Faculty & Research
Research Finds Shareholder Participation Improves Financial Reporting Quality
In a paper recently accepted for publication in Contemporary Accounting Research, Lihong Liang, associate professor of accounting at the Martin J. Whitman School of Management at Syracuse University, found that shareholder participation improves financial reporting quality. Co-authors were William Barber (Georgetown University), Sok-Hyon Kang (George Washington University) and Zinan Zhu (National University of Singapore).
The paper, titled “External Corporate Governance and Misreporting,” analyzed external governance provisions, specifically those provisions that limit direct shareholder participation in the governance process. The researchers found that fewer restrictions on shareholder participation are associated with a relatively low incidence of accounting restatements.
Research Analyzes Risk Associated with Supply Uncertainty in Agricultural Settings
In a recently accepted paper in Operations Research, Dr. Burak Kazaz, the Laura J. and L. Douglas Meredith Professor of Teaching Excellence and associate professor of supply chain at Syracuse University’s Martin J. Whitman School of Management, and his co-author, Dr. Scott Webster (Arizona State University, formerly Syracuse University), analyze the economic tradeoffs associated with uncertain supply of a perishable product, reviewing how risk aversion and the source of uncertainty – demand and/or supply – affect supply chain decisions.
Their paper, titled “Technical note – Price-setting newsvendor problems with uncertain supply and risk aversion,” explores how economic decisions are affected by supply uncertainty. The researchers found that when risk aversion is incorporated into the joint price and quantity decision under uncertainty, it does not create structural problems when the source of uncertainty is demand. However, risk aversion creates significant problems when the source of uncertainty stems from supply fluctuations. The authors develop a new elasticity measure that enables scholars to solve such complex problems. Managerially, their work finds that a firm will order more and price the commodity higher when the source of uncertainty is supply. The research builds on earlier studies that demonstrated that risk-averse firms price lower and order fewer items when the source of uncertainty is demand.
Byron's Research on Female Board Representation's Effect on Firm Financial Performance to Appear in the Academy of Management Journal
Research by Kris Byron, associate professor and chair of the department of management at the Martin J. Whitman School of Management at Syracuse University, has been accepted for publication by the Academy of Management Journal. The paper, titled “Women on Boards and Firm Financial Performance: A Meta-Analysis,” aggregated results from 140 studies, examining the relationship between a firm’s financial performance and female board representation. The co-author was Corinne Post (Lehigh University).
They found that having women on boards of directors is positively related to accounting returns. This relationship is more positive in countries that have stronger shareholder protections, which the researchers say could be due to the fact that shareholder protections can motivate boards to use the varied experience, knowledge and values each member brings to the board.
The findings show that, in general, no relationship between female board representation and market performance exists. However, in countries with high gender equality, there was a positive relationship; in countries with low gender parity, a negative relationship. “Societal gender differences in human capital may influence investors’ evaluations of the future earning potential of firms that have a higher number of female board members,” according to Byron.
Kazaz et al Present First of its Kind Research on Pricing Wine Futures
In a recently accepted paper in Manufacturing & Service Operations Management, Dr. Burak Kazaz, the Laura J. and L. Douglas Meredith Professor of Teaching Excellence and associate professor of supply chain at Syracuse University’s Martin J. Whitman School of Management, and his co-authors, Dr. Tim Noparumpa (Syracuse Ph.D. ’12) and Dr. Scott Webster (Arizona State University, formerly Syracuse University), examine the impact of wine tasting experts and their reviews when it comes to selling wine before it is bottled, known as “wine futures."
Their research shows how to price wine futures, as well as what proportion of the wine should be sold in advance versus through retail chains. It demonstrates that Bordeaux grand cru wineries increase their profit by approximately 10%; they estimate that small and artisanal winemakers in the U.S. can benefit from such financial markets by improving their profits by 14-15%. This work is significant as it is perceived as the first of its kind in pricing wine futures. Earlier research thoroughly examines the pricing of bottled wine but has not explored a model for pricing wine not yet bottled.
Albring's paper on how Regulation Fair Disclosure effects Financing Decisions to appear in Management Science
Research by Susan Albring, associate professor of accounting in the Whitman School of Management at Syracuse University, has been accepted for publication by Management Science. The paper, titled “Does the Firm Information Environment Influence Financing Decisions? A Test Using Disclosure Regulation,” finds that the quality of a firm’s information environment impacts their choice between debt and equity financing within the context of Regulation Fair Disclosure (Reg FD). Co-authors are Monica Banyi (University of Virginia), Dan Dhaliwal (University of Arizona), and Raynolde Pereira (University of Missouri).
According to Susan, the goal of this work is to evaluate whether a firm's information environment impacts the choice between debt and equity financing within the context of Regulation Fair Disclosure (Reg FD), which prohibited the use of selective disclosure. The authors find that firms with high proprietary costs of public disclosure are more likely to use debt financing after Reg FD. They also evaluate changes in firm disclosure policy and find firms that adopted an expansive public disclosure policy are more likely to use equity financing. Overall, “the evidence is consistent with theory: firms with deteriorated firm information environments increase their use of less information-sensitive debt, while firms with improved information environments favor equity financing,” says Albring.
Research by Professors Brandes and Dharwadkar to Appear in the Strategic Management Journal
Research by Pamela Brandes, associate professor of management, Ravi Dharwadkar, professor of management, and SangHyun Suh, PhD (Whitman, 2009), at the Martin J. Whitman School of Management at Syracuse University, has been accepted for publication by the Strategic Management Journal. The paper, titled “I Know Something You Don’t Know! The Role of Linking Pin Directors in Monitoring and Incentive Alignment,” found that linking pin directors, those serving simultaneously on the audit and compensation committees, play an essential role in information exchange between board committees.
Using data from S&P 1500 firms, the researchers found linking pin directors are associated with lower executive compensation and influence pay mix. In studying the dynamics behind this process, they discovered that newly created linking pins improve monitoring effectiveness whereas recently dissolved linking pins decrease it. The researchers also found that linking pins are all the more important when managers make less conservative accounting choices.