This study examines the impact of cash conversion cycle (CCC) on cost of equity (COE). A CCC measures the time it takes for a firm to convert its inventory into cash flows from sales. A CCC is one of several metrics that evaluates a firm's operational risk, and this paper investigates whether CCC affects COE. Using 29,248 firm-year observations that span 1984-2018, we find that firms with longer CCC have higher equity financing costs. Furthermore, we observe significant moderating effects of product market conditions and information asymmetry. The positive relationship becomes weaker (stronger) with greater competition and demand uncertainty (information asymmetry). Our findings provide useful insights for managers as our results reveal that investors recognize CCC as a value-relevant signal in determining COE.

We decompose the total value loss around firms’ announcements of financial restatements into components arising from investors’ revisions in cash flows and discount rates. First, relative to population benchmarks, restatements represent circumstances in which the cash flow component becomes more important in explaining valuations. While we find significant contributions from both sources, with the cash flow component explaining more than 33% of the variation in stock returns surrounding restatement announcements, this component explains only 13% to 22% in comparable non-restating firms. When restatements are caused by underlying financial fraud, the discount rate impact becomes more important, explaining about 88% of return variation. On the contrary, the cash flow impact is relatively larger for firms with higher earnings persistence or restatements associated with errors. Our decomposition of the value loss helps explain returns in the post-announcement period. Firms with a higher relative discount rate impact experience a significant downward stock price drift after the initial announcement-related price decline. For firms with a higher relative cash flow impact, the evidence suggests the initial impact of the restatement announcement is more complete with no subsequent drift pattern. Our findings close gaps in the evidence on financial restatements and extend the literature on the drivers of stock price movements.

This paper examines the value relevance of corporate environmental performance (CEP) using individual environmental performance indicators and multidimensional constructs derived from Trumpp et al. (2015). Accounting information can be described as ‘value-relevant’ when the information in financial statements has the ability to explain firm value. In recent years, stakeholders such as governments, public institutions, firms, customers, and local communities have recognized the importance of corporate environmental performance. Thus, one of the main research questions is whether corporate environmental performance is value relevant. The empirical results in this paper indicate that only a few individual environmental performance indicator variables are value relevant, while most environmental performance constructs have a significant impact on firm value. Our findings suggest that firm value significantly increases with improved environmental management or operational performance. In addition, environmental performance indicators and environmental performance constructs have a significant impact on firms in environmentally sensitive industries, confirming the notion of higher value relevance of environmental information for firms in these industries. This study contributes to prior literature by carrying out a comprehensive analysis on the multidimensional nature of corporate environmental performance and its impact on value relevance. This paper also reconciles extant literature on the construct validity of environmental performance indicators and environmental performance constructs by formulating standardized composite measures of CEP following Larker et al. (2007).

This study examines how the equity compensation of chief executive officers (CEO) and that of outside directors affect management earnings forecasts (MFs) and the relationship between these two positions in terms of compensation. Our evidence reveals that CEO (director) equity compensation is positively associated with MF likelihood, frequency, and accuracy when director (CEO) equity compensation is not high. However, an increase in director (CEO) equity compensation is not effective in improving disclosure quality when the level of CEO (director) equity compensation is already high. These results suggest that the two incentive mechanisms act as substitutes when both are intensively used in the context of MF disclosure.

In business facilities such as theaters, restaurants, stadiums, and etc., anecdotal evidences suggest that waiting lines for women's restrooms are longer than those for men's. Respectively, there have been growing concerns on ensuring restrooms in business facilities to be equally convenient for both women and men. This issue not only relates to gender equality, but also relates to business performance, since restroom experience directly affects performance efficiency (e.g., revenues, repeat sales, asset turnover, service times, and etc.). Nonetheless, current codes and legislations for designing restrooms in business facilities are not based on objective analyses but on the survey of experts that may be male biased. In this study, we develop a quantitative model using queueing theory and simulations to evaluate the waiting time for restrooms. Using our model, we compare the waiting times between women and men to examine if the current codes and legislations provide equal access. Our analysis reveals that the current standard specified by the Uniform Plumbing Code (UPC) still fails to achieve equal access. The methods demonstrated in this study may serve as a basis for design of restrooms in business facilities and improve both gender equality and performance efficiency in business facilities.

