The Business Review, Cambridge

The American Academy of Business Journal

Vol. 26 * Number 1 * September 2020

The Library of Congress, Washington, DC   *   ISSN: 1540 – 7780

Online Computer Library Center, OH  *  OCLC: 805078765

National Library of Australia  *  NLA: 42709473

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The primary goal of the journal will be to provide opportunities for business related academicians and professionals from various business related fields in a global realm to publish their paper in one source. The Journal will bring together academicians and professionals from all areas related business fields and related fields to interact with members inside and outside their own particular disciplines. The journal will provide opportunities for publishing researcher's paper as well as providing opportunities to view other's work. All submissions are subject to a double blind peer review process.  The Journal is a refereed academic journal which  publishes the  scientific research findings in its field with the ISSN 1540-7780 issued by the Library of Congress, Washington, DC.  The journal will meet the quality and integrity requirements of applicable accreditation agencies (AACSB, regional) and journal evaluation organizations to insure our publications provide our authors publication venues that are recognized by their institutions for academic advancement and academically qualified statue.  No Manuscript Will Be Accepted Without the Required Format.  All manuscripts should be professionally proofread / edited before submission. After the manuscript is edited, you must send us the certificate. You can use for professional proofreading/editing or other professional editing service etc... The manuscript should be checked through plagiarism detection software (for example, iThenticate/Turnitin / Academic Paradigms, LLC-Check for Plagiarism / Grammarly Plagiarism Checker) and send the certificate with the complete report.

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Copyright: All rights reserved. No part of the material protected by this copyright notice may be reproduced or utilized in any form or by any means, including photocopying and recording, or by any information storage and retrieval system, without the written permission of the journal.  You are hereby notified that any disclosure, copying, distribution or use of any information (text; pictures; tables. etc..) from this web site or any other linked web pages is strictly prohibited. Request permission / Purchase article (s):


Copyright 2000-2020. AABJ. All Rights Reserved

Business/Accounting Course Design Preferences: Do Faculty and Students Agree?

Dr. Mark W. Rieman, Charleston Southern University, SC

Dr. Daniel L. Tracy, University of South Dakota, SD

Dr. John E. Knight, University of Tennessee at Martin, TN



Every semester business each professor must decide how each course is taught, often with little input from their students.  Many business faculty members feel that students have little knowledge of course content or of teaching pedagogy.  While students’ may have limited content knowledge, students do know which teaching methods suit their learning styles best.  Students are key stakeholders in the educational process and have a significant interest in their success within it.  Students decide on a business major to study and decide which specific courses they wish to take.  These decisions are often affected by students’ perceptions about specific teachers and their teaching methods.  Students also critique their professors’ teaching performances through student teaching evaluations, with the results often impacting professors’ merit pay, tenure, and promotion decisions.  Fourteen controllable course design features were ranked in importance by large samples of business faculty and students.  The analysis is intended to provide input for business faculty with respect to course design factors that have the potential to improve student satisfaction, while still balancing student and faculty goals. The differences between accounting faculty and their students as well as non-accounting faculty and their students are compared. When business faculty members design courses for the semester, a plethora of issues must be considered.  Some of the more prominent issues might include their actual business experience prior to their teaching careers, the topics with which they are most familiar within their specific areas of teaching, different teaching methodologies they have learned, and consideration of their own personalities including both strengths and weaknesses.   Some course design considerations can be adjusted at the start of a semester without harming overall student learning or causing any major disruptions in the way professors normally teach classes.  Other considerations are not so controllable.  The individual professor’s personality, including their sense of humor, is not something that can be changed quickly.  A teacher’s prior research, which gives insights into specific content areas, takes time to develop, and is not something that can be changed overnight to make course adjustments.  Even professor “hotness” is something some students consider when deciding which teachers to take for a class (Liu et al. 2013) and is obviously not something that is easy (if even desirable) to change.  Other exogenous factors such as classroom location, scheduled class time, or classroom seat comfort are uncontrollable to the faculty member.


