BAFA Conference abstracts 2015

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https://www.researchgate.net/publication/292138241 BAFA Doctoral Conference 2015 - Abstracts Dataset · January 2016 READS 20 Available from: Majd Munir Iskandrani Retrieved on: 06 July 2016

Corporate Finance 1 Led by Mike Adams and Arif Khurshed

The Determinants and Survival of Reverse Mergers vs Mergers and
Acquisitions Yang Bai (University of Edinburgh) A reverse takeover is a special merger where a private firm is acquired by a public firm and the private firm’s management team control the combined entity. Previous reverse merger studies focus on the public and private firms’ financial characteristic and market condition of the reverse merger transaction. I expand the reverse merger literature by examining the ownership structure factor’s influence on reverse merger activities. My study investigates the impact of board of directors’ ownership structure on the private firm’s choice of going public and taking over another company, as well as its impact on the post-merger performance. A private bidder has two routes to go public and take over other firms. It can conduct a reverse merger transaction with a public listed firm to inherit the public listing status as well as the operational business of the public firm. An alternative route is to complete an initial public offering (IPO) first, and the IPO firm can conduct subsequent M&As of other operational companies. As reverse merger transactions are not necessary to issue shares to the public, board of directors’ holding in the private company may be less diluted via a reverse merger than an IPO. The post-transaction ownership structure may impact on private companies’ choices of going public: directors who want to keep a concentrated ownership on the company may prefer to go the reverse merger route; directors who want to dilute their holdings and to cash out may prefer the IPO route to going public. In addition, the board of directors’ ownership structure may influence the post-deal performances. A higher board of directors’ ownership suggests better alignment of managers’ interest to shareholders’ interest and board of directors are expected to be more likely to make well-conceived M&As which enhance the longrun value of acquiring firms. Using the event study method over a two-year window, I examine the post-merger performances of reverse mergers and M&As conducted by recently listed firms and I test Jensen’s (2005) conjecture that the effect of agency costs will lead to ill-conceived M&A deals which in turn can destroy acquiring firms’ shareholder value. Correspondence Details Yang BAI University of Edinburgh Business School 29 Buccleuch Place Edinburgh EH8 9JS United Kingdom Email: [email protected]

A Study of Profit Inequality of Listed Firms: Comparative Evidence
from US and China Cong Wang (University of Edinburgh) Firm profit is a fundamental topic both in economics and in finance. The classical economic school represented by Adam Smith and David Ricardo argues that there should be a uniform rate of profit for all firms and industries when the economy is in equilibrium. Contradicting to the theory, empirical studies on profit rate report that the differences in profitability between industries or between firms are persistent even in the long run. One explanation for the inconsistency between theory and empirical study results is that classical economic theory assumes that market competition is perfect but in reality market competition is not perfect. Among various factors that shape the competition between firms, the influence of government has been drawing more and more attention. The purpose of this study is to investigate profit inequality among listed firms and how the existence of state owned enterprises influences it. Profit in this study refers to the year-end net income of each listed firms and Gini-coefficient is used as the measurement of profit inequality. I find that both U.S. and China have experienced steady increase in profit inequality during the past decades but the patterns of inequality differ. In U.S., inequality between industries gradually fades while inequality between firms becomes increasingly significant. However, in China, inter-industry inequality starts to soar since late 1990s and explains most of the total inequality in late 2000s. Another interesting finding is that the profit inequality between state owned enterprises (SOEs) and private owned listed firms explains more than half of the total profit inequality, suggesting that a few number of SOEs earn a significant portion of total profits. We also find that the existence of firms that are controlled by the central government of China results in higher firm profit inequality, especially in highly regulated industries. Correspondence Details Cong WANG University of Edinburgh Business School 29 Buccleuch Place Edinburgh EH8 9JS United Kingdom Email: [email protected]

Managerial Compensation and Returns to Share Buyback Firms Waqar Ahmed
(Warwick Business School) Open Market Share Repurchase (OMSR) announcements have become a preferred way of executives to signal undervaluation of their stock. Besides being regarded as signal of undervaluation, OMSRs have also been criticised for their flexibility, lack of credibility and apparent absence of any downside penalty for the executives if they fail to honour their commitment and thus can also be exploited opportunistically. So OMSRs can be value signalling or agency driven. Since the two theories (agency vs signalling) are not mutually exclusive, a challenge is to isolate value signalling OMSR announcements from “cosmetic” ones. As pure, ex-ante, measure of managerial intent does not exist; managerial compensation structure is examined here to see if the executive wealth incentives and risk preferences are in line with those of shareholders. It is argued that better convergence in the interests and risk preferences of the two groups lowers agency problems and hence increases the “perceived” credibility of the executive announcements. Our analysis shows that not all buyback announcements have same signalling power and hence do not create equal value for shareholders. We show that executive compensation structure does influence the “perceived” credibility of OMSR programs, and hence explains the way the market reacts to such buyback announcements. We show that market tends to react more positively to initial buyback announcement from executives where their wealth incentives (as measured by delta) are better aligned with those of shareholders and tend to discount the news where executives have higher incentives to increase firm risk (as measure by vega). More interestingly, the phenomenon lasts in the long run stock price performance as well. The results show that executives’ compensation structure can explain the abnormal stock price performance of share buyback firms. Correspondence Details Waqar AHMED Warwick Business School University of Warwick Coventry CV4 7AL United Kingdom. Email: [email protected]

Investments Led by Andy Stark and Norman Strong

Performance Evaluation of UK Bond Mutual Funds Elizabeth Littlejohn (University
of Strathclyde) Studies of mutual fund performance have long since provided significant contributions to the academic literature. However, the majority of which has focused on US equity funds; a limited amount by comparison is specific to bond funds, particularly on an international basis. This paper will first specify and test appropriate asset pricing models, which will then be used to assess the performance of UK bond mutual funds and identify the extent of abnormal performance. A resounding finding from the literature is that managers are unable to realize a positive alpha after having accounted for costs. With financial innovation resulting in a greater selection of both active and passive investment vehicles, the question continues as to whether cost-effective products such as ETFs may provide a more attractive solution for investors. With the industry coming under increased scrutiny as to the fee structures of funds, the skills employed by the managers are continually called into question. This paper aims to further shed some light as to the value, if any, that they add. The sample period will incorporate the global economic crisis whereby experimental monetary policy has profoundly affected the bond markets imposing a challenging environment. The data gathered is free from survivorship bias to as great an extent as is possible. It has been cross-referenced using a number of sources to identify the most complete listing of UK bond mutual funds, having identified mergers, name changes, and liquidations. The analysis will first focus on UK government bond mutual funds before also conducting a study involving a greater cross-section. By doing so, this will allow for an assessment of performance across styles and risk profiles. To the best of my knowledge, this paper is the first to conduct such an analysis of UK bond mutual fund performance. Correspondence Details Elizabeth LITTLEJOHN University of Strathclyde Department of Accounting and Finance Curran Building 100 Cathedral Street Glasgow G4 0LN United Kingdom Email: [email protected]

Listed Infrastructure Equity Investments: Simplistic Heuristic or New Beta? Simon
Wilde (University of Bath) Institutions are increasingly investing in infrastructure as part of their allocation to alternative investments, alongside private equity, real estate, hedge funds, etc.. The infrastructure 'narrative' states that infrastructure investment provides diversification benefits to investors. These diversification benefits have been examined previously. However, these studies have primarily focused on a purely descriptive comparison of the Sharpe ratios of listed infrastructure companies (such as utilities, telecom and transport operators) and the Sharpe ratios of investment substitutes. Previous research has focused on two definitions of listed ‘infrastructure’: listed infrastructure indices and industry classifications of quoted stocks. We introduce a new third definition: listed infrastructure funds. We argue listed infrastructure funds fit more closely with infrastructure investment product offerings and with the important contractual and governance characteristics of infrastructure. Listed funds have previously received only limited research attention, none of which has assessed its return characteristics. Another limitation of previous research is that it has not tested for the statistical significance of the diversification benefits they find. Employing the mean-variance span tests originally described by Huberman and Kandel (1987) and Kan and Zhou (2012) allows, for the first time, an assessment of the diversification benefits and a determination regarding their statistical and economic significance. We show that the previously used definitions of listed infrastructure indices and industry classifications provide little diversification benefit, with the diversification benefits not persistent over time or not in existence. In contrast, our new listed infrastructure fund definition is found to exhibit superior Sharpe ratios to other listed infrastructure, and mean-variance spanning tests indicate a high level of statistical significance for their portfolio diversification benefits. However, the relatively low aggregate market capitalisation of the listed funds may limit the ability of investors to enjoy these benefits unless the far larger unlisted infrastructure fund universe has similar characteristics. Correspondence Details Simon WILDE School of Management University of Bath Bath BA2 7AY Email: [email protected]

The Performance of Portfolio Construction Strategies Over Time Lizhen Zhu
(University of Edinburgh) The Modern Portfolio Theory (MPT) is the cornerstone of financial economics. Based on this theory, the mean-variance optimization that allocates assets in order to maximize portfolio expected return for a given level of risk or, minimize portfolio risk for fixed expected return, is considered optimal. However, it is difficult to implement in practice and small estimation errors will ruin the whole results. Thus, alternative portfolio construction strategies have been proposed in the literature. In this paper, we evaluate the out-of-sample performance of seven widely used portfolio construction methods: equally weighting, mean-variance weighting, risk parity based on variance, risk parity based on volatility, minimum variance weighting, equal risk contribution and maximize diversification. We ask the question that whether the method of allocating assets has impacts on portfolio performance. If so, when does it has influence and which dataset will be affected. We construct portfolios using ten US industries, five country indices and four asset classes. In the full sample period analysis, portfolios formed by different strategies are statistically indifferent in performance. Afterwards, we run rolling-window analysis to explore the performance of those strategies every five year. The results are varying among datasets and no strategy is able to outperform consistently over time. Correspondence Details Lizhen ZHU (Lillian) PhD Office 3.23 Business School The University of Edinburgh 29 Buccleuch Place Edinburgh EH8 9JS United Kingdom Email: [email protected]

Examining the Behaviour of Women Investors in Arab Capital Markets
Razan O Salem (Lord Ashcroft International Business School) Gender differences in the level of education, profession, and wealth have been narrowing over the years in the Arabian Peninsula; except in the level of investments in stock markets. In general, men are still the dominant participants in the stock market while women make up, around 5 % of total stock market investments. . It is a well-established fact that women and men have different approaches towards investing, both in terms of strategies and risk attitudes. A large body of empirical research on gender differences in investment behaviour among individual investors indicates that men pick riskier portfolios, mainly due to their overconfidence. They also, on average, trade more aggressively, and take more financial risk than women. Although women invest less, due to their risk aversion behaviour, they still gain higher returns more than their male counterparts. In general, women in developed and developing countries prefer to invest in safe financial securities. In recent decades, women in Arab countries have become wealthier and more powerful players in the region’s economy, but still hold most of their wealth in safe securities (as saving deposits and gold), rather than stocks. Saudi women alone hold US $15 billion mostly in cash accounts and real estate. Using a sample of women investors in Saudi Arabia and Jordan, this paper will examine the investment behaviour of Arab women and the factors affecting their investment decision-makings. Additionally, the research also studies the primary reasons behind Arab women fears from investing in stocks and indicates the main motives that could potentially lead them to be more active investors in stocks. In order to achieve the aims of the research, a cross sectional quantitative method is used to establish whether changes in the independent variables affect the dependent variable. To the best of our knowledge, no research to date has investigated the investment behaviour of Arab women possibly due to culture and religion sensitivities. Investigating the investment behaviour of Arab women, the investment barriers, and the investment motives may lead women to invest more and encourage other women to start investing. Therefore, studying Arab women is important theoretically and practically. Correspondence Details Razan SALEM Lord Ashcroft International Business School Anglia Ruskin University East Road Cambridge CB1 1PT United Kingdom Email: [email protected]

