William Dilla | Iowa State University (original) (raw)

Papers by William Dilla

Research paper thumbnail of The Impact of Graphical Displays of Pro Forma Earnings Information on Professional and Nonprofessional Investors' Earnings Judgments

Behavioral Research in Accounting, 2013

ABSTRACT: Regulation G (SEC 2003b) requires managers to reconcile textual non-GAAP performance me... more ABSTRACT: Regulation G (SEC 2003b) requires managers to reconcile textual non-GAAP performance measures (i.e., pro forma disclosures) to GAAP. Graphical disclosures also require reconciliation; however, neither the format nor the placement of the reconciliation is specified. We apply cognitive fit theory to argue that the influence of graphical information presentation formats is contingent on investor type and judgment complexity. Participants in our study viewed a simulated Investor Relations website for a large drug retailer and made judgments regarding current fiscal year earnings performance, earnings potential, and investment amount. We manipulated graphical (GAAP-only versus GAAP and pro forma) and textual (GAAP-only versus pro forma reconciled to GAAP) earnings disclosure content in a 2 × 2 between-participants design. We find that nonprofessional investors' current fiscal year earnings performance, earnings potential, and investment amount judgments are all influenced b...

Research paper thumbnail of Management Control for Sustainability: The Development of a Fully Integrated

Managers struggle to translate sustainability strategies into actions. This study examines the us... more Managers struggle to translate sustainability strategies into actions. This study examines the use of a management control system (MCS) and sustainability control system (SCS) to support the implementation of an integrated sustainability strategy. It is based on in-depth interviews with key finance and sustainability managers in a Swedish global industrial company. We draw upon the levers of control (LOC) concept to analyze the organization’s use of MCS and SCS. The interactive components of the firm’s SCS are characterized by dialogue between strategic and tactical level managers in a non-invasive environment. Thus, the firm deploys these strategic performance controls in an enabling as opposed to a constraining fashion. Strategic validity controls, however, are only well-developed for a subset of the firm’s products and services. These findings suggest that the manner in which an organization deploys interactive controls within its SCS is influenced strongly by the organization’s ...

Research paper thumbnail of Response Scales in Risk Judgments: The Effects of Representation, Fineness and User Choice

Relatively little is known about how various decision aid design characteristics affect judgments... more Relatively little is known about how various decision aid design characteristics affect judgments in accounting and auditing. This article examines the effects of changing three response scale characteristics: representation (whether scales are labelled with numbers or words), fineness (whether scales are discrete or continuous), and user choice (whether decision makers are assigned to or choose the scale). Participants made inherent risk assessments for a hypothetical audit client using one of the four combinations that resulted from manipulating two levels of scale representation and two levels of scale fineness. Participants were assigned to one of these four combinations or allowed to select from among them. The results indicate that: (1) scale representation does not substantively affect judgment quality, (2) compared with discrete scales, continuous scales increase both judgment quality and the effort required to make risk assessments, and (3) compared with assigning participa...

Research paper thumbnail of The Influence of Sustainability Assurance Report Level and Format on Investor Judgments

Research paper thumbnail of Management control for sustainability: Towards integrated systems

Management Accounting Research

Research paper thumbnail of Relationships within the Fraud Diamond: The Decision Processes that Influence Fraudulent Intentions in Online Consumer Fraud

Journal of Information Systems

Online consumer fraud is a problem with significant consequences. While a substantial body of res... more Online consumer fraud is a problem with significant consequences. While a substantial body of research examines the strategies used to defraud consumers in online environments, little is known about the decision processes that perpetrators follow before engaging in fraud. To address this issue, we develop an ethical decision-making model of online consumer fraud based on the fraud diamond. The model also includes anonymity, a key feature of online environments, which can influence sellers' ethical decision-making processes. We empirically evaluate the model first by asking participants to consider the misrepresentation of an asset's value in an online transaction, and then by having participants engage in a real-life version of that scenario. Results indicate that perceived anonymity affects the influences of capability, opportunity, and motivation on rationalization. Further, greater perceived anonymity increases the influence of rationalization on one's intent to act. ...

