Professor Elam

Wednesday May 10, 2017

Yeret Bustos – Rules Versus Principle

Yeret took a look at the principle based IFRS rules versus the Rule Based GAAP we use in the states. The large accounting firms are lobbying in the press for a more principle based system. The poster does  a good job of showing the difference in the two with far fewer rules in IFRS and in my opinion many that make more sense such as arrangement of the Cash Flow Statement.

Rachel Shore – Ethic in the Service Industry

I was anxious to examine this one in detail after reading that Rachel herself has spent seven years as a server at Olive Garden and BJ Brewhouse.  Rachel notes the employee turnover rate in the restaurant industry is 72.9% compared with 46.1% in the total private sector. And she performed some original research. She obtained one hundred answers to a ten question survey conducted among both present and prior servers. She then presented the results showing massive evidence of fraud. Her solution is to pay the servers more, As it is the server sees the guest, not the company as their real employer as that is who pays them. No wonder loyalty is out the window.  And she suggests some improvement on handling coupons and discounts. Often the server will turn in the discount and pocket the difference as indicated by the survey.  Well done this is a candidate for a published case study.

Vicky Salazar, Brenda Reyes – Turnover at the Big 4

Interestingly one student is working for a Big 4 and the other is employed by one of the next seven large firms in the US. Their study shows higher turnover in the Big 4.  The researchers gathered from a variety of sources including eblogs and surveys. It appears they did some original research among firms in San Antonio finding the turnover was not actually as high as expected. A bar graph presents  categories explaining why individuals leave.  Well done and I will also be following up with them on a case study.

Travis Valadez – Goodwill Where Does the Money Go

One of my friends has commented that Goodwill is the fastest growing retail franchise in America. I don't know what prompted Travis interest in this but the results are quite revealing.And indeed, Goodwill refers to its locations as franchises, just like MCD!  Goodwill is paying execs in each franchise some some half million dollars while paying some employees as little as 22 cents per hour. No wonder complaints are beginning to surface.  Good work in this Travis!

Nelson Thomas and Gary Turner, The Lucifer Effect

The Lucifer Effect was the result of an experiment that placed 'normal people' as prisoners and guards in an actual prison. Chaos soon developed with Mental abuse and torture used by the newly minted guards. The experiment was quickly curtailed.

I had a bit of a hand in this as the students were looking for a similar corporate example. I suggested the story detailed in Den of Thieves by James Stewart about Mike Miliken. The same elements were there that allowed Milken to escape control. He was making his firm, Drexel so much money he was allowed to move to California, the other end of the USA, and avoid supervision. And so he became both the bid and the ask in his own market, free to price bonds as he pleased. Mark ups of  25% were not uncommon.  Nelson and Gary  draw parallels between the Standford experiment and Milken.