Earnings and Management Quality Led by Mark Clatworthy and Ed
Lee

Audit Quality and Earnings Management in Chinese Listed Companies Abdul
Rahman Al Natour (Nottingham Business School) The separation between management and ownership in a company leads to agency problems, where managers can use the asymmetry of information in order to hide intentional misstatements such as managing earnings. Auditors have the responsibility for detecting and reporting any material misstatement in the financial respects, with the intended effect that financial reporting quality is maintained and users of accounts have confidence in reported numbers. . The purpose of this paper is to investigate the effectiveness of audit in mitigating earnings management in China. In previous literature, discretionary accruals have been used to detect earnings management. However, these studies may not apply to the Chinese market. As an emerging market with a distinct ownership nature (e.g. state ownership is still prevalent in China), the incentives for managing earnings and the tendency toward hiring big audit firms may vary. As the Chinese market differs in many ways from Western markets such as the UK and US, this paper evaluates previous models in terms of their applicability to the Chinese environment. This paper therefore starts by applying the previous earnings management models to the Chinese listed companies, in order to examine their ability to detect earnings management or the developments needed in order to achieve this goal. The study will then examine the relationship between audit quality and earnings management in China. Correspondence Details Abdul Rahman AL NATOUR Nottingham Business School Wollaton Road Nottingham NG8 1BB United Kingdom Email: [email protected]

The Association between Compliance Control and Financial Reporting Quality Xiu-Ye
Zhang (Lancaster University Management School) This paper investigates whether not compliance with non-accounting regulation (laws/rules) has implications for firms’ financial reporting quality. Compliance control and control over financial reporting are two overlapping aspects of one integrated internal control system. I conjecture they are connected through internal interaction and general factors which affect internal control system as a whole. I explore the association between compliance and financial reporting quality by testing whether the financial reporting problems rate is higher for firms that fail to control their compliance with securities laws. I find that firms not complying with securities laws have significantly higher financial reporting problems rate than control firms that do not violate securities laws. Further, the results show that the effect is much stronger for accounting frauds than restatements, and the evidence is more pronounced in the post securities-laws noncompliance windows. This paper presents the first empirical examination of the link between the compliance aspect of internal control and accounting problems. It provides evidence that is consistent with the notion that internal control over financial reporting only partially identifies financial reporting problems. It is also corresponded to the newly updated COSO’s integrated internal control framework which emphasizes on the implementation of the compliance aspect of internal control. Correspondence Details Xiu-Ye ZHANG Department of Accounting & Finance Lancaster University Management School Lancaster LA1 4YX United Kingdom Email: [email protected]

Outsourced Accounting and Earnings Quality in Private Firms Dennis Sundvik
(Hanken School of Economics) Small businesses commonly outsource accounting tasks such as bookkeeping, preparation of financial statements, and tax declarations to companies offering accounting and/or tax services. The alternative would be to have accountant staff member(s), which refers to the situation of insourcing. An underlying purpose of this study is to examine the characteristics of firms choosing to outsource their accounting tasks. Simultaneously, the study will examine the characteristics of firms who perform accounting tasks in-house. Previous literature has identified cost reductions, focus on core business, and access to expertise as key reasons for the decision to outsource the accounting function. Meanwhile, the loss of internal expertise and information may be reasons not to outsource, in addition to doubts on the possible cost savings. However, the main purpose of the study is to shed light on the outsourcing or insourcing effect on earnings quality, among private firms. This specific link has not been examined in prior literature and the study may thus contribute to the field in a significant manner. Additionally, a second main purpose of the study is to examine whether the act of earnings management is restricted by the use of external accountants or bookkeepers, or whether the contrary applies. In order to answer this research question, a strong incentive for earnings management among private firms will be examined. The investigation will be centered on whether firms shift earnings from a high tax rate period to a low tax rate period when the statutory corporate tax rate is reduced. Such a behavior can be expected among private firms, since tax authorities are one of the main users of their financial information. Firm-level earnings management will thus be examined surrounding the event of a corporate tax reform with respect to a variable indicating the firm use of outsourced accounting services. Recent prior literature has concluded that private firms engage in more earnings management around such events than public firms, but the effect of private firm use of outsourced accounting has, as far as we know, not been considered. Correspondence Details Dennis SUNDVIK Hanken School of Economics Vasa Campus PO Box 287 (Kauppapuistikko 2) 65101 Vaasa Finland Email: [email protected]

Financial Reporting Led by David Alexander and Chris Humphrey

Development of Standard Business Reporting in the UK Esra’a S
Alkhatib (Brunel University London) Standard Business Reporting (SBR) is an example of policy-driven initiative based on a technology. As the technology has matured so it has an understanding of how it can be incorporated in policy to provide benefits to business and Government. In this case, to reduce the administrative burden on companies through e-filing of statutory financial reporting data made possible by the development of a national taxonomy. This helps by standardising information descriptions and formats so that regulators can re-use the same information for different purposes and companies do not need to prepare different financial reports for different government bodies. The most widely used enabling technology is eXtensible Business Reporting Language (XBRL). The purpose of this paper is to investigate the development and implementation of SBR in the UK. The first step was taken in June 2006 with the introduction of a voluntary joint filing service that enables companies to file their statutory accounts once fulfil requirements of HM Revenue and Customs and Companies House simultaneously. The second step was taken in April 2011 from which date HM Revenue and Customs required most companies to file their tax returns and computations electronically via Inline XBRL (iXBRL). The paper also investigates the factors that drive the adoption of SBR in the UK by analysing the perceptions of the key stakeholders: filers (e.g. companies); users (e.g. HM Revenue & Customs, Companies House, Office for National Statistics, investors, lenders, creditors and credit rating agencies). The analysis is based on three levels of information: (a) key stakeholders’ perceptions of the potential benefits and costs of the SBR (b) the extent that SBR may enhance the quality of financial information and (c) the technological, organisational and environmental factors that may lead to adopt SBR. To the best of the author’s knowledge, this is the first study to examine these factors and it is anticipated that the results will fill a gap in the literature as well as provide recommendations to regulators in other jurisdictions planning to initiate SBR projects. Correspondence Details Esra’a ALKHATIB Brunel University London College of Business, Arts and Social Sciences Brunel Business School Eastern Gateway Building Uxbridge UB8 3PH United Kingdom Email: [email protected]

Effects of IFRS Adoption on the Financial Statements of Nigerian
Listed Entities: The Case of Oil and Gas Companies Masud Bala (Dundee Business School) On 28 July 2010, the Nigerian Federal Executive Council approved January 1, 2012 as the effective date for the convergence of Nigerian Statement of Accounting Standards (SAS) or Nigerian GAAP (NG- GAAP) with International Financial Reporting Standards (IFRS). This study investigates the impact of the adoption of IFRS on the key performance indicators (KPIs) of Nigerian listed Oil and Gas firms. The study further investigates the impact of the adoption on Exploration and Evaluation (E&E) expenditures and the costs of Decommissioning of Oil and Gas installations and environmental rehabilitation. The impact of the adoption of IFRS on the contractual relationships between Nigerian Government and Oil and Gas companies was also investigated. A paired samples t-test and Wilcoxon Signed Rank test were conducted where the accounting numbers and financial ratios of GAAP and IFRS were computed and analysed. Questionnaires were administered to CEOs of Oil and Gas companies, Finance Directors, auditors, financial analysts and other stakeholders in adoption and implementation of IFRS in Nigeria and the responses collated and statistically analysed. The results of the analyses reveal a statistically significant increase in the E&E expenditures and the mean cost/barrel of Crude Oil production of Oil and Gas companies. The NG-GAAP values of inventories, GPM, ROA, Equity and TA were also significantly different from the IFRS values. However, the mean and median differences between GAAP and IFRS values of ATO, GP and decommissioning expenditures were not statistically significant. Gray’s Conservatism Index (Gray, 1980) also shows that most of the GAAP standards were more conservative than IFRS standards. The questionnaire analyses reveals that IFRS financial statements are of higher quality, easier to prepare and present to management and easier to compare across competitors in the Oil and Gas sector. This implies that the adoption and implementation of IFRS by Oil and Gas companies is a positive step towards overhauling the Nigerian Oil and Gas sector and revamping the Nigerian economy. Correspondence Details Masud BALA Dundee Business School University of Abertay Dundee. United Kingdom Email: [email protected]

Critical Analysis of Gaps Between Accounting Practice and Standards –
The Case of Upstream Oil and Gas Sector Majid Hajatmand (University of Abertay) Accountants’ judgments have always been crucial as they can affect the transparency in financial reporting and hence could mislead the internal and external users of financial statements. Currently there is only one IFRS (IFRS 6) aims to provide guidelines for extraction industry including oil and gas businesses. However it only covers the exploration phase of oil and gas operation and no further international guidelines have been published for production phase of oil and gas companies. This deficiency of international standards on the one hand and the accountants’ diverse interpretation on the other hand has created a technical gap between accounting practice and accounting standards. This gap has created inconsistent methods of reporting on similar topics by UK oil and gas companies. It is important to emphasis that the initial purpose behind the development of accounting standards is to create a consistent accounting language that could be used as a yardstick for measuring, interpreting and reporting the financial performance of companies in a unique method. The first purpose of this PhD research is to investigate how the accountant’s perception and experience could have a diverse impact on measurement, interpretation and reporting by oil companies? Meanwhile it will include the areas in oil and gas business that accountants’ professional judgment could be divergent. Furthermore how this judgmental effect to financial statements could be minimized to reach a better professional and transparent reporting? The PhD project could also address further objectives/questions such as: how far the accountants’ view affects the transparency of financial statement? Are the current standards clear enough to prevent favorable interpretations by accountants or they leave rooms for such interpretations? How far accountants’ judgments increase the gap between accounting practices and accounting standards? The second main purpose of this PhD project is to critically analyse the current accounting issues that accountants are facing during their daily work with oil companies. In other world the missing links between the required accounting standards and the actual practice would be critically analysed. Overall, the PhD project critically analyse this gap from two angles: 1) From practical point of view i.e. what are the accounting practices in oil and gas companies in which are not covered by accounting standard@ 2) From accounting standards point of view i.e. which areas of current accounting standards are not being complied with by oil and gas companies? This research is the first of its kind in upstream oil and gas sector in UK and the final results aim to shed a light for those who are struggling with the current accounting issues in oil sector or those who are involved with setting accounting standards. It is also aimed to recommend a potential practical solution and course of action accordingly. Correspondent Details Majid HAJATMAND Dundee Business School University of Abertay Bell Street Dundee United Kingdom Email: [email protected]

