Papers by Ella Mae Matsumura
Social Science Research Network, May 26, 2019
Organizations often rely on management control systems to stimulate individual creativity and org... more Organizations often rely on management control systems to stimulate individual creativity and organizational innovation. However, organizations face a serious problem using formal controls to stimulate creativity because extrinsic motivation (motivation induced by external rewards, such as monetary incentives) can sometimes crowd out intrinsic motivation (motivation linked to intrinsic satisfaction in performing a task) to be creative. Still, formal control systems are necessary to coordinate individuals’ creative activities with others, especially when many individuals work interdependently on complex and large projects. We shed light on this management control dilemma by reviewing early and recent studies and examine empirical evidence. We call for further research on how management control systems can stimulate creativity in a manner consistent with organizations’ best interests.
Chapter 1: Accounting and the Business Environment Chapter 2: Recording Business Transactions Cha... more Chapter 1: Accounting and the Business Environment Chapter 2: Recording Business Transactions Chapter 3: The Adjusting Process Chapter 4: Completing the Accounting Cycle Chapter 5: Merchandising Operations Chapter 6: Merchandise Inventory Chapter 7: Internal Control and Cash Chapter 8: Receivables Chapter 9: Plant Assets, Natural Resources, and Intangibles Chapter 10: Investments Chapter 11: Current Liabilities and Payroll Chapter 12: Long-Term Liabilities Chapter 13: Corporations Chapter 14: The Statement of Cash Flows Chapter 15: Financial Statement Analysis Chapter 16: Introduction to Managerial Accounting Chapter 17: Job Order Costing Chapter 18: Process Costing Chapter 19: Cost Management Systems: Activity-Based, Just-In-Time, and Quality Management Systems Chapter 20: Cost-Volume-Profit Analysis Chapter 21: Variable Costing Chapter 22: Master Budgets Chapter 23: Flexible Budgets and Standard Cost Systems Chapter 24: Responsibility Accounting and Performance Evaluation Chapter 25: Short-Term Business Decisions Chapter 26: Capital Investments Decisions Appendix A-2011 Green Mountain Coffee Roasters, Inc. Annual Report A-1 Appendix B-Present Value Tables B-1 Appendix C-Accounting Information Systems
18. Introduction to Managerial Accounting 19. Job Order Costing 20. Process Costing 21. Cost-Volu... more 18. Introduction to Managerial Accounting 19. Job Order Costing 20. Process Costing 21. Cost-Volume-Profit Analysis 22. Master Budgets 23. Flexible Budgets and Standard Cost Systems 24. Cost Allocation and Responsibility Accounting 25. Short-Term Business Decisions 26. Capital Investment Decisions
Journal of Management Accounting Research, 2018
We examine how suppliers' structural decisions (strategic choices regarding scale, scope, and... more We examine how suppliers' structural decisions (strategic choices regarding scale, scope, and complexity) and executional skills (drivers that support the day-to-day operations of the firm) influence its customer base concentration and, in turn, supplier performance. We investigate our research question through an in-depth study of suppliers in the apparel industry. We find that suppliers' structural decisions have an important relation to the level of a supplier's customer concentration. However, we find little evidence that the component of concentration arising from structural decisions is associated with supplier performance (both financial and operational). Instead, the favorable relation between supplier performance and suppliers' customer concentration is primarily driven by the component of concentration arising from suppliers' executional skills. Our evidence indicates that greater customer concentration in and of itself does not relate to the anticipate...
Pearson Deutschland, 2015
The purpose of this paper is to propose a comprehensive model of audit-clients’ bid-seeking choic... more The purpose of this paper is to propose a comprehensive model of audit-clients’ bid-seeking choice to solicit privately negotiated bids (i.e., one bidder) versus engaging in an auction (i.e., multiple competitive bidders) for audit services, and to investigate the outcomes of that model in terms of the likely number of bidders, audit fees, audit quality, and additional non-billed services. Investigating this issue is motivated by clients’ frequent, yet seemingly anomalous, choice to select an auditor through negotiation rather than competitive bidding (e.g., Copley and Doucet 1993; Johnstone et al. 2003), and the recently reduced number of highest-quality audit firm providers (i.e., Andersen LLP’s elimination from the market for audit services). Results from numerical examples show that equilibrium levels of service and equilibrium fees simultaneously increase with the efficiency of auditors, and there is a lower fee per unit of service as the efficiency of the auditor increases. Co...
