R&D accounting discretion as an income smoothing tool: An empirical analysis of German listed companies

Carina Brettschneider, Ludwig-Maximilians-Universität München (Bachelorarbeit)
Junior Management Science 4(2), 2019, X-X

Capitalization of development costs is compulsory according to IFRS if a set of criteria is fulfilled. However, this obligation
is considered as a de facto right for capitalization since the criteria are quite subjective, allowing for a certain degree of
flexibility. Hence, the question arises whether managers use research and development (R&D) accounting to conduct earnings
management in terms of income smoothing. Using a sample of German listed companies, the study conducts several regression
analyses to test whether there is a negative relationship between R&D capitalization and different income smoothing proxies.
Results show that the hypothesis is supported independent of the income smoothing proxy used. The study proofs that
managers indeed use R&D capitalization judgments to conduct income smoothing.

Keywords: R&D capitalization; income smoothing; earnings management; R&D accounting; development costs.

Implementation of strategic change by franchisees: A sensemaking perspective

Theresa Langenmayr, Universität Zürich (Masterarbeit)
Junior Management Science 4(2), 2019, X-X

Franchisees play an important role when inter-organizational change, initiated by franchisors, is to be implemented. The objective of this thesis is to gain insights into franchisees’ sensemaking activities. Drawing on sensemaking theories and franchising literature, a case study on franchisees in the automotive industry reveals how social processes of interaction, within and across their organizational boundaries, influence their interpretations of change initiatives. It contributes to the sensemaking literature through expanding research to inter-organizational change. It also contributes to the franchising literature through analyzing the franchisees’ role during franchisor-initiated change from a sensemaking perspective.

Keywords: sensemaking; inter-organizational change; franchising

The Influence of Cryptocurrencies on Enterprise Risk Management – an empirical evidence by the example of Bitcoin

Maximilian Bölstler, Universität St. Gallen (Bachelorarbeit)
Junior Management Science 4(2), 2019, X-X

This thesis analyzes the influence of cryptocurrencies in the context of risk management by considering the emerging risk
factors of Bitcoin as a payment method. By means of an empirical analysis through an online survey, the current operational
dealing of incoming Bitcoin funds, the risk awareness of the potential threats, and the corresponding control activities
implemented by companies accepting Bitcoin payments have been examined. The results reveal that the risks of this new
technology-based payment method have not been extensively evaluated and that there exists a partially significant lack of
know-how. Therefore, the risks are either not at all or improperly addressed by a majority of the organizations. However,
the exchange rate risk and the cyber risk, which is a strongly linked to the administration of cryptocurrencies, represent the
most significant related risk factors associated with cryptocurrencies in recent times. To ensure an appropriate operational
dealing with cryptocurrencies, the author presents a risk control matrix based on the results of the analysis and discusses control
activities to mitigate these emerging threats. Finally, a holistic Cryptocurrency IC Framework (following the COSO 2013
IC Framework) is presented, with the objective of effectively and efficiently developing and maintaining systems of internal
control with regard to cryptocurrencies.

Keywords: Blockchain; digital assets; Bitcoin; cryptocurrency; IC framework; enterprise risk management.x

Does Subordinated Debt Discipline Banks? Empirical Evidence of Market Discipline in Europe

Daniel Schürk, Johann Wolfgang Goethe Universität (Bachelorarbeit)
Junior Management Science 4(2), 2019, X-X

This thesis provides a differentiated answer to the question whether subordinated debt disciplines bank’s risk-taking behavior. I investigate the conditions and applicability of market discipline through subordinated debt instruments by critically reviewing the state of research. Relating to the regulatory context, I discuss proposals and various empirical studies and find that subordinated debt is an adequate measure to discipline banks under certain conditions.
My own empirical analysis contributes to evidence provided by prior studies and updates them for the European case. I conclude that subordinated debt investors perceive differences in risk between banks and across time and are sensitive to credit ratings and accounting variables at generally higher spread levels compared to senior bonds. Results include that spread is positively sensitive (increases with respect to one standard error) to equity to capital (225 BPS), provision for loan losses (200 to 225 BPS), non-performing loans to equity (400 to 715 BPS) and interest coverage ratio (60 BPS). Spread is negatively sensitive (decreases with respect to one standard error) to ROA (120 BPS) and loan loss reserves (360 to 620 BPS).

Keywords: debt market discipline; bond spreads; subordinated debt; bail-in; bail-out; BRRD; Basel II; Basel III; market monitoring; market influence

The Impact of the Organic Label Halo Effect on Consumers’ Quality Perceptions, Value-in-Use and Well-Being

Philipp Küst, Freie Universität Berlin (Masterarbeit)
Junior Management Science 4(2), 2019, X-X

Food well-being is an innovative field of research analysing the complex consequences of food intake on body and mind. In
face of mounting civilization diseases and environmental challenges promoting healthy and sustainable diets is crucial. For
consumers it is difficult however, to assess the healthiness and environmental friendliness of a product. Food labels, like the
organic one, are therefore used as extrinsic cues to help customers distinguish between alternatives.
This paper analyses how the organic label biases consumers’ quality perception, a phenomenon that has been referred to as
the organic label halo effect. It further intends to uncover the links between several quality dimensions and their consequences
as reflected in value-in-use. Finally it aims to detect if those consequences ultimately lead to enhanced post-prandial wellbeing.
A quantitative study in an experimental canteen setting was conducted to answers those questions. Structural equation
modelling (SEM) was applied to test the hypotheses. The results indicate a positive impact of the organic label halo effect on
consumers’ quality perceptions in terms of health & safety, environmental friendliness & animal welfare as well as prestige.
Those in turn were shown to positively influence on several value-in-use dimensions, including social, altruistic, functional
and hedonic value. Finally, the latter two were significantly related to well-being.
Hence, this research shows that providing organic food in a canteen ultimately enhances consumer well-being through
inferential beliefs on quality and value evoked by the label. The findings help to better understand the links between food
consumption and subjective well-being and are therefore of interest for policy makers and researchers around the world.

Keywords: food well-being; organic label halo effect; value-in-use; perceived quality; extrinsic cues.

Charakteristika vs. Carry – Outperformance in Devisenmärkte

Tom O. K. Zeissler, Wirtschaftsuniversität Wien (Masterarbeit)
Junior Management Science 4(2), 2019, X-X

In response to the intensification of economic crises in the euro area, the European Cen-tral Bank (ECB), along with other central banks, has conducted both conventional and unconventional monetary policy. The most recent unconventional measure has been outright asset purchases under the corporate sector purchase programme (CSPP) target-ing euro-denominated investment-grade bonds issued by non-financial corporations in the euro area. Using a Difference-in-Differences (DID) approach on a sample of euro-zone data I find that the CSPP initiative has consistently contained credit risk. In con-trast, spillover effects to firms not subject to the CSPP policy are limited.

Keywords: quantitative easing; unconventional monetary policy; asset purchase program; credit default swaps; corporate sector purchase program