Using a comprehensive sample of switches to and from the largest auditors (i.e., the Big N), we examine empirically whether the sensitivity of Big N auditor switches to client risk and misalignment changed between the pre- and post-Enron periods. Although we find an increase in the sensitivity to client misalignment, the sensitivity to client risk generally decreases. The results are consistent with Big N auditors rebalancing their audit client portfolios in response to post-Enron capacity constraints arising from the supply of former Arthur Andersen clients and the audit demands imposed by Sarbanes-Oxley rather than increasing their sensitivity to client risk. Additional evidence indicates that the Sarbanes-Oxley demand shock did not affect Big N auditor switching behavior incremental to the initial Andersen supply shock.

Scholars indicate significant interest in business models that support entrepreneurial behavior in developing markets [Wankel C., editor. Alleviating Poverty through Business Strategy. New York: Palgrave Macmillan 2008]—particularly as they relate to job creation. This research introduces microfranchising as a business model adaptation that helps low-income individuals overcome non credit-related barriers to entry in obtaining employment. This study reveals a clear challenge for researchers—to better understand microfranchising and the extent to which the practice creates employment and enables individual business success. Largely unanswered questions concern the profiles of typical microfranchisees as well as the impacts of microfranchising on low-income individuals in subsistence marketplaces. This preliminary research focuses on one type of microfranchise operating in Accra, Ghana. Using data from microfranchises enables the exploration of whether workers in subsistence markets benefit from the microfranchise model. In comparing a microfranchise business with comparably-sized non-franchised businesses, this analysis finds preliminary evidence that the microfranchise creates starter jobs. Baseline results highlight microfranchisee characteristics and indicate that this form of microfranchising positively impacts savings and profits.

Decentralizing the allocation of public goods by giving funds directly to communities takes advantage of local information concerning needs, but leaves funds open to misuse or capture by local elites. A large scale development project in Indonesia attempts to overcome this downside of decentralized allocation by having communities compete locally for block grants. Competition weeds out less efficient projects. Increasing the number of villages bidding by 10% leads to a 1.8% decline in road construction costs. Increased community participation in project planning also leads to better outcomes.

We scrutinize the role financial reporting for fair values, asset securitizations, derivatives and loan loss provisioning played in the Financial Crisis. Because banks were at the center of the Financial Crisis, we focus our discussion and analysis on the effects of financial reporting by banks. We conclude fair value accounting played little or no role in the Financial Crisis. However, transparency of information associated with asset securitizations and derivatives likely was insufficient for investors to assess properly the values and riskiness of bank assets and liabilities. Although the FASB and IASB have taken laudable steps to improve disclosures relating to asset securitizations, in our view, the approach for accounting for securitizations in the IASB's Exposure Draft that would require banks to recognize whatever assets and liabilities they have after the securitization is executed better reflects the underlying economics of the securitization transaction. Regarding derivatives, we recommend disclosure of more disaggregated information, disclosure of the sensitivity of derivatives' fair values to changes in market risk variables, and implementing a risk-equivalence approach to enable investors to understand better the leverage inherent in derivatives. We also conclude that because the objectives of bank regulation and financial reporting differ, changes in financial reporting needed to improve transparency of information provided to the capital markets likely will not be identical to changes in bank regulations needed to strengthen the stability of the banking sector. We discuss how loan loss provisioning may have contributed to the Financial Crisis through its effects on procyclicality and on the effectiveness of market discipline. Accounting standard setters and bank regulators should find some common ground. However, it is the responsibility of bank regulators, not accounting standard setters, to ensure the stability of the financial system.

When Alcoa Inc. sought to improve knowledge transfer and innovation in its Global Primary Products division, it saw huge potential for performance improvements-if only operational and technical know-how that had developed uniquely within separate refineries could be shared more widely. To leverage this highly dispersed expertise (refineries are located as far apart as Australia, Brazil, Suriname, U.S.A., Spain and Jamaica), Alcoa has adapted the concept of "communities of practice" within its organization to create a web of global virtual teams that operate outside and across the main operational and divisional lines of authority. These parallel global virtual teams (pGVTs) bring together people who are working in similar functions within each of the geographically separate locations, in a virtual environment. Since mid-2004, more than 80 of these pGVTs have been launched, and the best practices that have been subsequently implemented are credited with generating significant increases in production output and saving millions of dollars in operating costs. Despite the overall success of Alcoa's innovative approach, their early experience involved a steep learning curve. Our research shows that it is the leadership of these pGVTs that is primarily responsible for their success or failure. We identify both the challenges facing pGVT leaders, and the actions those leaders can take to overcome these challenges and ensure their teams' success.

This study of nurses finds that the decision to seek help depends on perceptions of experts’ accessibility and trustworthiness, and these perceptions are predicted by experience, formal roles, and affective organizational commitment.

Using a scenario-based experiment, this study examined how employee attitude and employee communication styles affected managers' reactions to employees' objections to a company policy. In the experiment, employee attitude (cynical versus trusting) and employee communication styles (aggressive versus diplomatic) were manipulated, and managers' reactions to voicing discontent were assessed through a questionnaire. Based on a sample of 185 middle managers working in various organizations in South Korea, the results showed that managers were more likely to engage in social undermining and were less likely to provide social support when cynical (rather than trusting) employees objected to a company policy. Also, attributed motives (i.e., personal attack and health concern) fully mediated the relationship between employee attitude and social support and social undermining. In addition, managers more likely attributed the objection to moral concerns when trusting (rather than cynical) employees communicated in an aggressive manner.

This research empirically examines the influence of psychological safety on knowledge sharing among coworkers in manufacturing and service operations contexts. Reconciling conflicting findings in the literature, we demonstrate that whereas psychological safety is an important antecedent of knowledge sharing, the relationship between psychological safety and knowledge sharing is moderated by the level of confidence that employees have in what they know. The greater this confidence, the lesser is the importance of psychological safety in facilitating knowledge sharing. Linking this result to social network theory, we find that psychological safety increases with the frequency of communication among coworkers and that the confidence of employees in their knowledge is related to the codifiability of the knowledge involved. We further investigate direct and indirect antecedents of psychological safety. This research offers insights into actions that managers can take to enhance psychological safety and, consequently, motivate their employees to share knowledge.

The authors conduct a systematic investigation into the cyclical sensitivity of advertising expenditures in 37 countries, covering four key media: magazines, newspapers, radio, and television. They show that advertising is considerably more sensitive to business-cycle fluctuations than the economy as a whole. Advertising behaves less cyclically in countries high in long-term orientation and power distance, but it is more cyclical in countries high in uncertainty avoidance. Furthermore, advertising is more sensitive to the business cycle in countries characterized by significant stock market pressure and few foreign-owned multinational corporations. The authors provide initial evidence on the long-term social and managerial losses incurred when companies tie ad spending too tightly to business cycles. Countries in which advertising behaves more cyclically exhibit slower growth of the advertising industry. Moreover, private-label growth is higher in countries characterized by more cyclical advertising spending, implying significant losses for brand manufacturers. Finally, an examination of 26 global companies shows that stock price performance is lower for companies that exhibit stronger procyclical advertising spending patterns