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Learning from Failure
Failures may lead to ultimate success in both nature and business. Just as dynamic ecosystems depend on death to replace senescent organisms with vigorous growth, the termination of uneconomic activities is essential to wealth creation. This paper explores the benefits of failures, and uses aspects of the analogy between death and business failure to analyze […]
Recognizing Decline: The Role of Triggers
Existing models of decline and turnaround assume an automatic initiation of a turnaround strategy when decline occurs. However, extended decline over time suggests that the turnaround strategy did not match the causality and severity of the situation. Borrowing from the crisis management literature, this paper argues that a triggering event or events needs to shock […]
Qualitative Expressions of Magnitude: The Auditor’s Responsibility
Publicly traded firms issue annual reports with significant portions that contain non-numerical information (i.e., written expressions). AU Section 550 of the professional standards (AICPA 2003) refers to this type of non-numerical information that accompanies the financial statements as “other information.” AU Section 550.04 clearly indicates that the auditor should read this other information and consider […]
The Effect of Litigation on Independent Auditor Selection
We examine the role of past litigation in the selection of independent auditors. Using a sample of persons typically involved in auditor selection, we find that any litigation announcement alleging audit improprieties greatly reduces the auditor’s likelihood of hire regardless of the type of legal action announced or the degree of direct involvement by the […]
A Success Versus Failure Prediction Model for the Real Estate Industry
The purpose of this study was to use the Lussier (1995) generic success versus failure (S/F) prediction model to develop a real estate industry specific model (S/F = ƒ [industry experience, age, advisors, planning, capital]). Using logistic regression analysis, the Lussier model (p = .028) and the real estate agency model (p = .001) are […]
International Diversification and Retirement Withdrawals
This study evaluates the success of the monthly withdrawal of funds from hypothetical retirement portfolios for the period January 1930 to December 2001. The objective of this research is to provide an empirical examination of the historical effect of global diversification on the withdrawal of funds from a retirement portfolio. We compare portfolios consisting of […]
