu, C.A.; Biron, C.; Mathieu, C., 2013) on a sample of family physicians.

 

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The Conception and Evaluation of the “Hard” and “Soft” Models of HRM.  Demonstrate How HR Practices in the Key Practice Areas (Recruitment, Development, Rewards and Appraisal) Might Differ between an Organization Pursuing the “Hard” HRM Approach and Another Organization Pursuing the “Soft” HRM Approach

Hsien-Mi Lin, Director, Human Resource Office, Cardinal Tien Hospital, New Taipei City, Taiwan R.O.C.

 

ABSTRACT

Human resource management (HRM) is a new way of thinking about how people should be managed as employees in the workplace.  It is gaining expeditious and widespread acceptance as a new term for managing employment.  It has frequently been described as a concept with distinct forms: hard and soft models.  The hard model of HRM emphasizes the rational concept of strategic fit and stresses the importance of the management of performance and an instrumental approach to the management of individuals.  In contrast, the soft model of HRM focuses on individual employees and their self-direction and set commitments, trust as well as self-related behaviour at the centre of any strategic approach to employees.  Both hard and soft models of HRM seem to be based on opposing views of human nature and managerial control strategies.  The hard model is based on notions of tight strategic control while the soft model is based on control through.  However, it is possible to consider the implications of different combinations of them.  In addition, the hard and soft models of HRM propose many ways for better management of human resources.  They contain many of the areas of personnel management, such as recruitment, selection, training and development, rewards and appraisal, and share a concern for achieving the strategic needs of organization.  There is no single organization that adopts either a soft model or a hard model to manage the human resources.  Both hard and soft models of HRM provide different concepts.  These rather different concepts are not necessary to be incompatible, because both the hard and soft models of HRM emphasize the importance of HRM factors that can lead to desirable outcomes for both employees and organization.  Furthermore, most of the normative statements about what composes HRM contain elements of both the hard and soft models.  This study will focus on hard and soft models of HRM, and is structured into four major sections.  In the first section, I shall briefly clarify the source as well as outline the main elements of the hard and soft models of HRM.  Then, in the second section, the hard and soft models of HRM will be evaluated.  In the third section, I will demonstrate how HR practices in four Key Practice Areas (ie. Recruitment, Development, Rewards and Appraisal) might differ between an organization pursuing the hard HRM approach and another organization pursuing the soft HRM approach. 

 

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Leadership For the Conduct of Employees;  The Influence of Ethical Culture and Climate

Dr. Julia Buchanan, National University, La Jolla, CA

 

ABSTRACT

Even though there is much written concerning ethics in organizations, there is little empirical research on how leadership effectively changes the behavior of individuals in an organization to become more ethical. This paper will review the literature on ethical climate as an element of organizational culture and the impact it has on an individual’s behavior. Much of the literature is theoretical in nature and contains recommended strategies that would likely impact behavior. Therefore, this review of the literature on ethical climate will explore how organizations can change and improve the ethical climate and how the climate is connected to the organizational culture. Of particular interest is discovering what is known about changing the ethical climate of an organization and how an ethical climate is maintained.  In 2001, The Ethics Commission for a mid-sized city in California, was created by the City Council. Later that year, ethics training was conducted for all unclassified managers, elected officials, and department managers which included training on ethical concepts, city codes, and council policies. Since that time, a number of significant ethical violations have occurred from the same unclassified group of management and elected officials that received the ethics training. The violations included accepting money from lobbyists for policy decisions leading to the indictment of three elected officials, and conflict of interest violations leading to indictments of four Pension Board directors. These incidents invite the question; does ethics training cause people to behave ethically? If training does not impact employee’s behavior, then what factors do influence people to be ethical and make appropriate ethical decisions?   There is much information about the growing number of ethical violations in the private sector. Schnebel and Bienert (2004) found, “In recent years we have seen a dramatic increase in the willingness of managers to submit to unethical or illegal or both-behavior in order to belong to the small minority of overly compensated ‘winners’, in the sense of financial payments” (p. 204). In addition, according to Grojean, Resick, Dickson, and Smith (2004),

 

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An Analysis of Instruction Expenditures and Public High School Completion on Hawai‘i’s Big Island

Dr. Larson Ng, University of Hawai‘i at Mānoa, Honolulu, Hawai‘i

 

ABSTRACT

The following study attempted to analyze the impact of instruction expenditures on public high school completers on Hawai‘i’s Big Island. Using the high schools that comprise the Big Island District, a correlation and bivariate regression procedure were employed to determine the nature and econometric relationship between instruction expenditures and high school completion from 2000 to 2007. Although instruction expenditures had increased for all high schools, increases in completion were not observed for all schools. Moreover, although four high schools econometrically showed positive relationships towards completion, there was no conclusive econometric evidence to validate that additional expenditures in instruction lead to higher levels of high school completion during 2000 to 2007.  Instruction is a critically important factor that contributes to high school completion. Although there are many techniques to measure the productivity of instruction, assessing its effectiveness through a financial perspective remains one practical way to accomplish this task (Beard, 2009). Consequently, this study will attempt to test whether increases in instruction expenditures result in higher numbers of high school completion by analyzing the Hawai‘i’s Department of Education’s (DOE) high school instruction expenditures (i.e., teacher salaries and benefits, substitutes, instructional paraprofessionals, pupil-use technology, software and instructional materials, trips, and supplies) and its econometric relationship with high school completers on the Big Island of Hawai‘i (Hawai‘i Department of Education, n.d.). With this research, it is hoped that the results will provide a snapshot of whether increased instruction funding does improve public high school completion. The following section will go over the instruction expenditures, size of its graduation classes, and high school completers for the DOE’s Big Island district as well as the individual high schools that comprise that district from 2000 to 2007. 