Research paper thumbnail of The influence of a good relationship between the internal audit and information security functions on information security outcomes

Accounting, Organizations and Society

Given the increasing financial impact of cybercrime, it has become critical for companies to mana... more Given the increasing financial impact of cybercrime, it has become critical for companies to manage information security risk. The practitioner literature has long argued that the internal audit function (IAF) can play an important role both in providing assurance with respect to information security and in generating insights about how to improve the organization's information security. Nevertheless, there is scant empirical evidence to support this belief. Using a unique data set, this study examines how the quality of the relationship between the internal audit and the information security functions affects objective measures of the overall effectiveness of an organization's information security efforts. The quality of this relationship has a positive effect on the number of reported internal control weaknesses and incidents of noncompliance, as well as on the numbers of security incidents detected, both before and after they caused material harm to the organization. In addition, we find that higher levels of management support for information security and having the chief information security officer (CISO) report independently of the IT function have a positive effect on the quality of the relationship between the internal audit and information security functions.

Research paper thumbnail of An Empirical Study of a Two-Sided Model of Fraudulent Exchange

Icis 2012 Proceedings, 2012

Abstract Interpersonal fraud is a complex social action constituted by a series of dependent even... more Abstract Interpersonal fraud is a complex social action constituted by a series of dependent events and an accurate representation of this interaction requires the examination of both the victim and perpetrator in fraudulent exchanges. IS domain research on ecommerce provides behavioral models that can be used to describe a victim's perspective on fraud in online commerce. Similarly, research in the accounting domain has developed the fraud triangle, a behavioral model that describes a perpetrator's perspective in committing fraud. ...

Research paper thumbnail of SECURQUAL: An Instrument for Evaluating the Effectiveness of Enterprise Information Security Programs

Journal of Information Systems, 2015

The ever-increasing number of security incidents underscores the need to understand the key deter... more The ever-increasing number of security incidents underscores the need to understand the key determinants of an effective information security program. Research that addresses this topic requires objective measures, such as number of incidents, vulnerabilities, and non-compliance issues, as indicators of the effectiveness of an organization's information security activities. However, these measures are not readily available to researchers. While some research has used subjective assessments as a surrogate for objective security measures, such an approach raises questions about scope and reliability. To remedy these deficiencies, this study uses the COBIT Version 4.1 Maturity Model Rubrics to develop an instrument (SECURQUAL) that obtains an objective measure of the effectiveness of enterprise information security programs. We show that SECURQUAL scores reliably predict objective measures of information security program effectiveness. Future research might use the instrument as a ...

Research paper thumbnail of Information evaluation behavior in a competitive environment: context and task effects/1435

Research paper thumbnail of Tests of information evaluation behavior in a competitive environment

Research paper thumbnail of Information evaluation in a competitive environment: context and task effects

Research paper thumbnail of Can Avatars Fight Fraud? How Virtual Business Environments Facilitate Learning More About Fraud Investigation and Prevention

Journal of Information Systems, 2013

An introduction is presented in which the editor discusses how virtual business environments can ... more An introduction is presented in which the editor discusses how virtual business environments can accelerate the advancement of research in fraud investigation and mentions two topics within the issue including fraud in virtual world and role of Embodied Conversational Agents in interviews.

Research paper thumbnail of Market Alternatives, Third Party Intervention, and Third Party Informedness in Negotiation

Group Decision and …, 1998

Negotiation is one possible mechanism for setting transfer prices when no unique transfer price i... more Negotiation is one possible mechanism for setting transfer prices when no unique transfer price is obviously correct, allowing divisional managers to run their divisions with some degree of autonomy. This study examines the effects of market alternatives, third party intervention and third party informedness in transfer pricing negotiation. Experiment 1 examined the effects of market alternatives in a fully crossed design of buyer and seller's Best Alternatives To a Negotiated Agreement (BATNA) at four levels (no, low, medium, or high). Experiment 2 examined the effects of third party intervention with reference to role (binding vs. nonbinding) and informedness (informed vs. uninformed). Results of Experiment 1 indicated that both the existence and level of market alternatives affected reservation prices, expected profits, aspiration levels, and individual profits. Dyads with unequal BATNAs did not obtain higher joint profits than those with equal BATNAs, while dyads with unequal BATNAs distributed profits more unevenly between negotiators than dyads with equal BATNAs. Results of Experiment 2 indicated that only making the third party's role binding had an effect on joint profits. However, the presence of a third party and both the role and informedness manipulations affected resource distribution.