This study attempts to estimate the economic costs and benefits of the addictive digital game industry. Addiction to digital games induces economic costs such as increase in crime, facilities investments for curbing addiction, increase in counselling costs and other welfare losses. As a case study, we investigate the digital game industry in South Korea which is known to have one of the highest rates of game addiction. According to our calculations, the annual cost of game addiction is estimated to be approximately $3.5B while the annual benefit is approximately $24.3B ($3.7B for addicted user market). The proportion of the total costs to total benefits from the game industry is an alarming 14% (95% for addicted user market). We offer some policy recommendations.

This study investigates the association between information asymmetry and the accrual anomaly. Prior literature argues that earnings management is pronounced among firms with high information asymmetry and that earnings management is the main phenomenon behind the accrual anomaly. Using 43205 firm-year observations from the CRSP/Compustat Merged (CCM) universe spanning 1975-2012, we provide empirical evidence that the accrual anomaly is generally concentrated in firms with higher information asymmetry. Additional analysis reveals that, investors' greater overestimation mainly takes a place in firms with negative accruals, rather than positive accruals, due to investors' risk-aversion tendencies.

This study examines whether financial expertise of audit committees affects the quality of textual information conveyed through the management discussion and analysis (MD&A) section of corporate annual reports. Our empirical results reveal that audit committee financial expertise, particularly that which is directly connected to accounting, curtails managerial opportunism in the form of upward management of MD&A tone. In addition, we find that the effect of financial expertise is more pronounced when the audit committee is more powerful or when audit committee members face higher litigation risks. Overall, this study highlights the importance of audit committee financial expertise in improving the quality of qualitative disclosures.

This study investigates the relationship between purpose and meaning in life and job satisfaction among the aged. This issue is quite timely since there has been an increase in the employment rate of senior citizens in Asian countries due to the insufficient working-age population. We survey 228 seniors who are older than 55 years in South Korea. Our results suggest that purpose and meaning in life are highly associated with overall job satisfaction among the aged. We also find that vocation mediates the relationship between purpose and meaning in life and job satisfaction.

According to our data, 38.5 % of S&P 1500 firms have at least one professor on their boards. Given the lack of research examining the roles and effects of academic faculty as members of boards of directors (professor–directors) on corporate outcomes, this study investigates whether firms with professor–directors are more likely to exhibit higher corporate social responsibility (CSR) performance ratings. Results indicate that firms with professor–directors do exhibit higher CSR performance ratings than those without. However, the influence of professor–directors on firm CSR performance ratings depends on their academic background—the positive association between the presence of professor–directors and firm CSR performance ratings is significant only when their academic background is specialized (e.g., science, engineering, and medicine). Finally, this positive association weakens when professor–directors hold an administrative position at their universities.

Nanoscience is one of the fastest growing and most impactful fields in global scientific research. In order to support the continued development of nanoscience and nanotechnology, it is important that nanoscience education be a top priority to accelerate research excellence. In this Nano Focus, we discuss current approaches to nanoscience training and propose a learning design framework to promote the next generation of nanoscientists. Prominent among these are the abilities to communicate and to work across and between conventional disciplines. While the United States has played leading roles in initiating these developments, the global landscape of nanoscience calls for worldwide attention to this educational need. Recent developments in emerging nanoscience nations are also discussed. Photo credit: Jae Hyeon Park.

This paper develops a tractable model of economic growth in which heterogeneous households produce capital a la Romer (1986). The paper demonstrates that depending on its varying degrees of persistence, productivity heterogeneity dictates economic growth. A regression analysis based upon a reduced-form version of the model shows that the persistence of human capital is the driving force behind the positive effects of productivity dispersion on economic growth