 

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Economic Hardship on Multicultural Families Youths and HRD in Korea

Dr. Namchul Lee, Korea Research Institute for Vocational Education and Training, Korea

 

ABSTRACT

Recently, with the rapid increase of multicultural youths in Korea, it is very likely that they will become important economic and social interests in the future. The purpose of this study is to analyze the status of economic activity and vocational education and training of multicultural youths and to suggest policies to support them. To do this, survey of a national-level and government research institute was used. The main contents of the research analyzed of previous literatures, multicultural families and youth human resources, economic, social situations, and problems. Chapter II explained the data used by the South Korean government and national-run research institutes for this research. In Chapter III looked at the status of human resources for multicultural families and youths. Chapter IV analyzed the current situations in terms of economic and human resources development. The final chapter suggested conclusions and policy suggestions. In recent years, the number of foreign immigrants and multicultural youths in Korea has been increasing. Various researches and policy interests have been increasing for social adaptation, human resources development and. vocational education and training support. In particular, the fast-growing trend of multicultural youths is likely to emerge as an important economic and social concerns for the implementation of the labor market in the near future. Therefore, the government should actively push for vocational education and training policies to develop into a global human resources for multicultural teenagers who are bilingual and multilingual through human resources development. The purpose of this study is to review the current status of economic activities and vocational education training for multicultural youths to find ways to support them. As a research method, literature review and survey were used to derive objective and valid research results.  Chapter II, we explained the data used by the South Korean government and national-run research institutes for this research. In Chapter III, we looked at the status of human resources for multicultural families and youths. Chapter IV, we analyzed the current situation in terms of economic and human resources development. The final chapter is conclusions and the policy suggestions. Researches on multicultural family children, foreign workers, marriage immigrants and the government policies are being carried out. But so far, there have been few studies on the support for vocational education and training and economic activity situations for multicultural youths in Korea.  The Korean case studies related to the subject of this research performed those by Lee.N.C et al. (2009), Lee, N.C et al (2012). Recently, K.H, Kim, N.C, Lee, H.M, Ra (2018) studied the support plan for multicultural youths vocational education and training.  

 

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Investigating if Multidisciplinary or Homogenous Teams Are More Innovative in a Higher Education Setting

Blake Hoover, Brigham Young University, Provo, UT

Dr. Geoffrey A. Wright, Brigham Young University, Provo, UT

 

ABSTRACT

This study is derived from the claim that multidisciplinary groups are more innovative than homogeneous groups; a claim that has flooded the business industry and has become criteria for accreditation in higher education. However, the impact of disciplinary diversity in work groups is a growing area of research; therefore, it is yet to be thoroughly understood. The purpose of this study is to answer the question: are multidisciplinary teams more innovative than homogenous teams. To accomplish this university students from differing majors were sorted into multidisciplinary and homogeneous groups while participating in a two-day innovation course. The course taught the students about divergent thinking, and invited them to work as teams to develop an innovative product, system or service. Each groups’ final product was independently judged by three experts using the Creative Solutions Diagnosis Scale (CSDS) measuring the innovativeness (functional creativity) of student work. The homogeneous groups outscored the multidisciplinary groups in every category. Group dynamics have been assessed as also playing a vital role in the successfulness of a diverse group. The Teamwork Quality Questionnaire (TWQ) was used to measure the quality of team interactions, student sentiments, and student attitude. These self-evaluations were used to assess if the group dynamics played a significant role in the functional creativity of the end product by checking for correlation with the results of the CSDS. The findings were inconclusive, meaning they did not correlate. Despite the findings not aligning with past research, they should be considered important. At a minimum, they describe a context and environment where multidisciplinary groups do not function at the same level as homogenous groups. Accordingly, there is a need to further investigate group formations and function in regards to innovation and creativity production.

