Matthew Sooy

• Doshi, H.; Patel, S.; Ramani, S.; Sooy, M., 2023, "Uncertain tone, asset volatility and credit default swap spreads", Journal of Contemporary Accounting & Economics, December 19(3): 100380 - 100380.
  Abstract: We examine the relationship between uncertain linguistic tone and credit default swap (CDS) spreads. Using an event study approach, we first show that uncertain linguistic tone in 10-Q/K filings is positively associated with CDS spread changes incremental to positive and negative tone and incremental to the response implied by equity market reactions to the same information. We further demonstrate that the relationship of uncertain tone to CDS spreads manifests largely through its impact on asset volatility. We show that this effect is driven by firms with high leverage and is stronger among firms with shorter relative to longer maturities. Our findings contribute to growing research into credit market reactions to non-quantitative information by demonstrating a positive relationship between credit market responses and uncertainty disclosure language, and that this relationship is mediated by investors’ implied asset volatility estimates.

  Link(s) to publication:

  https://www.sciencedirect.com/science/article/pii/S1815566923000309

  http://dx.doi.org/10.1016/j.jcae.2023.100380

• Sooy, M., 2023, "The Compliance Consequences of Fault Assignment and Sanction Strength in Sanctions", Behavioral Research in Accounting, September 35(2): 131 - 152.
  Abstract: Regulators rely heavily on “no-fault” settlements in their enforcement, where targets avoid costly litigation by accepting sanctions without admitting or denying fault. Considerable public debate surrounds the issue, but prior research has typically focused on financial dimensions of sanctions such as the magnitude of fines. I conduct an economic experiment where individuals face a costly compliance choice in the presence of sanctions that may either be greater than or less than the benefits of violating and may also require admission of fault. I observe that compliance quality is greater when sanctions assign fault. I also observe that, relative to strong sanctions, the frequency of compliance decreases under weak no-fault sanctions but does not decrease under weak fault sanctions. Lastly, I observe that non-decision-making participants struggle with the task of anticipating compliance, believing that compliance quality will increase in sanction strength but not fault although the opposite is true.

  Link(s) to publication:

  http://dx.doi.org/10.2308/bria-2022-034

• Barradale, N. J.; Goodson, B.; Sooy, M., 2022, "Does Accounting Measurement Influence Market Efficiency? A Laboratory Market Perspective", Behavioral Research in Accounting, September 34(2): 1 - 18.
  Abstract: Using laboratory markets where accounting regimes can be directly compared with equivalent economic parameters, we test whether and how two different accounting measurement bases – historical cost (HC) and mark-to-market (MTM) – influence trader perceptions and asset mispricing. Our results show that traders perceive otherwise equivalent assets differently by regime, consistent with accounting regimes imposing differential information processing costs. In the MTM regime, traders integrate market price information to a greater extent and integrate asset fundamental information to a lesser extent. We also observe that traders in the MTM regime express prospective preferences for information about future market prices, but in HC prefer information about future dividends. These individual-level effects correspond with greater market-level mispricing/bubbles under MTM. Our results suggest that accounting regimes can, on their own, contribute to price bubbles and their subsequent collapse.

  Link(s) to publication:

  https://meridian.allenpress.com/bria/article-abstract/doi/10.2308/BRIA-2020-049/484910/Does-Accounting-Measurement-Influence-Market?redirectedFrom=fulltext

  http://dx.doi.org/10.2308/BRIA-2020-049

• Bundy, S. C.; Mohapatra, P. S.; Sooy, M.; Stone, D. N., 2022, "Aristocracy or Meritocracy? The Role of Elite Pedigree and Research Performance in New Accounting Faculty Placements", Issues in Accounting Education, February 37(1): 19 - 39.
  Abstract: This paper investigates the joint and complex influences of elitism and merit in the hiring of new accounting faculty. Building on research showing that search committees value pedigree in hiring new faculty, we theorize both aristocratic (e.g., accessing or reinforcing elite networks) and meritocratic (e.g., signaling stronger future research potential) influences on the hiring of new accounting faculty. Using curriculum vitae from 381 Accounting Ph.D. Rookie Recruiting and Research Camps, we examine whether candidates graduating from elite accounting institutions place disproportionately higher than do their non-elite peers. Results suggest that elite pedigree predicts placement rank among candidates without favorable publication outcomes at top journals (e.g., acceptance or invitation to resubmit) but not among candidates with favorable publication outcomes. Favorable publication outcomes at other journals are unrelated to placement rank. The results suggest joint and complex aristocratic (elite-based) and meritocratic ( productivity-based) influences in new accounting faculty hiring.

  Link(s) to publication:

  http://dx.doi.org/10.2308/ISSUES-2020-083

• Brown, J. B.; Fisher, J.; Sooy, M.; Sprinkle, G., 2014, "The Effect of Rankings on Honesty in Budget Reporting", Accounting Organizations and Society, May 39(4): 237 - 246.
  Abstract: We conduct an experiment to investigate the effect of rankings, which are pervasive in practice, on the honesty of managers’ budget reports, which is important for sound decision making in organizations. Participants in our experiment are ranked in one of four ways: (1) firm profit, (2) own compensation, (3) both firm profit and own compensation, and (4) randomly, which serves as our baseline condition. None of the rankings affect participants’ remuneration. Compared to our baseline (random rankings) setting, where participants indeed exhibit honesty concerns, we find that rankings based on firm profit significantly increase honesty and that rankings based on own compensation significantly decrease honesty. Participants who received both rankings were significantly more honest than participants in the own compensation rankings condition. We did not, however, find significant differences in honesty between the both rankings and firm profit rankings conditions. As such, participants in the both rankings condition seemed to focus more on the firm profit metric than on the financially congruent own compensation metric. We also find that our results are stable across periods, suggesting that the effects of rankings neither increased nor dissipated over time. We discuss the contributions of our study and concomitant findings to accounting research and practice.

  Link(s) to publication:

  http://dx.doi.org/10.1016/j.aos.2014.03.001

• Miller, T.; Peffer, S.; Sooy, M.; Stone, D., 2014, "The IMA Educational Case Journal: A Retrospective of the First Five Years (2008-2012)", IMA Educational Case Journal, March 7(1): 1 - 17.
  Abstract: THIS REPORT PROVIDES A GUIDE TO the first five years of cases published in the IMA® Educational Case Journal (IECJ). Its goal is to promote the use of IECJ cases by facilitating instructors’ case searches based on teaching needs. It indexes published IECJ cases, classifying them according to several teaching-relevant dimensions: managerial accounting topic, CMA® (Certified Management Accountant) topic, target audience, case firm size, case industry, case firm legal entity type, and number of case downloads. It concludes with an analysis of case contributors and potential areas where future work could better link management accounting instruction and case use. It also provides an electronic resource to facilitate identifying relevant cases.

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