The Disclosure of Strategy and Business Model in the Annual
Reports of UK Companies Adeola D. Adekemi (Essex Business School) In order to improve the quality of corporate reporting, a guideline by the Canadian Institute of Chartered Accountants (2001) emphasizes the importance of disclosing narrative information according to a strategic view of business. This framework suggests that accompanying narrative information concerning company vision (core business and long-term business strategy); critical success factors; capabilities (resources) for achieving desired results; expected results; and connected risks and opportunities should be included in annual reports. Furthermore, Beretta and Bozzollan (2008) described the ‘richness’ of the content of annual reports as a function both of the width of the disclosures on different topics regarding a firm’s business model and value-creation strategy, and of the depth of the disclosures about the presence insights into a firm’s future performance. Conversely, in disclosing information management confronts a dilemma; much of the information that investors need in forecasting cash flow with less uncertainty, and hence increase the value of the firm, is the same information that could effect proprietary costs imposed by the reaction of competitor(s) and other actors to the information released (it is doubted that information can be made available to the securities market without being available to competitors). However, in 2010, The UK Corporate Governance Code introduced a requirement for listed companies to disclose in their annual report their business model and strategy for delivering corporate objectives (Combined Code, 2010). Furthermore, in 2012, The UK government proposed a new framework for narrative reporting to include a strategic report, though similar to the business review, but quoted companies are required to include a report on their strategy, their business model and any human right issues, effective from October 2013 (Deloitte, 2012). The purpose of this study is to investigate the impact of strategy and business model disclosure in the valuation role of accounting information, in terms of quality. Put differently, it will be interesting to understand the richness (quality) of the content of annual reports in terms of richness as a function of the width of the disclosures regarding a firm’s business model and value creation strategy; as pointed out by Beretta and Bozzollan (2008). The second objective involves investigating if the shift of strategy disclosure from the domain of voluntary disclosure towards a mandatory disclosure in the UK has been able to influence the long-term strategies of firms to enhance its quality and ensure that it serves the long-term interests of both firms and economies more widely, as argued by Whittington and Yakis- Douglas (2010). Lastly, it will be worthy of note to find out how corporate governance requirements influence the disclosure of strategy. Correspondence Details Adeola D. Adekemi Essex Business School Wivenhoe Park Colchester United Kingdom Email: [email protected]

Management Accounting 1 Led by Lisa Jacks and Julia Mundy

Organisational Readiness of Management Accounting Change for Target Cost Management
in Food Processing Company Safrul Izan Mohd Salleh (Portsmouth Business School) The evolution of management accounting since 1995 has significant impact on food processing industries for long lasting competitive edge and business survival. At this stage, accurate and reliable information on costs, business performance and understanding customer needs was crucial for new product development. The information was also essential for effective use of resources, to neutralise the competitor’s threat and yielded profits for business and stakeholders. Food processing companies have now searched for strategic cost management approaches that will react to the rapid environmental changes, emphasis on continuous improvement activities, driven by market information, and prioritise cross-functional collaboration. There are many arguments for the transition from traditional cost management to strategic cost management approaches. The omission of traditional cost management, for instance, to address accurate cost of products, to meet customer requirements and to provide useful information for management in the decision making process could risk desired return to companies and stakeholders. Target cost management has been introduced and argued as the practical new cost management approach in improving product cost management, product development, product quality and productivity. Target cost management has been widely accepted in Japanese industries. Based on the progress and achievements in Japanese industries, most companies in the United States and Western Europe have raised attention on target cost management. However, the management accounting literature suggested that target cost management was less adopted in the food processing and other industries in the United States and Western Europe than traditional cost management approaches. It was believed that, this situation closely associated with the topic of management accounting change. Three overlapping phases in management accounting change are “readiness phase” where organisational members are prepared for the change; “adoption phase” which is the period where the change is still on trial, and “institutionalization phase” which involves efforts to internalise the changes. The purpose of this research is to investigate the elements of organisational readiness of management accounting change for target cost management in food processing company. Although target cost management was widely implemented in the manufacturing industries, there is no objection to apply this approach in the food processing company. What is important is that, food processing company need to assess their readiness before internalise the changes from traditional to target cost management. Correspondence Details Safrul Izani MOHD SALLEH Portsmouth Business School Portland Street Portsmouth PO1 3DE United Kingdom Email: [email protected]

Management Accounting System Change: Institutional Perspectives from Nigeria Babafemi O
Ogundele (Salford Business School) This study aims to explore and investigate the process of Management Accounting System (MAS) change in a Bank from a family owned bank to a group structure with several subsidiaries. The study intends examine possible influences of internal and external factors in shaping the overall process of MAS change, and how change is diffused between group and subsidiaries while considering the change process between subsidiaries. This study adopts Kasurinen’s (2002) model of classifying change agents into catalysts, facilitators and delayers to explore, investigate and describe the process of MAS change. The study, using a single case study, adopts an interpretive approach, and seeks to obtain data from multiple sources to explore MAS change process in the case study organisation. The research theoretical frame work is based the two variants of institutional theory (OIE and NIS) as the study’s theoretical framework. The knowledge of institutional factors affecting the process of MAS change and the extent of influences is believed may facilitate an understanding of how the process of change evolves under varied influences of institutional factors. This study will further seek to provide insight to process of MAS change is transferred between subsidiary organisational and the parent on one hand as well as a direct transfer between subsidiary organisations. Correspondence Details Babafemi O OGUNDELE Salford Business School Salford Manchester M5 4WT United Kingdom Email: [email protected]

Accounting Information Systems Alignment Towards Critical Success Factors of Accounting
Information Systems Effectiveness: Knowledge of Users Sharinah Puasa (Strathclyde Business School) Rapid changes in technology and business practices worldwide have led to greater demand for information technology to be applied in the accounting field namely, Accounting Information System. Globalisation in communication and business world has required organisations to optimise their performance in Accounting Information System in order to compete among others. Therefore, an effective Accounting Information System which is aligned with organisation’s needs and activities should be maintained properly. The purpose of this study is to investigate the Accounting Information Systems alignment towards critical success factors of Accounting Information Systems effectiveness from the perspective of users’ knowledge. In prior studies, researchers had suggested various numbers of factors that influencing Accounting Information System effectiveness and Accounting Information System alignment criteria. This study is hoped to find out a general set of relevant Critical Success Factors of the system effectiveness and its alignment criteria in Malaysian Public Listed companies practices based on users’ knowledge perspectives. In addition to that, previous literature measure the alignment of Accounting Information Systems by looking at information required versus the capacity of the system in providing such information. Thus, Accounting Information System alignment in this study is views from three dimension which are user knowledge, information required and capacity of the system. This study will be conducted for Malaysian Public Listed Companies on the Main Market in Bursa Malaysia. Mixed research method (qualitative and quantitative) will be applied to identify the relevant list of Critical Success Factors and alignment criteria. After that, primary data will be collected from a survey-questionnaire based method. The results of this study is hoped to contribute towards body of knowledge and organisation policy in Malaysian Public Listed companies practices. Correspondence Details Sharinah PUASA Accounting and Finance Department Strathclyde Business School University of Strathclyde 100 Cathedral Street Glasgow G4 0LN United Kingdom Email: [email protected]

The Management Accounting Needs of Small Enterprises and the Role
of Small Accounting Practices Vandana Tripathi (The Open University) The high failure rate of small enterprises in the UK points to the need to increase their financial robustness. Small accounting practices (SAPs) would seem to provide a possible alternative source of management accounting information for businesses too small to afford in-house accountants, but the literature over thirty years suggests that this approach has not been adopted. The sparse research in this area to date has proposed disparate reasons for the limited use of SAPs, but has failed to provide a definitive explanation. The intractability of the barriers to the use of SAPs for the provision of management accounting information points to a mismatch between management accounting theory, which tends to be based on neo-classical economics, and the approach used in practice in small enterprises and SAPs. The research investigates the barriers to the use of SAPs for the provision of management accounting information to small enterprises. It assesses the extent to which owner managers carry out management accounting in small enterprises despite the opportunity cost and explores the reasons behind their tendency not to seek services from SAPs to assist with management accounting. It also evaluates the potential of SAPs to provide management accounting services and the reasons limiting their promotion. The research draws on a critical realist perspective using qualitative, multiple case studies involving semi-structured interviews to examine the degree to which a number of existing theoretical perspectives can explain how the barriers have arisen and why they have remained. The findings will expand existing research on management accounting by bringing into focus the interaction between human actors and their structural context in shaping management accounting practices in small enterprises, particularly with regard to the barriers to the greater use of SAPs. Correspondence Details Vandana TRIPATHI 20 Tenbury Gardens Wolverhampton WV4 4JD United Kingdom Email: [email protected]

The Impacts of Corporate Governance Led by Elisabeth Dedman

The Effect of Board Structure and Presence of Female Directors
on Corporate Risk Taking in the UK Buthiena Kharabsheh (University of Liverpool) This study investigates the effects of board structure and the presence of female directors on corporate risk-taking behaviour of UK public firms. The research employs a sample of 589 firms from the non- financial sector and 276 firms from the financial sector listed in the FTSE All-Share Index on the London Stock Exchange over the period 2003-2012. The main objective of this research is thus to examine the effect of board structure characteristics and the presence of female directors on corporate risk taking in UK publicly listed companies. After controlling for three types of endogeneity, i.e. simultaneity, unobserved heterogeneity and dynamic endogeneity, through the application and use of a dynamic panel estimator system GMM, this study finds that board structure and female directors are important determinants of corporate risk taking in the UK. Board independence and CEO/Chair duality are negatively related to corporate risk taking in both the financial and non-financial companies. In addition, the findings indicate that larger boards in the non- financial sector result in lower corporate risk taking whereas no impact of board size was found in the financial sector. While analysing the percentage number of female directors on corporate risk taking, it was revealed that the presence of female directors on corporate boards in the non-financial sector increases the corporate risk taking and thus works in line with shareholders’ interests and expectations. Moreover, the study finds that this positive significant effect has a quadratic concave effect on corporate risk taking. However, in the financial sector no significant effect on risk taking is shown by the presence of female directors. After considering the effect of financial crisis, it was found that the non-executive directors work in line with shareholders’ interests and support more risky investments in the pre-crisis period in the non- financial companies. However, the non-executive directors in the financial sector behave in a more conservative way, and negatively affect corporate risk taking in both the pre-crisis and post-crisis periods. Moreover, in both sectors duality is found to be negatively related to corporate risk taking during the crisis period only, with no significant effect found for duality in the pre- and post-crisis periods. Further, the positive effect of female directors in the non-financial companies appears only in the pre-crisis period. Overall, the findings of this research would be important for the regulators and policymakers responsible for establishing corporate governance regulations for both the financial and non-financial sectors in the UK. Correspondence Details Buthiena KHARABSHEH University of Liverpool Management School University of Liverpool Liverpool L69 7ZH United Kingdom Email: [email protected]