Research paper thumbnail of Information evaluation in a competitive environment: context and task effects/BEBR 1513

Research paper thumbnail of Do environmental responsibility views influence investors’ use of environmental performance and assurance information?

Sustainability Accounting, Management and Policy Journal

Purpose The purpose of this study is to investigate whether investor views regarding the benefits... more Purpose The purpose of this study is to investigate whether investor views regarding the benefits of corporate environmental responsibility moderate the influence of environmental performance and assurance information on their judgments. Specifically, the authors examine the effects of two broad views: environmental responsibility is more important than financial performance, regardless of investment returns (i.e. environmental responsibility importance) and positive environmental performance will increase investment returns (i.e. environmental performance return). Design/methodology/approach Nonprofessional investors completed an online study where environmental performance (high or low) and assurance on environmental performance information (present or absent) were varied. Participants’ corporate environmental responsibility views were assessed using a series of questions adapted from Cheah et al.’s (2011) study. Findings Environmental performance and assurance information had a g...

Research paper thumbnail of Do environmental responsibility views influence investors’ use of environmental performance and assurance information?

Sustainability Accounting, Management and Policy Journal

Purpose The purpose of this study is to investigate whether investor views regarding the benefits... more Purpose The purpose of this study is to investigate whether investor views regarding the benefits of corporate environmental responsibility moderate the influence of environmental performance and assurance information on their judgments. Specifically, the authors examine the effects of two broad views: environmental responsibility is more important than financial performance, regardless of investment returns (i.e. environmental responsibility importance) and positive environmental performance will increase investment returns (i.e. environmental performance return). Design/methodology/approach Nonprofessional investors completed an online study where environmental performance (high or low) and assurance on environmental performance information (present or absent) were varied. Participants’ corporate environmental responsibility views were assessed using a series of questions adapted from Cheah et al.’s (2011) study. Findings Environmental performance and assurance information had a g...

Research paper thumbnail of Voluntary Disclosure in Annual Reports: The Association between Corporate Financial Performance, Graph Use, and Graph Type

Prior archival research indicates that companies reporting increases in key financial performance... more Prior archival research indicates that companies reporting increases in key financial performance variables (KFVs) are more likely to include graphs of these measures in their annual reports. This study expands prior work by using cognitive and social psychology theories to predict that the decision to graph depends not only the direction, but also on the magnitude of changes in corporate financial performance. We also examine management choices related to the type of annual report graphs, i.e., whether companies use simple or artistically embellished graph formats to present financial information. Using data from 163 top US companies that were in continual existence from 1999 to 2002, we replicate earlier findings that companies with increases in corporate performance are more likely to graph KFVs. Further, we extend prior research by showing that companies with larger increases in sales are more likely to graph this measure, but companies with larger increases in the "bottom ...

Research paper thumbnail of VIRTUAL WORLDS

It’s just a game, or is it? Real money, real

Research paper thumbnail of It’s Just a Game, or is It? Real Money, Real Income, and Real Taxes in Virtual Worlds

Virtual worlds like Second Life offer players opportunities to earn real-world income through the... more Virtual worlds like Second Life offer players opportunities to earn real-world income through their activities in the game. It will not be long before governments begin to establish policies and regulations regarding the income generated by players of these game environments. This paper examines the issue of taxes in virtual world games. Two alternative places for recognizing income could be established by regulators: 1) at the point when in-game transactions take place; or 2) when players convert game assets into real-world currency. We argue for realization of income, and therefore taxation, at the exchange. We expect that burdensome policies such as requiring game operators to monitor and report taxable activities to the authorities will dissuade game play and likely result in the collapse of these vibrant economies. Therefore, our recommendation is that the IRS should establish specific rules that inform players about how they should calculate income and work with game operators...

