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The objective of this research is to examine how the capital market responds when a firm announces that it plans to implement an enterprise resource planning (ERP) system. This is the first study to investigate the extent to which ERP systems are deemed to add market value to business organizations. Study findings indicate an overall positive reaction to initial ERP announcements. Further analyses suggest that the reaction is most positive for small/healthy firms. Finally, the market response to larger ERP vendors, as reflected by PeopleSoft and SAP, is significantly more positive than to smaller ERP vendors.

The objective of this research project is to examine the impact of information systems (IS) outsourcing announcements on the market value of contract-granting firms. This study is important to researchers, professionals, and policy makers as it provides empirical evidence from the capital market that outsourcing is considered to be a value-added business exchange for contract-granting firms. Research findings indicate positive and significant market value gains for smaller vs. larger firms and service vs. nonservice industry firms. The significant effects observed in this study are explained by the existence of information asymmetry in the capital market for smaller firms and service firms, and by the relatively higher investment made by service firms in information technology. This study contributes to accounting research by examining the importance of providing financial report users with nonfinancial forward-looking information concerning management's strategic decisions, such as the decision to outsource IS functions. Additionally, the current study complements and extends extant IS outsourcing research, as it integrates efficient market and capital market theory into ongoing investigations aimed at identifying the underlying determinants of IS outsourcing decisions.

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We examine whether information in footnotes might lack reliability because auditors permit more misstatement in disclosed, as opposed to recognized, amounts. In both the stock-compensation and lease settings, audit partners require greater correction of misstatements in recognized amounts than in the equivalent disclosed amounts. Debriefing questions indicate that the partners make these decisions knowingly, even though they expect greater client resistance to correcting recognized amounts, because they view recognized amounts as more material. Partners also spend more time on correction decisions for recognized information. While prior literature suggests that amounts are often relegated to footnotes because they are less reliable, our results suggest that the actual choice to disclose versus recognize can also reduce information reliability. These results have implications for the interpretation of prior research on the reliability of recognized and disclosed numbers, for * Johnson Graduate School of Management, Cornell University; †Accountancy Department, Bentley College. We thank Phil Berger, Rob Bloomfield, Shana Clor-Proell, Tom Dyckman, Brooke Elliott, Frank Hodge, Susan Krische, Marlys Lipe, Anne Magro, Mark Peecher, Steve Smith, Jay Thibodeau, an anonymous reviewer, and participants at workshops at Catholic University of Leuven, Cornell University, Drexel University, University of Illinois, University of Iowa, Maastricht University, Oklahoma University, University of Washington, and Washington University for comments. We thank Cornell's Johnson School and Bentley College for financial support, and we thank the Big 4 audit partners who participated in our experiments. R E T R A C T E D and Lease Information R E T R A C T E D and Lease Information R E T R A C T E DWe examine whether information in footnotes might lack reliability because auditors permit more misstatement in disclosed, as opposed to recognized, R E T R A C T E Dauditors permit more misstatement in disclosed, as opposed to recognized, amounts. In both the stock-compensation and lease settings, audit partners R E T R A C T E Damounts. In both the stock-compensation and lease settings, audit partners require greater correction of misstatements in recognized amounts than in R E T R A C T E Drequire greater correction of misstatements in recognized amounts than in the equivalent disclosed amounts. Debriefing questions indicate that the part- R E T R A C T E Dthe equivalent disclosed amounts. Debriefing questions indicate that the partners make these decisions knowingly, even though they expect greater client R E T R A C T E Dners make these decisions knowingly, even though they expect greater client resistance to correcting recognized amounts, because they view recognized R E T R A C T E D resistance to correcting recognized amounts, because they view recognized amounts as more material. Partners also spend more time on correction deci- R E T R A C T E Damounts as more material. Partners also spend more time on correction decisions for...

Research findings suggest that users' preexperiment level of involvement with and attitude toward the present system are positively associated with their desire to participate in the development of the new system. Study results also indicate that users' a priori self-efficacy beliefs regarding their perceived abifity to effectively contribute to the development process are positively related to desired participation. Pre-to post-experiment gains in psychological and behavioral variables are next assessed. In the instrumental voice condition, user involvement, user attitude, and performance gains are significantly highest. User attitude and involvement gains are significantly higher in the non-instrumental voice condition than in the no voice condition; however, gains in user performance are not significantly different between these treatment conditions. Research findings indicate that user participation can be effective, particularly when users perceive a noticeable degree of instrumental control over the decision outcome.

We examine whether analysts' incentives to maintain good relationships with management contribute to the optimistic/pessimistic within-period time trend in analysts' forecasts. In our experiments, 81 experienced sell-side analysts from two brokerage firms predict earnings based on historical information and management guidance. Analysts' forecasts exhibit an optimistic/pessimistic pattern across the two timing conditions (early and late in the quarter), and the effect is significantly stronger when the analysts have a good relationship with management than when their only incentive is to be accurate. Debriefing results indicate that analysts are aware of this pattern of forecasts, and believe that this benefits their future relationships with management and with brokerage clients. The analysts most frequently cite favored conference call participation and information access when describing benefits from maintaining good relationships with management. Our results suggest the following: The optimistic/pessimistic pattern in forecasts is in part a conscious response to relationship incentives, information access is perceived to be a major benefit of management relationships, and recent regulatory changes may have lessened but have not eliminated this conflict of interest source.