Detecting Earnings Management Using Neural Networks

Detecting Earnings Management Using Neural Networks. Trying to balance between relevant and reliable accounting data, generally accepted accounting principles (GAAP) allow, to some extent, the company management to use their judgment and to make subjective assessments when preparing financial statements. The opportunistic use of the discretion in financial reporting is called earnings management. There have been a considerable number of suggestions of methods for detecting accrual based earnings management. A majority of these methods are based on linear regression. The problem with using linear regression is that a linear relationship between the dependent variable and the independent variables must be assumed. However, previous research has shown that the relationship between accruals and some of the explanatory variables, such as company performance, is non-linear. An alternative to linear regression, which can handle non-linear relationships, is neural networks. The type of neural network used in this study is the feed-forward back-propagation neural network. Three neural network-based models are compared with four commonly used linear regression-based earnings management detection models. All seven models are based on the earnings management detection model presented by Jones (1991). The performance of the models is assessed in three steps. First, a random data set of companies is used. Second, the discretionary accruals from the random data set are ranked according to six different variables. The discretionary accruals in the highest and lowest quartiles for these six variables are then compared. Third, a data set containing simulated earnings management is used. Both expense and revenue manipulation ranging between -5% and 5% of lagged total assets is simulated. Furthermore, two neural network-based models and two linear regression-based models are used with a data set containing financial statement data from 110 failed companies. Overall, the results show that the linear regression-based models, except for the model using a piecewise linear approach, produce biased estimates of discretionary accruals. The neural network-based model with the original Jones model variables and the neural network-based model augmented with ROA as an independent variable, however, perform well in all three steps. Especially in the second step, where the highest and lowest quartiles of ranked discretionary accruals are examined, the neural network-based model augmented with ROA as an independent variable outperforms the other models.

Multiple Perspectives on Networks: Conceptual Development, Application and Integration in an Entrepreneurial Context

Multiple Perspectives on Networks: Conceptual Development, Application and Integration in an Entrepreneurial Context. The purpose of this thesis is to enhance cross-fertilization between three different approaches to network research. The business network approach may contribute in terms of how relationships are created, developed and how tie content changes within ties, not only between them. The social network approach adds to the discussion by offering concepts of structural change on a network level. The network approach in entrepreneurship contributes by emphasizing network content, governance and structure as a way of understanding and capturing networks. This is discussed in the conceptual articles, Articles 2 and 3. The ultimate purpose of this thesis is to develop a theoretical and empirical understanding of network development processes. This is fulfilled by presenting a theoretical framework, which offers multiple views on process as a developmental outcome. The framework implies that change ought to be captured both within and among relationships over time in the firm as well as in the network. Consequently, changes in structure and interaction taking place simultaneously need to be included when doing research on network development. The connection between micro and macro levels is also stressed. Therefore, the entrepreneur or firm level needs to be implemented together with the network level. The surrounding environment impacts firm and network development and vice versa and hence needs to be integrated. Further, it is necessary to view network development not only as a way forward but to include both progression and regression as inevitable parts of the process. Finally, both stability and change should be taken into account as part of network development. Empirical results in Article 1 show support for a positive impact of networks on SME internationalization. Article 4 compares networks of novice, serial and portfolio entrepreneurs but the empirical results show little support for differences in the networks by type of entrepreneur. The results demonstrate that network interaction and structure is not directly impacted by type of entrepreneur involved. It indicates instead that network structure and interaction is more impacted by the development phase of the firm. This in turn is in line with the theoretical implications, stating that the development of the network and the firm impacts each other, as they co-evolve.

