CMA BAREC - Funded Projects

Goodman School of Business

CMA BAREC - Funded Projects

Internal Control over Financial Reporting and the Cost of Voluntary Auditor Attestation under Section 404 (b) of Sarbanes-Oxley Act
Dr. Fayez A. Elayan; Dr. Parunchana Pacharn; Dr. Jingyu (Jennifer) Li

A number of cross-listed Canadian non-accelerated filers have chosen to voluntarily comply with Sarbanes-Oxley Act Section 404 (b). This project addresses the question of what motivates these companies to voluntarily comply despite the allegedly high cost of compliance. More specifically, this study develops a signaling model to explain what motivates cross-listed Canadian firms to voluntarily comply with Section 404 (b), and examine the determinants and characteristics of voluntary compliers.

Y Works: Generational Differences in Workplace Values
Dr. Darlene Bay and Shane Nicholls (Concordia University)

Generation Y (Gen Y), the cohort of individuals born between 1980 and 2000 (Eisner, 2005; Lowe, Levitt, & Wilson, 2008) will increasingly be filling job openings created as the Baby Boomers begin to retire in large numbers (Stendardi, 2005). Because Gen Y holds significantly different values than previous generations (Twenge, Campbell, Hoffman, & Lance, 2010), managers, including partners and human resource professionals in accounting firms, are finding it difficult to supervise, motivate, and interact with members of this new generation (Streeter, 2004). Practitioner journals have recently published articles offering advice on how to attract, motivate and retain the new generation of accountants (e.g., Lam and MacGregor, 2008; Yeaton, 2008). Deloitte has appointed a national director of next-generational initiatives, whose charge is to gather and disseminate information about the new generation and how to best meet the challenges they represent (Kranz, 2009). International accounting bodies and large consulting firms have commissioned reports about Gen Y, intended to help accounting firms meet the challenge of the new generation workers (Lyon, et al. 2009). KPMG now offers five weeks of vacation after one year of employment (100 Best, 2008), which has been seen as the result of attempting to adapt to work values of Gen Y (Twenge et al., 2010). This study investigates two potential impacts of Gen Y on the profession of accounting: whether the strong preference of Gen Y for work-life balance will result in fewer average hours worked and whether the sense of entitlement of Gen Y will result in expectations of higher salaries that accounting firms will be forced to meet.

Incentive Contracts in Periods of Environmental Uncertainty
Dr. Leslie Berger; Dr. James Wainberg (University of Waterloo); Dr. Alan Webb (University of Waterloo)

Environmental uncertainty arises when events that create opportunities for and threats to an organization are difficult for employees within the organization to predict (Swamidass and Newell 1987; Milliken 1987; Hirst 1987). One challenge for firms operating in an uncertain environment is selecting the most effective incentive scheme for their employees (Prendergast 2000). Recent performance measurement research identifies two different incentive schemes that may be used in this setting: a subjective or a relative performance incentive scheme. Although recent research documents several strengths and weaknesses of both subjective and relative performance incentive schemes, it is currently unclear which incentive scheme more effectively influences employee performance in uncertain environments. We will address this unresolved issue by comparing the degree to which each incentive scheme motivates desirable employee performance (e.g., decisions that maximize the organization’s cumulative net income) in a setting of high environmental uncertainty.

How does management accounting education impact graduates’ career success?
Dr. Alexei Nikitkov

We like to think of “education” and “professional success” as a “cause-and-effect” relationship. However, if we consider the breadth of a university education, we are likely to find an array of experiences that influence or are consistently linked to graduates’ career advancement. The objective of this study is to evaluate how management accounting education links to several metrics of accounting graduates success and to inform accounting educators about this set of success drivers. Management accounting education (independent variables) is captured through traditional indicators: classes taken, marks in these classes, classes dropped, classes repeated, program of study, major and minor academic average, honours standing, and demographic data. Success (dependent variables) is represented by salary level, company standing, tenure, training and skills development, promotions, and occupational self-efficacy. Use of websites such as Facebook, Google, Twitter,, LinkedIn, and will facilitate data collection.

