Who’s Watching? Accountability in Different Audit Regimes and the Effects on Auditors’ Professional Skepticism


Journal of Business Ethics

A paraître

Départements : Comptabilité et Contrôle de Gestion, Management et Ressources Humaines, GREGHEC (CNRS)

Mots clés : Accountability, Auditors, Professional skepticism, Joint audit, Judgment, Experiment

The European Commission has suggested that the use of joint audits should lead to improved auditor skepticism and—by extension—audit quality, throughincreased accountability. However, archival research does not find support for improved audit quality in a joint audit setting. To better understand the relationship between accountability in different review regimes and auditors’judgments, we examine the behavioral effect of implementing a joint audit relative to other review regimes based on a 1 9 3 experimental design. Forty-seven senior auditors and partners from a Big Four firm performed a goingconcern evaluation task under one of three review regimes: the joint audit, the internal review, and the no review regime. Notwithstanding the difference in the audiences to which auditors are accountable, there is no difference in thejudgment process. In terms of their judgment outcome, however, auditors in the joint audit setting were the least skeptical in their judgment of the going concern assumption. Overall, we suggest that the joint audit may lead tounintended behavioral consequences

Why the Empty Shells Were Not Fired: A Semi-Bibliographical Note



A paraître

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Willing and Able: A General Model of Organizational Responses to Normative Pressures


Academy of Management Review

A paraître

Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

Mots clés : institutional theory, normative pressures, symbolic, substantive, conformity, compliance, issue salience

We develop a conceptual understanding of when and how organizations respond to normative pressures. More precisely, we examine two main factors underlying the willingness and ability of organizations to respond to an issue: (1) issue salience, and (2) the cost-benefit analysis of resource mobilization. We suggest that decision-makers’ interpretation of issue salience in conjunction with their perception of the costs and benefits of taking action to address the issue generates five potential responses: symbolic compliance and symbolic conformity, substantive compliance and substantive conformity, and inaction. We extend the baseline model by examining a number of boundary conditions. By focusing on the willingness and ability of organizations to respond to normative pressures, and by adopting the issue as the unit of analysis, our model helps explain intra- as well as inter-organizational response heterogeneity to institutional complexity. We contribute to the institutional research tradition and offer useful implications for managerial practice, from strategic management to policy making

Zero-sum revision games


Games and Economic Behavior

A paraître

Départements : Finance, GREGHEC (CNRS), Economie et Sciences de la décision

Mots clés : Revision games, Zero-sum games, Deadline effect

In zero-sum asynchronous revision games, players revise their actions only at exogenous random times. Players' revision times follow Poisson processes, independent across players. Payoffs are obtained only at the deadline by implementing the last prepared actions in the “component game”. We characterize the value of this game as the unique solution of an ordinary differential equation and show it is continuous in all parameters. As the duration of the game increases, the limit revision value does not depend on the initial position and is included between the min-max and max-min of the component game. We characterize the equilibrium for 2×2 games. When the component game min-max and max-min differ, the revision game equilibrium have a wait-and-wrestle structure: far form the deadline, players stay put at sur-place action profile, close to the deadline, they take best responses to the action of the opponent

À la découverte du lien organisationnel : avez-vous lu A. O. Hirschman ?


Management International

hiver 2018, vol. 22, n°2, pp.9-12

Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

Mots clés : Théorie des organisations, Hirschman, sortie, voix, loyauté

Le dossier spécial consacré par la revue Management International à la pensée de Albert O. Hirschman est issu d’une journée organisée par i3-CRG, le LIRSA (CNAM) et SnO d’HEC. Il s’agit de revenir sur l’importance des concepts de Hirschman pour la théorie des organisations, notamment exit, voice et loyalty. Économiste de formation, spécialiste notamment de l’économie du développement, Hirschman a pratiqué toute sa vie durant le dépassement des frontières disciplinaires (trespassing) ce qui l’a amené à la théorie des organisations et il reste un exemple pour les chercheurs actuels

A Model of Trading in the Art Market


American Economic Review

mars 2018, vol. 108, n°3, pp.744-774

Départements : Finance, GREGHEC (CNRS)

Mots clés : art; auctions; endogenous trading; price indexes; private values; returns

We present an infinite-horizon model of endogenous trading in the art auction market. Agents make purchase and sale decisions based on the relative magnitude of their private use value in each period. Our model generates endogenous cross-sectional and time-series patterns in investment outcomes. Average returns and buy-in probabilities are negatively correlated with the time between purchase and resale (attempt). Idiosyncratic risk does not converge to zero as the holding period shrinks. Prices and auction volume increase during expansions. Our model finds empirical support in auction data and has implications for selection biases in observed prices and transaction-based price indexes

