This paper employs theory of normal organizational wrongdoing and investigates the joint effects of management tone and the slippery slope on financial reporting misbehavior. In Study 1, we investigate assumptions about the effects of sliding down the slippery slope and tone at the top on financial executives’ decisions to misreport earnings. Results of Study 1 indicate that executives are willing to engage in misreporting behavior when there is a positive tone set by the Chief Financial Officer, regardless of the presence (...) or absence of a slippery slope. A negative tone set by the CFO does not facilitate the transition from minor indiscretions to financial misreporting. In Study 2, we find that auditors evaluating executives’ decisions under the same conditions as those in Study 1 do not react to the slippery slope condition, but auditors assess higher risks of fraud when the CFO sets a negative tone. Overall, our results indicate that many assumptions about the slippery slope and tone at the top should be questioned. We provide evidence that pro-organizational behaviors and incrementalism yield new insights into the causes of ethical failures, financial misreporting behavior, and failures of corporate governance mechanisms. (shrink)

Management has the opportunity to promote self-serving accounting practices, such as earnings management, when management can effectively avoid oversight by the audit committee. This article investigates the effects of financial knowledge and dispositional trust on the ability of audit committee members to recognize management attempts to avoid full disclosure to the board and potentially deceive board members. The results of a controlled laboratory experiment with 40 experienced audit committee member participants indicate that: Audit committee members with less financial knowledge are (...) more likely to accept insufficient client explanations for accounting judgments than are more knowledgeable audit committee members; Audit committee members with less financial knowledge are more likely to reject sufficient client explanations for accounting judgments than are more knowledgeable audit committee members; and Audit committee members that place higher levels of trust in others are more likely to accept insufficient client explanations for accounting judgments than are less trusting committee members. (shrink)

Significant advances have recently been made in our understanding of the mechanisms of activation of proteins that require processing. Often this involves endoproteolytic cleavage of precursor forms at basic residues, and is carried out by a group of serine endoproteinases, termed the proprotein convertases. In mammals, seven different convertases have been identified to date. These act in both the regulated secretory pathway for the processing of prohormones and proneuropeptides and in the constitutive secretory pathway, in which a variety of proproteins (...) are activated endoproteolytically. The recently completed sequence of the nematode Caenorhabditis elegans genome affords a unique opportunity to examine the entire proprotein convertase family in a multicellular organism. Here we review the nature of the family, emphasising the structural features, characteristic of the four nematode genes, that supply all of the necessary functions unique to this group of serine endoproteinases. Studies of the C. elegans genes not only provide important information about the evaluation of this gene family but should help to illuminate the roles of these proteins in mammalian systems. BioEssays 22:545–553, 2000. © 2000 John Wiley & Sons, Inc. (shrink)

Chromosome ends have been implicated in the meiotic processes of the nematode Caenorhabditis elegans. Cytological observations have shown that chromosome ends attach to the nuclear membrane and adopt kinetochore functions. In this organism, centromeric activity is highly regulated, switching from multiple spindle attachments all along the chromosome during mitotic division to a single attachment during meiosis. C. elegans chromosomes are functionally monocentric during meiosis. Earlier genetic studies demonstrated that the terminal regions of the chromosomes are not equivalent in their meiotic (...) potentials. There are asymmetries in the abilities of the ends to recombine when duplicated or deleted. In addition, mutations in single genes have been identified that mimic the meiotic effects of a terminal truncation of the X chromosome. The recent cloning and characterization of the C. elegans telomeres has provided a starting point for the study of chromosomal elements mediating the meiotic process. (shrink)

Management has the opportunity to promote self-serving accounting practices, such as earnings management, when management can effectively avoid oversight by the audit committee. This article investigates the effects of financial knowledge and dispositional trust on the ability of audit committee members to recognize management attempts to avoid full disclosure to the board and potentially deceive board members. The results of a controlled laboratory experiment with 40 experienced audit committee member participants indicate that: (1) Audit committee members with less financial knowledge (...) are more likely to accept insufficient client explanations for accounting judgments than are more knowledgeable audit committee members; (2) Audit committee members with less financial knowledge are more likely to reject sufficient client explanations for accounting judgments than are more knowledgeable audit committee members; and (3) Audit committee members that place higher levels of trust in others are more likely to accept insufficient client explanations for accounting judgments than are less trusting committee members. (shrink)