Honesty in Managerial Reporting: Collusion and Norms
Dr. Darlene Bay; Dr. Parunchana Pacharn; Nadharatch (Patrick) Ounlert, MACC

Decentralized firms experience significant agency problems in their budgeting decisions. Subordinates with private information about the costs of or returns on projects may behave opportunistically, manipulating reports for their personal gain. Prior studies have proposed various mechanisms (such as a hurdle rate contract or relative performance contract) to achieve efficient truth-inducing equilibria (Antle and Eppen 1985, Antle and Fellingham 1990, Arya et al. 1996). However, many experimental studies have shown that individuals may not behave as opportunistically as predicted by the standard agency theory (Evans et al. 2001, Hannan et al. 2006, and Rankin et al. 2008). These studies suggest that some individuals prefer to report honestly or in a way to achieve “fair” wealth distribution, rather than to maximize their financial payoff. Our study examines a budgeting process in a multi-agent setting, where a relative performance contract is shown theoretically to be optimal. We test the efficiency of the budgeting process under: 1) a trust contract where the managers are funded as requested, and 2) relative performance contracts derived from standard agency theory. Under each contract, we test whether individuals express preferences to report honestly and whether an opportunity to collude and/or organization norms affect their reporting behaviours.

The Role of Women on Canadian Boards of Directors 
Dr. Paul Dunn

Boardroom dynamics is a topic of keen interest to accountants.  CMA Management often has articles on this and in 2005 had a special feature on women in the boardroom (Colman, 2005).  I have two research papers on the role of women on Canadian boards of directors.  “Female Appointments to All Male Boards of Directors: Breaking the Gender Barrier” examines the human capital characteristics of women who are appointed to men only boards of directors.  This paper was presented at the 2008 Academy of Management annual conference.  The other paper is on “The Utilization of New Female Corporate Directors on Board Committees”.  It examines whether women have power on boards of directors or are appointed as tokens.  Power and tokenism are proxied by their board committee membership.  This paper was presented at the 2008 Society for Business Ethics annual conference as well as the 2008 International Conference for Advances in Management. Both papers were well received.  However, the studies would be improved if I could compare the sample of 193 women with a sample of 193 men who were appointed to boards during the same time periods. This project extends these prior studies by comparing the sample of women with a comparable sample of men.

Emotional Intelligence Tests: Can They Be Faked?
Dr. Darlene Bay; Dr. Gail Lynn Cook; Shane Nicholls, MSc student; Matt Wegener, MSc student

Emotional Intelligence is currently being touted as important to success in the workplace as well as in educational institutions.  In the business realm, it has been claimed that emotional intelligence is a more important determinant of success than either technical expertise or cognitive ability (Goleman, 1995). In light of this claim, some employers have begun to use emotional intelligence tests in the hiring process.  These instruments are relatively new and their reliability and validity have been questioned by researchers.  Our study seeks to determine if students can influence the results of an emotional intelligence test by answering in such as way as to appear to be the type of person fitting a job description.  In addition, we investigate whether an ability-based instrument (the MSCEIT) is more difficult to systematically fake than a self-report instrument (EQ-i).

An Investigation into Shareholder Resolutions
Dr. Paul Dunn

Shareholder resolutions tend to restrict managerial freedom, requiring more disclosure and transparency, a larger voice for shareholders, and a greater concern for other non-shareholder stakeholders.  There has been increased interest in shareholder resolutions (Monks et al., 2004), especially with respect to the voting pattern (O’Neill & Cook, 2009) and voting success (Morgan & Wolf, 2007) of these resolutions.  However, not all shareholder resolutions go to a vote at the annual general meeting.  Some are withdrawn, while others are withdrawn after the issue is negotiated with management.  The purpose of this research proposal is to use institutional theory to develop testable hypothesizes concerning the factors that contribute to firms adopting any one of three strategies in response to shareholder resolutions: having it voted on, having it withdrawn, or having it withdrawn after the issues is negotiated.

Effect of Continuous Preparation v. Cramming on Student Marks
Dr. Darlene Bay, Dr. Pacharn, Dr. Gail Lynn Cook

Accounting education has been characterized as relying too much on traditional styles of education and has been criticized for failing to develop the “softer” skills of the students (Albrecht and Sack, 2000).  Technical skills (e.g., functional competencies, content knowledge) by themselves are no longer sufficient to help our students be successful—they must also develop enabling competencies such as problem solving and decision making, leadership and group dynamics, professionalism and ethical behavior, and communication (The CMA Competency Map, June 2007) and a variety of other skills that cannot be learned from reading books or taking multiple choice tests.

Active learning techniques have the potential to increase the ability of accounting education to foster these softer skills.  To the extent that active learning methods are demonstrably successful and the results can be communicated to other educators, the benefits to accounting education, accounting students and the profession will increase.  

Our project examines the impact of a class participation requirement (i.e., oral communication; problem solving and decision making) in a cost accounting class.  In the course of analysis of data for an unrelated project, we found some evidence that students who participate actively in class perform better on a technically-oriented, content knowledge exam.   We have designed the current study to replicate this result and to analyze potential reasons for the effect.  We hypothesize that class participation increases the ability of the students to retain the knowledge they are discussing, thus improving performance on the exam.