Do Accounting Standards Matter for Productivity?

Banker, Rajiv D.; Huang, Rong; Li, Yinghua; Zhao, Sha

doi:10.1111/poms.13257

Cited by 11 publications

(4 citation statements)

References 60 publications

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“…Measuring innovation in terms of operational efficiency can be a good proxy for evaluating the outcome of firm innovation. Recently, Banker et al [63] (2020) argued that the International Financial Reporting Standards (IFRS) accounting regime increases productivity by improving information environments and promoting internal resource allocation decisions. Korea is one of the countries that has adopted IFRS since 2011.…”

Section: Discussionmentioning

confidence: 99%

The Value Relevance of Operational Innovation: Insights from the Perspective of Firm Life Cycle

Ryu

Won

2022

Sustainability

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This study investigates the effect of innovation on firm value at each stage of the firm life cycle (FLC): growth, mature and decline stages. Innovation involves improving the yield of input resources and creating new revenue sources. Thus, we define operational innovation as overall efficiency in business operations and divide the operational innovation into technical innovation and scale innovation. We adopt data envelopment analysis to measure a firm’s operational innovation and Dickinson’s method to determine the firm’s life cycle stage. The findings show that the effect of operational innovation on firm value differs among different stages of the firm life cycle, indicating that firms seeking value maximisation should improve the performance of technical innovation at the growth stage and that of scale innovation at the decline stage. In addition, technical innovation is positively related to the firm’s future value at every stage of its life cycle, signifying that the firm’s sustainability is associated with technical innovation rather than scale innovation. This study contributes to the existing literature by presenting the value relevance of the operational innovation that firms should pursue in each life cycle stage.

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Section: Discussionmentioning

confidence: 99%

The Value Relevance of Operational Innovation: Insights from the Perspective of Firm Life Cycle

Ryu

Won

2022

Sustainability

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“…Lastly, using textual data from public disclosures, we join a growing stream of empirical studies in operations management (Banker et al., 2021; Hendricks & Singhal, 2005; Huo et al., 2014; Ma et al., 2021; Srinivasan & Swink, 2018), respond to a call for adequate use of empirical methodologies to address a methodological gap in the literature (Fisher et al., 2020; Sodhi et al., 2012), and also add novel insights to recent research on the real effects of textual analysis on operations and supply chain management (Feng & Shanthikumar, 2018; Guha & Kumar, 2018; Lee, 2018). By deriving new features relevant in the context of supply chain from corporate disclosure filings, we contribute to the burgeoning body of operations management research which constructs measures from textual data (Abrahams et al., 2015), and more specifically from 10‐K (Ak & Patatoukas, 2016; Leung & Sun, 2021; Yiu et al., 2020).…”

Section: Conclusion Managerial Implications and Future Researchmentioning

confidence: 99%

Customers’ managerial expectations and suppliers’ asymmetric cost management

Liang

Cavusoglu

2023

Production and Operations Management

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This paper investigates how managers in the upstream firm (i.e., supplier) adjust their allocations of cost resources in response to managerial expectations of the downstream firms (i.e., customers) on the future demand and prospects. We conduct an empirical analysis to examine the impact of the tone of customers’ forward‐looking disclosures (FLDs) contained in the Management Discussion and Analysis section of 10‐K filings on suppliers’ asymmetric cost behaviors, characterizing costs decreasing less for sales fall than increasing for equivalent sales rise (i.e., “cost stickiness”). We show that the degree of suppliers’ asymmetric cost management is positively associated with their customers’ tone of FLDs. Moreover, such an association is stronger when the suppliers produce more unique products for their major customers. Our inferences remain robust after controlling for the strategic disclosure behavior of the customer firms, ruling out an alternative mechanism of suppliers’ own managerial expectations and managerial empire‐building incentives. Lastly, using a decision made by the U.S. Supreme Court in 2005 as a quasi‐natural experiment setting, we show that the effect of customers’ tone of FLDs on suppliers’ cost stickiness becomes stronger when FLDs are more informative. To the best of our knowledge, this paper is the first to introduce cost stickiness in the operations management context to capture management's operational decision intervention regarding resource allocation. We also contribute to information sharing literature by highlighting the importance of channels other than the traditional explicit information sharing channel in obtaining demand‐relevant information in supply chains.

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“…Specifically, it examines how “producers' operating environments can influence productivity levels and growth” (Syverson, 2011, p. 348). For example, the second stream studies how regulations, productivity spillovers, competition, trade, and market structures affect firm productivity (Banker et al., 2021; Col et al., 2018; Natividad, 2014; Serpa & Krishnan, 2018). My work pertains to the second group of research because it examines how warfare affects firm productivity, particularly how civil war affects the productivity of service and nonservice firms.…”

Section: Related Literaturementioning

confidence: 99%

How does warfare affect firms' productivity?

Jola‐Sanchez

2022

Production and Operations Management

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Warfare afflicts millions and creates unparalleled operational challenges in the developing world. With data from war‐torn Colombia, I examine the effects of civil war on firms' total factor productivity (TFP) using propensity score and conflict hotspot models. I find that warfare increases TFP in service firms, such as public administration and defense, by up to 12.68%, whereas it decreases TFP in manufacturing and other nonservice companies by up to 3.64% a year after a violent episode occurs. This effect stems from intellectual capital growth and service firms' ability to create value from customer input.

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Do Accounting Standards Matter for Productivity?

Cited by 11 publications

References 60 publications

The Value Relevance of Operational Innovation: Insights from the Perspective of Firm Life Cycle

The Value Relevance of Operational Innovation: Insights from the Perspective of Firm Life Cycle

Customers’ managerial expectations and suppliers’ asymmetric cost management

How does warfare affect firms' productivity?

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