Research paper thumbnail of The Impact of Graphical Displays of Pro Forma Earnings Information on Professional and Nonprofessional Investors' Earnings Judgments

Behavioral Research in Accounting, 2013

ABSTRACT: Regulation G (SEC 2003b) requires managers to reconcile textual non-GAAP performance me... more ABSTRACT: Regulation G (SEC 2003b) requires managers to reconcile textual non-GAAP performance measures (i.e., pro forma disclosures) to GAAP. Graphical disclosures also require reconciliation; however, neither the format nor the placement of the reconciliation is specified. We apply cognitive fit theory to argue that the influence of graphical information presentation formats is contingent on investor type and judgment complexity. Participants in our study viewed a simulated Investor Relations website for a large drug retailer and made judgments regarding current fiscal year earnings performance, earnings potential, and investment amount. We manipulated graphical (GAAP-only versus GAAP and pro forma) and textual (GAAP-only versus pro forma reconciled to GAAP) earnings disclosure content in a 2 × 2 between-participants design. We find that nonprofessional investors' current fiscal year earnings performance, earnings potential, and investment amount judgments are all influenced b...

Research paper thumbnail of Management Control for Sustainability: The Development of a Fully Integrated

Managers struggle to translate sustainability strategies into actions. This study examines the us... more Managers struggle to translate sustainability strategies into actions. This study examines the use of a management control system (MCS) and sustainability control system (SCS) to support the implementation of an integrated sustainability strategy. It is based on in-depth interviews with key finance and sustainability managers in a Swedish global industrial company. We draw upon the levers of control (LOC) concept to analyze the organization’s use of MCS and SCS. The interactive components of the firm’s SCS are characterized by dialogue between strategic and tactical level managers in a non-invasive environment. Thus, the firm deploys these strategic performance controls in an enabling as opposed to a constraining fashion. Strategic validity controls, however, are only well-developed for a subset of the firm’s products and services. These findings suggest that the manner in which an organization deploys interactive controls within its SCS is influenced strongly by the organization’s ...

Research paper thumbnail of Response Scales in Risk Judgments: The Effects of Representation, Fineness and User Choice

Relatively little is known about how various decision aid design characteristics affect judgments... more Relatively little is known about how various decision aid design characteristics affect judgments in accounting and auditing. This article examines the effects of changing three response scale characteristics: representation (whether scales are labelled with numbers or words), fineness (whether scales are discrete or continuous), and user choice (whether decision makers are assigned to or choose the scale). Participants made inherent risk assessments for a hypothetical audit client using one of the four combinations that resulted from manipulating two levels of scale representation and two levels of scale fineness. Participants were assigned to one of these four combinations or allowed to select from among them. The results indicate that: (1) scale representation does not substantively affect judgment quality, (2) compared with discrete scales, continuous scales increase both judgment quality and the effort required to make risk assessments, and (3) compared with assigning participa...

Research paper thumbnail of The Influence of Sustainability Assurance Report Level and Format on Investor Judgments

Research paper thumbnail of Management control for sustainability: Towards integrated systems

Management Accounting Research

Research paper thumbnail of Relationships within the Fraud Diamond: The Decision Processes that Influence Fraudulent Intentions in Online Consumer Fraud

Journal of Information Systems

Online consumer fraud is a problem with significant consequences. While a substantial body of res... more Online consumer fraud is a problem with significant consequences. While a substantial body of research examines the strategies used to defraud consumers in online environments, little is known about the decision processes that perpetrators follow before engaging in fraud. To address this issue, we develop an ethical decision-making model of online consumer fraud based on the fraud diamond. The model also includes anonymity, a key feature of online environments, which can influence sellers' ethical decision-making processes. We empirically evaluate the model first by asking participants to consider the misrepresentation of an asset's value in an online transaction, and then by having participants engage in a real-life version of that scenario. Results indicate that perceived anonymity affects the influences of capability, opportunity, and motivation on rationalization. Further, greater perceived anonymity increases the influence of rationalization on one's intent to act. ...

