Journal of Applied Business Research (JABR) 2021-11-23T14:30:22+00:00 Stephanie Clute Open Journal Systems <p><strong>Published since 1985</strong><br>ISSN 0892-7626 (print), ISSN 2157-8834 (online)<br>The Journal of Applied Business Research (JABR) welcomes articles in all areas of applied business and economics research.</p> An Analytical Model Of Audits In Disclosure Of Pro Forma Earnings 2021-11-23T13:40:39+00:00 Andrew Chan <p>Firms have discretion on financial reporting under Generally Accepted Accounting Principles or GAAP. The proliferation in recent years of earnings metrics that deviate from GAAP figures confounds investors' ability to compare firm financial performance. Non-GAAP (or pro forma) figures usually do not include certain balance sheet or income statement items that are required under GAAP. Regulators and accounting standard-setting body are concerned that pro forma financial measures have been used by management to mislead investors by overstating or smoothing earnings or to meet Wall Street earnings expectations. On the other hand, management asserts that by excluding certain nonrecurring and noncash items, pro forma earnings are more relevant in measuring firm performance. Indeed, prior empirical studies provide evidence that certain pro forma measures may have incremental information content over GAAP earnings. Pro forma earnings are typically unaudited and the quality of disclosures accompanying such measures varies across firms. This paper develops an analytical (mathematical) model to examine whether firms will exhibit higher credibility through auditor selection when disclosing pro forma earnings. This study extends prior empirical literature by providing an analytical perspective on the importance of attestation performed by auditors regarding pro forma earnings. The model in this study suggests that managers who possess superior information than shareholders in an asymmetric information setting and expect high future earnings are more likely to engage large auditors when disclosing pro forma earnings. As such, the model may explain the voluntary disclosure of accounting information by managers in capital markets.</p> 2021-09-01T00:00:00+00:00 Copyright (c) 2021 Audit Quality And Earnings Management: Evidence From Shanghai Stock Market In China 2021-11-23T13:49:42+00:00 Chang Seop Rhee Hyunjung Rhee Zhenbo Li <p>The prior studies report that the global big4 audit firms (Big4) generally provide higher quality audit services compared to the local audit firms, but inconsistent result on audit quality of the Big4 audit firms was observed in the Chinese stock market. We believe that it may be not appropriate to distinguish high or low audit quality as separating the Big4 and non-Big4 because the market share of the Big4 and non-Big4 on Shanghai stock market is considerably lower than that of other countries. Therefore, we use the measure of Chinese big10 audit firms (Big10) as higher audit quality and examine the association with the level of earnings management using the sample of Shanghai Stock Market listed companies in China. From the empirical tests, we find that the Big10 provide better audit service to prevent their clients’ earnings management than non-Big10 audit firms. The finding of this study demonstrates the Big10 provide differentiated audit service from non-Big10 audit firms on Shanghai stock market in China.</p> 2021-09-01T00:00:00+00:00 Copyright (c) 2021 Leaving A No-Risk 36 Percent Return On The Table: Supply Chain Finance Opportunities Managing Payables Discounts 2021-11-23T14:05:42+00:00 Sonja Hightower M. Theodore (Ted) Farris <p>Supply chain management has traditionally emphasized managing the physical flow of parts and finished goods. The next natural evolutionary step is developing the management of supply chain finance across multiple trading partners. One of these opportunities requires investigation of managing payment discounts. Traditionally, suppliers offer a discount to buyers to encourage earlier payment. Terms such as 2/10 n/30 allow for a 2% discount if the entire purchase is paid in full within the 10-day discount period instead of the customary 30 days. This 2% payment reduction translates into the equivalent of an annual return of 36%, resulting in the traditional rule of thumb to take the discount whenever possible. For a variety of reasons, only a small percentage of buyers actually are capturing these high returns. There is a disconnect between trading partners for using discounts for managing working capital across the supply. This paper explores the beneficial impact of participating in early payment discount programs, potential reasons for failing to capture discounts and possible solutions and offers research questions to guide future research to aid in improving this supply chain finance opportunity.</p> 2021-09-01T00:00:00+00:00 Copyright (c) 2021 Optimal Fleet Size And Mix For A Rental Car Company 2021-11-23T14:14:52+00:00 Nasreddine Saadouli <p>In this paper, a linear programming model for optimizing the fleet size and mix for a rental car company is developed and solved. Rental car companies depend on their fleet of vehicles for generating the entirety of their income. Additionally, the investments required are typically very significant due to the high cost of vehicles. Consequently, the composition of the fleet could significantly affect the company’s profitability and sustainability in a volatile demand environment. Determining the optimal fleet size and mix has been the focus of research in particular in revenue and yield management and VRP streams. However, most models focused on cost minimization without taking into account the resale value of vehicles once retired from the fleet. This paper addresses the problem from a return maximization perspective while taking into account resale values of vehicles. Sensitivity analysis is carried out to gain further insight into the problem and enable the model to support the company’s management in refining the strategic plan.</p> 2021-09-01T00:00:00+00:00 Copyright (c) 2021 An Assessment Of Instruments Utilised By Export Promotion Agencies In Eastern Africa 2021-11-23T14:20:39+00:00 Ane Massyn Henri Bezuidenhout Ewert P.J. Kleynhans <p>This study identifies the export promotion instruments that are applied by public export promotion organisations situated within the East African Community (EAC) countries to stimulate exports and encourage economic growth. The East African region is the fastest developing region in Africa. EAC member countries are, therefore, used as a case study. How export promotion instruments are bundled by export promotion organisations depends on the socioeconomic, political and trade environment of a country as well as the structure of the country’s export promotion agencies. By utilising primary and secondary data, public export promotion organisations of Burundi, Kenya, Rwanda, Tanzania and Uganda were studied. These general and country-specific instruments were identified through onsite interviews in the respective countries under investigation. The results suggest that the most important export promotion instruments applied include advertising, promotional events, advocacy and legal assistance. It also includes capacity building concerning packaging, pricing and quality requirements within foreign markets as well as assistance concerning planning and preparation for export market engagement. Foreign trade missions, trade fairs, expos, and additional services offered by trade offices and representatives abroad are also general export promotion instruments, as is the provision of information and export financing. Country-specific export promotion instruments identified during onsite interviews in the various countries include unique promotional events and product branding, use of cell phone WhatsApp groups and embassies as a channel for information, trade assistance and trade clinics. Our contribution to the field is that this study is foundational and represents the first comprehensive effort to write up these activities of the EPO’s to establish viable research in the EPOs in the East Africa Region.</p> 2021-09-01T00:00:00+00:00 Copyright (c) 2021 A Model To Measure Competitiveness In Touristic Companies In Mexico 2021-11-23T14:30:22+00:00 José Carlos González Núñez Delfino Vargas Chanes Liliana Raquel Ruiz Fuentes <p>The objective of this paper is to develop a model that measures competitiveness among tourism businesses in Mexico. To that end, this research consists of three parts: the first refers to the theoretical framework to define the competitiveness of a tourism company and proposes a theoretical business competitiveness model; the second deals with the development of a questionnaire upon the theoretical model; in the third part, the questionnaire and the theoretic model are validated using factor analysis and a competitiveness index, is presented.</p> 2021-09-01T00:00:00+00:00 Copyright (c) 2021