By Dave Hendrick
Newswise — Justin Hopkins wanted to be a professor for as long as he can remember.
He loved reading, discussing big ideas and the university environment.
But to be the kind of professor he envisioned, the accounting expert also knew he needed to gain some worldly professional experience before pursuing the dream in earnest.
“My goal was to hold a variety of different jobs,” said Hopkins, a professor in the Accounting area at the University of Virginia Darden School of Business. “Public sector, private sector, internal and external auditing. So that’s what I did.”
First up after college: the Peace Corps, where his primary job was to teach rice farmers in the Dominican Republic how to use accounting information to make better informed decisions about their livelihood.
“Farmers would take loans in the fall to buy seeds and plant crops and fertilize them, and when the harvest happens in the spring, they would pay back their loans,” said Hopkins. “The goal was to get these farmers to be sustainable so they didn’t need the loans anymore.”
Hopkins said he knew little about the Dominican Republic and nothing about rice farming, and was cognizant of avoiding the role of the outsider with all of the answers.
“It’s an intimidating thing because you’ve got no idea what their life is like,” said Hopkins.
“But once you’ve lived next to them, gone to their birthday parties and their funerals, and helped them plant and fertilize, you get a feel for their lives and their needs.”
Hopkins said he realized his job wasn’t to teach people how to do a better job of planting rice, or even how to run their business.
Rather, he introduced them to a new set of tools and potentially useful skills, enabling, rather than directing, their approach to financial aspects of their business.
“It becomes more of a two-way relationship in which you are learning a lot from them and, at the same time, you are showing them a whole new side of thinking and understanding that they have probably never been exposed to,” said Hopkins.
Measuring Risks and Reactions to Financial Misdeeds
After the Peace Corps, Hopkins sought a variety of accounting experiences, working with Ernst & Young in public accounting, auditing several SEC registrants in a variety of sectors and developing what would be a long-running interest in financial reporting.
“As an auditor, you’re hired by a company to audit them, but at same time you’re supposed to oversee and monitor their financial reporting process and opine on their internal controls and the validity of their financial statements,” said Hopkins. “That was a very interesting dynamic to see.”
With experience in various aspects of his field, Hopkins put his full attention toward pursuing his academic ambitions, earning a Ph.D. in accounting from the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill.
Beginning a theme that would carry over into his career at Darden, Hopkins wrote his thesis on securities class-action suits and financial misreporting, seeking to determine whether the threat of shareholder litigation affects management behavior, especially in the financial reporting context.
“I looked at a court opinion that was unexpected and radically changed the threat of litigation for a small subset of firms. I looked at those financial reports before and after the ruling and saw a lot more misreporting after the reduction of litigation risk,” Hopkins said. “It does appear from the data that when litigation risk decreases, the threat of misreporting increases.”
Hopkins has largely continued down the path of exploring the interaction between legal risk and how laws and regulations affect decision-making.
A recent paper co-authored by Hopkins, “Revealing Corporate Financial Misreporting,” looked at companies that materially misstated earnings due to stock options backdating, how few ended up actually restating earnings and why. The authors suggest the findings could have implications for penalizing firms that restate earnings, noting the perverse incentives for companies to refrain from restating, lest they open themselves up to a raft of penalties and litigation.
Connecting Across UVA
Hopkins has used connections with colleagues at UVA Law to organize a corporate counsel roundtable, seeking to understand the pressure points and issues facing legal compliance officers at a variety of firms.
“One of the things I really like about UVA is we have opportunities to interact with people who are in the trenches facing these matters,” said Hopkins. “I take that information, and I build research. I translate that into cases and pass that on to students. It’s a whole process, and I really think that’s the way that scholarship should work.”
Returning to the Peace Corps analogy, Hopkins said he doesn’t go into a Darden classroom assuming he knows what information the students need. Initially, at least, he doesn’t know their personal stories or motivations or what they hope to get from an accounting course. Instead, he tries to introduce them to a few tools they may find useful along their professional journeys.
“I try to figure out what skills they need, what decisions they are making and what I can do to help get them there,” Hopkins said.
About the University of Virginia Darden School of Business
The University of Virginia Darden School of Business delivers the world’s best business education experience to prepare entrepreneurial, global and responsible leaders through its MBA, Ph.D., MSBA and Executive Education programs. Darden’s top-ranked faculty is renowned for teaching excellence and advances practical business knowledge through research. Darden was established in 1955 at the University of Virginia, a top public university founded by Thomas Jefferson in 1819 in Charlottesville, Virginia.
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