Current Research Initiatives
Research Review Committee
Risk Management research proposals in response to RFPs are reviewed by a faculty committee. The faculty review committee also serves as an advisory board for new RFP topics and invited academic research seminars. The faculty members are as follows:
Chair: Donna Fletcher, Associate Professor Finance Department
Anthony Buono, Professor Management and Behavioral and Political Sciences Department
Scott Callan, Professor Economics Department
William Gribbons, Professor Information Design and Communication Department
Gregory P. Hall, Associate Professor Behavioral and Political Sciences Department
James E. Hunton, Trustee Professor Accountancy Department
William Schiano, Associate Professor Computer Information Systems Department
Risk Management RFP Submission, Review and Funding Process
- Proposal should address the defined topic areas.
- Teams should be comprised of the appropriate faculty expertise to answer the research question posed.
- The research proposal must be accompanied by a preliminary literature review and defined methodology
There are generally two screens, using a revise and resubmit process before final selection is made for funding.
Research Workshops and Academic Conferences
Three research workshops are held each academic year, ranging from presentations by the funded research teams on preliminary findings to invited external academic seminars in areas of Bentley faculty research. Research teams also periodically sponsor academic conferences in their area of risk management research.
Scheduled Workshops and Conferences to date
February 11, 2004
Robbert, Haughton and Senne : The effect of data quality on risk management
October 26, 2004
Skelton and Thamhain: Risk Management in Product Development Projects
November 17, 2004
2nd Annual Conference on Securing the Weak Link in Cyberspace
February 16, 2005
Culnan, Foxman and Ray: Securing the Weak Link in Cyberspace
April 13, 2005
Earle and Madek: The New World of Risk Post Sarbanes-Oxley for Corporate Attorneys and their Boards
April 27, 2005
Kimball and Steblovskaya: Risk Management in Incomplete Markets Under High Volatility
October 26, 2005
Hall, Schwartzkopf, Levy and Osterheld: Insights into Not-for-Profit Governance from Educational Institutions: Deliberations on the Sarbanes-Oxley Act
November 30, 2005
Adams, Gupta, Haughton and Leeth: An Analysis of Gender Differences in Executive Compensation
February 01, 2006
Read and Abdolmohammadi: Corporate Governance Ratings and Financial Restatements
April 19, 2006
Thamhain and Skelton: Risk Management of Product Devleopment Projects in the Area of Enterprise Risk Management - Phase II
February 7 2007
Fletcher, Abdolmohammadi and Thibodeau: Implementing company level controls: An ethical perspective on the monitoring role of boards of directors
April 18, 2007
Josephy, Kimball and Steblovskaya: Optimal Hedging in Incomplete Markets Under High Volatility
Funded Research Projects
- Culnan, Foxman and Ray
Securing the weak link in cyberspace
This study addresses the question of how to promote awareness and action on the part of small businesses and consumers to securing the internet. The main goal of the
study is to frame the issue and provide a structure for implementing these recommendations utilizing stakeholder analysis. Stakeholder analysis will identify perceived value
and cost asymmetries and shape social marketing recommendations to achieve effective attitude and behavior change. It will also help identify those stakeholders with
the best potential to perform consumer education. Based on this analysis, the team will conduct a survey to measure the extent to which consumers are aware of security issues, have implemented security software on their home computers, and to test their preferences for accessing security solutions (the marketing mix).
Refereed Conference Proceedings and Presentations
“Securing the Weakest Link in Cyberspace: Marketing Computer Security for Home PC’s to Consumers” Presented at: “Research Reaching New Heights,” the 2004 American Marketing Association Marketing and Public Policy Conference, May 21 to 22, 2004, Salt Lake City, Utah. (Refereed abstract published in proceeding).
Bentley College Conferences
November 17, 2004 . 2nd annual Bentley Conference on “Securing the Weak Link in Cyberspace.” (First conference was held in December 2002 and was co-sponsored by the Massachusetts Attorney General’s Office and a trade association.
Funding by Symantec to hire Harris Interactive to collect the data for the survey : $25,000
- Robbert, Haughton and Senne
The effect of data quality on risk management
The objective of this study is to derive a measure for determining the quality of system data as well as a measure for the quality of information based on this data that is used in reports for decision makers who must assess risks. A subset of clean data is used to create a statistical model of a decision that relies on the information. Simulated perturbations of the clean data are then used to establish a boundary for determining what degree of error produces erratic, unusable results. This approach has the advantage that it can be used to show the effects of poor data quality on the result of the analysis as accuracy declines for any reason.
