I study accounting because I believe that the focus of financial accounting research on the processes that generate financial statements is a powerful approach to understanding business. Looking at the outputs of the accounting process from the context of systems science can help consumers of financial data and academicians better understand the information on hand.
Systems thinking and modeling is a great way to approach this type of understanding. System Dynamics is a method for making the complicated mathematics underlying differential equations accessible, while providing deep insight for decision makers engaged in the process. By building computer models that replicate observable behavior, we can develop meaningful insights into the mechanics of our organizations.
Understanding the structures that generate patterns of behavior is essential for modern managers, as we live in an increasingly data-rich world. While having data is beneficial, it can also be difficult to understand what is important given all the tools available to us. The solution is to start an analysis with a deep understanding of how an organization works. Only then can managers select "high leverage points" for action.
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 financial accounting, including earnings management and the valuation of intellectual property. He is also interested in the application of differential equation models to general management practices. He has presented his work at the International Systems Dynamics 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, and has consulted for Hayley & Aldritch, Alcatel-Lucent, and Canyon Capital Management.
- Ph.D., Massachusetts Institute of Technology
- B.S.E.E., Northwestern University
Areas of Instruction
Accounting, Statistics, Systems Thinking, and Modeling.
Kawika teaches the introductory classes in accounting in the MBA program, as well as the data analysis course in the MBA for professionals program in Portland. 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
"Cyclical Dynamics of Airline Industry Profits"
In order to better understand the causes of profit cycles in the airline industry, I build a large-scale model of the airline industry that includes more endogenous feedbacks than previous models, as well as formulations for several strategies that have been employed by airlines to mitigate the cycles.
"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
"Earnings Mean Reversion or Cyclicality? Competition as Delayed
In this paper I examine profit cycles in general 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.
"Diffusion Models and Intangible Asset Valuation."
This working paper approaches the valuation of intangible assets through the lens of the Bass diffusion model for market penetration.
For current drafts of these papers, please visit my academia.edu profile.
"Cyclical Dynamics of Airline Industry Profits," 2009 Parallel Presentation, System Dynamics Conference, Albuquerque, NM.
"Cycles in Casualty," Spring 2010, MIT-UAlbany-WPI PhD Colloquium Presentation.
"Modeling Markets," 2007, Poster Presentation, System Dynamics Conference, Boston MA.
"System Identification," Fall 2007, MIT-UAlbany-WPI PhD Colloquium Presentation.
Honors and Awards
- MIT Sloan School of Management Doctoral Fellowship
- Massachusetts Institute of Technology Presidential Award (2006)
- BP/MIT Energy Fellowship (2009)
- Nominated for Institute-wide Goodwin Medal for Conspicuously Effective Teaching (2009)