Associate Professor of Business Administration
Tatiana Sandino is an Associate Professor of Business Administration in the Accounting and Management Unit, teaching the first-year required MBA course Financial Reporting and Control. Prior to joining the HBS faculty, she was an assistant professor at the Marshall School of Business, University of Southern California, where she taught management accounting to evening MBA students and undergraduate accounting majors, and received the Dean’s Award for Research Excellence.
Professor Sandino's research examines how organizations use different control mechanisms to lead employees at the executive, middle management, and lower levels toward the achievement of common goals in an organization. She is particularly interested in chain organizations, where control mechanisms can allow firms to successfully replicate a business model across different locations, and in issues concerning executive compensation. Her work has been published in The Accounting Review, the Journal of Accounting and Economics, the Journal of Accounting Research, and Contemporary Accounting Research, and it has been featured in media venues such as The Wall Street Journal, the Financial Times, The Huffington Post, and CNBC.
Professor Sandino earned a DBA in accounting and management at Harvard Business School; an MBA at INCAE Business School, Managua, Nicaragua; and a BS in industrial engineering at the Universidad de Costa Rica, San José, Costa Rica.
Can Wages Buy Honesty?: The Relationship Between Relative Wages and Employee Theft
In this study we examine whether, for a sample of retail chains, high levels of employee compensation can deter employee theft, an increasingly common type of fraudulent behavior. Specifically, we examine the extent to which relative wages (i.e., employee wages relative to the wages paid to comparable employees in competing stores) affect employee theft as measured by inventory shrinkage and cash shortage. Using two store-level datasets from the convenience store industry, we find that relative wages are negatively associated with employee theft after we control for each store's employee characteristics, monitoring environment, and socio-economic environment. Moreover, we find that relatively higher wages also promote social norms such that coworkers are less (more) likely to collude to steal inventory from their company when relative wages are higher (lower). Our research contributes to an emerging literature in management control that explores the effect of efficiency wages on employee behavior and social norms.
Developing Good Measures to Advance Management Accounting and Control Research: A Discussion of 'Corporate Frugality: Theory, Measurement and Practice'
On Testing Business Models
This study explored management decisions regarding formal empirical testing of business models. It documented a test of one company's business model under seemingly favorable conditions for such a test – a successful single product firm following a consistent strategy over a long period of time with stable management and publicly traded stock. Although the findings provided only weak support for the hypothesized business model, the confidence of the company's top managers in their business model remained high. Further analysis revealed that the managers' response to the test results was consistent with that expected of Bayesian-rational agents. Our analyses provided the basis for development of a framework for understanding the expected value of testing business models in various circumstances. This framework may explain apparent contradictions between previous studies containing normative statements regarding the value of testing business models.
Keywords: performance measurement;
non-financial performance measures;
Huelsbeck, D., K. Merchant, and Tatiana Sandino. "On Testing Business Models
." Accounting Review
86, no. 5 (September 2011): 1631–1654. (Awarded a Research Grant from the Chartered Institute of Management Accountants.)
Executive Pay and 'Independent' Compensation Consultants
Executive compensation consultants face potential conflicts of interest that can lead to higher recommended levels of CEO pay, including the desires to "cross-sell" services and to secure "repeat business." We find evidence in both the US and Canada that CEO pay is higher in companies where the consultant provides other services, and that pay is higher in Canadian firms when the fees paid to consultants for other services are large relative to the fees for executive-compensation services. Contrary to expectations, we find that pay is higher in US firms where the consultant works for the board rather than for management.
Keywords: Executive Compensation;
conflicts of interest;
board of directors;
Organizational Design and Control across Multiple Markets: The Case of Franchising in the Convenience Store Industry
Many companies operate units that are dispersed across different types of markets, serving significantly diverging customer bases. Such dispersion is likely to compromise headquarters' ability to control local managers' behavior and satisfy the needs of different customer types. In this study we find that market-type dispersion is an important determinant of the delegation of decision rights and the provision of incentives. Using a sample of convenience store chains, we show that market-type dispersion is positively associated with the degree of franchising at the chain level as well as the probability of franchising a given store within a chain. Our results are robust to alternative definitions of market-type dispersion and to other determinants of franchising such as the stores' geographic dispersion. Additional analyses suggest that chains that do not franchise cope with market-type dispersion by decentralizing operations from headquarters to their stores and providing their store managers higher variable pay.