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An Analysis of Corporate Social Responsibility  (CSR) Across Firms, Industries, and Regions

Dr. Gordon W. Arbogast, Jacksonville University, FL

Julie Ankenbrand, Jacksonville University, FL



According to the United Nations Industrial Development Organization (UNIDO), Corporate Social Responsibility (CSR) is a management concept whereby firms within their various industries and regions integrate social and environmental concerns into their business operations and interactions with their stakeholders. Increasing public CSR visibility makes this integration more critical for companies to retain and improve their corporate/brand images. CSR, which consists of environment, social, and governance (ESG) focus areas, is coming more into the public spotlight as consumers become increasingly aware of how companies influence ESG- related activities.  Companies that do not focus on improving their public images are likely to experience negative financial impacts in the form of brand degradation, decreased sales, and negative public perception. To address this challenge, companies are becoming more focused on CSR and are allocating increasing investment funds in this activity. An ever-growing base of socially conscious consumers may perceive those companies that ignore or pay little attention to CSR activity negatively. However, CSR is still a relatively new and abstract topic and companies do not have formulas that assist in guiding their CSR spending.  This paper investigates what whether CSR varies across industrial firms, industries and regions.  In a first study, data from companies on the 2017 Fortune 500 Global List, along with their associated CSR spending, was analyzed to determine if a relationship existed between the ratio of CSR spending in a firm with respect to its industry, geographic region and company size. In a second study, a random selection of 100 companies from the Fortune 500 was selected. Four four independent components of CSR were then employed: (1) Community, (2) Employee, (3) Environment, and (4) Governance. A model then regressed these four variables against individual Corporate Financial Performance to determine if any of the variables had any significant influence on a firm’s financial performance.  An analysis of the first model concluded that there was not a clear relationship between the ratio of CSR Spending in a firm when viewed against its industry, geographical region or size. The second model did show that a linkage existed between CSR and Profit Margin, with the primary effect coming from the CSR component- Employee.  In the last two decades, the need for increased Corporate Social Responsibility (CSR) has become mainstream due to the demand of governments, consumers, investors and employees. Financial market breakdowns, severe economic declines, environmental disasters, natural disasters, and food shortages require more than immediate responses. Proactive initiatives by corporations to prepare for such crises have increased corporate non-financial reporting, encompassing the social, environmental and economic impact of the company’s operations. Thus, many companies are not turning to CSR for selfless reasons, but rather due to profitability and growth considerations.


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Do Auditors Protect Shareholders Against Financial Expropriation by Corporate Insiders?

Dr. Edward B. Douthett, Jr., George Mason University, VA



We investigate whether empirical evidence exists to indicate that auditors can detect and deter shareholder expropriation by the parties in control of the company’s resources at the time of an initial public offering (IPO).  We conduct our empirical tests on a sample of IPOs where regulators have explicitly identified financial expropriations in the form of spinning shares on IPOs.  While a protectionist role against spinning is seemingly beyond the auditor’s primary attest responsibilities, performing this role is consistent with the auditor’s incentives of self-interest and avoidance of potential legal penalties associated with a client’s inappropriate resource diversion.  We find that higher levels of IPO assurance services are associated with spinning suggesting auditors may be able to detect spinning expropriations. We also find that audit quality is not associated with spinning suggesting audit quality does not detect or deter spinning expropriations.  The results provide some evidence that auditors can play a role in owner and investor protection.  Our purpose is to test for evidence that auditors play a role in detecting and deterring opportunities for shareholder wealth expropriation.  The expropriating cases under study are “spinning” arrangements where the primary decision-maker, such as the majority owner/entrepreneur or an influential agent, such as the investment banker underwriting the IPO, allocates the IPO shares in a way that expropriates the financial value of current shareholdings or the future value of the outside investment. While minority, or non-controlling shareholders are included as those being expropriated, the focus of our study is not specifically on whether auditors can completely resolve expropriation problems between minority shareholders and controlling agents, but rather whether auditors can detect and deter shareholder expropriation of any kind.  Detecting and deterring expropriation is consistent with the incentives of self-interested auditors who desire to build or avoid impairing their current reputation, a proposition recently analyzed and developed in Newman, Patterson, and Smith (2005).  We examine auditor-related effects in a sample of IPOs where the Securities and Exchange Commission (SEC) identified spinning expropriations.  The underwriters settled with the SEC by paying large fines to avoid litigation.  Liu and Ritter (2010) describe spinning one of the four scandals associated with IPOs that has been scrutinized by regulators and academics for the past 25 years.  These scandals are conducted through underpricing and the allocation of new issue shares, and ultimately reduce the proceeds received by all IPO owners or hurt the longer-run performance of the IPO stock in the aftermarket.  Spinning is a favorable allocation of the IPO shares to other company executives or friends to influence the executives’ future business decisions or contribute to the personal wealth of friends. (1)  In cases of spinning, the underpricing is greater than expected, and the IPO is one that is considered "hot," i.e., the price is expected to jump as soon as trading starts.  The greater-than-expected underpricing reduce the proceeds from the offering to original IPO owners.  The word "spinning" refers to the fact that the shares are flipped for a quick profit in the aftermarket by the executives and friends being "spun." 