 

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Students’ Misconceptions of Statistics

Dr. Leonard Presby, William Paterson University, NJ

 

ABSTRACT

Statistics is the skill of good judgment making in the face of uncertainty and is used in many disciplines such as financial analysis, econometrics, auditing, production and operations including services improvement and marketing research. Statistics educators have long recognized the importance of empowering students with statistical thinking skills that could be applied in and beyond the classroom. But, often students feel the application of statistics is evident and obvious. The determination of a result, they feel, is often logical.  The aim of this paper is to investigate the degree of students’ misconceptions of statistics. Twelve statistical questions were presented to students at both the undergraduate and graduate level to see their understanding. Findings show that students often arrive at incorrect solutions in applying their intuition to common statistical situations. The overall results show that some  students have poor statistical reasoning skills. They do seem convinced, however, of the correct answer when the solution is demonstrated to them. Students left the course with a positive appreciation of statistics. This study suggests that statistical reasoning should be taught strategically so as to minimize misconceptions among students as well as to empower their statistical reasoning ability.  The ability to understand and apply Business Statistics is becoming increasingly important in industry. A good understanding of Business Statistics is a requirement to make correct and relevant interpretations of data. Lack of knowledge could lead to erroneous decisions which could potentially have negative consequences for a firm. Statistics contain data that is published for business members to look at and analyze. Business statistics is employed in making good and sound decisions for a company or industry. These decisions are made even if there is uncertainty in what may happen financially. Statistics transcends the classroom walls and holds value in our daily lives. Many students enrolling in a statistics course, question whether the introduction and use of formulas is really necessary. Aren’t many of the concepts intuitive? Students sign up for courses with diverse interests and goals. Yes, they feel there is a use of statistics in business. They realize it can be used in numerous business areas. Anything that has to do with marketing research, for example, will be included in statistics. But students seem to feel one can easily arrive at a correct answer, for example, without applying probability theory or hypothesis testing.

 

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Tax Burden and Taxation Rules of The Financial Instruments (Theory and Practices)

Dr. Atilla Uyanik, Associate Professor, Marmara University &CPA, Istanbul, Turkey

 

ABSTRACT

This paper examines tax burden and specially taxation of financial Instruments in general and Turkey.   In recent years, important changes have occurred in tax laws especially in income tax code. Tax harmonization, tax co-ordination, tax competition are expressions, which are used to describe the processes of approachments of the taxation systems in different countries, or which lead to such outcomes.  Our study underlines the importance of fundamental regulations that govern financial markets and their role in increasing the operation ability of the market with special emphasis on taxation policy as a means of supporting financial products.  It can be said that taxation, the tax exception and exemptions aiming at developing financial markets are applied differently according to the income receivers. It is understood that the financial products offered by the state and its agencies and the financial products offered by companies are subject to low tax or exception. In case of income receivers, tax exception and exemption are provided to real persons in order to evaluate the rather small savings and to encourage their participation in the market.  In Turkey, especially after the Temporary Article 67 of the PIT Law regulates the taxation of the capital income taxed at flat rate of 15 percent. The capital income regulated under this article are the gains derived from the alienation and the retention of the marketable securities and other capital market instruments, and the taxation of the deposit interests, repo gains and the income that is derived from the private finance institutions.

 

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Prejudice in Internal Auditing in the Saudi Arabian Governmental Sector

Dr. Mohammed A. Alabbas, King Khaled University, KSA

 

ABSTRACT

This study investigates the prejudice in internal auditing in the context of the Saudi public sector, and attempts to fill a gap, and contributes to the internal auditing literature by applying the prejudice model. Structural Equation Modeling (SEM) is utilized to analyze associations between variables. A sample of 365 is participated, and the results indicate that attitudes toward internal auditors vary among participants, nonetheless there are indications that auditees feel threatened by realistic or symbolic harms and intergroup anxiety. This study is limited to the Saudi context and cannot be generalizable to other contexts, hence, similar research in behavioral topics is needed. This study will be useful to IIA, other regulators, and practitioners because it provides insights into factors that threaten internal auditing and may useful in identifying causes of threats in auditing reports.   The internal audit function is an important element of the corporate governance structures (Gerrit, Abdolmohammadi, & Lenz , 2012; Ferrya, Zakaria, Zakaria, & Slack, 2017; Tang, Yang, & Gan, 2017). Similarly, internal audits affect the quality of financial reporting (Christ, Masli, Sharp, & Wood, 2015; Kasim, 2015; Gros , Koch, & Wallek, 2017). However, this function may not always be effective (Al-Twaijry, Brierley, & Gwilliam, 2003; Mihret and Woldeyohannis, 2008; Christ, et al., 2015; Coetzee and Erasmus, 2017) and may encounter conflict within organizations because auditees may not fully understand the role of the internal auditor in the organization (Mihret, James, & Mula, 2010). More so, it is difficult to convince people within organizations of the value of internal audits (Sarens and De Beelde, 2006; Nobel, 2010; Mihret et al., 2010; Nuijten, Twist, & Steen, 2015).  To function effectively, internal audit requires a shared perspective with line management regarding the role of internal audits (Alic and Rusjan, 2012). Failure to reach this could result in the judgment among management that internal audit is simply an obstacle to the organization’s objectives (Flesher and Zanzig, 2000 and Khelil, Hussainey, & Noubbigh, 2016).

 

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Index: The Library of Congress, Washington, DC:    ISSN: 1540 – 7780

Index: Online Computer Library Center, OH:   OCLC: 805078765 

Index: National Library of Australia: NLA: 42709473

Index: Cambridge Social Science Citation Index, CSSCI.

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