Research paper thumbnail of The influence of a good relationship between the internal audit and information security functions on information security outcomes

Accounting, Organizations and Society

Given the increasing financial impact of cybercrime, it has become critical for companies to mana... more Given the increasing financial impact of cybercrime, it has become critical for companies to manage information security risk. The practitioner literature has long argued that the internal audit function (IAF) can play an important role both in providing assurance with respect to information security and in generating insights about how to improve the organization's information security. Nevertheless, there is scant empirical evidence to support this belief. Using a unique data set, this study examines how the quality of the relationship between the internal audit and the information security functions affects objective measures of the overall effectiveness of an organization's information security efforts. The quality of this relationship has a positive effect on the number of reported internal control weaknesses and incidents of noncompliance, as well as on the numbers of security incidents detected, both before and after they caused material harm to the organization. In addition, we find that higher levels of management support for information security and having the chief information security officer (CISO) report independently of the IT function have a positive effect on the quality of the relationship between the internal audit and information security functions.

Research paper thumbnail of An Empirical Study of a Two-Sided Model of Fraudulent Exchange

Icis 2012 Proceedings, 2012

Abstract Interpersonal fraud is a complex social action constituted by a series of dependent even... more Abstract Interpersonal fraud is a complex social action constituted by a series of dependent events and an accurate representation of this interaction requires the examination of both the victim and perpetrator in fraudulent exchanges. IS domain research on ecommerce provides behavioral models that can be used to describe a victim's perspective on fraud in online commerce. Similarly, research in the accounting domain has developed the fraud triangle, a behavioral model that describes a perpetrator's perspective in committing fraud. ...

Research paper thumbnail of SECURQUAL: An Instrument for Evaluating the Effectiveness of Enterprise Information Security Programs

Journal of Information Systems, 2015

The ever-increasing number of security incidents underscores the need to understand the key deter... more The ever-increasing number of security incidents underscores the need to understand the key determinants of an effective information security program. Research that addresses this topic requires objective measures, such as number of incidents, vulnerabilities, and non-compliance issues, as indicators of the effectiveness of an organization's information security activities. However, these measures are not readily available to researchers. While some research has used subjective assessments as a surrogate for objective security measures, such an approach raises questions about scope and reliability. To remedy these deficiencies, this study uses the COBIT Version 4.1 Maturity Model Rubrics to develop an instrument (SECURQUAL) that obtains an objective measure of the effectiveness of enterprise information security programs. We show that SECURQUAL scores reliably predict objective measures of information security program effectiveness. Future research might use the instrument as a ...

Research paper thumbnail of Information evaluation behavior in a competitive environment: context and task effects/1435

Research paper thumbnail of Tests of information evaluation behavior in a competitive environment

Research paper thumbnail of Information evaluation in a competitive environment: context and task effects

Research paper thumbnail of Can Avatars Fight Fraud? How Virtual Business Environments Facilitate Learning More About Fraud Investigation and Prevention

Journal of Information Systems, 2013

An introduction is presented in which the editor discusses how virtual business environments can ... more An introduction is presented in which the editor discusses how virtual business environments can accelerate the advancement of research in fraud investigation and mentions two topics within the issue including fraud in virtual world and role of Embodied Conversational Agents in interviews.

Research paper thumbnail of Market Alternatives, Third Party Intervention, and Third Party Informedness in Negotiation

Group Decision and …, 1998

Negotiation is one possible mechanism for setting transfer prices when no unique transfer price i... more Negotiation is one possible mechanism for setting transfer prices when no unique transfer price is obviously correct, allowing divisional managers to run their divisions with some degree of autonomy. This study examines the effects of market alternatives, third party intervention and third party informedness in transfer pricing negotiation. Experiment 1 examined the effects of market alternatives in a fully crossed design of buyer and seller's Best Alternatives To a Negotiated Agreement (BATNA) at four levels (no, low, medium, or high). Experiment 2 examined the effects of third party intervention with reference to role (binding vs. nonbinding) and informedness (informed vs. uninformed). Results of Experiment 1 indicated that both the existence and level of market alternatives affected reservation prices, expected profits, aspiration levels, and individual profits. Dyads with unequal BATNAs did not obtain higher joint profits than those with equal BATNAs, while dyads with unequal BATNAs distributed profits more unevenly between negotiators than dyads with equal BATNAs. Results of Experiment 2 indicated that only making the third party's role binding had an effect on joint profits. However, the presence of a third party and both the role and informedness manipulations affected resource distribution.

