In her article “Business Development Tips to Boost a Firm’s Reach ,” Katherine argues that CPA firms have and continue to invest in supplementing long-established business development and associated practices; given the highly competitive and rapidly changing corporate environment. In this respect, the author asserts that DHJJ has so far taken content marketing as a unique differentiation strategy, which would allow the firm to gain the desired competitive edge in Chicago and beyond. According to the author, this aspect of online marketing allows a firm to utilize original published content with the sole purpose of broadening its presence and consumer base. In the article, Katherine refers to Gansey, one of the DHJJ employees, who attribute the company’s traffic increase and new business leads to this new approach.
The author proceeds to corroborate that forward-thinking business organizations from across the globe continue to identify new marketing strategies, which help them to gain access and market to existing, as well as potential clients, while at the same time, tracking returns on investment (ROI). In this respect, Katherine utilizes the article to present five tactics other accounting companies should consider incorporating into their marketing plans. The first tactic involves publishing online content in a given niche or area of expertise. The second revolves around using basic but result-oriented search engine optimization (SEO) methods, which include the incorporation of pages through the use of specific phrases.
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The third way through which accounting firms can improve their performance involves becoming experts at networking events. In particular, CPAs should place much emphasis on showcasing their know-how when it comes to these activities by serving as organizers and guest speakers. In this way, they find the opportunity to engage in conversations with added value. Fourth, these organizations should invest in fostering and maintaining client loyalty by giving back to their consumers. Finally, they should focus on marketing to current clients, which researchers have recommended as an effective and change-driven marketing method. In essence, CPAs should consider conducting follow-ups to cross-sell their products.
Article 2
In their recent article, “Signaling Versus Free Cash Flow Theory: What Does Earnings Management Reveal about Dividend Initiation?” Smith and Pennathur utilize signaling and free cash flow theories to conduct a comprehensive investigation into earnings management, which occurs before dividend initiation. According to the signaling theory, increased dividends signal the market about a firm’s prospects. On the other hand, the free cash flow theory provides that dividend increases play a central role in acting as credible commitments tasked with the responsibility of mitigating agency problems, especially those linked to free cash flows.
After providing this background information, the economic researchers present a detailed description of the data and method they have utilized to undertake the investigation. In particular, they have sampled 423 dividend initiators listed in the United States’ (U.S.) Center for Research in Security Prices (CRSP). Smith and Pennathur proceed to examine accrual-based earnings management, earnings based on the market evaluation, and real earnings management. The researchers achieve this by undertaking the evaluation in a signaling framework, as well as the agency or free cash flow approach.
The authors refer to previous studies, which have so far argued that individual firms tend to associate with upward management of earnings with the sole purpose of increasing dividends. In this way, they create a coordinated and highly organized signal to the immediate market. By studying earning management when it comes to dividend initiation, the researchers’ primary purpose revolves around determining whether management plays any role in the manipulation of earnings downward or it serves as a signal to the corporate environment or market.
In their study findings, Smith and Pennathur have established that dividend initiating companies prioritize downward earnings management, the process which aligns with the widely adopted free cash flow framework. The result in question supports findings in previous studies, which revealed stable earnings performance, as well as accrual quality, which characterized periods after the whole process of dividend initiation. Another finding from the study shows that the price reaction of the market day stock contradicts the signaling purpose since it remains inversely proportional to the management of earnings. In this sense, the researchers conclude by suggesting that the primary objective of earnings management involves preservation of financial flexibility, postponing shareholders’ expectations when it comes to the initiation of recurring dividends, and creating earnings reserves.
References
Raz, K. (2019). Business Development Tips to Boost a Firm’s Reach. Journal of Accountancy .
Smith, D., & Pennathur, A. (2019). Signaling versus free cash flow theory: What does earnings management reveal about dividend initiation? Journal of Accounting, Auditing & Finance, 34 (2), 284-308.