Refereed Conference Proceedings and Presentations
Robbert, Mary Ann, Lynne Senne and Dominique Haughton, "Information Quality Assessment", Advances in Decision Technology and Intelligent Information Systems, published by International Institute for Advanced Studies in Systems Research and Cybernetics, Baden-Baden, Germany, 2004.
Haughton,Dominique, Mary Ann Robbert, Lynne Senne and Vismay Gada, “Effect of Dirty Data on Analysis Results,” Proceedings of 8th International Conference on Information Quality, Boston, Mass., 2003
Mary Ann Robbert, Lynne Senne and Dominique Haughton, “A Framework for Cleaning Data: Bad Data and Mortgage Decisions”, Proceedings of the CA/SE ’05 Workshops, Porto, Portugal, 2005
Mary Ann Robbert, Dominique Haughton and Lynne Senne, "Graphical Tools for Assessing Information Quality: Loan Application Decisions", International Journal of Technology, Policy and Management, Vol.4 No. 4, Winter 2005
- Abdolmohammadi and Read
Audit Opinion Modifications and Financial Restatements
We examine the frequency of audit opinion modifications (e.g., going concern, GAAP consistency), in years preceding and in the period of restatement, in a sample of 180 companies that restated financial statements for the reporting periods 1998-2001 as compared with a control sample matched on the basis of industry, size, reporting period, and auditor. Following prior literature (Kinney et al. 2003, Myers et al. 2004), we expect restatement firms to be in weaker financial condition, and to make more frequent changes in second tier GAAP as they operate within the gray areas of accounting. Hence, we anticipate restatement firms, in periods immediately preceding restatement as well as the period of restatement, to be the recipients of more going-concern reports and audit opinions modified for lack of consistent application of accounting principles. Overall, our analysis indicates that auditors modify their opinions for the restatement sample at a rate twice that of the control sample for each of the three years immediately preceding restatement as well as the period of restatement. This finding suggests that certain audit opinion modifications (e.g., going concern, lack of consistency in application of accounting principles) might be relevant information to users of financial statements as they assess the possibility of future financial restatement.
Refereed Conference Presentations
“An Investigation of the Effects of Audit-firm Tenure on Financial Restatements, Audit Opinion Modifications, and Total Accruals” at the Forum of the Mid-year meeting of the American Accounting Association (Clearwater, Fla., January16 to 17, 2004).
“Audit Opinion Modifications and Financial Restatements” at the Boston accounting Research colloquium (BARC) at Suffolk University (scheduled for October 1, 2004 ).
Abdolmohammadi, M.J. and W.J. Read. “Are Audit Opinion Modifications Associated with Future Financial Restatements?” Journal of Forensic Accounting. VII (1, January-June): 39-64 2006.
Skelton and Thamhain
Risk management of product development projects
This study is an investigation of management practices and business processes in the area of enterprise risk management (ERM) with application focus on the “fuzzy front end” of new product development projects. The objective of this research is to examine the business processes, organizational support systems, managerial tools and people issues that affect the ability of the enterprise to identify and deal with risks in high-technology product development projects. employed by companies for identifying, minimizing and managing risks. Further, the study will examine the people issues and critical support functions necessary for using these tools effectively within the framework of modern Integrated Product Development (IPD).
Working Papers Submissions
Skelton, Terance M and Thamhain, Hans J (2004). “Managing product development risks: Considering the total NPD cycle.“ Submitted to Journal of Product Innovation Management , June 2004.
Skelton, Terance M and Thamhain, Hans J (2004). “Managing risks in high-tech projects.” Submitted to Project Management Journal, July 2004.
Skelton, Terance M and Thamhain, Hans J (2004). “Managing risks in high-tech product developments.” Targeted for publication in IEEE Transactions on Engineering Management or Journal for Product Innovation and Management in the fall of 2005.
Refereed Conference Proceedings and Presentations
Skelton, Terance M and Thamhain, Hans J (2004). “Risk Management Must Start Early in the Project Lifecycle” (co-authored with T. Skelton), Proceedings, 18 th IPMA World Congress on Project Management, 18-22 June 2004, Budapest , Hungary.
Skelton, Terance M and Thamhain, Hans J (2004). “Proactive risk management of high-tech projects: beyond analytical methods” (co-authored with T. Skelton),Proceedings, 2004 International Conference on Management of Technology, IAMOT 2004, Washington, DC, April 3-7, 2004.