Nanomedicine enables unique diagnostic and therapeutic capabilities to tackle problems in clinical medicine. As multifunctional agents with programmable properties, nanomedicines are poised to revolutionize treatment strategies. This promise is especially evident for infectious disease applications, for which the continual emergence, re-emergence, and evolution of pathogens has proven difficult to counter by conventional approaches. Herein, a conceptual framework is presented that envisions possible routes for the development of nanomedicines as superior broad-spectrum antiviral agents against enveloped viruses. With lipid membranes playing a critical role in the life cycle of medically important enveloped viruses including HIV, influenza, and Ebola, cellular and viral membrane interfaces are ideal elements to incorporate into broad-spectrum antiviral strategies. Examples are presented that demonstrate how nanomedicine strategies inspired by lipid membranes enable a wide range of targeting opportunities to gain control of critical stages in the virus life cycle through either direct or indirect approaches involving membrane interfaces. The capabilities can be realized by enabling new inhibitory functions or improving the function of existing drugs through nanotechnology-enabled solutions. With these exciting opportunities, due attention is also given to the clinical translation of nanomedicines for infectious disease applications, especially as pharmaceutical drug-discovery pipelines demand new routes of innovation.

Managers sometimes manage earnings upward (i.e., engage in earnings management) or guide analyst forecasts downward (i.e., engage in expectation management) to meet or beat analysts earnings forecasts (MBE). Our results suggest that certain management behavior to achieve MBE is highly associated with firms level of accounting conservatism. In detail, we find that (1) the level of accounting conservatism decreases as firms achieve MBE in consecutive years, (2) engaging in earnings management to achieve MBE lowers firms level of conservatism, and (3) firms that achieve MBE in consecutive years (CMBE firms) whose credit rating had been elevated practice less conservative accounting implying that the MBE string itself might act as a substitute for conservative accounting in lowering firms cost of debt.

This paper examines earnings management dynamics in the airline industry during the airline industry deregulation of 1978. We expect that earnings management would increase after deregulation, since industry deregulation generally increases managerial discretion, whereas internal corporate governance systems are sluggish in adapting to newly changed environments. As corporate governance structures become more effective in tempering highly discretionary managers, and as capital markets learn more about how to design better management incentive systems, managers’ incentives and capacity to engage in earnings management will diminish. Based on industry data, we find that the magnitude of absolute values of discretionary accruals increase significantly in the post-deregulation period. Managers in the airline industry were inclined to engage in income increasing earnings management after deregulation. However, the increased level of earnings management then decreased to return close to the level seen during the regulation period. The findings support the predicted deregulation impact on earnings management dynamics.

This paper examines earnings management dynamics in the airline industry around the industry deregulation of 1978. The 'corporate-governance-dynamics' hypothesis (Kole and Lehn, 1999) suggests that there exists a time lag of the internal corporate governance systems in adapting to new industry environments. Since industry deregulations expand managerial discretion rapidly whereas internal corporate governance systems are sluggish at adapting to the newly changed environment, the magnitude of earnings management is expected to increase in the post-deregulation period. As corporate governance structures become more effective in tempering highly discretionary managers and as capital markets learn more about how to design better management incentive systems, managers' incentives and capacity to distort their earnings report will diminish. From the industry data, we find that the magnitude of discretionary accruals increased significantly in the post-deregulation period. Managers in the airline industry were also inclined to overstate their earnings after deregulation. The increased level of discretionary accruals of those airline companies, however, dwindled afterwards close to the level of the regulation period. Our findings support the predicted deregulation impact on earnings management dynamics.

Effective supply chain management is a key differen tiator and source of competitive advantage across s everal industries, yet many rapid advances in supply chain and logistics have not been well adopted in health care industry, in particular by health care providers. Healthcare providers currently spend approximately 40% of tota l cost towards procuring, managing and distributing supplies and m edical devices. Supply chain and related activities constitute the second largest expenditure for healthcare providers . Among the various stakeholders of healthcare supp ly chain, Group Purchasing Organization (GPO) are a dominant force and act as an necessary intermediary between the manufacturer, distributors, solution providers and the provider. Most hospitals in the United States h ave affiliation with one or more GPOs, making GPOs an important stakeholder in healthcare supply chains. GPOs aggregat e purchasing volume based on demand from several healthcare providers to negotiate quantity discount fro m manufacturers and offer a variety of additional ser vices such as vendor selection; product portfolio m anagement, ecommerce, contracting, data and information service s that help improve supply chain performance for pr oviders. In this paper we discuss the value of leveraging GPO s ervices by healthcare providers to enhance their su pply chain.