Agency Assurance - UniversitÃƒÂ¤t St.Gallen

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The University of St. Gallen, Graduate School of Business Administration, Economics, Law and Social Sciences (HSG) hereby consents to the printing of the present dissertation, without hereby expressing any opinion on the views herein expressed. St. Gallen, June 12, 2006 The President: Prof. Ernst Mohr, PhD
Acknowledgements I am very fortunate to have received inspiration, support, advice, and encouragement from Prof. Dr. Martin Hilb and a postive academic and professional atmosphere in his Multicultural Management program at the University of St. Gallen. I also value the input of Prof. Dr. Dres. h.c. Rolf Dubs, who was critically supportive and provided important words of motivation at the times they were most needed. I highly appreciate these uncommon efforts and the relationships that have developed from them. I want to thank Prof. Dr. Dennis De, who as my colleague and former dean at the School of International Business of Reutlingen University, has always been fully confident and helpful in my pursuit of the doctoral degree. Finally, I am truly blessed by the love and understanding of my wife, Tina, and my children, Peter and Monica. Reutlingen, June 30, 2006 Robert M. Lo Bue
Page 1: Agency Assurance: The Role of the A
Page 5: To Tina
Page 8 and 9: ii 2.2.4 The Communication Axis 28
Page 10 and 11: iv 6.1.7 Agency Cost Effectiveness
Page 12 and 13: vi 9.4.1 Transaction Cost Theory 20
Page 14 and 15: viii 12.8 Returning to Audited Fina
Page 16 and 17: x Figures 1-1 Corporate Governance
Page 18 and 19: xii Tables 1-1 Pay for Performance
Page 20 and 21: xiv Abbreviations AICPA a.k.a. CA C
Page 22 and 23: xvi WTO www XBRL XML World Trade Or
Page 24 and 25: 2 that corporation to regain their
Page 26 and 27: 4 new role as powerful centralized
Page 28 and 29: 6 Other international leaders, howe
Page 30 and 31: 8 Table 1-3. Reforms proposed versu
Page 32 and 33: 10 Figure 1-1. Corporate Governance
Page 34 and 35: 12 1.2.2 Systemic Conflicts of Inte
Page 36 and 37: 14 board structures providing leade
Page 38 and 39: 16 Audits have become a loss-leadin
Page 40 and 41: 18 “The Big Winner, Again, Is ‘
Page 42 and 43: 20 That is, as owners who remain in
Page 44 and 45: 22 management). 5 The American Inst
Page 46 and 47: 24 their individual qualifications,
Page 48 and 49: 26 reporting.” 11 The same study,
Page 50 and 51: 28 itself into a rules-based system
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30 CFO’s (chief financial officer
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32 Signalling theory identifies fac
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35 CHAPTER 3. Constitution - The Au
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37 To understand further the logica
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39 3.2 Stakeholder Roles and Respon
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41 quantitative approach combined w
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43 Figure 3-1. Two Contrasting Appr
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45 Executive stock ownership - when
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47 or it increases the equity dilut
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49 member being a member of managem
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51 to-day management of individual
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53 CHAPTER 4. Constitution - The Re
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55 investors being driven by quarte
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57 to government authorities. From
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59 better measurement for evaluatin
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61 costs, especially residual losse
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63 This oversight function is typic
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65 The NYSE and NASD rules continue
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67 in entirety for that matter, is
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69 is reproduced in Appendix 3. 32
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71 “the Commission believes that
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73 organization. This is the percei
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75 pressure on boards’ recruitmen
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77 number of directors, as shown on
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79 In the few years following the s
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81 government has moved in the dire
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83 term. It directs more board reso
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85 CHAPTER 5. Constitution - The Ri
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87 outright fraud. Some of the prof
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89 Section 404 of the Sarbanes-Oxle
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91 data collected and analyzed. How
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93 Case Review 5-1 Financial Manage
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95 the gains for managers from high
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97 many years, not only as a result
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99 Jack Welch, the much heralded le
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101 options for future compensation
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103 equity class, which in its key
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105 1978 report identified the prob
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107 making clearly transparent warn
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109 field of management accounting,
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111 office. Although it is importan
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113 CHAPTER 6. Constitution - The I
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115 model is joint responsibility f
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117 continuously entered into the e
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119 “efficient allocation of risk
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121 The chart shows compellingly th
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123 firms to be solicited for polit
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125 in newspaper stock listings the
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127 Case Review 6-3. Allianz Dresdn
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129 managers, as well, generally do
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131 element in a constructive activ
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133 CHAPTER 7. Classification in th
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135 This is why auditors are asked
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137 products and services from comp
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139 influenced by accounting standa
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141 contact with consumers and prov
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143 supervisors, as well as any mac
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145 with products is increasingly m
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147 ownership rights that are quite
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149 dollars in trading derivatives
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151 Although there are many benefit
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153 Reinvestment and new investment
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155 7.5 Agency Assurance Addresses
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157 Transactions for acquiring or p
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159 of financial statements are lef
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161 4.) the Statement of Cash Flows
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163 CHAPTER 8. Classification for I
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165 Because the authors consider th
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167 Figure 8-1. Classification Axis
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169 Michael Polanyi in his seminal
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171 assets have the potential to be
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173 - can be transferred separately
