FEDERATION OF SCHOOLS OF ACCOUNTANCYDELOITTE

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FEDERATION OF SCHOOLS OF ACCOUNTANCY/DELOITTE
TOUCHEFACULTY CONSORTIUM

• CORPORATE GOVERNANCE SYNERGIES BETWEEN
  RESEARCH AND TEACHING
• Ganesh Krishnamoorthy
• Associate Professor
• Northeastern University
• May 17, 2003

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CORPORATE GOVERNANCE SYNERGIES BETWEEN RESEARCH
AND TEACHING

• We now have a significant body of knowledge from
  prior research tells us, among other things,
  about
• How corporate governance impacts (or is
  associated with) financial reporting quality
• How corporate governance affects the assurance
  provided by the external audit function
• What makes boards and audit committees effective
  in fulfilling their financial oversight
  responsibilities

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CORPORATE GOVERNANCE SYNERGIES BETWEEN RESEARCH
AND TEACHING

• Where and how are issues related to corporate
  governance addressed in the accounting
  curriculum?
• No systematic evidence (that I could find).
• An informal survey of accounting faculty at
  Northeastern University reveals that the coverage
  of corporate governance issues in most courses
  is ad-hoc and uses few structured pedagogical
  approaches such as readings, cases, etc.
• Is there adequate coverage in textbooks?
• Few instructional cases in Issues in Accounting
  Education.

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CORPORATE GOVERNANCE SYNERGIES BETWEEN RESEARCH
AND TEACHING

• Some opportunities
• Integration through cases
• Experience with one case drawn from a research
  project
• Assignments and Exercises in Text Books (or as
  additional material)
• Guest speakers drawn from corporate boards and
  audit committees
• Role playing exercises, especially in graduate
  courses
• Greater integration of governance research in
  courses (especially graduate and executive MBA
  type programs)
• Graduate courses and Ph.D. seminars focused on
  governance

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CORPORATE GOVERNANCE SYNERGIES BETWEEN RESEARCH
AND TEACHING

• Current Research (with Arnie Wright Jeff Cohen
  at Boston College)
• Does the type (agency and resource
  dependence) and strength of the corporate board
  impact auditors
• 1. Program planning (audit scope) judgments
• 2. Inventory obsolescence and valuation
  judgments and
• 3. Assessments about the audit committees role
  in helping resolve potential disagreements with
  the management?

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CORPORATE GOVERNANCE SYNERGIES BETWEEN RESEARCH
AND TEACHING

• Case used in the research
• Realistic case drawn from the SEC filings of a
  real firm where theres an inventory
  obsolescence/salability issue.
• Pilot and post-experimental tests were conducted
  to check the realism of the case.
• Instructional Case
• Dynamic Data Corporate Governance and the
  Quality of Financial Reporting
• Designed for use in a financial reporting,
  auditing, or a management control systems course.

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CORPORATE GOVERNANCE SYNERGIES BETWEEN RESEARCH
AND TEACHING

• Major learning objectives are to provide students
  with an understanding of
• The actors involved in corporate governance and
  how they affect the particular financial
  reporting issue (inventory valuation) at hand.
• Factors impacting the effectiveness of the board
  of directors and the audit committee in
  fulfilling their financial oversight
  responsibilities.
• The agency and resource dependence roles of
  the board.
• The current regulatory and legal environment
  affecting governance.
• The ethical dilemmas that management may face and
  the role of the governance agents.
• Governance considerations when dealing with a
  multinational corporation/client.

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CORPORATE GOVERNANCE SYNERGIES BETWEEN RESEARCH
AND TEACHING

• Additional areas where cases and other
  instructional resources can be particularly
  useful
• Assessing the effectiveness of governance
  mechanisms in an organization.
• Governance mechanisms and their role in detecting
  or preventing fraud and deterring earnings
  management.
• Interaction among actors in the corporate
  governance mosaic and the resulting impact on
  financial reporting quality.
• Audit committees and their role in enhancing
  auditor independence.
• The role of governance mechanisms, especially
  audit committees, in helping resolve
  disagreements between the auditor and the
  management.
• Evaluation of governance in audit client
  acceptance/continuation decisions.
• The impact of governance factors in the audit
  process.