While firm managers emphasize the importance of establishing a culture of creativity in hopes tha... more While firm managers emphasize the importance of establishing a culture of creativity in hopes that such a climate will lead to successful new products and/or services, recent literature finds creativity also promotes opportunistic behavior. Two recent experimental studies suggest two different reasons for this finding. On the one hand, recent psychological evidence shows creativity promotes individuals’ self-serving rationalizations to convince themselves that their behavior is acceptable (the “rationalization channel”). On the other hand, contemporaneous research suggests individuals in a creative environment have a preference for accepting greater risk in decision-making, which leads to self-interested behavior (the “risk-taking channel”). We complement experimental evidence by using survey and archival data to show that a creative corporate culture is positively associated with financial misconduct. In addition, our findings provide stronger support for the rationalization channe...
1. Accounting and the Business Environment 2. Recording Business Transactions 3. The Adjusting Pr... more 1. Accounting and the Business Environment 2. Recording Business Transactions 3. The Adjusting Process 4. Completing the Accounting Cycle 5. Merchandising Operations 6. Merchandise Inventory 7. Accounting Information Systems 8. Internal Control and Cash 9. Receivables 10. Plant Assets, Natural Resources, and Intangibles 11. Current Liabilities and Payroll 12. Partnerships 13. Corporations 14. Long-Term Liabilities 15. Investments 16. The Statement of Cash Flows 17. Financial Statement Analysis
The Dodd-Frank financial reforms of 2010 promised to better align risk-reward incentives by, amon... more The Dodd-Frank financial reforms of 2010 promised to better align risk-reward incentives by, among other things, reducing imprudent securitzation (i.e., sales of financial assets) and excessive executive compensation. This would, in turn, promote systemic stability. To assess whether Dodd-Frank’s elaborate rules on securitization and compensation are likely to achieve this goal, we explore the connection between the two empirically. Using a unique dataset covering 1993-2009 — the largest of its kind — we find that securitizing banks (regulated depositaries) on average paid their CEOs twice as much as non-securitizing banks, a finding that is both statistically and economically significant. By contrast, non-bank (industrial) firms that securitized actually paid their CEOs less than non-securitizers. Because securitizing banks performed no better than other firms (non-securitizing banks or industrials), we find evidence of agency cost; because bank-originated securitizations performed...
Journal of Management Accounting Research, 2017
We examine the extent to which the 2013 COSO Internal Control—Integrated Framework (ICIF) succeed... more We examine the extent to which the 2013 COSO Internal Control—Integrated Framework (ICIF) succeeds in the goal to expand its application beyond a compliance framework. We do so by mapping the points of focus in the 2013 ICIF to the principles articulated in the Levers of Control (LOC) framework advocated by Simons (1995). The analysis shows how the revision achieves partial success. This identification of areas in which the frameworks overlap promotes an integrated view of organizational control and aids assessment of the efficacy of a firm's control over its strategic and operational processes. We also examine the extent to which the 2016 COSO Enterprise Risk Management (ERM) Exposure Draft captures non-overlapping areas between the 2013 ICIF and the LOC, and highlight implications for future work in this evolving area.
Page 1. THE ACCOUNTING REVIEW Vol. 67, No. 4 October 1992 pp. 753-782 Fraud Detection: A Theoreti... more Page 1. THE ACCOUNTING REVIEW Vol. 67, No. 4 October 1992 pp. 753-782 Fraud Detection: A Theoretical Foundation Ella Mae Matsumura University of Wisconsin-Madison Robert R. Tucker University of Illinois at Chicago ...
Social Science Research Network, Feb 27, 2020
This study examines challenges to the retrospective financial evaluation of continuous improvemen... more This study examines challenges to the retrospective financial evaluation of continuous improvement (CI) activities. Through a review of the literature and active engagement with CI implementations, we identify several issues that may lead to divergence between operational and financial assessments. Out of this conflict emerges a set of concepts that we find important − the delineation of soft versus hard capacity benefits, the distinction between capacity used and capacity paid for, and the data gaps that relate to these benefits – and recognize operational improvement and financial improvement as distinct, yet interrelated, theoretical constructs. This study helps explain a series of persistent gaps in the management accounting literature: Conflict between operations and accounting managers, the divergent perspectives of Johnson and Kaplan after their publication of Relevance Lost (Johnson & Kaplan, 1987), and the need for both operational control (including detailed capacity contr...
