Make Your Work More Visible—
So It Can Have an Impact

Dana R. Hermanson
Professor of Accounting
Co-Founder – Corporate Governance Center, Kennesaw State University Research
Fellow – Corporate Governance Center at the University of Tennessee

Paul D. Lapides
Director – Corporate Governance Center, Kennesaw State University
Research Fellow – Corporate Governance Center at the University of Tennessee

Over the years, we have heard a common refrain from academics, “Outside of a few other professors and Ph.D. students, I’m not sure anybody really sees my work. I wish my research could have a greater impact in the business community.”

The Auditing Section’s Research Committee asked us to provide some thoughts on this issue—specifically, what can you do to make your work more visible, to give it a greater potential for impact in the business community? First, we will share our recent experience of issuing corporate governance and financial reporting principles through our university’s Corporate Governance Center. Then, we will offer some practical tips for making your work more visible.

The 21st Century Governance and Financial Reporting Principles
In March of 2002, Enron was still unfolding, and several groups had offered their thoughts on key reforms needed, best practices, etc. We decided that it made sense for the Corporate Governance Center to issue a statement reflecting our views on key governance issues (based on our experience in the field, our research, etc.).

To maximize the quality and credibility of our statement, we asked four of our Center’s Fellows (Mark Beasley (North Carolina State University), Joe Carcello (University of Tennessee), Todd DeZoort (University of Alabama), and Terry Neal (University of Tennessee) to participate in this effort. Through an iterative process, we developed ten governance principles and seven financial reporting principles that we believe are appropriate for U.S. public companies (see http://ksumail.kennesaw.edu/~dhermans/principl.htm).

The launch of our principles included the following steps:

• A press release issued on Ascribe, one of many services that distribute information to the press,
• Supporting local efforts by the public relations experts at our respective universities,
• Emails to almost all of the reporters with whom we had interacted on similar stories,
• Emails to key individuals and organizations within the governance, accounting, and academic communities, and
• Placing the principles and press release online at the Center’s website.

We had no idea what type of reception we would receive, as this was the first “position paper” we had issued from the Center. In fact, we knew that it was possible that our principles might be completely ignored by the press.

Initial coverage of the principles included The Associated Press, the AICPA website, The Corporate Library website, Corpgov.net, Public Sector News, the Knoxville News-Sentinel, the Corporate Board Member website, and several local papers and radio stations. We were encouraged by this degree of coverage, but by far the most extensive coverage came from a somewhat unexpected source, the Institute of Internal Auditors.

Just after the issuance of our principles (but unknown to us), the IIA was scheduled to make a presentation to the New York Stock Exchange as the NYSE was considering changes to its listing requirements. In its submission to the NYSE, the IIA endorsed our ten governance principles and reproduced the entire text. The IIA stated, “While many models could serve as the starting point for the development of sound corporate governance principles, the 21st Century Governance Principles for U.S. Public Companies, recently issued by the Corporate Governance Center at Kennesaw State University in Kennesaw, Georgia, appear to the Institute to be particularly appropriate. The Institute believes these ten principles provide a sound model for effective governance because, like the Corporate Governance Center, the IIA believes that sound governance is dependent on the synergy generated among the four components of the governance system: the board, management, internal auditors, and external auditors” (see http://www.theiia.org/iia/index.cfm?doc_id=3587).

The IIA later distributed its NYSE statement (including our ten governance principles) to the U.S. Securities and Exchange Commission, American Stock Exchange, National Association of Securities Dealers, National Association of Corporate Directors, Financial Executives International, all members of Congress, and appropriate White House staff. The governance principles also have been included in a number of IIA publications.

In short, the IIA’s efforts resulted in much wider distribution of our governance principles than we ever imagined, and the IIA’s endorsement surely served to enhance the credibility of our message. Had we not emailed the principles to the IIA President, none of this would have happened. While we cannot know exactly what impact our governance principles might have had on the deliberations of the NYSE and others, we are encouraged that many of the governance principles we advocated were included in the recommendations issued by the NYSE in 2002, includ- ing the call for all listed companies to have an internal audit function.

Even now, we continue to encounter uses and citations of the governance principles. For example, an article discussing the governance and financial reporting principles is cited in a corporate governance program at Harvard, and the principles will be included in a forthcoming Management textbook. We have presented the principles to numerous U.S. and international business groups, and have used the principles in our classes.

Ironically, we probably spent more time debating the financial reporting principles, yet they have received very little attention, demonstrating that you can never be sure how your work will be received.

Practical Tips for Making Your Work More Visible
Our experience with the principles makes it clear that you cannot rely on only one or two methods to distribute your work. Payoffs may come from unexpected places.

Here are five tips for making your work more visible:

1. Write for multiple audiences – If you want your work to be seen by the business community, you have to take it to them. In other words, you must write in the publications that they read. In addition to submitting papers to top academic journals, target some practitioner publications and the business press. For example, we have had excellent feedback from quotes and letters to the editor in The Wall Street Journal and Business Week. Several years ago, the first author had a letter in The Wall Street Journal criticizing Disney’s board. Soon after, he received a handwritten note from Disney CEO Michael Eisner. Clearly, many more people read a letter or quote in a major business publication than will ever read an academic article. If your letter or quote contains the substance of your major research findings, then you have essentially taken your research to the business community. You may get calls from people asking to see the full study or seeking your advice on related issues.
2. Mail (email) your work to key people – When you have an article or working paper that directly addresses an issue facing a regulator or other organization, send them your paper or at least an abstract of the paper. As long as you don’t get carried away, this is a low-cost way to share your work with the people who can act on your findings. We have found that many people are starved for good information, and your research may give them some of what they need. The 1999 release of the COSO sponsored study, Fraudulent Financial Reporting: 1987–1997 (Beasley, Carcello, and Hermanson), was done largely through direct mailings to key accounting and governance participants, as well as key members of the media. We believe that this direct mailing was essential to the attention this study received from regulators.
3. Get to know the media – Virtually every newspaper and business publication in the country is writing about accounting and auditing issues. Get to know the business reporters in your market. You can start with an email or phone call to introduce yourself; alternatively, your institution’s PR experts may have valuable contacts that you can leverage. Once you are quoted in a story, reporters from other publications will seek you out as an expert. Also, using the Profnet system (http://www2.profnet.com/) can lead to numerous contacts with the media. Finally, many local radio stations (or even public TV stations) have business shows or segments. Introduce yourself to the host or producer, and you may find that your work makes it to the radio or TV.
4. Share your work with your M.B.A. and E.M.B.A. students – If your institution has graduate programs, recognize that your M.B.A. and E.M.B.A. students may soon be major players in the local business community. Share your work with them in the classroom. In addition to helping you to integrate your teaching and research, you also may find that your current and former students can use some of your insights.
5. Speak to groups – Finally, get out and speak to business groups. Almost any presentation to a business group is an appropriate forum for sharing relevant research. Such presentations can lead to other opportunities, possibly including sponsorship of future studies, access to data, or access to research participants.
   
   The basic theme of this approach is, “Do excellent work that adds value to the academy and industry, collaborate whenever it will improve quality, and distribute your work in ways that can improve business practices.” Obviously, research that isn’t excellent or doesn’t add value will not have an impact on practice. More importantly, excellent work that nobody hears about also will not affect practice.
   
   We hope that this discussion will prompt some ideas for how to maximize the visibility and potential impact of your work.

21st Century Governance Principles for U.S. Public Companies

1. Interaction – Sound governance requires effective interaction among the board, management, the external auditor, and the internal auditor.
2. Board Purpose – The board of directors should understand that its purpose is to protect the interests of the corporation’s stockholders, while considering the interests of other stakeholders (e.g., creditors, employees, etc.).
3. Board Responsibilities – The board’s major areas of responsibility should be monitoring the CEO, overseeing the corporation’s strategy, and monitoring risks and the corporation’s control system. Directors should employ healthy skepticism in meeting these responsibilities.
4. Independence – The major stock exchanges should define an “independent” director as one who has no professional or personal ties (either current or former) to the corporation or its management other than service as a director. The vast majority of the directors should be independent in both fact and appearance so as to promote arm’s-length oversight.
5. Expertise – The directors should possess relevant industry, company, functional area, and governance expertise. The directors should reflect a mix of backgrounds and perspectives. All directors should receive detailed orientation and continuing education to assure they achieve and maintain the necessary level of expertise.
6. Meetings and Information – The board should meet frequently for extended periods of time and should have access to the information and personnel it needs to perform its duties.
7. Leadership – The roles of Board Chair and CEO should be separate.
8. Disclosure – Proxy statements and other board communications should reflect board activities and transactions (e.g., insider trades) in a transparent and timely manner.
9. Committees – The nominating, compensation, and audit committees of the board should be composed only of independent directors.
10. Internal Audit – All public companies should maintain an effective, full-time internal audit function that reports directly to the audit committee.

21st Century Financial Reporting Principles for U.S. Public Companies

1. Reporting Model – The current GAAP financial reporting model is becoming increasingly less appropriate for U.S. public companies. The industrial-age model currently used should be replaced or enhanced so that tangible and intangible resources, risks, and performance of information-age companies can be effectively and efficiently communicated to financial statement users. The new model should be developed and implemented as soon as possible.
2. Philosophy and Culture – Financial statements and supporting disclosures should reflect economic substance and should be prepared with the goal of maximum informativeness and transparency. A legalistic view of accounting and auditing (e.g., “Can we get away with recording it this way?”) is not appropriate. Management integrity and a strong control environment are critical to reliable financial reporting.
3. Audit Committees – The audit committee of the board of directors should be composed of independent directors with financial, auditing, company, and industry expertise. These members must have the will, authority, and resources to provide diligent oversight of the financial reporting process. The board should consider the risks of audit committee member stock/stock option holdings and should set audit committee member compensation at an appropriate level given the expanded duties and risks faced by audit committee members. The audit committee should select the external auditor, evaluate external and internal auditor performance, and approve the audit fee.
4. Fraud – Corporate management should face strict criminal penalties in fraudulent financial reporting cases. The Securities and Exchange Commission should be given the resources it needs to effectively combat financial statement fraud. The board, management, and auditors all should perform fraud risk assessments.
5. Audit Firms – Audit firms should focus primarily on providing high-quality audit and assurance services and should perform no consulting for audit clients. Audit firm personnel should be selected, evaluated, compensated, and promoted primarily based on technical competence, not on their ability to generate new business. Audit fees should reflect engagements’ scope of work and risk.
6. External Auditing Profession – Auditors should view public accounting as a noble profession focused on the public interest, not as a competitive business. The profession should carefully consider expanding audit reports beyond the current “clean” versus modified dichotomy so as to enhance communication to financial report users.
7. Analysts – Analysts should not be compensated (directly or indirectly) based on the investment banking activities of their firms. Analysts should not hold stock in the companies they follow, and they should disclose any business relationships between the companies they follow and their firms.

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