Evolution of the Board of Directors in the UK Corporate
Governance Context: Determinants and Implications Nasser Alkalbani (University of East Anglia) Now, more than 21 years have passed since the introduction of the first version of the UK Code. This model has seen many amendments, most of these amendments having been directed toward enhancing the role of the board of directors. Therefore, the overall aim of this research is to examine the evolution of the board of directors in the context of UK corporate governance, in term of the implications on firm performance during normal economic conditions and during financial crisis. Therefore, in order to achieve this goal, this study aims to investigate if:  Board of directors’ characteristics (e.g. board structure, board diversity, board directorships and board activity) affect firm performance at the same level in various economic environments;  The influence of board of directors’ characteristics (e.g. board structure, board diversity, board directorships and board activity) on firm performance during and after financial crisis more significant than during times of boom period. Hence, the questions below have been constructed to fulfil the above research objectives: 1. Does the impact of board structure (e.g. board size, proportion of independent directors, CEO duality, and availability of major three board sub-committees) on firm performance during and after financial crisis more significant than during times of boom period? 2. Does the impact of board diversity (e.g. percentage of women on the board, women as chairman or women as CEO, women activity, board age diversity) on firm performance during and after financial crisis more significant than during times of boom period? 3. Does the impact of board current directorships (e.g. board directorships, independent directorships, non-executive directorships, and executive directorships) on firm performance during and after financial crisis more significant than during times of boom period? 4. Does the impact of board activity (e.g. meeting frequency and meeting attendance rate) on firm performance during and after financial crisis more significant than during times of boom period? This research employs a panel data from the annual reports of the UK Financial Times Stock Exchange- FTSE 350 firms over 8-year period from 2005 to 2012. This period will capture different economic conditions; the period before financial crisis (boom period: 2005-2007), during financial crisis (crisis period: 2008-2009) and after financial crisis (recovery period: 2010-2012). The split of the sample period will allow to account for any differences in the implication of boards’ characteristics on firm performance. Given the nature of panel data, this study employs a dynamic panel data model with fixed effect or with random effect. To see which one is more appropriate fixed effect or random effect, Hausman test will be used Correspondence Details Nasser ALKALBANI University of East Anglia Norwich United Kingdom Email: [email protected]

Corporate Social and Environmental Disclosures 1 Led by Ken McPhail
and Jeffrey Unerman

Accounting for Corporate Environmental Responsibility in Emerging Economies: The Case
Study of Nigeria Abdurafiu Noah (Essex Business School) Environmental issues arising from the operations of corporations have become global phenomena receiving substantial attention of policy makers, researchers, organizations, government, investors, and environmentalists, amongst others in recent years (see Delmas and Toffel, 2004; Belal 2008; Jennings and Zandbergen, 1995;Gray et al. 2014;O’Dwyer et al. 2005;Lauwo, 2014). Nigeria like any other countries in the world is facing environmental pollution/issues management and reporting. For instance the study of Yale 2005 rates the country amongst the low environmental performer. This study attempt at examining how and why corporate environmental responsibility [CER] is being practiced and reported in Nigerian’s corporations. In doing so, the study explored two cases from mining sector of the economy to achieve the set objective. These two cases are cement companies which are referred to as Cases A and B. The study draws on integrated institutional theoretical framework [institutional and resource dependence theories] as conceptualised by Oliver, 1991, to provide better understanding of CER practices and reporting in the chosen cases. The theoretical contribution of this study is its attempt to use the theories in the context of CER practices in emerging economies in general and Nigeria in particular. The study used semi-structured interviews, visual and documentary evidences, unlike other studies that used survey questionnaire approach, which is common practice in previous researches in Nigeria (Owolabi, 2008; Hassan and Kouthy, 2013; Ngwakwe, 2009; Oba et al. 2011). The study also adopted documentary analysis technique [qualitative analysis] to analyse the annual reports of the selected companies in Nigeria and the interviews conducted. Correspondence Details Abdurafiu Olaiya NOAH Essex Business School University of Essex Colchester United Kingdom. Email: [email protected]

Corporate Social and Environmental Disclosures: A Comparative Analysis of Nigerian
and UK Oil and Gas Companies Sani D Mohammed (Dundee Business School) Corporate organisations are documented as preparing and reporting their social and environmental consequences and contributions referred to as corporate social disclosures either in the annual report and accounts, or in stand-alone sustainability reports. To ensure consistency and global comparability in corporate social and environmental reporting practices, coalition of international organisations issued disclosure guidelines such as the Global Reporting Initiative (GRI) to guide corporate organisations on social and environmental disclosures. Using such international disclosure guidelines as the GRI, social and environmental disclosure studies are carried out from such perspective as determining the nature, quantity and quality of disclosures. The aim of this study is to comparatively analyse corporate social and environmental disclosures between listed Nigerian oil and gas companies and UK oil and gas companies longitudinally for the period 2004 – 2013. Using disclosure indexing based on GRI sustainability reporting guideline, the study shall employ content analysis to determine the volume and quality (compliance with the GRI guideline) of social and environmental disclosures by sampled companies. The study shall based on the content analysis determine the trend of social and environmental disclosures over the period of the study. Simple two sample t-test shall be employed to compare the mean disclosures by Nigerian and UK oil and gas companies. Multiple regression analysis shall be used to determine the influence of country of origin, economic development, corporate size and profitability on the volume and quality of disclosures by the sampled Nigerian and UK oil and gas companies. As Nigeria is the focus of this study, semi-structured interviews shall be conducted with managers of the sampled Nigerian oil and gas companies to have an in-depth understanding of their perception and perspectives on social and environmental disclosures. The study shall use legitimacy and stakeholder theories as theoretical frameworks for explaining disclosure practices of the sampled Nigerian and UK oil and gas companies. By analysing the social and environmental disclosure practices of listed Nigerian oil and gas companies, the study shall reveal the social and environmental disclosure practices of an important industry in Nigeria. Similarly, the study shall investigate the social and environmental disclosure practices of listed UK oil and gas companies longitudinally. In this way, the study may reveal gaps from expected better disclosures by sampled listed UK oil and gas companies and listed Nigerian oil and gas companies. Results from the study may be useful to policy makers in the Nigerian oil and gas industry in particular and the Nigerian government in general. Correspondence Details Sani D MOHAMMED Dundee Business School The Old College Bells Street Dundee DD1 1HG United Kingdom Email: [email protected]

Uncovering the Role of Ethical Leadership in Online Corporate Social
Responsibility (CSR) Disclosure in Malaysia Nazahah Abd Rahim (University of Gloucestershire) Online CSR disclosure involves communicating any CSR information through the internet. However the problem arises when there is lack of attention in disseminating the message of CSR digitally online. As this is a non-mandatory reporting practice in Malaysia, businesses are not fully utilizing the potential benefits of the online communication particularly the use of corporate websites in disseminating CSR information to their stakeholders. Meanwhile, scandals in the corporate world, whether centered on corruption, bribery or fraud tend to fall back to the manager’s responsibility (or irresponsibility) whom was put in-charge of managing and disseminating company’s information. As the downfall of many companies nowadays was due to ethical conduct of the managers, every organization needs to look more closely at manager’s ethical behaviours. To avoid “hidden agendas” of managers, reporting mechanisms such as CSR reporting is one of the tools that can be used to “monitor” managers. Reporting can be done not only through the conventional mode of print-based media, but also managers can communicate information via the internet, particularly on corporate websites. A range of information can be exhibited on corporate websites which are easily accessible by all stakeholders, not only the shareholders, but also to future and potential investors, reaching a wider audience, faster information dissemination and at an economical cost. This research investigates the association between ethical leadership and the level of online CSR disclosure. It highlights the different attributes that managers embrace ethically, the impact on the level of online CSR disclosures and hope to have significant implications for theory and practice. However, prior research has not attempted either theoretically or empirically to examine potential leadership dimensions such as ethical leadership towards CSR in the context of online environment, hence study on this issue is important. Correspondence Details Nazahah ABD RAHIM University of Gloucestershire Park Campus Cheltenham GL50 2RH United Kingdom Email: [email protected]

Corporate Social Responsibility Disclosure: A Preliminary Study of Islamic Banks
in Malaysia and GCC Countries Mohd Shukor Harun (Plymouth Business School) The Islamic banks assets grew at an average rate of 18% per year between 2008 and 2013, and among the main player in this industry consist of Islamic banks in GCC and Malaysia. Parallel with its positive growth, they are expected to enhance their transparency, accountability and a greater involvement in solving social issues either to their employees or community. Therefore, this paper aims to examine the level of CSR disclosure among Islamic banks in GCC and Malaysia in the year 2013.The study attempts to look at the issue of how far, does sample Islamic banks disclose and apply Islamic values in reporting their corporate social responsibility and its compliance with the guideline issued by AAOIFI, 2010.With a sample of 7 Islamic banks across two different region namely as GCC countries (United Arab Emirates (UAE), Bahrain, Qatar, Kuwait, Saudi Arabia ,Oman) and Malaysia, a CSR disclosure index was developed based on the 12 criteria adopted from AAOIFI, 2010. Using un- weighted index, the results showed that the level of CSR disclosure by the sample Islamic banks is relatively low and their average score just 41%, lower than the minimum benchmark which is 50%. The analysis of CSR disclosure level for each banks are based on information from their annual report and website, the information are manually collected. From the analysis, among the most popular locations in disclosing CSR information are in the chairman’s statement, directors report, calendar of the year, notes to the account and others, statement of corporate governance, additional compliance information report of Shariah supervisory council, statement of CSR and sustainability report. This study provides useful insights on the CSR disclosure practice among Islamic banks in Malaysia and GCC, which remained largely unexplored. The study also represents the first empirical investigation of CSR disclosures specifically focus between two regions which is Malaysia and GCC; its empirical findings complement the findings of previous studies. Previous research in this area tend to focus on random selected Islamic banks around the world such as Jordan, Sudan, Iran, Bahrain, U.A.E., Palestine, Egypt, Turkey, Pakistan, Kuwait, Bangladesh, Qatar, Albania, South Africa, and Mauritania ,rather than focus in a specific region such as Malaysia and GCC. Correspondence Details Mohd Shukor HARUN Plymouth Business School Mast House Sutton Harbour Plymouth PL4 8AA United Kingdom Email: [email protected]

Corporate Finance 2 Led by Mike Adams and Arif Khurshed

Net Equity Issuance Effect in the UK Hang Zhou (University
of Edinburgh) Net Equity Issuance (NEI) refers to the change of firm’s shares outstanding due to events such as SEOs, share repurchases and stock mergers. It has been found to have predicting power of cross- sectional stock returns in the US and other international markets. However, its existence in the UK remains unclear due to distinctive characteristics of the UK stock market. The paper employs a Fama- Macbeth methodology and portfolio formation analysis to test the existence of the Net Equity Issuance effect in the UK. The results from both set of methodologies confirm the existence and pervasiveness of the Net Equity Issuance effect in the UK stock market. Furthermore, augmented asset pricing models using investment factor and liquidity factor are used to explore the rational explanations behind the anomalous effect. Correspondence Details Hang ZHOU 3.23 University of Edinburgh Business School 29 Buccleuch Place Edinburgh EH8 9JS United Kingdom Email: [email protected]