Collective Network Capability in International Project Business Networks - A Case Study of the Business Network for the Ashanti Electrification Project in Ghana

Despite thirty years of research in interorganizational networks and project business within the industrial networks approach and relationship marketing, collective capability of networks of business and other interorganizational actors has not been explicitly conceptualized and studied within the above-named approaches. This is despite the fact that the two approaches maintain that networking is one of the core strategies for the long-term survival of market actors. Recently, many scholars within the above-named approaches have emphasized that the survival of market actors is based on the strength of their networks and that inter-firm competition is being replaced by inter-network competition. Furthermore, project business is characterized by the building of goal-oriented, temporary networks whose aims, structures, and procedures are clarified and that are governed by processes of interaction as well as recurrent contracts. This study develops frameworks for studying and analysing collective network capability, i.e. collective capability created for the network of firms. The concept is first justified and positioned within the industrial networks, project business, and relationship marketing schools. An eclectic source of conceptual input is based on four major approaches to interorganizational business relationships. The study uses qualitative research and analysis, and the case report analyses the empirical phenomenon using a large number of qualitative techniques: tables, diagrams, network models, matrices etc. The study shows the high level of uniqueness and complexity of international project business. While perceived psychic distance between the parties may be small due to previous project experiences and the benefit of existing relationships, a varied number of critical events develop due to the economic and local context of the recipient country as well as the coordination demands of the large number of involved actors. The study shows that the successful creation of collective network capability led to the success of the network for the studied project. The processes and structures for creating collective network capability are encapsulated in a model of governance factors for interorganizational networks. The theoretical and management implications are summarized in seven propositions. The core implication is that project business success in unique and complex environments is achieved by accessing the capabilities of a network of actors, and project management in such environments should be built on both contractual and cooperative procedures with local recipient country parties.

Multidimensionality of Actors in Business Networks: The Influence of Social Action in Pharmacy Networks in Finland

In the markets-as-networks approach business networks are conceived as dynamic actor structures, giving focus to exchange relationships and actors’ capabilities to control and co-ordinate activities and resources. Researchers have shared an understanding that actors’ actions are crucial for the development of business networks and for network dynamics. However, researchers have mainly studied firms as business actors and excluded individuals, although both firms and individuals can be seen as business actors. This focus on firms as business actors has resulted in a paucity of research on human action and the exchange of intangible resources in business networks, e.g. social exchange between individuals in social networks. Consequently, the current conception of business networks fails to appreciate the richness of business actors, the human character of business action and the import of social action in business networks. The central assumption in this study is that business actors are multidimensional and that their specific constitution in any given situation is determined by human interaction in social networks. Multidimensionality is presented as a concept for exploring how business actors act in different situations and how actors simultaneously manage multiple identities: individual, organisational, professional, business and network identities. The study presents a model that describes the multidimensionality of actors in business networks and conceptualises the connection between social exchange and human action in business networks. Empirically the study explores the change that has taken place in pharmaceutical retailing in Finland during recent years. The phenomenon of emerging pharmacy networks is highly contemporary in the Nordic countries, where the traditional license-based pharmacy business is changing. The study analyses the development of two Finnish pharmacy chains, one integrated and one voluntary chain, and the network structures and dynamics in them. Social Network Analysis is applied to explore the social structures within the pharmacy networks. The study shows that emerging pharmacy networks are multifaceted phenomena where political, economic, social, cultural, and historical elements together contribute to the observed changes. Individuals have always been strongly present in the pharmacy business and the development of pharmacy networks provides an interesting example of human actors’ influence in the development of business networks. The dynamics or forces driving the network development can be linked to actors’ own economic and social motives for developing the business. The study highlights the central role of individuals and social networks in the development of the two studied pharmacy networks. The relation between individuals and social networks is reciprocal. The social context of every individual enables multidimensional business actors. The mix of various identities, both individual and collective identities, is an important part of network dynamics. Social networks in pharmacy networks create a platform for exchange and social action, and social networks enable and support business network development.