Keywords: control systems;
The Impact of Shareholder Activism on Financial Reporting and Compensation: The Case of Employee Stock Options Expensing
We examine the economic consequences of more than 150 shareholder proposals to expense employee stock options (ESO) submitted during the proxy seasons of 2003 and 2004, the first case in which the SEC allowed a shareholder vote on an accounting matter. Our results indicate that these proposals affected accounting and compensation choices. Specifically, (i) targeted firms were more likely to adopt ESO expensing relative to a control sample of S&P 500 firms, (ii) among targeted firms, the likelihood of adoption increased in the degree of voting support for the proposal, and (iii) non-targeted firms were more likely to adopt ESO expensing when a peer firm was targeted. Additionally, (i) CEO pay decreased in firms in which the proposal was approved relative to a control sample of S&P 500 firms, and (ii) among targeted firms, approval of the proposal was associated with decreases in CEO compensation and the use of ESO in CEO pay. Our findings reveal an increasing influence of shareholder proposals on governance practices.
Keywords: shareholder activism;
stock option expensing;
Introducing the First Management Control Systems: Evidence from the Retail Sector
Focusing on a sample of US retailers, I study the management control systems (MCS) that firms introduce when they first invest in controls, and identify four categories of initial MCS, which are defined in terms of the purposes these MCS fulfill. The first category, Basic MCS, is adopted to collect information for planning, setting standards, and establishing the basic operations of the firm. The other three categories are contingent on more specific purposes: Cost MCS focus on enhancing operating efficiencies and minimizing costs; Revenue MCS are introduced to foster growth and be responsive to customers; and Risk MCS focus on reducing risks and protecting asset integrity. I hypothesize and find that the choice among these categories reflects the firms' strategy, and that firms that choose initial MCS better suited to their strategy perform better than others.
Keywords: Management Control Systems;
Sandino, Tatiana. "Introducing the First Management Control Systems: Evidence from the Retail Sector
." Accounting Review
82, no. 1 (January 2007): 265–293. (Awarded the Outstanding Doctoral Dissertation Award, 2005, Management Accounting Section, American Accounting Association;
Awarded the Emerging Scholar Competitive Manuscript Award, 2011, Foundation for Applied Research, Institute of Management Accountants.)
A Test of a Company's Business Model
This case describes the aggressive entry of BanCrecen, an affiliate of the Mexican bank BanCrecer, in Costa Rica in 1994. Its strategy, like that of the Mexican home office, was to focus on personal banking, with the rapid expansion of neighborhood branches and strong innovation in the design of financial products for consumers.
Dario, S., E.L. Montiel, and Tatiana Sandino. "BanCrecen
." Journal of Business Research
50, no. 1 (October 2000): 29–39.
Global Investors Teaching Note
Merchant, K., Tatiana Sandino, and W. Van der Stede. "Global Investors Teaching Note." In Management Control Systems: Performance Measurement, Evaluation and Incentives
. 2nd Edition edited by Kenneth Merchant, and Wim Van der Stede. New York: Financial Times Prentice Hall, 2007.
Merchant, K., and Tatiana Sandino. "Global Investors." In Management Control Systems: Performance Measurement, Evaluation and Incentives
. 2nd Edition edited by Kenneth Merchant, and Wim Van der Stede. Prentice Hall, 2007.
The Business of Selling Movies
Du, F., J. Gong, Tatiana Sandino, W. Van der Stede, and M. Young. "The Business of Selling Movies
." Strategic Finance
89, no. 9 (March 2008): 35–41.
Four Options for Measuring Value Creation
Putting Business Models Under the Microscope
The article provides advice for financial managers on evaluating business models for corporate performance measurement. Emphasis is given to a study sponsored by the Chartered Institute of Management Accountants (CIMA) that examined the business model of a medical diagnostic test equipment manufacturer. Those engaged in the study conducted statistical tests which demonstrated that only research and development expenditures and instrument placement affected financial performance. They also found that the business model did not offer information on stock returns.