e-bulletin February 2018
Dr Haitian Lu is Associate Dean of the Faculty
Dr Haitian Lu has been appointed Associate Dean (External Relations and Development) of the Faculty. He took up the role on 1 January 2018 in succession to Dr Pamsy Hui.
Dr Lu is Associate Professor in law at the School of Accounting and Finance. He obtained a PhD in law from the National University of Singapore, a master's in law from the University of Liverpool, and a bachelor's degree in law from Nanjing University. His teaching and research interests centre on legal development, corporate governance, and corporate social responsibility in Hong Kong and mainland China.
Mr Szeto Chun Named Outstanding Student of the Faculty
Mr Paul Szeto Chun, reading for the BBA (Hons) in Marketing degree, earned the 2017 Outstanding Student of the Faculty of Business award with international exposure, passionate enthusiasm, and good personal qualities. He was formally recognized at the presentation ceremony hosted by PolyU on 26 February 2018.
On top of achieving outstanding academic performance, Paul won several business competitions together with his teammates. He had set up several projects to promote physical health, environmental conservation and community spirit. Based on his service learning experience gained in Sweden, he developed an online platform for buying unsold food at a low price with the purposes of minimizing food waste and supporting the needy.
Marketing Students Win CSR Challenge
Two teams of marketing students won championship and the Best Video award in CSR Challenge organized by the Hong Kong Federation of Business Students.
The champion team was made up of Miss Tsang Ka Lai, Miss Ip Wing Lam and Miss Chung Pik Ki. The best video was produced by Mr Yeung Tsz Hin, Mr Chow Wai Sum, Miss Sin Yim Yan, Miss Chan Yim Yan and Miss Lam Hoi Man.
The 2017 competition was themed "Responsible Eating Sustainable Living" and open to entrants from all disciplines at local universities. It was aimed at promoting corporate social responsibility (CSR) and encouraging students to contribute creative CSR ideas to the community. The final was held on 3 February 2018.
Professor Andy Yeung and His Team Receive Responsible Research in Management Award
"Environmental Incidents and the Market Value of Firms: An Empirical Investigation in the Chinese Context", accepted for publication by Manufacturing & Service Operations Management, was awarded 2017 Responsible Research in Management Award. This paper is co-authored by Dr Chris Lo and Mr Yi Zhou at PolyU's Institute of Textiles and Clothing, Professor Christopher S. Tang at the University of California, Los Angeles, Professor Andy Yeung in the Faculty's Department of Logistics and Maritime Studies, and Dr Di Fan at the Macau University of Science and Technology.
The authors investigated stock market reactions to 294 Chinese manufacturing firms involved in 618 environmental incidents between 2006 and 2013 and found a significantly negative stock market reaction to announcements of environmental incidents. Their analysis showed that Chinese firms with stronger personal political ties, i.e., top management teams or board members with concurrent or prior government appointments, were affected more when environmental incidents occurred. They also found that environmental incidents caused by Chinese firms could have a significantly negative impact on the market value of their overseas customers.
The inaugural Responsible Research in Management award, co-sponsored by the Community for Responsible Research in Business and Management, and the International Association for Chinese Management Research (IACMR), aims at discovering good scholarship in management that focuses on important issues concerning business and society and published in the recent five years.
Sustainability Conference Discusses Governance and Financial Health of NGOs
Sustainability Conference: Governance and Financial Health of NGOs took place on 9 February 2018. It gathered stakeholders of NGOs (non-governmental organizations) and researchers for a sharing of research findings and an open discussion on the latest developments in governance and financial health, local and international practices as well as challenges facing NGOs.
The conference was organized by the Centre for Economic Sustainability and Entrepreneurial Finance (CESEF) at the School of Accounting and Finance. CESEF conducts research in the areas of Economic Sustainability, Entrepreneurial Finance, and Internet-based Finance. It transfers knowledge through publishing reports and research articles in addition to maintaining a network of scholars, practitioners, and other stakeholders for resolving sustainability issues and improving market and regulatory frameworks.
AF Public Lecture Looks at Accounting Information and Market Efficiency
The School of Accounting and Finance (AF) hosted on 23 January 2018 a public lecture. Delivering the lecture, entitled "Quantitative and Qualitative Information and Stock-Price Anomalies", was Professor Eli Bartov from New York University.
