ACCOUNTING MEASUREMENT FOR LEADERS
Causality Analysis: Sample Student Projects
The subject for most analyses is the company where the student currently works. As such, many papers
cannot be freely shared with the public. Below are three topics students have chosen for their analysis
without reference to the company name.
Sample #1: Challenging Conventional Wisdom.
At a software company the working assumption is that for new products to get a positive reception in
the press it was necessary to invest in costly press junkets designed to impress reporters and gain
favorable recommendations. The alternative is a phone conference with news writers, which is less
expensive but thought to be less effective. The student wanted to challenge this assumption. In a
climate where everyone is busy, would a reporter be more responsive to a less time intensive phone call
or is the splashy event necessary to gain attention in an over-stimulated environment? Using the
example from Freakonomics with the real estate agents, the student examined the incentives present
under each scenario along with the information asymmetry to assess which approach is more effective
and under what circumstances. Sample new product launches were compared. The outcome was the
quality of the press coverage and the inputs were the type of public relations efforts. In a
comprehensive analysis, the student found that the links were dependent on a broad set of inputs, not
the least of which is balancing the opportunity cost of lost executive talent while traveling with the value
of creating relationships and gaining new knowledge from users.
Sample #2: Information Asymmetry
This project examined how information asymmetry was used to create advantages for financial advisors
and disadvantages for clients. The student made the analogy to the KKK story in Freakonomics to
demonstrate how complex language serves advisors well. Using data the student showed how
incentives for advisors change the type of advice provided to clients. He examined the consequences
for such actions on the client, the investment industry and public policy implications.
Sample #3: Incentives to Misreport Data – Creating Economic Incentives
This project examined how incentives led to misleading reporting. A new safety program was installed
at the organization. The goal was to eliminate accidents and employees within a unit earned cash
awards if there were no safety violations in a given time period. The program was successful with the
number of safety violations dropping significantly. The student captured data before and after the
program was instituted, along with supplementary interview data. The results showed that violations
did drop but not at the level suggested by the outcome measures. Rather, there was peer pressure to
not report violations so that units could earn cash awards. Not only was this dishonest but it prevented
the organization from learning about systems that needed changing. This topic was revisited during our
discussion of internal control to discuss how a better system could have achieved similar goals without
motivating dishonest behaviors.