Browsing by Author "Warsame, Hussein A."

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    An empirical investigation on the impact of executive stock options on firm valuation
    (2006) Akindayomi, Akinloye; Warsame, Hussein A.
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    Financial Reporting Neutrality, Corporate Tax Planning, and the Role of Corporate Transparency
    (2023-06) Jafri, Syed Rahat Ali; Warsame, Hussein A.; Anderson, Mark C.; Srivastava, Anup
    This Ph.D. thesis investigates the complex interplay between accounting neutrality, corporate governance, corporate tax planning, and corporate transparency. The thesis is composed of three empirical studies that examine various aspects of this relationship. In the first study, I propose an empirical measure of neutrality and examine a long-term trend in corporate reporting neutrality around the FASB's emphasis on neutrality in 2010. The results demonstrate a significant increase in neutrality and a decrease in biases after 2010, indicating the effectiveness of regulatory efforts to promote accounting neutrality. In the second study, I examine the relationship between tax aggressiveness and corporate transparency, using eXtensible Business Reporting Language (XBRL) avoidance. Furthermore, I explore the underlying managerial incentives for tax planning and corporate transparency decisions by examining moderating effects of governance quality on this relationship. I find that tax-aggressive companies avoid XBRL to mitigate the risk of detection by the Internal Revenue Service (IRS). Moreover, shareholders’ value creation, not managerial diversion, is the primary managerial incentive behind tax aggressiveness. In the third study, I investigate the impact of XBRL-induced information transparency on accounting conservatism and tax avoidance. I find that XBRL monitoring reduces the demand for conservatism, leading to lower levels of conditional conservatism in post-XBRL adoption periods for XBRL-adopting firms. Furthermore, XBRL reduces corporate tax avoidance through three channels: a decline in conditional conservatism leading to increased tax payments, non-IRS monitoring, and IRS monitoring. Conclusively, my thesis significantly contributes to the existing body of literature on corporate transparency, financial reporting, and corporate tax planning. My findings demonstrate that regulatory initiatives to mitigate financial reporting biases can influence achieving neutral financial reporting. Additionally, I find that corporate managers employ strategies to minimize taxes to enhance shareholder value. Consequently, they maintain transparency with shareholders while restricting information flow between their companies and the IRS. Finally, the XBRL mandate plays a crucial role in reducing information processing costs, thereby resulting in decreased corporate tax avoidance and enhanced corporate transparency.
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    Innovation and Performance
    (2018-04-12) Hyun, Soonchul; Anderson, Mark; Tanaka, Atsuko; Huang, Rong; Banker, Rajiv D.; Warsame, Hussein A.
    My dissertation consists of three studies that connect innovation to performance in different ways. In my first study, I investigate how product quality, productivity, and customer satisfaction as intermediate performance measures capture information about current innovation activities and serve as leading indicators of future financial performance. My first study also investigates how these links from innovation to performance differ across strategies. Estimating seemingly unrelated regression (SUR) models, I find that increases in quality, productivity, and customer satisfaction are important value drivers that link different types of innovation to higher future ROS and sales growth. For differentiators, product innovations that increase product quality and customer satisfaction lead to higher performance. For cost leaders, improved process innovation that increases productivity leads to performance. In my second study, I consider how the introduction of new information technology (IT) and organizational change, as two types of organizational innovation activities, affect productivity over time. Measuring productivity improvements using data envelopment analysis (DEA), I find that new IT has a positive impact on organizational productivity in both the first and second years after the introduction of new IT. In contrast, organizational change has a negative productivity effect in the first year, followed by a positive effect in the second year. This pattern indicates that the beneficial effect of new IT is realized quickly, but organizational change has an initial disruptive effect before its beneficial effect on productivity is realized. I also find that new IT and organizational change have complementary effects on productivity. In my third study, I investigate how two strategic positions – differentiation (externally focused) and cost leadership (internally focused) – moderate the impact of innovation activities on operating performance. I use DEA to construct an aggregate performance index that combines the information in profit margin and sales growth as the dependent variable. Estimation results show that differentiation positively moderates the impact of product innovation on performance and cost leadership positively moderates the impact of process innovation on performance. This study demonstrates the importance of strategic capability and the alignment of strategy with innovation.
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    Labour Investment: A Managers’ Decision-Making Perspective
    (2020-04-22) Yu, Dongning; Anderson, Mark; Warsame, Hussein A.; Herremans, Irene M.; Mashruwala, Raj; Lehar, Alfred; Muslu, Volkan
    My dissertation consists of three studies that investigate factors that affect management’s labour investment decisions and how management of labour influences firm performance. In my first study, I examine how firms adjust their labour in response to business downturns and how different labour adjustment practices influence firms’ financial performance. I classify firms into two groups: those with more stable labour adjustment strategies (most sticky in labour) and those with more flexible labour adjustment strategies (least sticky in labour). I find that companies with more flexible labour adjustment strategies outperform relative to companies with more stable labour adjustment strategies in terms of return on assets. Using DuPont analysis, I find that underperformance of stable companies is due to lower efficiency (asset turnover) and the superior performance of flexible firms is due to higher efficiency. However, stable firms achieve higher profit margin than flexible firms, consistent with the resource-based view of human capital. In my second study, I investigate whether higher ability managers achieve better performance outcomes through labour investment. I document that deviations from expected net hiring are, on average, smaller for higher ability managers. In this regard, I find that higher ability managers avoid both over-investment and under-investment in labour. I also find that managerial ability mitigates the negative effects of deviations from expected hiring on future firm performance. This latter result holds whether deviations from expected hiring are positive or negative. In my third study, I investigate how companies adjust their employment in recessions with a focus on credit constraints. Controlling for firm productivity, I find an inverted U-shaped relationship between leverage and labour growth rate. This suggests that debt accommodates labour growth up to a certain point, but adding additional debt after that point imposes financial constraints on firms’ ability to effectively manage labour growth – these firms may be forced to grow labour less or reduce labour more than the optimal amount. In addition, recession enlarges the negative impact of financial constraints on labour growth rate. Findings of my thesis studies contribute to management decision-making regarding labour adjustment in response to business cycles.
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