Corporate Environmental Responsibility in Demand Networks (summary section only)

Research on corporate responsibility has traditionally focused on the responsibilities of companies within their corporate boundaries only. Yet this view is challenged today as more and more companies face the situation in which the environmental and social performance of their suppliers, distributors, industry or other associated partners impacts on their sales performance and brand equity. Simultaneously, policy-makers have taken up the discussion on corporate responsibility from the perspective of globalisation, in particular of global supply chains. The category of selecting and evaluating suppliers has also entered the field of environmental reporting. Companies thus need to tackle their responsibility in collaboration with different partners. The aim of the thesis is to further the understanding of collaboration and corporate environmental responsibility beyond corporate boundaries. Drawing on the fields of supply chain management and industrial ecology, the thesis sets out to investigate inter-firm collaboration on three different levels, between the company and its stakeholders, in the supply chain, and in the demand network of a company. The thesis is comprised of four papers: Paper A discusses the use of different research approaches in logistics and supply chain management. Paper B introduces the study on collaboration and corporate environmental responsibility from a focal company perspective, looking at the collaboration of companies with their stakeholders, and the salience of these stakeholders. Paper C widens this perspective to an analysis on the supply chain level. The focus here is not only beyond corporate boundaries, but also beyond direct supplier and customer interfaces in the supply chain. Paper D then extends the analysis to the demand network level, taking into account the input-output, competitive and regulatory environments, in which a company operates. The results of the study broaden the view of corporate responsibility. By applying this broader view, different types of inter-firm collaboration can be highlighted. Results also show how environmental demand is extended in the supply chain regardless of the industry background of the company.

Networks, Organisations and Men: Concepts and Interrelations

Research on men’s networks and homosociality in and around organisations can produce knowledge on organisational power relations, and contribute to the efforts to promote equality in working life. The search for a conceptual framework to study these issues arises in this paper from my ongoing work on men's social networks and gendered power in and around organisations. Men give each other social support through networks in which formal and informal relationships intermingle, but networks are also contexts of competition and oppression, and of construction of masculinities that are in hierarchical relations with each other and with femininities. For studying the networks men have with each other in work organisations I suggest a broader starting point that contextualises these homosocial networks with men’s other personal relations, and integrates different perspectives deriving from social network analysis, critical studies on men and organisational studies.

Why Don't Students Talk? Causes of Foreign Language Communication Apprehension in English Classes: A Comparison of High Apprehensive and Low Apprehensive Upper Secondary Students.

OBJECTIVES. Oral foreign language skills are an integral part of one's social, academic and professional competence. This can be problematic for those suffering from foreign language communication apprehension (CA), or a fear of speaking a foreign language. CA manifests itself, for example, through feelings of anxiety and tension, physical arousal and avoidance of foreign language communication situations. According to scholars, foreign language CA may impede the language learning process significantly and have detrimental effects on one's language learning, academic achievement and career prospects. Drawing on upper secondary students' subjective experiences of communication situations in English as a foreign language, this study seeks, first, to describe, analyze and interpret why upper secondary students experience English language communication apprehension in English as a foreign language (EFL) classes. Second, this study seeks to analyse what the most anxiety-arousing oral production tasks in EFL classes are, and which features of different oral production tasks arouse English language communication apprehension and why. The ultimate objectives of the present study are to raise teachers' awareness of foreign language CA and its features, manifestations and impacts in foreign language classes as well as to suggest possible ways to minimize the anxiety-arousing features in foreign language classes. METHODS. The data was collected in two phases by means of six-part Likert-type questionnaires and theme interviews, and analysed using both quantitative and qualitative methods. The questionnaire data was collected in spring 2008. The respondents were 122 first-year upper secondary students, 68 % of whom were girls and 31 % of whom were boys. The data was analysed by statistical methods using SPSS software. The theme interviews were conducted in spring 2009. The interviewees were 11 second-year upper secondary students aged 17 to 19, who were chosen by purposeful selection on the basis of their English language CA level measured in the questionnaires. Six interviewees were classified as high apprehensives and five as low apprehensives according to their score in the foreign language CA scale in the questionnaires. The interview data was coded and thematized using the technique of content analysis. The analysis and interpretation of the data drew on a comparison of the self-reports of the highly apprehensive and low apprehensive upper secondary students. RESULTS. The causes of English language CA in EFL classes as reported by the students were both internal and external in nature. The most notable causes were a low self-assessed English proficiency, a concern over errors, a concern over evaluation, and a concern over the impression made on others. Other causes related to a high English language CA were a lack of authentic oral practise in EFL classes, discouraging teachers and negative experiences of learning English, unrealistic internal demands for oral English performance, high external demands and expectations for oral English performance, the conversation partner's higher English proficiency, and the audience's large size and unfamiliarity. The most anxiety-arousing oral production tasks in EFL classes were presentations or speeches with or without notes in front of the class, acting in front of the class, pair debates with the class as audience, expressing thoughts and ideas to the class, presentations or speeches without notes while seated, group debates with the class as audience, and answering to the teacher's questions involuntarily. The main features affecting the anxiety-arousing potential of an oral production task were a high degree of attention, a large audience, a high degree of evaluation, little time for preparation, little linguistic support, and a long duration.