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Leading Organizations by the Values Journey Model of Adult Bio-Psycho-Social Behaviour

Dr. David A. Robinson, Professor, Holmes Institute, Australia



Individuals and firms are engaged in a journey that is navigated by their responses to problems of existence. The journey typically follows a trajectory defined by three stages and six value stations. Transitioning between value stations occurs naturally but may be impeded by inertia or organizational pathologies. This article defines the three stages and six value stations, explains how transitioning occurs, what can go wrong, and the leadership challenges associated therewith.  A model of human values, explaining psycho-social behavior among adults, originated with the work of Prof Clare Graves of  New York University in 1959.  It was later promoted by Dr Don Beck of Baylor University and Christopher Cowan under the title, Spiral Dynamics and further developed by the current author, formerly of Rhodes University, South Africa and subsequently professor in several universities in Australia and Asia, currently at Holmes Institute, Australia. The essential principle of the Values Journey is that life may be perceived as a journey of personal development in which each individual develops their unique set of human values along the way. The values, being the underlying motives that pattern behaviors in response to given circumstances, are so formed by coping with challenges of existence.  Firstly, that we as humans attempt to develop in two directions concurrently, along the X axis by increasing our capacity for rational and considerate conduct, and up the Y axis by improving our capacity for autonomous thought and action. Secondly, the journey is progressive, yet step-wise, i.e. people advance alternately in the X or Y plain. Thirdly, each pair of stations represent a ‘stage’ of development, thus there are three distinct stages, portrayed here as pre-orderly, orderly, and post-orderly. The divide between stage 1 and 2 is known as the ethical divide, a kind of discipline that must be mastered to give purpose and to bring consistency and allow control (whether by self- or externally-imposed). The divide separating stages 2 and 3 is known as the holism divide as to cross it requires a world view that is more universal and all-inclusive. Fourthly, the step-wise advancement through value stations entails taking on board new paradigms of thinking, which may evoke a rejection of previously-held values. Whilst it is possible to perceive a person’s current values by observing their actions and behaviors, it must always be remembered that personal values are not fixed, i.e. a current value station is not necessarily a destination but may simply be a phase in the journey. When a person’s current behaviors are consistent with a particular value station, it is representative of a comfort zone or alpha state. Clues as to where in the Values Journey a person currently resides can be obtained by observing their actions and behaviors. In Table 1 some examples of personal aims, characteristic behaviors (and their possible formative triggers at a young age) are shown. All of these represent the ways that a person may ‘cope’ with their ‘problems of existence’. As conditions of life change, people are prompted to adapt the ways they cope and in that they may take on a new set of values. When that happens the person will quickly adjust to their new alpha.  They may choose not to do so, however, thereby remaining fixated in a comfort zone (alpha state), unable or unwilling to adapt.


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Corporate Governance in the wake of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in Australia: The Call for Reform

Carlo Soliman, LLM, CEO, Soliform Property, Australia

Anurag Kanwar, LLM, The Institute of International Studies, Deputy Covenor Admissions and Compliance Working Group, IEAA, Australia