Why Firms Retain Their Defined Benefit Plans? Evidence from the
UK Evisa Mitrou (University of Exeter) I examine the effect that managements’ membership in the firms’ defined benefit pension (DB) plan in the same terms as the rest of the employees affects the firms’ decision to retain DB plans open in a sample of UK firms for the period 2000-2013. In addition, I examine the incentive to attract and retain highly skilled employees as a possible determinant of companies’ decision to continue to sponsor DB plans. I find that firms that retain their DB plans have management with membership in the company’s DB plan and also are companies that require highly skilled employees. Furthermore, for a smaller sample of companies I find evidence that firms with insider trustees (trustees that are also company executives) are more likely to retain their DB plans reflecting in this way risk management as opposed to risk shifting motives in corporate pension decisions. This finding is stronger when there is a CFO trustee than a CEO trustee suggesting that pension decision fall into CFO’s expertise. The paper contributes to the literature in several ways. First, this study contributes to the literature on pension plan shifting behaviour by documenting the determinants of DB plan retention. To date there is no study (to the best of my knowledge) that addresses this question explicitly. Understanding why some firms continue to sponsor DB plans is of interest to academics, regulators and stakeholders given the fact that the magnitude of pension obligations represents a very significant portion of a company balance sheet and thus the financial management of DB pension plans will remain a top priority for sponsoring companies. Second, recent US studies (e.g. Anantharaman and Lee, 2014) find that managerial incentives affect the extent of risk shifting versus risk management in DB pension plans and that executives’ stake in DB plans is a main driver of pension funding policy. I extend this research by identifying managerial stake in corporate pension plan as a driving factor of DB plan retentions in the UK. However, when it comes to DB pension plan retention (or termination) decisions this is more evident for firms in industries with highly skilled human capital. In addition, I extend prior work on pension benefit governance (e.g. Cocco and Volpin, 2007) by evidencing that firms with insider trustees are more likely to keep their DB plans open, suggesting that insider- trustees act more in line with the interest of plan members. Correspondence Details Evisa MITROU University of Exeter, Business School, Streatham Court, Streatham Campus, Exeter EX4 4ST United Kingdom Email: [email protected]

Determinantes of Capital Structure in MENA Region Mansour Albarrak (University
of Plymouth) This paper examines the determinants of capital structure in the MENA countries. Our main interest is to investigate tax as it is one of the influential factor affecting capital structure. The absence of tax for the MENA countries is either replaced with Zakat, traditional tax systems or in some countries nether the first nor the second. We test the main theories of capital structure, namely: trade off theory and pecking order theory. The countries included in this paper are Saudi Arabia, United Arab Emirates (Include both Abo-Dhabi and Dubai stock indexes), Bahrain, Qatar, Kuwait, Oman, Egypt, Morocco and Jordan and Turkey. Out of our sample a few GCC countries are considered to be unique in their taxation code as there is no corporate tax. This study covers firm characteristics as suggested by previous literature. These characteristics are tangibility, profitability, risk, debt tax shield, growth, dividends, age and size. This study will also investigate the effect of the industry and the credit rating on the capital structure. The data of this study is obtained from the Reuters DataStream database. Different methodological models are used to answer the questions we raise in this study. These include using Panel Data models, Dynamical Model, Tobit model, Structural Equation Modelling (SEM) and GRNN Generalized Regression Neural Networks. Correspondence Details Mansour ALBARRAK Plymouth School of Management Drake Circus Plymouth PL4 8AA United Kingdom Email: [email protected]

The Impact of China’s Split Share Reform Policy on Capital
Structure Decisions of Companies Listed on Shanghai and Shenzhen Stock Exchange Muhammad Yahya Ghazali (Nottingham University Business School) Since it’s inception in 1990, the Chinese stock market was based on the split share structure. Different classes of shares are listed on the Shanghai and Shenzhen stock exchange. ‘A’ shares are traded in local currency on both the Shanghai and Shenzhen stock exchange and were initially only available to domestic investors. ‘B’ shares are denominated in US dollars and are available to foreign investors. They are also traded on both the Shanghai and Shenzhen stock exchange. Those shares held by the state or institutions with ‘legal person’ status were classified as non-tradable shares. Shares held by individual and institutional investors were classified as tradable shares. Until recently, 70% of the listed shares were not tradable, and were held by the state or legal person. The remaining shares were tradable, and were mainly held by domestic individual and institutional investors. This is known as the split share structure. The purpose of split share structure was to enable the state-owned firms to raise capital and at the same time, retain government control in firms. By 2005, certain restrictions were relaxed such as domestic investors were allowed to purchase B- shares, and foreign investors were allowed to trade in domestic A-share market. But a crucial barrier “split share structure” remained. Serious problems emerged from the split share structure such as agency conflict, market illiquidity and loss of investor confidence that affected the development of China capital markets. Hence in order to improve the capital market, in 2005 the Chinese government commenced the split share structure reform that aimed to convert all non-tradable shares into tradable, allowing a shift in ownership structure from government to public ownership by existing tradable shareholders and institutional investors. The split-share reform provides a unique environment in which to empirically analyze the changes in the capital structure due to changes in ownership of firms listed on China capital markets. There are many studies on split share reform and its effect on the firm financing decisions but they fail to quantify long-term effect of the reform and also their approach has not been thoroughly tested. This paper aims to fill this gap by capturing the combined effect of split share reform and foreign investors’ influence on the capital structure decisions of Chinese listed firms. Additionally, this paper will also shed light on how foreign investment takes place in China, and also the influence of foreign investors in financing decisions of Chinese listed firms in the period of study: pre-reform, transition period and post-reform. By increasing our understanding of foreign interest in Chinese listed firms and firm responses to the important changes to the structure of shares in China, it is hoped this paper will be useful to academics, practitioners and policy-makers. Correspondence Details Muhammad Yahya GHAZALI Nottingham University Business School Nottingham NG8 1BB Email: [email protected]

Stock Market Characteristics Led by Norman Strong and Andy Stark

The Effect of Ownership Level, Concentration and Type on Market
Liquidity: Empirical Evidence from the UK Majd Munir (University of Liverpool) This paper investigates the impact of ownership level, concentration and type on market liquidity. Using a sample of 260 non-financial FTSE 350 firms during 2003-2012 we investigate the effect of ownership level and concentration on the information and real friction of market liquidity. We further investigate the role of the owner’s identity in determining the level of market liquidity after controlling for firm specific characteristics. We find that high ownership concentration is negatively related to market liquidity. This result is due to an information asymmetry problem, as large shareholders and blockholders possess economies of scale in the collection of information or have access to private, value-relevant information and may trade on this information to extract the private benefits of control. Moreover, the insider ownership is found to have a negative impact on market liquidity which in line with both agency theory and the adverse selection hypothesis. In addition, from trading hypothesis perceptive we show that insider, block holder and largest shareholders trade less in comparison with outside investors but they still hold some private information about the firm’s prospects. Conversely, the institutional ownership provides great support for the fact that ownership dispersion increases the shares that available to trade and increase as a result market liquidity. Furthermore, this paper investigates the impact of specific types of shareholders on market liquidity. We find that most block holder types, particularly insider manager and non-manger block holders, have a deleterious effect on market liquidity. Moreover, this study also shows that financial institutional block holders and majority strategic block holders decrease market liquidity. This effect may be due to the fact that these block holder types do have access to private information, and simply do engage in information-based trading, as they are typically long-term investors. In contrast, free float holder and individual are able to improve market liquidity. Therefore, this study is able to show that there is a trade-off between liquidity and control but this does not hold for all block holder types. Furthermore, this paper uses several low frequency measure of market liquidity to account for the multidimensional concept of market liquidity; however, we highlight the necessity to further assess the effect of market microstructure on the relationship of ownership level, concentration, type and market liquidity and we suggest our plans for future research in this area. Correspondence Details Majd Munir ISKANDRANI University of Liverpool Management School University of Liverpool Liverpool L69 7ZH United Kingdom Email: [email protected]

Critical Investigation into Malaysian Stock Market Efficiency and the Impact
of Asian Financial Crisis and Global Financial Crisis Yee Min Hew (Hull Business School) This paper presents the Malaysian Stock Market efficiency market hypothesis (EMH) and the impact of both Asian Financial Crisis and Global Financial Crisis in 1997 and 2007 respectively. The period chosen for the investigation in this study spans from January 1992 to June 2013. The tests carried out in examining the stock market efficiency are done by using the time series models such as ADF, PP and KPSS as well as dummy variable have been chosen in testing the impact of crises. The period of these 22 years has been split into 4 categories: Pre-Asian Crisis Period, Asian Crisis Period, Post-Crisis Period and Global Financial Crisis Period in order to fulfil the robustness check and reveal the accuracy of the outcome. The findings indicate that the Malaysian Stock Market is Weak-Form Efficient with non- stationary unit root trend. The result of impacts of both crises implies that the Global Financial Crisis in 2008 has been found to contain higher volatility than the Asian Financial Crisis during 1997. Correspondence Details Yee Min HEW Hull Business School Cottingham Road Hull HU6 7RX United Kingdom Email: [email protected]

What You See Is What You Bet Angela Izah (University
of Essex) In most instances information that feeds decisions is communicated to people visually, ranging from printed paper documents with static content in black and white to multicolour on-screen instructions with dynamically changing content and flashing images. Does the way information is presented impact decisions? By mimicking the colours frequently used in security trading software platforms, we evaluate the impact of the graphical interface on decisions people make in standard questions of choice in risk and uncertainty. To do so, we conduct an online random assignment experiment, exploiting intrinsic incentivization of subjects (willingness to help or curiosity). The treatment group faces partly investment framed, partly neutral lottery choice questions presented in the trading platform interface style, whilst the control group faces neutral formulations of the same questions presented in black and white. Our results demonstrate that intrinsic motivation of subjects in the control group is consistent with previous studies whilst it is significantly lower in the treatment group. Treatment group exhibits a significantly riskier yet more ambiguity-averse behaviour. The main channel for this impact of visual framing seems to be the change in mood, which shows significant association with most decision variables. This effect is isolated from the actual environment where subjects respond to our survey, yet depends on their age, gender and knowledge of statistics. Correspondence Details Angela IZAH University of Essex Business School Wivenhoe Park Colchester CO4 3SQ Email: [email protected]

Value Relevance Led by Mark Clatworthy and Ed Lee

Asset Measurement in the Extractive Industries Sean Power (University College
Cork) Firms in the extractive industries, Oil and Gas as well as Mining, face particular challenges in producing financial reports that are useful to investors. Firms in the industry encounter significant initial exploration expenditure which involve long lead times and uncertain future economic benefits. Exploration, development and production expenditure face high levels of exploration, production and commodity price risk. These factors erode the levels of relevance and faithful representation of the accounting information contained in the financial reports. Two main categories of asset exist within the industry: exploration and evaluation (EE) and property, plant & equipment (PPE). EE assets are regulated by International Financial Reporting Standard (IFRS) 6. This standard affords much flexibility to firms when it comes to recognition and measurement of EE assets. The increased flexibility is partly in response to the difficulty in defining an individual EE asset and determining the level at which groups of EE assets should be assessed for impairment. PPE are regulated by International Accounting Standard (IAS) 16 which affords much less flexibility than IFRS 6. An individual PPE asset can be more easily identified and the associated future economic benefits can be determined with a greater degree of certainty. This paper examines if the separation of the non-current assets of such firms into EE and PPE is useful. A value relevance study is conducted on a sample of firms listed on the London Stock Exchange in the extractive industries. Particular attention is paid to the EE assets of these firms, since this category is unique to the extractive industries. Within the EE category, firms employ different accounting policies. The second research question examines if any one of these policies produce more relevant and faithfully represented financial information than others or if the best policy is contingent on the circumstances of the firm. Correspondence Details Sean POWER Department of Accounting, Finance & Information Systems University College Cork Cork Ireland Email: [email protected]