Relative Contribution of Cell Proliferation and Microvascularity to Metastasis in Malignant Uveal Melanoma

Uveal melanoma (UM) is the second most common primary intraocular cancer worldwide. It is a relatively rare cancer, but still the second most common type of primary malignant melanoma in humans. UM is a slowly growing tumor, and gives rise to distant metastasis mainly to the liver via the bloodstream. About 40% of patients with UM die of metastatic disease within 10 years of diagnosis, irrespective of the type of treatment. During the last decade, two main lines of research have aimed to achieve enhanced understanding of the metastasis process and accurate prognosis of patients with UM. One emphasizes the characteristics of tumor cells, particularly their nucleoli, and markers of proliferation, and the other the characteristics of tumor blood vessels. Of several morphometric measurements, the mean diameter of the ten largest nucleoli (MLN) has become the most widely applied. A large MLN has consistently been associated with high likelihood of dying from UM. Blood vessels are of paramount importance in metastasis of UM. Different extravascular matrix patterns can be seen in UM, like loops and networks. This presence is associated with death from metastatic melanoma. However, the density of microvessels is also of prognostic importance. This study was undertaken to help understanding some histopathological factors which might contribute to developing metastasis in UM patients. Factors which could be related to tumor progression to metastasis disease, namely nucleolar size, MLN, microvascular density (MVD), cell proliferation, and The Insulin-like Growth Factor 1 Receptor(IGF-1R), were investigated. The primary aim of this thesis was to study the relationship between prognostic factors such as tumor cell nucleolar size, proliferation, extravascular matrix patterns, and dissemination of UM, and to assess to what extent there is a relationship to metastasis. The secondary goal was to develop a multivariate model which includes MLN and cell proliferation in addition to MVD, and which would fit better with population-based, melanoma-related survival data than previous models. I studied 167 patients with UM, who developed metastasis even after a very long time following removal of the eye, metastatic disease was the main cause of death, as documented in the Finnish Cancer Registry and on death certificates. Using an independent population-based data set, it was confirmed that MLN and extravascular matrix loops and networks were unrelated, independent predictors of survival in UM. Also, it has been found that multivariate models including MVD in addition to MLN fitted significantly better with survival data than models which excluded MVD. This supports the idea that both the characteristics of the blood vessels and the cells are important, and the future direction would be to look for the gene expression profile, whether it is associated more with MVD or MLN. The former relates to the host response to the tumor and may not be as tightly associated with the gene expression profile, yet most likely involved in the process of hematogenous metastasis. Because fresh tumor material is needed for reliable genetic analysis, such analysis could not be performed Although noninvasive detection of certain extravascular matrix patterns is now technically possible,in managing patients with UM, this study and tumor genetics suggest that such noninvasive methods will not fully capture the process of clinical metastasis. Progress in resection and biopsy techniques is likely in the near future to result in fresh material for the ophthalmic pathologist to correlate angiographic data, histopathological characteristics such as MLN, and genetic data. This study supported the theory that tumors containing epithelioid cells grow faster and have poorer prognosis when studied by cell proliferation in UM based on Ki-67 immunoreactivity. Cell proliferation index fitted best with the survival data when combined with MVD, MLN, and presence of epithelioid cells. Analogous with the finding that high MVD in primary UM is associated with shorter time to metastasis than low MVD, high MVD in hepatic metastasis tends to be associated with shorter survival after diagnosis of metastasis. Because the liver is the main organ for metastasis from UM, growth factors largely produced in the liver hepatocyte growth factor, epidermal growth factor and insulin-like growth factor-1 (IGF-1) together with their receptors may have a role in the homing and survival of metastatic cells. Therefore the association between immunoreactivity for IGF-1R in primary UM and metastatic death was studied. It was found that immunoreactivity for IGF-IR did not independently predict metastasis from primary UM in my series.