Gautam Dahima, CPA, Australia



The aftermath of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has cast a spectre of doubt over the efficacy of the legal system to adequately cope with the regulatory challenges that emanated from the high level of systemic misconduct observed. This paper will examine the scope of the Royal Commission’s Inquiry and its recommendations in light of the current legal framework and the consequences of any change. The implications of the current protections are considered as well as the likely government response. It is postulated that the present regulatory system provides effective legislative protections. However, the problem lies with the investigative willingness and enforcement inclination to implement the law in a consistent manner. This in turn is best achieved through a multi-modal approach that focuses on a stronger culture of compliance. Given the proliferation of companies in Australia, any amendment to the law will have a profound impact on all stakeholders in how corporations are monitored and audited in the future.  The genesis of the Corporation dates back to the reign of Elizabeth 1 (1) where Crown Monopolies and Charter Companies emerged to undertake high risk enterprises. Such ventures were legally separate from their investors and managers in an effort to overcome risky commercial and speculative investments and by spreading the risk, and, with it, the minimisation of failure. In the English Westminster System, the notion of the separate legal entity, that underpins the very existence of the Corporation, arose from the common law. Cases such as Salomon v Salomon, (2) for example, oxygenate the idea that a totally abstract entity could attain all the powers of a natural person and be utilised to protect those managing its affairs. In modern times, whilst the corporation remains relevant, its scope has changed. In fact there has emerged a more sinister use which has seen this abstract device used to cloak fraud and other forms of misconduct. This can have far reaching consequences, the most notable being the Global Financial Crisis. Therefore, the importance of good corporate governance cannot be underestimated because a well-regulated corporate and financial services industry is essential for a stable economy. (3)  Whilst it is beyond the scope of this paper to provide a historical treatise on the evolution of corporate law, some notable developments deserve mention as they serve to contextualise the present regulatory and corporate governance climate.  The collapse of HIH arguably represents a watershed in Australian Corporate history both in terms of its size and the changes to the law that followed. As Australia’s major professional indemnity provider, its collapse had a profound impact on many industries such as professional service providers. For example, many of Australia’s 150 community legal centres closed after their professional indemnity insurance was put in doubt. Other professionals, such as accountants and lawyers, also lost cover. In addition, without public liability cover, councils (4) and not-for-profit organisations became reluctant to hold community and sporting events.  The epiphany of modern corporate governance was born following the Royal Commission7 into the collapse of HIH insurance. In April 2003, Commissioner Justice Neville Owen delivered his report which identified wide ranging and systemic failures in both the organisation itself and with the broader governance culture of the period. Justice Owen’s report delivered 61 wide-ranging policy recommendations that addressed issues impacting on the prudential, legal and regulatory regime governing the general insurance industry in Australia (5) and, as a result, saw many changes germinate from this inquiry.


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Why is the Value Estimated from the Constant Dividend Growth Model not an Equilibrium Value?

Dr. Joseph Cheng, Pepperdine University, CA

Ellen Jiao, Lingnan University, Hong Kong



For dividend discount models, the intrinsic value of stock is estimated by discounting all the future cash dividends of the stock.  The Constant Dividend Growth Model formula, also known as the Gordon Model, is expressed as P = D1 / (k-g).  (Gordon 1963). This classical formula is founded on the simple assumption that the firm will pay future dividends that grow continually at a constant rate forever.  Such assumption renders the dividend discount model a long-run equilibrium model.  In this paper, we show that this formula to be inconsistent with long run equilibrium in most cases.  In the long run where capital can be varied, firms will have the incentive to boost share value by issuing shares if the return on equity ROE > required return k or to buy back shares if ROE < k. Thus, capital level reaches the long run equilibrium state only when the return on equity is equal to the required return (k = ROE).  In such case, the Constant Dividend Growth Model can be simplified even further to : V = EPS1 / k.   This newly derived valuation formula is based on only EPS and required return, thus broadening its application to even stocks which pay no dividends.  In sum, this paper reveals the inconsistency of the Constant Dividend Growth Model with long-run equilibrium that leads to mispricing and proposes an alternative model for pricing stocks in long-run equilibrium, for both dividend and non-dividend paying stocks. The Constant Dividend Growth Model has been the classical model for valuing equity for many years.  It is appealing because of its simple application.  The value of the stock is derived by discounting future dividends which are assumed to grow at a constant rate forever.  All future dividends are discounted by the required return adjusted for the time period.  One drawback of this model is that it is only applicable to firms which pay dividends.  In this paper, we not only point out the inconsistency of the Constant Growth Model, but also present a corrected version of the Dividend Discount Model that can be applied to also firms which pay no dividends. John Burr Williams proposed that asset price should be based on estimates of the future income in The Theory of Investment Value (1938).  He elaborated on the concepts of discounted cash flow valuation, which is generally regarded as the basis for the DDM. Franco Modigliani and Merton Miller proposed the MM theorem in the Cost of Capital, Corporate Finance and the Theory of Investment (1958) that asset valuation should be based on future cash flows and that share value maximization should be the goal of firms. Gordon (1963) proposed the use of single discount rate to value the expected dividends in the future, which is a function of growth.  In such environment, share price is determined by the expected dividends.


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Copyright: All rights reserved. No part of the material protected by this copyright notice may be reproduced or utilized in any form or by any means, including photocopying and recording, or by any information storage and retrieval system, without the written permission of the journal.  You are hereby notified that any disclosure, copying, distribution or use of any information (text; pictures; tables. etc..) from this web site or any other linked web pages is strictly prohibited. Request permission / Purchase article (s):


Member: Association of American Publishers (AAP), Professional / Scholarly Publishing, New York

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Index: The Library of Congress, Washington, DC:    ISSN: 1540 – 7780

Index: Online Computer Library Center, OH:   OCLC: 805078765 

Index: National Library of Australia: NLA: 42709473

Index: Cambridge Social Science Citation Index, CSSCI.

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