While previous studies focused mainly on quantitative information, text analysis enables recent research to cover the relationship between both quantitative and qualitative information, and firm value. Professor Bartov discussed two of his recent papers. The first, about Post Loss/Profit Announcement Drift, uncovers a new anomaly, related to earnings signs and their magnitudes, by using quantitative information. The second, about Cognitive Bias, Conflict of Interests, and Analysts' Use of Qualitative Earnings Information, provides evidence of analysts' failure to incorporate qualitative risk information in earnings forecasts due to cognitive bias.
LMS Public Lecture Traces Latest Developments in Aviation Industry
The Department of Logistics and Maritime Studies (LMS) held on 6 February 2018 a public lecture to review recent developments in aviation. The event, entitled "Taking Wing: Reflections on Aviation Management", was addressed by Mr John Slosar, Chairman of Swire Pacific Limited.
Mr Slosar shared his views about aviation management, the robust growth of the aviation industry and the complexity of airline business. He stressed the growing importance of digitalization and big data to airlines.
MM Public Lecture Explores Daily Survey Studies
The Department of Management and Marketing (MM) organized a public lecture on 25 January 2018. The event, entitled "Conducting Daily-survey Studies", was addressed by Professor Sabine Sonnentag from the University of Mannheim, Germany.
Diary methods overcome retrospective bias and other limitations of survey methods. Quantitative diary methods and similar approaches, such as experience sampling, receive increasing attention within management research. Multiple assessments allow for modelling changes in affect, attitude, and behaviour over time. In her lecture, Professor Sonnentag provided an overview of research questions to be addressed with quantitative diary methods, study designs as well as approaches to data collection and data analysis.
Do Clients' Enterprise Systems Affect Audit Quality and Efficiency?
Contemporary Accounting Research 34 (4), 1975-2021 (2017)
Morton Pincus, University of California, Irvine
Feng Tian, The Hong Kong Polytechnic University
Patricia Wellmeyer, University of California, Irvine and Norwegian School of Economics
Sean Xin Xu, Tsinghua University
Enterprise systems (ESs) are widely used to support business processes along the enterprise value chain. It has been shown that ESs, by integrating business functions and making information about day-to-day activities available, enhance operational transparency and improve the internal information environment. However, while ES-based business infrastructures can offer many benefits, their prevalence and increased complexity have also brought new challenges to external auditors. Motivated by the prominence of this issue for auditors and regulators and by the scarcity of research jointly examining ESs and auditors' work, the authors investigate whether the presence and extent of client firms' ES implementations are related to the quality and efficiency of auditors' work. Using proprietary archival data on ES implementations and controlling for self-selection, they find that ES implementation improves the quality and efficiency of current and future years' audit work. Specifically, there are fewer restatements, a greater likelihood of auditors issuing going-concern opinions to firms that do not survive, higher accruals-based auditing quality, a lower likelihood of Form 10-K filing delays, and generally lower audit fees. The authors further show that the benefits of ESs generally increase with the scope of implementation and are generally greater when the ES includes accounting and finance systems. Inconsistent with improvement in the quality of auditors' work, they find no evidence that ESs help auditors identify material weaknesses in advance of restatement announcements and they find that even in the presence of ESs, auditors issue an excessive number of going-concern opinions to clients that survive.
Disagreement, Underreaction, and Stock Returns
Management Science, 63 (4), 1214-1231 (2017)
Ling Cen, University of Toronto
K. C. John Wei, The Hong Kong Polytechnic University
Liyan Yang, University of Toronto and Peking University
The authors explore analysts' earnings forecast data to improve on one popular disagreement measure — the analyst forecast dispersion measure — proposed by Diether et al. [Diether KB, Malloy CJ, Scherbina A (2002) Differences of opinion and the cross section of stock returns. J. Finance 57: 2113-2141]. Their analysis suggests that changes in the standard deviations of forecasted earnings can work as a complementary disagreement measure that is comparable across stocks and immune from other return-predictive information contained in the normalization scalars of analyst forecast dispersion measures. They also document evidence that the change-based disagreement measure predicts future cross-sectional returns significantly only when changes in the mean forecasts are negative. This finding suggests that the interaction between disagreement and underreaction to earnings news affects asset prices.