Skelton, Terance M and Thamhain, Hans J (2003). “Going Beyond Analytical Methods: Managing Risks in High-Tech Product Developments,” International Conference on NPD Project Innovation, Fort Worth , TX , October 20-22, 2003.
Skelton, Terance M and Thamhain, Hans J (2003). “The human side of managing risks in high-tech product developments,” Proceedings, 2003 IEEE International Engineering Management Conference, Albany , NY , November 2-3, 2003.
Panel Discussion at Professional Conferences
Skelton, Terance M and Thamhain, Hans J (2003). “Managing risk at the front end,” Roundtable Discussion at the International Conference on NPD Project Innovation, Fort Worth, TX, October 20-22, 2003
Skelton, Terance M and Thamhain, Hans, “Managing Risk in High Technology,” Chapter 12 in Management of Technology, New York: Wiley & Sons, 2005.
- Earle and Madek
The New World of Risk Post Sarbanes-Oxley for Corporate Attorneys and their Boards: A Prescription for Action and Assessment of Impact
The Sarbanes–Oxley Act of 2002 (hereinafter Sarbanes-Oxley Act will be referred to as SOA) imposed a myriad of requirements on boards and corporate attorneys. The SEC is charged with promulgating rules to insure compliance with this Congressional mandate and many are still in the process of being written. The question remains will the SOA in fact deter the actions it was drafted for and will the price be an acceptable one? The project explores attorneys' obligations to be a “whistleblower” under SOA through statutory and case research. The questions examined include how much latitude is there in these obligations, identification of the risks to all parties, determination of the trigger standard and how such a standard has been operationalized. This phase will focus on both identified problems and proposed solutions. In addition to this traditional approach, the research will be augmented with qualitative data gleaned from interviews of attorneys.
Accepted for Publication
“The New World of Risk for Corporate Attorneys and Their Boards Post Sarbanes-Oxley: An Assessment of Impact and a Prescription for Action,” forthcoming atBerkeley Business Law Journal.
Earle and Madek. August 2004.“The New World of Risk for Corporate Attorneys and Their Boards Post Sarbanes-Oxley: An Assessment of Impact and a Prescription for Action” , Academy of Legal Studies in Business (ALSB), Ottawa, Canada.
- Kimball and Steblovskaya
Risk Management In Incomplete Markets Under High Volatility
The proposed project involves developing a new, robust, discrete time financial market model of incomplete markets where stock price jumps are caused by disclosure of misstated corporate financial information. These jumps may occur over very short periods of time and cause significant changes in stock price volatilities. While the link between poor corporate governance and unexpected stock price drops is clear, analysis of the stock price reaction of Enron, Tyco and Worldcom show that the size of the drop and duration of the market response can vary. The proposed research will study the effect of these stock price jumps on option pricing.
Working Paper Submissions
Albeverio, S., Steblovskaya, V., Schmitz, M. and Wallbaum, K.”Poisson Processes in a Model with Interacting Assets”, submitted to Stochastic Processes and Applications
- Conference Presentation:
Invited to present a survey of the research results at the International conference Crimean Autumn Mathematical School-Symposium (KROMSH-2004), Simferopol , Ukraine , September 18 to 29, 2004.
- Academic Seminar Presentations:
Recent Developments in Discrete Modeling of Financial Markets , given at Institute of Applied Mathematics, University of Bonn (Germany) July 2004.
Poisson Processes in a Model with Interacting Assets, given at Nicolaus Copernicus University of Torun ( Poland ) July 2004.
Refereed Conference Proceedings
Josephy, N., Kimball, L., and Steblovskaya, V.: “Risk Management in Incomplete Markets.” Proceedings of the Hawaii International Conference on Statistics, Mathematics and Related Fields, January 16 to 18, 2006.
- Conference Presentation:
- Abdolmohammadi and Read
Corporate Governance Ratings and Financial Restatements
A growing area of interest in financial restatement research is the investigation of a possible linkage between non-GAAP financial reporting and corporate governance. To date, the studies in this area have primarily relied on various audit committee characteristics, such as director independence and financial expertise as measures of corporate governance. We know of no study that has examined a possible association between financial restatements and multiple corporate governance rankings, as developed by a recognized corporate governance research and ratings agency. Hence, the objective of this study is to use the corporate governance proprietary ratings, as developed by Institutional Shareholder Services (ISS), the leading provider of corporate governance data services, to investigate possible differences in corporate governance attributes between companies that restated their financial statements in the period 2002 through June 2004 and a control sample of matched companies that did not restate.