Social networks for volunteered geographic information - A case study of OpenStreetMap

The world of mapping has changed. Earlier, only professional experts were responsible for map production, but today ordinary people without any training or experience can become map-makers. The number of online mapping sites, and the number of volunteer mappers has increased significantly. The development of the technology, such as satellite navigation systems, Web 2.0, broadband Internet connections, and smartphones, have had one of the key roles in enabling the rise of volunteered geographic information (VGI). As opening governmental data to public is a current topic in many countries, the opening of high quality geographical data has a central role in this study. The aim of this study is to investigate how is the quality of spatial data produced by volunteers by comparing it with the map data produced by public authorities, to follow what occurs when spatial data are opened for users, and to get acquainted with the user profile of these volunteer mappers. A central part of this study is OpenStreetMap project (OSM), which aim is to create a map of the entire world by volunteers. Anyone can become an OpenStreetMap contributor, and the data created by the volunteers are free to use for anyone without restricting copyrights or license charges. In this study OpenStreetMap is investigated from two viewpoints. In the first part of the study, the aim was to investigate the quality of volunteered geographic information. A pilot project was implemented by following what occurs when a high-resolution aerial imagery is released freely to the OpenStreetMap contributors. The quality of VGI was investigated by comparing the OSM datasets with the map data of The National Land Survey of Finland (NLS). The quality of OpenStreetMap data was investigated by inspecting the positional accuracy and the completeness of the road datasets, as well as the differences in the attribute datasets between the studied datasets. Also the OSM community was under analysis and the development of the map data of OpenStreetMap was investigated by visual analysis. The aim of the second part of the study was to analyse the user profile of OpenStreetMap contributors, and to investigate how the contributors act when collecting data and editing OpenStreetMap. The aim was also to investigate what motivates users to map and how is the quality of volunteered geographic information envisaged. The second part of the study was implemented by conducting a web inquiry to the OpenStreetMap contributors. The results of the study show that the quality of OpenStreetMap data compared with the data of National Land Survey of Finland can be defined as good. OpenStreetMap differs from the map of National Land Survey especially because of the amount of uncertainty, for example because of the completeness and uniformity of the map are not known. The results of the study reveal that opening spatial data increased notably the amount of the data in the study area, and both the positional accuracy and completeness improved significantly. The study confirms the earlier arguments that only few contributors have created the majority of the data in OpenStreetMap. The inquiry made for the OpenStreetMap users revealed that the data are most often collected by foot or by bicycle using GPS device, or by editing the map with the help of aerial imageries. According to the responses, the users take part to the OpenStreetMap project because they want to make maps better, and want to produce maps, which have information that is up-to-date and cannot be found from any other maps. Almost all of the users exploit the maps by themselves, most popular methods being downloading the map into a navigator or into a mobile device. The users regard the quality of OpenStreetMap as good, especially because of the up-to-dateness and the accuracy of the map.

Fast distributed approximation algorithms for vertex cover and set cover in anonymous networks

We present a distributed algorithm that finds a maximal edge packing in O(Δ + log* W) synchronous communication rounds in a weighted graph, independent of the number of nodes in the network; here Δ is the maximum degree of the graph and W is the maximum weight. As a direct application, we have a distributed 2-approximation algorithm for minimum-weight vertex cover, with the same running time. We also show how to find an f-approximation of minimum-weight set cover in O(f2k2 + fk log* W) rounds; here k is the maximum size of a subset in the set cover instance, f is the maximum frequency of an element, and W is the maximum weight of a subset. The algorithms are deterministic, and they can be applied in anonymous networks.