Analysis of Oil and Gas Reserves Management and Valuation: The
Role of Non-Financial Performance Metrics in Africa Asuquo Okon (Dundee Business School) The traditional accounting valuation models have been accorded a reasonable importance in appraising the share price of oil and gas companies. However these models impose restriction in the determination of long-term value of the companies. The traditional price and return models encompassing only earning and book values of equity, writhe from lack of certainty based on omitted relevant variables. More so, accounting information such as; earnings and book equity are insufficient in the valuation process for oil and gas exploration companies. In this context therefore, historical cost accounting is inappropriate for accurately conveying the oil and gas companies' financial performance for appropriate investment decision. The purpose of this study is to investigate the need for the multinational oil and gas companies in African reporting region to move from application of the historical cost accounting to discovery value accounting. In the previous literature, the historical cost accounting has been proven from incapable of systematically providing the value of the company beyond the earnings. In contrast, the non-financial factors like, reserves replacement, revisions, acquisition, and extension/discovery of proved reserves, reserves life ratio, net well to gross ratio and value added ratio, explained the value of the oil and gas companies beyond the firms earning potential to the continuity of the company’s future earning potential. Although some studies have concluded that accounting information, such as net income and the book value of equity are value-relevant in cross-sectional studies, the role of non-financial metrics in determining long term value of oil and gas companies has not been investigated in Africa reporting region from a valuation perspective. This therefore, is the first resolve of the study. As such we hope to determine the role of non-financial metrics in the determination of long-term value of oil and gas companies in the region. The study intends to use Linear Regression Model as an ideal tool for data analysis. Also the study will rely on panel regression model analysis to certify the value relevance of the nine non-financial variables over earnings, and the book value of equity. The study hypothesis will be tested by using two pooled, panel regression models for the period of fifteen years (15 years) from 1998–2013 for a sample of publicly- traded oil and gas companies in African reporting region. Correspondence Details Asuquo OKON Dundee Business School Abertay University 1 Bell Street Dundee DD1 1HG Scotland United Kingdom Email: [email protected]

Does the Informativeness of Fair Value Goodwill Accounting Depend on
Industry-Specific Growth Opportunities? Peter Frii (Norwegian School of Economics) I investigate whether the informativness of reported impaired goodwill depend on the reporting-firm’s industry-specific growth opportunities. There are at least two reasons why the informativeness of reported goodwill impairments may depend on the reporting-firm’s industry-specific growth opportunities. First, SFAS 142 requires managers to only test for impaired goodwill if the reporting unit is impaired, suggesting that goodwill is more likely to reflect underlying economics during periods when other assets are not appreciating in value. Second, opportunistic managers of a firm with diminishing industry-specific growth opportunities may no longer be able to delay the reporting of impaired goodwill as investors are more likely to strengthen their monitoring activity. Using two tests on agency concerns, I find no evidence that the reporting of goodwill impairments depends on the reporting-firm’s industry-specific growth opportunities. In fact, I find some evidence suggesting that firms with diminishing industry-specific growth opportunities are less likely to report impaired goodwill, and report smaller amounts. However, based on the association test, I find that the reporting of goodwill impairments is positively associated with abnormal returns when the reporting- firm’s industry-specific growth opportunities are diminishing. Overall, these results indicate (1) the delayed reporting of impaired goodwill likely not reflect a fair application of SFAS 142, and (2) the reporting of impaired goodwill is less informative (i.e., less surprising) to investors when the reporting-firm’s industry-specific growth opportunities are diminishing. Correspondence Details Peter FRII Department of Accounting, Auditing and Law Norwegian School of Economics (NHH) Helleveien 30 5045 Bergen Norway Email: [email protected]

Determinants and Consequences of Goodwill Impairment: Evidence from UK Listed
Companies after the Implementation of IFRS 3 Mohamed S I Elmahgoub (Strathclyde Business School) The increased importance of goodwill, along with the problems associated with its recognition and valuation, have led accounting organisations and professional bodies to issue sets of accounting standards related to the fair presentation of this asset. Since the beginning of 2005, UK firms listed on the main London Stock Exchange have been required to adopt the IFRS issued by the IASB. IFRS 3 Business Combinations is one of the standards that accounts for goodwill using the same accounting treatment followed by IAS 36 Impairment of Assets, and hence requires companies to perform impairment tests annually for their recorded goodwill, rather than the systematic amortization over an assumed life of not more than 20 years that was required by the UK FRS 10 Goodwill and intangible assets, issued by the ASB in 1997. Therefore, accounting for goodwill impairment moved towards fair value-based measures, ignoring the historical based approach, to better reflect the underlying economic value of goodwill reported. However, several studies that discuss the determinants of goodwill impairment found that they are mainly affected by management reporting incentives rather than the economic impairment factors. Therefore, the first objective of this paper is to examine different determinants that have not been explored before, such as: the effect of auditor specialization; corporate governance mechanisms; and the reaction of the market to M&A deals’ announcements on the management decision regarding goodwill impairment. Moreover, the reaction of the market to goodwill impairment has been examined in the literature in terms of its external effect on investors’ returns, analysts’ forecast revisions, and credit ratings. Therefore, the second objective of this paper is to extend prior literature, through examining its internal effect on managers’ future decisions regarding overpriced M&A deals following the adoption of IFRS 3, compared to its previous effect following the old method of amortization (for the period before 2005). This is to evaluate the value relevance of goodwill impairment from different perspective. Data will be collected from DataStream and BoardEx database for all UK listed companies on the period from 2007 to 2015 for the first objective and from 2000 to 2015 for the second one. Therefore, this paper contributes to the literature examining the determinants and value relevance of goodwill impairment through exploring new factors that may affect managers’ decision for taking timely goodwill impairment decisions, and studying the internal effect of goodwill impairment on managers’ future M&A decisions. Correspondence Details Mohamed ELMAHGOUB Strathclyde Business School Curran Building 100 Cathedral Street Glasgow G4 0LN United Kingdom Email: [email protected]

Value Relevance of Fair Value Hierarchy Under IFRS 7: Evidence
from EU Financial Firms Sami Adwan (University of Essex) IASB issued IFRS 7Financial Instruments: Disclosures in August 2005 (effective for fiscal year starting on or after 1st January 2007) to enhance the disclosures about financial instruments. In line with SFAS No. 157, IFRS 7 had been developed to require the disclosure of fair value assets and liabilities in three levels based on the inputs used to estimates fair value measures (effective from 1st January 2009). Specifically, Level 1 fair values when quoted prices for similar instruments are used as inputs, Level 2 fair values when directly observable market inputs are used other than Level 1 inputs, and finally Level 3 fair values when inputs are not based on observable market data. First, we test the value relevance of fair value measures for each of the three disclosure levels. The advocates of fair value accounting claim that it implies value relevant accounting information of financial institutions as it reflects current market conditions, and thus provide timely information as well as simplifies financial reporting (such as in the case of hedging accounting). On the other hand, those who argue against fair value accounting contend that it is less reliable and subject to greater subjectivity compared to historical cost accounting. This can give the management more opportunities to manipulate the financial results, which results in more information asymmetry between investors and management. Compared to Level 1 and Level 2 fair values, Level 3 fair values rely on management’s expectations and projections. The information asymmetry problems, therefor, is more likely to be higher for Level 3 fair values, which might adversely affect the investor ability to rely on such measurement for valuation purposes. Hence, we test the value relevance of Level 3 fair values versus Level 1 and Level 2 fair values. In a further analysis we examine whether the value relevance of fair values depends on country-level institutional environment as well as firm-level corporate governance mechanism. More specifically, we investigate whether the institutional environment and corporate governance play a role in mitigating the information asymmetry problems associated with fair values, and how this role varies across the three levels of fair values. This paper extends the existing literature (focusing on US market) by studying the value relevance and the reliability of IFRS 7 fair value hierarchy for a sample of EU financial firms over an extended period (2009-2012). Correspondence Details Sami ADWAN Essex Business School Wivenhoe Park Colchester CO4 3SQ United Kingdom Email: [email protected]

Financial Disclosures – Content and Style Led by David Alexander
and Steve Young

Annual Report Readability and Audit Fees Sultan Altass (Leeds University
Business School) This study examine the relationship between annual report readability and audit fees based on the Flesch Reading Ease formula and three commonly used fees measures, namely, audit fees, non-audit fees and total audit fees. The Management obfuscation Hypothesis assumes that managers attempt to hide unfavourable news by manipulating the complexity of annual reports. Previous research document strong relationship between the quality of annual financial statements and measures of audit fees. This study extend this camp of research by examining the effect of audit fees on the readability of annual reports. Moreover, following evidence that found statistical relationship between readability, firm performance and audit fees, this study extend annual report readability literature by focusing on the joint effect of fees and performance on readability. The results show that the fees paid to auditing firms for statutory audit is statistically significant in explaining annual report readability and this association hold after controlling for different firm-specific and financial characteristics. This suggest that high levels of audit fees is partially responsible for the quality of annual report quality. Conversely, firms that pay lower levels of audit fees tend to disclose easier to read reports, holding all other variables constant. In contrary to expectations, non-audit fees did not show to have significant relationship with annual report readability. Similarly, following random effect regression on the association between total audit fees and readability, this study document that the relationship between total audit fees and annual report readability is insignificant. Moreover, I document strong relationship between the joint effects of the three measures of audit fees, firm performance and annual report readability and that these interactions show that audit, non-audit and total fees exhibit greater effects in poorly performed firms. Correspondence Details Sultan ALTASS Centre for Advanced Studies in Finance Leeds University Business School University of Leeds Maurice Keyworth Building University of Leeds LeedsLS2 9JT United Kingdom Email: [email protected]

Tone Management in the Event of Acquisition: Managerial Incentives and
Economic Consequences Yousry Ahmed (University of Bristol) Motivated by much attention has been paid recently to textual analysis within finance literature, this research, and unlink the extant evidence on acquisition, explores the pattern of news following an acquisition, investigates the managerial incentives, and observes the economic consequences of such pattern of news. To that end, we hand-collected more than 5881 UK annual reports between 2004 and 2013, we then utilised computerised textual analysis relying on Diction software after adopting the Loughran-McDonald’s word list for positive and negative news. Our initial result shows that managers are, on average, tending to provide more bad news than good news. That result, though, was not hold any longer once we distinguish firms that completed their acquisition deals. Specifically, we find that managers of those firms that completed their acquisitions tend to provide, on average, more good news than bad news. While managers of firms that either did not do acquisitions or withdrew from acquisitions are likely to reveal, on average, more bad news than good news, and stressing the bad tone of news was significantly higher in firms that have decided to withdraw than those have not decided to engage in acquisitions in the first place. All the observed differences were statistically and economically significant, suggesting the necessity of studying the managerial incentives of those managers for deciding to engage in such patterns, and also investigating their economic consequences. Our results are expected to have theoretical and practical implications. Correspondence Details Yousry AHMED School of Economics, Finance and Management University of Bristol 8 Woodland Road Bristol BS8 1TN United Kingdom Email: [email protected]

