Date: May 7, 2009

From: Jeffrey Gramlich, Professor of Accounting and

L.L. Bean/Lee Surace Endowed Chair

Re: Activities of the L.L. Bean/Lee Surace Endowed Chair

Criteria for the holder of the L.L. Bean/Lee Surace Endowed Chair

Three documents specify the role and expectations concerning the L.L. Bean/Lee Surace Endowed Chair: (1) terms from the original gift document dated September 12, 2001, (2) terms from the initial contract signed on February 7, 2003, and (3) terms from the appointment renewal letter dated June 18, 2008, which are identical to the terms of the February 7, 2003, initial contract.

The gift document dated September 12, 2003, states:

· “The Chair will be a senior faculty member in Accounting who is willing to mentor junior faculty and participate in helping the School of Business build its reputation.”

· “The Chair will bring a strong record in scholarship and demonstrated leadership skills and having teaching responsibilities.”

The initial contract between USM and Jeffrey Gramlich, dated February 7, 2003, which were replicated in the June 18, 2008, reappointment letter, state:

· “The holder of the LL Bean/Lee Surace chair is expected to provide leadership and mentoring in the area of intellectual contributions.”

· “The holder of the LL Bean/Lee Surace chair is expected to be highly visible and active within the local business and professional community as well as maintaining a national reputation in professional associations of the discipline.”

Based upon these relatively limited instructions, I’ve been working hard to promote the USM School of Business mission and activities while trying to meet these expectations.

Activities of the L.L. Bean/Lee Surace Endowed Chair

A. Scholarship, leadership and mentoring related to intellectual contributions.

1. In September 2008, USM colleagues Doug Chene, John Sanders and I published an article in Journal of Accountancy titled, “Is 2008 a good year to elect out of installment sale accounting?” This paper utilized Excel to model the salient portions of the Internal Revenue Code that apply to individual taxpayers, and then showed examples of situations in which it made sense in 2008 to elect out of installment sale accounting. Readers could download the model from the Journal of Accountancy website and tailor it for their specific needs.

2. In December 2008, USM colleagues Doug Chene, Joel Gold and I submitted a paper to Journal of Financial Planning which has now been resubmitted to that journal. The paper is titled, “The scope and practice of comprehensive financial planning: Survey results, current standards and engagement letter modifications.” Our aim in this paper is to assess the extent of the financial planning profession’s preference for use of the term “comprehensive” financial planning when legal authorities indicate that the term raises legal liability issues. Our results suggest that planners prefer the “comprehensive” terminology, so we suggest ways to modify the engagement letter to mitigate legal liability.

3. USM colleague Jean Guttman, Simmons College president Helen Drinan, and I currently have a working paper titled, “Would you stand up to your boss? A case of sexual harassment in a large Catholic hospital system.” Based on Helen’s direct experiences, this paper addresses sexual harassment in the highest echelon of a large hospital setting. We plan to submit this paper to an ethics-related case journal within the coming months.

4. Alongside colleagues Mei Feng at the University of Pittsburgh and Sanjay Gupta at Michigan State University, our paper, “Special purpose vehicles: Empirical evidence on determinants and earnings management,” was recently accepted for fall 2009 publication in The Accounting Review. This paper documents the prevalence of special purpose vehicles, as well as the motivations for forming them and the effects of strong corporate governance to mitigate those motivations. Among other key findings, the paper reports evidence that off-balance sheet entities formed for financial reporting purposes (vis-à-vis economic reasons) were successful in increasing income statement earnings.

5. A paper titled, “The economic effects of state corporate tax accounting choices on the state corporate income tax,” has been accepted for publication in National Tax Journal. This paper is co-authored with Sanjay Gupta at Michigan State University, Mary Ann Hoffman at Appalachian State University, and Jared Moore at Oregon State University. This paper identifies state-specific corporate tax rules and estimates their relative revenue impacts.