Optimisation problems in wireless sensor networks

This thesis studies optimisation problems related to modern large-scale distributed systems, such as wireless sensor networks and wireless ad-hoc networks. The concrete tasks that we use as motivating examples are the following: (i) maximising the lifetime of a battery-powered wireless sensor network, (ii) maximising the capacity of a wireless communication network, and (iii) minimising the number of sensors in a surveillance application. A sensor node consumes energy both when it is transmitting or forwarding data, and when it is performing measurements. Hence task (i), lifetime maximisation, can be approached from two different perspectives. First, we can seek for optimal data flows that make the most out of the energy resources available in the network; such optimisation problems are examples of so-called max-min linear programs. Second, we can conserve energy by putting redundant sensors into sleep mode; we arrive at the sleep scheduling problem, in which the objective is to find an optimal schedule that determines when each sensor node is asleep and when it is awake. In a wireless network simultaneous radio transmissions may interfere with each other. Task (ii), capacity maximisation, therefore gives rise to another scheduling problem, the activity scheduling problem, in which the objective is to find a minimum-length conflict-free schedule that satisfies the data transmission requirements of all wireless communication links. Task (iii), minimising the number of sensors, is related to the classical graph problem of finding a minimum dominating set. However, if we are not only interested in detecting an intruder but also locating the intruder, it is not sufficient to solve the dominating set problem; formulations such as minimum-size identifying codes and locating–dominating codes are more appropriate. This thesis presents approximation algorithms for each of these optimisation problems, i.e., for max-min linear programs, sleep scheduling, activity scheduling, identifying codes, and locating–dominating codes. Two complementary approaches are taken. The main focus is on local algorithms, which are constant-time distributed algorithms. The contributions include local approximation algorithms for max-min linear programs, sleep scheduling, and activity scheduling. In the case of max-min linear programs, tight upper and lower bounds are proved for the best possible approximation ratio that can be achieved by any local algorithm. The second approach is the study of centralised polynomial-time algorithms in local graphs – these are geometric graphs whose structure exhibits spatial locality. Among other contributions, it is shown that while identifying codes and locating–dominating codes are hard to approximate in general graphs, they admit a polynomial-time approximation scheme in local graphs.

Discriminative learning of Bayesian networks via factorized conditional log-likelihood

We propose an efficient and parameter-free scoring criterion, the factorized conditional log-likelihood (ˆfCLL), for learning Bayesian network classifiers. The proposed score is an approximation of the conditional log-likelihood criterion. The approximation is devised in order to guarantee decomposability over the network structure, as well as efficient estimation of the optimal parameters, achieving the same time and space complexity as the traditional log-likelihood scoring criterion. The resulting criterion has an information-theoretic interpretation based on interaction information, which exhibits its discriminative nature. To evaluate the performance of the proposed criterion, we present an empirical comparison with state-of-the-art classifiers. Results on a large suite of benchmark data sets from the UCI repository show that ˆfCLL-trained classifiers achieve at least as good accuracy as the best compared classifiers, using significantly less computational resources.

Nature of chemistry in the national frame curricula for upper secondary education in Finland, Norway and Sweden

The aim of this study was to discover how current chemistry syllabi in the frame curricula for up- per secondary education in three Nordic countries (Finland, Norway, and Sweden) take into account topics related to the nature of chemistry. By qualitative content analysis, the statements related to the nature of chemistry were divided into categories. Conclusions and implications for improving the frame curricula under study were made by comparing results with research into the nature of science. Chemistry syllabi from the Nordic frame curricula analyzed take into account the aims related to the nature of chemistry in a very similar manner. The ideas that should be made more explicit in all of the analyzed curricula are: i) the limits of the chemical models and theories, ii) the relationship between chemistry and other natural sciences, iii) the importance of creativity in chemical research, iv) the concepts of evidence in science texts, v) the social nature of chemical research, and vi) chemistry as a technological practice.