Exploring the Evolution of the Annual Report from a Designers’
Perspective Penny Chaidali (University of Bristol) Annual reports issued by firms constitute a significant tool of interaction between the management of companies and existing and potential investors. Prior studies on accounting communication have indicated that annual reports are considered of high importance by users who depend on the information provided in these documents before making decisions relating to current and future investments. The majority of studies focus on the disclosures existing in the annual report, however there is little research into the way in which this important tool is designed to be used by organisations so as to communicate their financial results to investors. The study aims to investigate this unexplored aspect of annual reports in order to identify how the involvement of professional designers has affected the evolution of the document by providing insights into the annual report design process. In particular, it sheds light on the evolution of the annual report as a document which reports the financial performance of the firm and influences investors’ decisions by looking at how professional designers are involved in the annual report design and production process. Correspondence Details Penny CHAIDALI School of Economics, Finance and Management University of Bristol 15-19 Tyndalls Park Road The Priory Road Complex Priory Road Clifton Bristol BS8 1TU Email: [email protected]

Disclosure of Intellectual Capital of German Non Profit Organisations Katrin
Blankenburg (University of the West of Scotland) The purpose of the research project is to offer German Nonprofit Organisations (NPOs) recommendation how to disclose their competitive advantages, which consist mainly of intangibles. A convincing communication of these intangibles helps to attract new donors, investors and other stakeholder. These new sources of funding and support in turn will enable organisations to put a stronger focus on their social goals. A literature review on IC in general, the German non-profit sector, and IC in the German non-profit sector, revealed an underrepresentation of research in the latter two areas. Therefore the questions researched are: How is IC currently communicated by German NPOs? What are the perceived benefits and risks of IC disclosure? What changes, if any, are desired regarding the general conditions for the disclosure of IC? To answer these questions, openly accessible publications of the nine most diverse German NPOs were analysed first. Publications in .pdf format were used since they hardly ever change in comparison to homepages of the organisations. A qualitative content analysis of these documents was executed to establish whether IC is disclosed at all by German NPOs and thus relevant and how IC is currently disclosed. Additionally, to ensure the soundness of the findings, semi-structured problem centred expert interviews with representatives of the nine NPOs were conducted. Since no general register for NPOs in Germany exists, the sample for the content analysis and consequently for the interviews is based on the information provided by the German Central Institute for Social Issues (DZI). A representative of the DZI was interviewed as well. The interviews showed that neither the term intellectual capital nor the concept is established within the German nonprofit sector. At the same time the qualitative content analysis illustrates that every organisation analysed remarked on the commitment of its staff (human capital), the importance of support by external stakeholders (relational capital), and its organisational culture (structural capital) for instance. Consequently it can be assumed that IC is relevant for German NPOs. Further analysis as to the differences and similarities in the approach of the nine NPOs to IC disclosure is ongoing. Correspondence Details Katrin BLANKENBURG HAW Hamburg Promotionszentrum Alexanderstraße 1 20099 Hamburg Germany Email: [email protected]

Emergence of Inline XBRL: Regulatory Perspective Lidia Mishchenko (Open University
Business School) Digital reporting has become one of the key elements for regulatory reporting by businesses to government in a number of countries including the UK. In April 2011 two of the governmental bodies in the UK, HM Revenue and Customs (HMRC) and Companies House (CH), mandated the usage of a new digital reporting standard Inline Extensible Business Reporting Language (iXBRL) for business and company tax filings. By tagging financial information with individual codes that are based on accounting standards and regulatory reporting regime, financial documents are now transformed into XBRL instance documents and can be processed by XBRL-enabled software tools. These tools are developed by software developers and distributed by vendors. The purpose of this paper is to explore how HMRC and CH got involved in a close cooperation with XBRL community in the UK and together with IT consultants and technical experts developed a human- readable format of XBRL, known as iXBRL. The central concern is the fabrication of the new standard through the formation of a network of actors and objects involved in the process. The study adopts a sociotechnical perspective that highlights the intricate and mutually constitutive relationship between the social and the material (Latour, 2005; Leonardi, 2010). The research involves semi-structured interviews with regulators, software vendors, and organizations involved in developing digital reporting facility in the UK. In addition to interviewing, secondary data is collected from various sources consisting of publicly available archival documentation and official documents provided by the participants. The study demonstrates the mechanisms that helped Inline XBRL gain dominance over other reporting standards by exploring the key roles of the actors and the complex dynamics of collaboration and confrontation among them. By focusing on the UK unique context of the mandate of iXBRL-based filing, it contributes by responding to calls for research to improve the current understanding of the process of establishing the infrastructure for the digital reporting facility. Correspondence Details Lidia MISHCHENKO The Open University Walton Hall Milton Keynes MK7 6AA United Kingdom Email: [email protected]

Management Accounting 2 Led by Lisa Jacks and Julia Mundy

Cost Management Change in the Egyptian Electricity Industry Loai A
Alsaid (University of Aberdeen) Public sector research on cost management has utilised a number of different perspectives, including a positivistic paradigm, an interpretive paradigm and a critical paradigm. However, much of the existing cost management literature is framed by positivistic methodological inclinations to see cost management as contingent upon selected variables and factors. Most scholars tend to rely upon surveys and other quantitative approaches while others carry out consultation oriented conceptualisations or model-building exercises. These studies, by and large, provide predictive theories and models but fail to appreciate cost management as a ‘situated practice,’ i.e. within its historical, economic and social context. Hence there is an academic necessity to understand and theorise cost management practices within their different cultural, economic, political and organisational settings, especially in less developed countries. This paper provides an empirical case study as to how the macro political dynamics lead to the micro organisational changes of cost management practices in the public sector organisations. It draws on Dillard et al.'s (2004) version of institutional theory to explain how the micro organisational changes of cost management within the public organisations aligned with the macro institutional changes. Empirical data for the study come from an extended case study of a state-owned enterprise in the Egyptian Electricity and Energy Sector, in which semi-structured interviews, field observations and documentary analysis have been deployed as the data collection methods. The paper highlights the necessity of seeing cost management change, especially in the politically sensitive public utilities in less developed countries, as an institutional political change. 'Changes' of cost management practices deployed in such utilities then operate as technological tools that bring together the wider political objectives of the state and the narrower economic objectives of the firms. Accordingly, the paper offers a political definition for cost management change in the public sector. Correspondence Details Loai ALSAID Accounting and Finance University of Aberdeen Business School Dunbar Street Aberdeen AB24 3QY United Kingdom Email: [email protected]

Performance Measurement in Tertiary Healthcare Services: Evidence from Nigeria Olayinka
Marte Uadiale (University of Essex) Performance measurement (PM) links to healthcare financing ranks among the contemporary issues in many countries. Consequently, healthcare organizations have come under intense cost-containment pressures and there has been growing demand for developing a comprehensive PM system in such organisations. While there have been some researches that focus on the design, adoption, implementation and use of performance measurement and management systems in healthcare organizations, the domain of these researches is limited as they fail to capture the dynamics of PM practices in developing countries. Therefore, this study seeks to gain insight into how performance measurement practices have evolved in healthcare organizations in Nigeria. Correspondence Details Olayinka Marte UADIALE University of Essex Essex Business School Wivenhoe Park Colchester CO4 3SQ United Kingdom Email: [email protected]

Profitability Analysis in Manufacturing Organisations and the Implications for Management
Control Systems Across Supply Chains: A Focus on the Construction Products Sector Paul Massey (Sheffield University Management School) Profit can be defined as the residual income arising from the difference between net revenue and the total costs of supply to the customer. This, however, is not a simple calculation as both the definitions of net revenue and total costs of supply are subject to considerable subjectivity in their calculation. A further complication is the level at which such profit is calculated and the impact of aggregation and consequential errors arising from any assumptions made in those calculations. The two main areas of subjectivity relate to the treatment of accounting provisions and to the bases of apportionment of indirect costs within the management control system (MCS). The issues of aggregation arise where accounting treatments are based on an assumed mix (products, customers, supply chain, etc.), but the MCS is incapable of responding adequately to mix changes. The production and sales systems in the majority of manufacturing organisations are restricted to within the organisational boundaries with the consequence that the MCS is similarly limited. Manufacturing organisations by their nature tend to be cost focused and this is reflected in their MCS. Similarly, much of the relevant literature and developments reflect this focus (e.g. standard costing, marginal costing, zero-based budgeting, Activity Based Costing, etc.). Recent accounting literature has investigated the relevance of Supply Chain Accounting and has attempted to go beyond organisational boundaries. However, these have been based on simple stable supply chains with very limited product range complexity and have concentrated on the reduction of direct costs in order to gain competitive advantage. In contrast, pricing theory has reflected a simplistic “cost-plus” approach and has followed traditional economic theory. Little has been published that reflects institutional and behavioural issues that define pricing decisions, it is these latter issues that lead to revenue uncertainty in reporting and the resultant application of provision accounting. The objective of this paper is to investigate the organisational issues that define and limit the development of the MCS to give relevant profitability analyses. In particular, the paper will discuss the issues related to revenue reporting and analysis, and its impact on profitability reporting. Consideration will be given to the structural, technical, institutional, and behavioural issues that impact on the relevance of the MCS. Correspondence Details Paul MASSEY Sheffield University Management School Conduit Road Sheffield S10 1FL Email : [email protected]

Corporate Governance in Africa and the Gulf Led by Elisabeth
Dedman and Chris Humphrey

Corporate Governance and Firm Financial Performance: The Nigerian Evidence Adetunji
Idowu (Essex Business School) This study investigates the performance impacts of the corporate governance practices by firms that are listed on the Nigerian Stock Exchange. Resulting from the review of prior literature, it was noted that most of the available studies on corporate governance and firm performance relate to developed economies whilst relatively it is only a few that focus on developing economies and in particular on Nigerian corporate governance practices. The research studies that are available on Nigerian corporate governance are noted to be very inadequate; and even just a few among these focus on the impacts of corporate governance mechanisms on public firms’ performance. The purpose of the study therefore is to carry out further investigation in this aspect of corporate governance and thereby add to the existing wide literature on corporate governance and firm performance with insight from Nigeria, a developing economy. The three major area of focus of this study include: the firm’s ownership structure, board and board audit committee and principal-principal conflicts of interests’ perspective to corporate governance. The main research question of the study is whether corporate governance significantly impacts on the performance of the listed firms? This study therefore examines the causal relationships that exist between the governance mechanisms being adopted by these firms and their performance using the panel data on a sample of Nigerian publicly listed firms over a period of ten years (2004 to 2014). In this paper, the researcher presents exclusively, only the research methodology used in carrying out this study which includes the hypotheses developed from the review of relevant literature, models developed for testing the hypotheses and variables measures in order to receive the experts’ comments and advice. Correspondence Details Adetunji IDOWU Essex Business School Wivenhoe Park Colchester CO4 3SQ United Kingdom Email: [email protected]