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175 Figure 8-2. Intellectual Capita
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177 expect any accounting standard
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179 This large market correction sh
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181 streams to a net present value
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183 negotiation ability, despite si
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185 “Definitions—The item meets
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187 Anyone who has actually led a b
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189 disclosure. These groups match
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191 CHAPTER 9. Classification as a
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193 Properly trained and certified
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195 The authors of a recent study s
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197 could even convince them to exp
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199 product based on a total produc
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201 telephone sales, and Packard Be
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203 as suppliers to each other and
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205 Revenue is a first, key indicat
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207 Gross profit is not just an int
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209 begin in the first quarter and
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211 and is fully amortized. Total r
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213 significantly by a system which
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215 6. Categorization as investment
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217 Expensing of stock options was
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219 favorable, and the share prices
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221 CHAPTER 10. Communication - Dis
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223 Case Review 10-1. Quality and Q
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225 The main lesson that Computer A
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227 Based Reporting systems promulg
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229 intense conflicts of interest f
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231 also to earlier research by Chi
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233 assessment and analysis of busi
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235 A number of the Manchester area
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237 the SEC when it was reasonable
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239 JAVA are required to participat
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241 The internet embodies the techn
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243 6. Warnings, alerts, and urgent
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245 CHAPTER 11. Communications for
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247 11.2 Strategic Credibility - Il
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249 the questionnaire instruments n
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251 public releases, the analysts a
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253 direct interests to the underst
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255 is also legally bound to refrai
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257 The bank’s clients are the ac
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259 weeks of time, certainly not mo
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261 members, including the chief ex
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263 same market space. They also ca
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265 dissatisfaction over Apartheid,
Page 289 and 290:
267 As was related earlier, Higgins
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269 CHAPTER 12. Communications Fail
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271 rules have been added to accoun
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273 partnerships. They simultaneous
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275 Case Review 12-1. Special Rules
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277 The AICPA was compelled to issu
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279 unfavorable opinions to the ear
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281 Inflated historical profits in
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283 industry. As might be expected,
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285 strategies leading edge compani
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287 financial statements are reliab
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289 of valuation models in preparin
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291 short-term results.” 21 Manag
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293 years” with stricter disclosu
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295 improvements in economic prospe
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297 to cover the cost of capital of
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299 in revenues and profits or impr
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301 CHAPTER 13. Agency Assurance an
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303 The contemporary corporate form
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305 13.2.3 Monitoring The second st
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307 making, which provided a voice
Page 331 and 332:
309 Directors and managers are chal
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311 triaxial framework for accompli
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313 audit committee can take the le
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315 A critical contradiction in acc
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317 resulting higher book value of
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319 Executives simply should never
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321 Just a few weeks later, Ford an
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323 boards, and owners, may be a go
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325 Now they must subject themselve
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327 earnings or to overstate the co
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329 telltale sign that intransparen
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331 13.7 Final Statement The conclu
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333 performance of the company.’
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335 APPENDIX 1. ICGN APPROACH TO TH
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337 APPENDIX 2. GOOD PRACTICE GUIDE
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339 Areas Requiring Special Attenti
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341 APPENDIX 3. AUDIT COMMITTEE CHA
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343 8. Assure that the auditor’s
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345 The AICPA Audit Committee Toolk
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359 Appendix 6. Skandia Value Schem
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361 Appendix 8. Ernst & Young Measu
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363 BIBLIOGRAPHY Aboody, David and
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365 on Improving the Effectiveness
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367 Conger, Jay A.; Finegold, David
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369 The Economist (2005-2) Too many
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371 Gustin, Sam (2005) Grasso deal
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373 Johnson, Jonathan L.; Daily, Ca
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375 LoBue, Robert (2004) Corporate
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377 Morris, Richard D. (1987) Signa
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379 Petty, Richard and Guthrie, Jam
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381 Securities and Exchange Commiss
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383 Tushman, Michael L. and O'Reill
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ROBERT M. LO BUE West Chester, PA U
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