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Kawika Pierson, CMA

Kawika Pierson, CMA

Message

I study accounting because the focus of accounting research on the processes that generate organizational performance is a powerful approach to understanding businesses, governments, and nonprofits. Looking at the outputs of the accounting process from the context of systems science can help consumers of accounting data, managers, and academics better understand the organizations we interact with.

System Dynamics is a method for making the complicated mathematics underlying differential equations accessible, while providing insight for decision makers by building models grounded in operational realities. When computer models that replicate observable behavior are based on structures that make intuitive sense we can develop impactful, and often unexpected, recommendations.

The structure of a system determines how it will respond to our decisions, so developing an understanding of how different structures behave is essential for managers.  My elective class in system dynamics helps students master this understanding and enables them to select "high leverage points" for action across disciplines and sectors.

Biography

Kawika Pierson is an Assistant Professor of Accounting and Quantitative Methods at Willamette University's Atkinson Graduate School of Management.  He graduated from MIT's Sloan School in 2011 with a PhD in Management, focusing on System Dynamics and Accounting. His thesis, entitled "Profit Cycle Dynamics," consists of three essays examining the existence and causes of profit cycles in the airline industry, the insurance industry, and across sectors in the economy.

Kawika's research interests lie in the application of differential equation modeling to problems in accounting and other areas of management.  His accounting research is focused on detecting and explaining long term patterns in firm and industry earnings.  His interests in other research areas range from explaining and correcting the relative age effect in professional sports to better understanding government budgets and policy making. He has published in several academic journals and presented his work at conferences including the International Systems Dynamics Conference and the Production and Operations Management Society Conference.

Kawika brings extensive private sector experience as a derivatives trader and consultant. He traded softs (renewable commodities) and options for Louis Dreyfus Commodities both in the domestic market and in China. He has consulted for environmental engineering firms, hedge funds, and nonprofit organizations.

Education

  • Ph.D., Massachusetts Institute of Technology
  • B.S.E.E., Northwestern University

Areas of Instruction

Accounting, Statistics, and Complex Systems

Kawika teaches the introductory classes in accounting in both the Early Career/Career Change MBA program and the MBA for professionals program. He also teaches an elective called "Business Dynamics: Systems Thinking and Modeling for a Complex World" in the Early Career/Career Change MBA program.

Selected Publications and Working Papers

Claus, L., Maletz, S., Casoinic, D., & Pierson, K. "Social Capital and Cultural Adjustment of International Assignees in NGOs: Do Support Networks Really Matter?" Forthcoming in The International Journal of Human Resource Management

We explore the use of support networks by international assignees from a non-governmental organization (NGO) in their cross-cultural adjustment to the host country. Our findings indicate that certain characteristics of the international assignee’s current assignment support network do impact their cultural adjustment to the host country, but that the effects are moderated by whether the assignee has prior international experience.

Hand, M., Pierson, K., & Thompson, F.  "A Replication Study of ‘Why Do Cities Hoard Cash?’ (The Accounting Review, 2009)". Forthcoming in Public Finance Review

Gore’s article explores the determinants and implications of cash reserves. We show that the empirical results reported in this article are largely replicable and that they are robust to substantial data extensions. Nevertheless, we believe that Gore reaches normative conclusions, that municipalities hold “excess cash reserves,” which are not justified by her empirical results.

Pierson, K., Addona, V., & Yates, P. (2014). A Behavioural Dynamic Model of the Relative Age Effect. Journal of Sports Sciences. 32-8: 776-784

The relationship between date of birth and success in a variety of sports, including hockey, is well-established. This phenomenon is known as the relative age effect (RAE). We model the RAE in Canadian youth hockey as a positive feedback loop where an initial age advantage is reinforced through additional training and playing opportunities based on a perceived skill advantage. 

Pierson, K. & Sterman, J. (2013). Cyclical Dynamics of Airline Industry Profits. System Dynamics Review. 29: 129-156

We develop a behavioral dynamic model of the airline industry with endogenous capacity expansion, demand, pricing, and other feedbacks; and model several strategies industry actors have employed in efforts to mitigate profit cycles. We find that aggressive use of yield management—varying prices to ensure high load factors (capacity utilization)—may have the unintended effect of increasing earnings variance by increasing the sensitivity of profit to changes in demand.

Pierson, K., & Blanc, T. "The Determinants of Utility Pole Failure and Optimal Replacement; Implications for the Management of Electrical Distribution Networks."

We apply survival analysis to a database of over 17,000 utility poles to determine what operational characteristics have an impact on pole life. We use our estimates for the size of these effects to calculate the optimal pole replacement time that minimizes the cost of maintaining a pole over the long term, and discuss how these results have important implications for the management of electrical distribution networks.

Pierson, K., Hand, M., & Thompson, F. "The Government Finance Database: A Common Resource for Quantitative Research in Public Financial Analysis"

In this article we offer a single, coherent resource that contains all of the census data on government finance from 1967-2011, uses easy to understand natural-language variable names, and will be extended when new data is available. 

"Earnings Mean Reversion or Cyclicality? Competition as Delayed Negative Feedback."

In this paper I examine earnings cycles by proposing that the industry-specific features of how competition acts on a firm are important determinants of how mean reversion manifests in firm earnings.

"Cycles in Casualty: An Examination of Profit Cycles in the Insurance Industry"

Here I build and analyze a parsimonious model of the property-casualty insurance industry, and show results which suggest that delays in adjusting the characteristics of underwritten insurance policies are responsible for the oscillatory behavior of earnings in that industry.

Selected Presentations

Cyclical Dynamics of Airline Industry Profits, 2014 Production and Operations Management Conference, Atlanta, Georgia.

Cycles in Casualty: An Examination of Profit Cycles in the Insurance Industry. 2013 International Conference of the System Dynamics Society, Cambridge, Massachusetts.

Cycles in Casualty, Spring 2010, MIT-UAlbany-WPI System Dynamics PhD Colloquium.

Cyclical Dynamics of Airline Industry Profits. 2009 International Conference of the System Dynamics Society, Albuquerque, New Mexico.

System Identification, Spring 2008, MIT-UAlbany-WPI System Dynamics PhD Colloquium.

Distinctions

  • Certified Management Accountant (2014)
  • Award for Excellence in Teaching, Atkinson Graduate School of Management (2012)
  • Sloan Nominee for the Goodwin Medal for Conspicuously Effective Teaching (2009)
  • BP/MIT Energy Fellowship (2009)
  • MIT Sloan School of Management Doctoral Fellowship (2006)
  • Massachusetts Institute of Technology Presidential Award (2006)
  • Erdős Number: 4, Paul Erdős -> James Baumgartner -> Stanley Wagon -> Vittorio Addona