- Hall, Schwartzkopf, Levy and Osterheld
Insights into Not-for-Profit Governance from Educational Institutions': Deliberations on the Sarbanes-Oxley Act
This research study investigates the internal and external forces that colleges and universities are dealing with as they consider whether to adopt or adapt modified provisions of the Sarbanes-Oxley Act of 2002, as well as, the manner in which they communicate their deliberations and decisions to their internal and external stakeholders. The methodology will involve structured interviews with business officers at the institution, business advisors such as legal counsel or financial advisors, internal auditors (where present), external auditors, trustees, and representatives of grantors. Further, surveys of internal parties concerning the flow of communications about the Act and other governance issues and surveys of other institutional stakeholders such as alumni/ae to determine their perceptions of the institution will be utilized.
- Josephy, Kimball and Steblovskaya
Optimal Hedging in Incomplete Martkets Under High Volatility
This research project is an extension of our ongoing research in risk management in incomplete markets under high volatility. In this project, we fully develop and implement the new risk evaluation methodology for option trading in an incomplete market with unexpected stock price jumps. We develop a numerical solution technique using statistical and computational methods, including the development of software for choosing a hedging strategy from a set of possible non arbitrage strategies. We will also extend our model theoretically to the case of stock price jumps with the Markov type dependence, as well as the case of independent, but not identically distributed stock price jumps. Finally, we will investigate higher dimensional cases.
Josephy, N., Kimball, L., Nagaev, A.V., Pasniewski, M., and Steblovskaya, V.: “An Algorithmic Approach to Non-self-financing Hedging in a Discrete Time Incomplete Market,” Discrete Mathematics and Applications, 17, 2, 189-207 (2007)
Adams, Gupta, Haughton and Leeth
An Analysis of Gender Differences in Executive Compensation
There is a considerable literature documenting a gender gap in employee compensation. Our work will extend this literature by examining the gender gap in compensation for the top five executives at U.S. based corporations. Gaps among groups, of which the gender gap considered here is a special case, are most commonly tested with a dummy variable introduced in the regression model as an independent variable, in the presence of other independent variables expected (often through theory, or experience) to be predictors (such as years of experience, or years of education, etc). When sample sizes are large enough, another method used in the literature to identify gaps among groups is an Oaxaca decomposition. Specifically:
where the subscripts f and m represent female and male; is the mean wage; is a vector of mean characteristics; and is a vector of regression coefficients. The first term on the right hand side of the equation represents differences in mean wages caused by differences in characteristics (the proportion of the wage gap explained by observable differences between men and women in areas such as education and experience), while the second term represents differences in mean wages caused by differences in the way men and women are paid for similar characteristics (the proportion of the wage unexplained by economic factors, a measure of labor market discrimination). To our knowledge, there is one recent paper which investigates the wage gap in corporate compensation, using data from the EXECUCOMP database up to 1997 only, and using both linear regression and Oaxaca decompositions as mentioned above. Our study will build on this work by using more recent and more complete data, and by building models of (the logarithm of) wages which will improve on existing linear models through the use of methods such as MARS (Multiple Adaptive Regression Splines) to help identify interactions and non-linearities (for an example of such a usage of this methodology, please see Baulch et al
Adams, S.M., Gupta, A., & Leeth, J.D. (forthcoming) “Are female executives overrepresented in precarious leadership positions?,” British Journal of Management.
Adams, S.M., Gupta, A., Haughton, D.M., and Leeth, J.D. (2007) “Gender differences in CEO compensation: Evidence from the U.S.,” Women in Management Review, 22(3), 208-224
Skelton and Thamhain
Risk Management of Product Devleopment Projects in the Area of Enterprise Risk Management - Phase II
Phase II is a continuation of our investigation into the fuzzy front end of new product development projects, focusing on the organizational/managerial issues of risk management. In this phase, we will examine the organizational environment, work processes, and leadershihp stule conducive to proactively dealing with risk in technology-based new product development projects. Paticular focus will be on the preventive actions that can be taken at the front-end of the product development, while looking ahead in the project lifecycle to identify areas for potential risk reduction. Three areas will be examined in particular: (1) the project work and its transfer processes, (2) the effects organizational cultures and values, and (3) the linkages between business strategy and product development risk.
Skelton, Terance M and Thamhain, Hans, “Managing Risk in New Product Development Projects: Beyond Analytical Methods,” Project Perspectives, Vol. 27, No. 1 pp 12-20, 2006