B. Leadership, mentoring and being highly visible and active within the local business and professional community.

1. The L.L. Bean/Lee Surace Colloquium Series has been developed to encourage and disseminate business-related research at USM. In April, we will finish our fifth year by delivering our 30^th edition in the Series. Over the five years, in addition to book authors and researchers from other institutions, 13 different colleagues from the USM School of Business have presented their research findings in their respective research fields. By welcoming the professional community to these presentations and encouraging intelligent dialogue, the Series elevates respect for the quiet, often unrecognized, research work that is the essential backbone for a respected business school accredited by the Association to Advance Collegiate Schools of Business (AACSB).

2. The L.L. Bean/Lee Surace Colloquium Series really seems to have caught on with supporters of the School of Business. If you are interested, you can learn more about the Series at http://www.usm.maine.edu/~gramlich/colloquium/index.html, but these are the speakers and topics who have intrigued us since February 2008:

· In February 2008, University of Maine professor Bob Strong presented his research concerning Benford’s Law and optimal stock price ranges.

· In March 2008, professor Robert Sroufe from Duquense University in Pittsburgh discussed his research on aligning motivation and sustainability in business.

· In April 2008, John Perkins discussed his experience-based book concerning his view that American business plays an over-active role in the operations of foreign governments.

· In September 2008, USM assistant professor presented survey-based research concerning the scope of comprehensive financial planning by professional financial planners.

· In October 2008, USM assistant professor Dana Kerr discussed research based upon the empirical argument (based upon cross-national data) that government social insurance is related to decreases in tort liability compensation.

· In November 2008, Ric Marshall from The Corporate Library (based in Portland) showed empirical evidence supporting the view that payoffs come to investors who invest in companies with strong corporate governance policies.

· In March 2009, Ms. Joline Godfrey, bestselling book author and CEO of Independent Means, Inc., informed and entertained an audience of nearly 300 about her book, Raising Financially Fit Kids.

· In an April event rescheduled from March due to illness, Colby College professor Tom Tietenberg discussed his book, The Uncommon Market: Controlling Greenhouse Gases Using Cap and Trade Policies.

· Also in April, USM School of Business sports marketing professor Jo Williams presented a case study on the use of Web 2.0 techniques to create a “buzz” about the introduction of a new professional sports team in a community.

As each speaker prepares for her/his presentation, I find that this is a particularly good time meet to discuss the research project, the overall research agenda, and the slides that will be presented. This is particularly so for School of Business faculty members and students who present in the Series. The purpose is to help tailor the specific presentation to the time length and audience in the Colloquium Series. I also am consistently available to meet with any faculty member who seeks a sounding board for her/his research ideas, and to help formulate research questions and structure research designs.

I am open to new topics and speakers for the L.L. Bean/Lee Surace Colloquium Series. USM School of Business research is highly prized and new proposals from faculty members who want to present in the Series are strongly encouraged. In addition, if you have ideas for speakers in the Series, please let me know.

Leadership and being highly visible and active within the local business community. For the past three years as a member of the board of Junior Achievement of Maine, I have led the organization and delivery of statewide online business simulation games for Maine high school students. In 2007, starting in Portland alone, we had 14 teams compete. In 2008, we had 28 teams that were located at USM and the University of Maine-Orono. In 2009, forty teams of high school students, each led by a business volunteer, participated from USM-Portland, USM-Lewiston, Maine Maritime Academy and the University of Maine-Orono. In the end, three girls from Catherine McAuley High School walked away with top honors, smiles that exceeded the sizes of their faces, and $500 savings bonds each.

C. Leadership and teaching responsibilities.

By combining the technologies of a SmartBoard with Internet-based Elluminate software, I have created an avenue for students to participate in an online version of the live first semester Intermediate Accounting course that we call Financial Reporting I. This means that about half of my students are in the classroom with me while the other half participate in the live presentation and discussion from any Internet-connected computer. This approach increases accessibility for students located at a distance from the USM campus or who have other constraints (e.g., child care) that make it difficult for them to attend the course in person.