Agency theory has been used to examine the problem of stewardship of an agent who makes decisions... more Agency theory has been used to examine the problem of stewardship of an agent who makes decisions on behalf of a principal who cannot observe the agent's actual effort. Effort i s assumed to be personally costly to expend. Therefore, i f an agent acts in his or her own interests, there may be a "moral hazard" problem, in which the agent exerts less effort than agreed upon. This dissertation examines this agency problem when the agent's effort i s multidimensional, such as when the agent controls several production processes or manages several divisions of a firm. The optimal compensation schemes derived suggest that the widely advocated salary-plus-commission scheme may not be optimal. Furthermore, the information from a l l tasks should generally be combined in a nonlinear fashion rather than used separately i n compensating a manager of several divisions, even i f the monetary outcomes are s t a t i s t i c a l l y independent. In situations where effort i s best...
Advances in Management Accounting, 2017
Abstract Purpose The paper provides a research framework for analyzing CSR issues and suggests kn... more Abstract Purpose The paper provides a research framework for analyzing CSR issues and suggests knowledge gaps that can be addressed by managerial accounting researchers. Methodology/approach The paper draws on frameworks introduced by Epstein (2008), Aguinis and Glavas (2012), and Hahn, Figge, Pinkse, and Preuss (2010). Findings Despite the potential tension between managing corporate social responsibility (CSR) performance and corporate financial performance, researchers have generally established a positive relationship between the two. However, the underlying mechanisms or processes linking CSR efforts to financial performance are not well understood. Managerial accounting researchers can help fill the knowledge gap on linkages between processes, performance measures, and incentives in achieving CSR goals. A particularly important area of potential research is how firms motivate creativity, both individually and collectively, to integrate CSR initiatives into firm processes. Originality/value The paper provides a framework for researchers starting out at the intersection of management accounting and CSR.
Do firms’ Form 10-K risk disclosures meaningfully reflect the material uncertainties they face? T... more Do firms’ Form 10-K risk disclosures meaningfully reflect the material uncertainties they face? The question is important because firms’ failure to disclose material risks may leave investors exposed to potentially significant losses. Further, investors and other stakeholders continue to raise concerns that public registrants’ 10-K filings are insufficient and boilerplate, and thus inconsistent with the requirements of Regulation S-K. We address this question with an analysis of about 3,000 climate-change risk (CCR) disclosures in 10-K filings of large public registrants over seven years. A key feature of our study is examination of users’ versus preparers’ CCR materiality judgments. Users’ judgments are proxied by the industry-based criteria for classification of CCR materiality provided by the Sustainability Accounting Standards Board’s panel of experts. Preparers’ judgments of CCR materiality are proxied by managers’ CCR disclosure choices in Form 10-K. Using cost of equity (COE)...
SSRN Electronic Journal, 2018
SSRN Electronic Journal, 2017
We examine the relation between managers' decisions whether to disclose climate-change risk (CCR)... more We examine the relation between managers' decisions whether to disclose climate-change risk (CCR) in Form 10-K and firm risk. Ambiguity about the materiality of CCR and the SEC's inconsistent enforcement of CCR disclosures cause uncertainty about whether disclosing CCR is mandatory or voluntary. We hand-collect data over a seven-year period from about 3,000 Form 10-K filings of S&P 500 firms on whether they disclosed CCR. We use SASB's Materiality Map ™ to proxy for report users' judgments of the materiality of CCR. We find that the cost of equity (COE) of disclosing firms is 21.3 bps lower than the COE of non-disclosing firms. More importantly, we find that for firms where report users judge CCR as material, the COE of disclosers is 49.1 bps lower than that of non-disclosers. In contrast, we find no association between disclosing CCR and COE for firms where report users judge CCR as not material.
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Papers by Ella Mae Matsumura