The Bottom Line on Accounting Research

USF expert conducts accounting research with relevance in a post-Enron world.



Uday Murthy

Professor & Quinn Eminent Scholar of Accounting Information Systems

College of Business


By Mary Beth Erskine News Writer


TAMPA, Fla. (Nov. 26, 2010) – Think academic research and you might envision white-coated scientists in pristine labs seeking solutions to global health issues – or engineers developing new and sustainable energy technologies. All conducting research that impacts the lives of individuals and communities.


Now think about academic research in the field of accounting. If you need help conjuring up an image to delineate its relevance, Uday Murthy has one word for you.




The financial scandal and demise of a $100 billion company impacted thousands of people and led to the collapse of a legendary auditing firm.


“The federal response, the Sarbanes-Oxley Act, called for sweeping reforms of the accounting industry, including renewed emphasis on internal controls and tougher auditing procedures,” says Murthy.


Like all business processes, however, measures to protect the public and investors from accounting errors and potential fraud demand continuous improvement.


And that is where Murthy’s expertise in accounting information systems – and his national reputation as one of the most productive researchers in this field – has impact.


“To minimize the risk of fraud to investors, standards established after the Enron and other scandals require auditors to conduct brainstorming sessions to uncover potential fraud risks that might be present for their audit clients. These brainstorming sessions are typically conducted face-to-face. I was interested in determining if there is a better way to brainstorm that would make these sessions more productive.”


This led Murthy to conduct a study of computer-mediated communication to conduct fraud brainstorming.  The results, published recently in the flagship accounting journal, The Accounting Review, revealed that computer-mediated fraud brainstorming is far more effective than face-to-face brainstorming.


“In addition to comparing face-to-face and electronic fraud brainstorming, we also investigated whether prompts flashed on the screen can stimulate participants to generate more relevant fraud risks. We found that brainstorming is also more effective for teams that received such electronic prompts to stimulate new thinking. “


The bottom line benefit? More effective, higher quality ideas about possible fraud risks that might be present during the audit, which in turn should lead to a more effective audit and ultimately yield more reliable information about company performance for investors.


Murthy has published more than 50 articles – 10 within the past year and more than half in the leading national accounting journals. Even more significant is the fact that Murthy is recognized for the practical relevance of his investigations and their influence on accounting practices. The American Accounting Association has cited three of Murthy’s papers as prime examples of the impact academic accounting research can have on the effectiveness and efficiency of professional accounting practices.


Murthy admits that his foray into the specialized field of accounting information systems was accidental. A native of Pune, India, he left a position with Price Waterhouse in Bombay at age 23 to pursue an MBA at Drexel University. He subsequently earned a doctorate in philosophy at Indiana University.


“It was the early 1980s and the first personal computers were becoming available. In fact, Drexel required all first-year students to have an Apple computer,” recalls Murthy. A teaching assistant, Murthy integrated technology into his accounting classes, educating himself about information systems – a combination of skills he tells his University of South Florida students is more important than ever.


“With the still evolving information revolution dramatically altering the role of accounting in organizations, businesses today are seeking professionals who understand business processes, such as accounting, as well as the capabilities of information technologies. Accountants need to have feet in both camps –accounting and technology.”


Murthy’s research adds a third dimension to the combination of accounting and technology – human nature. “My research is behavioral in nature,” he says. “I draw heavily on theories in psychology, conducting investigations at the intersection of psychology, accounting, and information systems.”


Murthy finds his current project the most exciting to date because of its potential to impact the average, non-professional investor.


“Most individual investors rely on financial statements companies have on their websites, even though these statements typically provide only aggregated information not unlike their paper-based counterparts. With technologies now enabling more detailed reporting of financial performance, regulators are calling for publicly held companies to use these technologies to provide more relevant information to investors.”


With graduate students serving as proxies for nonprofessional investors, Murthy is investigating methods for enhancing the usefulness of web-based financial statements. In one experiment, he provides them with disaggregated financial performance information to determine if the information improves decision making – or if it results in “information overload.” In one condition, participants are provided with a “drilldown” capability, where they can control the degree of disaggregated information they see. Participants use the information to decide on the level of investment to make in each of two companies that compete in the same industry. 


Similar to Murthy’s numerous other investigations, the study combines elements of accounting, information systems, and theories from psychology. And, as with most of his research, the study has practical, real-world implications, in this case for individual investors.


It’s academic research with real-world relevance – without the white coat.


Mary Beth Erskine can be reached at 813-974-6993.