Research paper thumbnail of Information evaluation in a competitive environment: context and task effects/BEBR 1513

Research paper thumbnail of Do environmental responsibility views influence investors’ use of environmental performance and assurance information?

Sustainability Accounting, Management and Policy Journal

Purpose The purpose of this study is to investigate whether investor views regarding the benefits... more Purpose The purpose of this study is to investigate whether investor views regarding the benefits of corporate environmental responsibility moderate the influence of environmental performance and assurance information on their judgments. Specifically, the authors examine the effects of two broad views: environmental responsibility is more important than financial performance, regardless of investment returns (i.e. environmental responsibility importance) and positive environmental performance will increase investment returns (i.e. environmental performance return). Design/methodology/approach Nonprofessional investors completed an online study where environmental performance (high or low) and assurance on environmental performance information (present or absent) were varied. Participants’ corporate environmental responsibility views were assessed using a series of questions adapted from Cheah et al.’s (2011) study. Findings Environmental performance and assurance information had a g...

Research paper thumbnail of Do environmental responsibility views influence investors’ use of environmental performance and assurance information?

Sustainability Accounting, Management and Policy Journal

Purpose The purpose of this study is to investigate whether investor views regarding the benefits... more Purpose The purpose of this study is to investigate whether investor views regarding the benefits of corporate environmental responsibility moderate the influence of environmental performance and assurance information on their judgments. Specifically, the authors examine the effects of two broad views: environmental responsibility is more important than financial performance, regardless of investment returns (i.e. environmental responsibility importance) and positive environmental performance will increase investment returns (i.e. environmental performance return). Design/methodology/approach Nonprofessional investors completed an online study where environmental performance (high or low) and assurance on environmental performance information (present or absent) were varied. Participants’ corporate environmental responsibility views were assessed using a series of questions adapted from Cheah et al.’s (2011) study. Findings Environmental performance and assurance information had a g...

Research paper thumbnail of Voluntary Disclosure in Annual Reports: The Association between Corporate Financial Performance, Graph Use, and Graph Type

Prior archival research indicates that companies reporting increases in key financial performance... more Prior archival research indicates that companies reporting increases in key financial performance variables (KFVs) are more likely to include graphs of these measures in their annual reports. This study expands prior work by using cognitive and social psychology theories to predict that the decision to graph depends not only the direction, but also on the magnitude of changes in corporate financial performance. We also examine management choices related to the type of annual report graphs, i.e., whether companies use simple or artistically embellished graph formats to present financial information. Using data from 163 top US companies that were in continual existence from 1999 to 2002, we replicate earlier findings that companies with increases in corporate performance are more likely to graph KFVs. Further, we extend prior research by showing that companies with larger increases in sales are more likely to graph this measure, but companies with larger increases in the "bottom ...

Research paper thumbnail of VIRTUAL WORLDS

It’s just a game, or is it? Real money, real

Research paper thumbnail of It’s Just a Game, or is It? Real Money, Real Income, and Real Taxes in Virtual Worlds

Virtual worlds like Second Life offer players opportunities to earn real-world income through the... more Virtual worlds like Second Life offer players opportunities to earn real-world income through their activities in the game. It will not be long before governments begin to establish policies and regulations regarding the income generated by players of these game environments. This paper examines the issue of taxes in virtual world games. Two alternative places for recognizing income could be established by regulators: 1) at the point when in-game transactions take place; or 2) when players convert game assets into real-world currency. We argue for realization of income, and therefore taxation, at the exchange. We expect that burdensome policies such as requiring game operators to monitor and report taxable activities to the authorities will dissuade game play and likely result in the collapse of these vibrant economies. Therefore, our recommendation is that the IRS should establish specific rules that inform players about how they should calculate income and work with game operators...