A Universe of Stories: Mobilizing Narrative Practices During Transformative Change


Strategic Management Journal

mars 2018, vol. 39, n°3, pp.664-696

Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

Mots clés : strategic change, narrative, strategyaspractice, storytelling, reflection

Constructing narratives of transformative change is an important but challenging practice through which strategy makers attempt to influence acceptance of an ongoing transformation. To understand whether and how strategy makers can construct a steady influx of captivating narratives of transformative change, we analyzed how one noted strategy maker assisted the successful transformation of his organization over three decades by orchestrating the production of change narratives. Our analysis reveals that the strategy maker constructed and reconstructed meanings of change over time using three sets of distinct but interconnected narrative practices. We develop a dynamic model linking the simultaneous mobilization of these practices to strategy makers’ ability to harness the persistent tension between novelty and familiarity in a transformative change, and thereby win endorsement from key audiences. This paper was accepted for publication on Strategic Management Journal Special Issue on "Strategy Processes and Practices: Dialogues and Intersections"

An Integrated Revenue Management Framework for a Firm's Greening, Pricing and Inventory Decisions


International Journal of Production Economics

janvier 2018, vol. 195, pp.373-390

Départements : GREGHEC (CNRS)

Mots clés : Environment, Newsvendor problem, Pricing, Market segmentation, Distribution-free approach

There is a growing interest on developing efficient ways of incorporating environmental considerations into business practices in order to meet both consumers' demand for green products/services, and the firms' sustainable profitability. The main contribution of this article is in developing an integrated revenue management framework to address a firm's greening (investment) effort, pricing and inventory decisions. It is assumed that the firm inaugurates a green product along with its existing product. Even though the firm offers both the green and regular product at differentiated prices, the market segmentation as a result of this price differentiation is regarded as imperfect. This imperfect market segmentation causes a demand leakage mainly due to the heterogeneity among the customers' willingness-to-pay. These effects are included in our proposed model and simplified analytical solutions are developed to solve the same. Additional scenarios where a firm experiences a price-dependent stochastic demand with an unknown distribution is also modeled. This scenario is addressed using a distribution-free approach based on Scarf' s rule. The performance of the proposed methods and the significance of the modeling framework are finally corroborated through several simulations. This analysis provides a sustainable environment, production and retailing framework while still augmenting profitability using fundamental tools from revenue management

Belief-free price formation


Journal of Financial Economics

février 2018, vol. 127, n°2, pp.342-365

Départements : Finance, GREGHEC (CNRS), Economie et Sciences de la décision

Mots clés : Financial market microstructure, Informed dealers, Price volatility, Belief-free equilibria

We analyze security price formation in a dynamic setting in which long-lived dealers re- peatedly compete for the opportunity to trade with short-lived retail traders. We charac- terize equilibria in which dealers’ pricing strategies are optimal irrespective of the private information that each dealer may possess. Thus, our model’s predictions are robust to dif- ferent specifications of the dealers’ information structure. These equilibria reconcile, in a unified and parsimonious framework, price dynamics that are reminiscent of well-known stylized facts: excess price volatility, price to trading flow correlation, stochastic volatility and inventory-related trading

Collaborative Prototyping of Alternative Designs Under a Target Costing Scheme


Production and Operations Management

mars 2018, vol. 27, n°3, pp.496–515

Mots clés : Collaborative prototyping, Parallel and sequential testing, Supplier involvement, Target costing

Prototyping allows firms to evaluate the technical feasibility of alternative product designs and to better estimate their costs. We study a collaborative prototyping scenario in which a manufacturer involves a supplier in the prototyping process by letting the supplier make detailed design choices for critical components and provide prototypes for testing. While the supplier can obtain private information about the costs, the manufacturer uses target costing to gain control over the design choice. We show that involving the supplier in the prototyping process has an important influence on the manufacturer's optimal decisions. The collaboration results in information asymmetry, which makes parallel prototyping less attractive and potentially reverses the optimal testing sequence under sequential prototyping: It may be optimal to test designs in increasing order of attractiveness to avoid that the supplier does not release technically and economically feasible prototypes for strategic reasons. We also find that the classical target costing approaches (cost- and market-based) need to be adjusted in the presence of alternative designs: Due to the strategic behavior of suppliers, it is not always optimal to provide identical target costs for designs with similar cost and performance estimates, nor to provide different target costs for dissimilar designs. Furthermore, the timing is important: While committing upfront to carefully chosen target costs reduces the supplier's strategic behavior, in some circumstances, the manufacturer can take advantage of this behavior by remaining flexible and specifying the second prototype's target costs later