Investigation of Contextual Influences on the Development of Corporate Governance
Practices in the Kenyan Corporate Sector Danson Kimani (Open University Business School) Many less developed countries (LDCs) have adopted corporate governance (hereafter CG) codes, due to various factors including: (a) pressure from multilateral organisations such as the World Bank and IMF, as a prerequisite for loans; (b) as a strategy for avoiding costly corporate failures; and (c) to enhance confidence among foreign investors and to attract foreign capital. Such LDCs have largely adapted the CG codes of the more developed Anglo-American countries, which are perceived as having succeeded in improving management’s accountability, firm efficiency, and corporate performance. However, extant evidence suggests that the corporate sectors of some surveyed LDCs continue to reel under CG challenges (e.g. corporate corruption, minority shareholders abuse, poor corporate performance, and political interference), despite the adoption of Anglo-American CG codes. With only a handful of empirical studies examining CG practices in Africa in the existing literature, this study seeks to expand that knowledge by investigating the factors which influence the application of an Anglo- American inspired CG code in Kenya. The researcher expects Kenyan contextual features to be different from those prevailing in the Anglo- American countries, e.g. regulatory framework and legal protection of shareholders, ownership structures, functioning of boards of directors, and firm-stakeholder relations. This thesis seeks to explore firstly the issues which led to the development of the present CG code in Kenya, together with further investigation of the factors which influence how the same code of practice has been implemented in Kenya. The objective is to examine Kenyan firms’ response to a largely Anglo- American styled code of CG, while simultaneously critiquing the notion of universal applicability of Anglo-American CG within non-Anglo-American settings. Three theories – agency theory, stakeholder theory and new institutional sociology – have been chosen to explain the findings reached in addressing the following primary research questions: (1) what factors influenced the development of the current code of CG in Kenya? and (2) what factors influence the way in which the Kenyan CG has been implemented? Following an exploratory qualitative approach, the expected outcomes from each research question are as follows. The first research question will: (a) discuss the events and debates which led to the development of the current Kenyan CG code; (b) identify potential differences between the Kenyan CG provisions and the Anglo-American CG codes of UK and USA; and (c) examine the extent of any such differences. The second research question will then investigate how and in what ways institutional factors may have influenced the way Kenyan CG code is implemented focussing on: (a) the Kenyan institutional and regulatory framework; (b) firms’ ownership structure; (c) role of boards of directors; (d) stakeholder relations; and (e) transparency of the Kenyan CG process. The researcher has begun by analysing documentary evidence (i.e. company annual reports, official documents and company websites) to be followed by in-depth semi-structured interviews with key CG stakeholders (i.e. corporate directors, CG trainers, officials from regulatory organisations, and representatives of shareholders). Correspondence Details Danson KIMANI Open University Business School Michael Young Building, C1 Wing The Open University (Walton Hall) Milton Keynes MK7 6AA United Kingdom Email: [email protected]

Governmental Involvement in Corporate Governance in the Nigerian Banking Sector
Larry Ordu (Lord Ashcroft Business School) The heightened global economic crisis that has enveloped the world banks has led to a loss in confidence in the self-regulation of banks and has instigated calls for more governmental involvement in the banking sector. There is therefore a huge debate on how regulatory reforms across the world intend to repair the damaged corporate integrity without undermining the free market principles upon which the success of the modern capitalist economy is based. On one side of the debate you have a preference for and a need to encourage more soft-law alternatives which is predominantly principle- based and allows firms to voluntarily adhere to corporate governance codes of and practices whilst at the other end of the debate, there is the perception that there is need to increase regulation and punish corporate offenders more heavily. This study will analyse the Nigerian Banking sector and its significance in corporate governance matters. Looking at the regulatory challenges in Nigeria and a lack of adequate enforcement, it is trying to show how much help a governmental involvement will bring. It will draw perspectives from developing countries with similar regulatory challenges and add to the inadequate literature in the area of corruption as a major cause for a lack of enforcement of corporate governance principles. This study is analysing 5 key variables to understand the corporate governance practices within the Nigerian Banking Sector and these include: Institutionalised Corruption (Political Patronage), Governmental Role, Regulatory Framework, Transparency and Independence. A critical evaluation of the Nigerian banking sector will uncover the regular regulatory challenges faced by the enforcement bodies and therefore it is adducing a more governmental involvement in corporate governance rather than a relaxation of barriers of entry for foreign investors in the banking sector. In trying to analyse these issues, this study attempts to shed light on the banking sector issues and the regulatory responses to the various corporate scandals. Knowing the importance of the banking sector in the Nigerian economy, the discussions here will aim to provide an understanding into the corporate governance regulatory model in the Nigerian banking sector. Correspondence Details Larry ORDU Anglia Ruskin University Lord Ashcroft International Business School Queen's Building Chelmsford CM1 1SQ United Kingdom Email: [email protected]

An Investigation into the Assessment of Corporate Governance (CG) and
Accountability in Libyan Listed Companies Ismail Elshahoubi (University of Reading) Corporate governance (CG) became an international issue during the 1980s. CG practices, especially in developing countries, have witnessed an increasing amount of interest, especially following the financial scandals of the 20th century. Currently, there is a global effort to develop and issue CG principles and standards, with the purpose of ensuring that the best practices are in place in order to protect firms from possible crises. A number of codes have already been established and published for different regions in the world via professional organisations one of which is the Organisation for Economic Co-operation and Development (OECD). In 2006, the Libyan Stock Market (LSM) was established in order to regulate the capital markets. Since that date CG has become a controversial issue in the Libyan environment, due to the government’s plan for economic restructuring that has transformed the economy from one based on socialist- oriented policies to a free-market system. A huge privatisation programme was launched which covered all economic sectors. Consequently, a debate was initiated about the necessity for good CG that would attract local and foreign investment and enhance the functioning of the private sectors in the Libyan economy. CG and accountability are said to be two sides of the same coin. Numerous studies have given significant consideration to the topic of CG and accountability from shareholders’ and stakeholders’ perspectives; nevertheless, few studies have concentrated upon this topic in Arab countries. There is a clear lack of research describing current practices, and observing and evaluating the code and framework of CG in the LSM.Thus, thisresearch aims to fill this identified gap by focusing upon CG and accountability in Libyan listed companies, considering that the current Libyan environment has made this topic a highly important one for research in this context. Correspondence Details Ismail ELSHAHOUBI Henley Business School University of Reading Whiteknights Reading RG6 6UD United Kingdom Email: [email protected]

Corporate Governance Practices in GCC Countries: Comparison, analysis and Recommendation
Towards a Unified Code of Best Practices Abdulla Al Jalahma (Henley Business School) Corporate governance is an important topic around the world and especially within the emerging markets in order to protect the minority shareholders. Therefore, this study will examine the corporate governance practices in the Gulf Corporation Council (GCC). This will provide an understanding of commonalities and differences in the GCC counties’ existing practices. The GCC countries have similar culture, ethics, religion and customs. Moreover, the oil is considering the primary source of income for all of the six countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the UAE). This study will provide recommendations that will assist in establishing a standardized code of corporate governance practices for the GCC countries. This code will provide reassurance of investor confidence especially the foreign investors, which will result to a stabile local capital markets development in the long-term. Correspondence Details Abdulla Al Jalahma Henley Business School Whiteknights Campus Business Informatics, Systems and Accounting Reading RG6 6UR United Kingdom Email: [email protected]

Corporate and Social Environmental Disclosures 2 Led by Ken McPhail
and Jeffrey Unerman

The Nature and Adequacy of Corporate Social and Environmental Responsibility
(CSR) Reporting Among Saudi Companies Moneera Alwahaibi (Brunel University) Corporate social and environmental responsibility (CSR) development is reflected in the literature into two main areas; CSR performance and CSR reporting. CSR reporting and assurance as a result of CSR performance is still a voluntary practice in most countries which creates heterogeneity in reporting and in turn prevents comparisons and limits evaluating the quality of the content. Although CSR reporting and assurance has been developed and transformed from being in the periphery of the literature to being in the centre of the research agenda (Parker 2014) ,it is still ‘under construction’. According to a KPMG survey of 2013, 51 per cent of 4100 surveyed companies include information in their annual reports compared to 9 per cent in 2008. In spite of this significant progress, reporting is still a developed country phenomenon. However, the existing literature in developing countries is relatively narrow, recent, mainly have a social nature (Visser 2008) and have an exploratory aim. Furthermore, studies have mostly restricted the research to one sector in one country in a specific year and the majority of studies is conducted in the newly industrialized countries while very few in Arab countries. Not surprisingly, there is a small amount of research in the area of CSR reporting in Saudi Arabia, most of which is pioneering in Saudi and paving the road for other promising studies, although, they are incomprehensive as they don’t include all sectors and are not longitudinal to draw a detailed picture of the disclosure movement, they are still relatively informative. Nonetheless, there is a real dearth of CSR reporting research in Saudi companies which needs to be overcome. Thus, this proposed research aims to determine the nature and adequacy of corporate social and environmental responsibility (CSR) reporting among Saudi companies listed in the Saudi Stock Exchange Market and simultaneously, to establish the driving forces of CSR reporting in Saudi companies. In order to achieve these aims, social and environmental accounting theories and content analysis will be used in line with the interpretations and descriptions needs. The empirical part of this research will study a sample of 159 companies registered in the Saudi Stock Exchange Market from 2003 to 2011, supported by interviews to collect the relevant data from different perspectives such as managers, academics and professionals. Correspondence Details Moneera ALWAHAIBI College of Business, Arts and Social Sciences Brunel University Kingston Lane Uxbridge Middlesex UB8 3PH United Kingdom Email: [email protected]

Corporate Social Responsibility Disclosure in Saudi Arabia Abdullah Aldosari (University
of Reading) This research is to explore the extent to which Saudi stakeholder perceptions affect the corporate social responsibility (CSR) disclosure and accountability. The focus is on how companies listed on the Saudi Stock Exchange handle their CSR disclosure information. Aspects such as who generates the information, who handles and delvers it and to who are discussed. The focusing on the status and perspectives of CSR in Saudi Arabia is quite scanty. Another equally important factor is that the extent to which research findings based on studies carried out in other countries may not be directly applicable to Saudi Arabia, given the country’s peculiarities such as its religion, culture and hitherto traditional way of doing business. Correspondence Details Abdullah ALDOSARI Henley Business School University of Reading Whiteknights Reading RG6 6UD United Kingdom Email: [email protected]

An Analysis of Corporate Social and Environmental Disclosure (CSED): In
Jordanian Context Tareq Bani-Khalid (Dundee Business School) The aim of this paper is to provide the reader a detailed description about the main determinants of the level of Corporate Social and Environmental Disclosure (CSED) in the Jordanian context. Specifically, the internal corporate factors such as: firm size, profitability, audit firm and financial performance are the selected independent variables in this paper. In contrast, the level of CSED practices is a dependent variable that will be measured by assigning sub-categories into key pre-selected categories. This paper is based on knowledge gathered via descriptive analysis of the CSED information in the annual report for each industrial company listed in Amman Stock Exchange (ASE) during 2010, 2011 and 2012. Thus, functionalist paradigm can be fruitfully employed in this work as an appropriate framework to analyse the practices of CSED, and to provide rational explanations for such practices. In fact, disclosure index is the main method that has been applied to measure the level and determinants of CSED practices. In addition, Statistical Package for Social Science (SPSS) analytical technique has been used to analyse the relationship between variables. The results show that there is unsatisfactory level in the total amount of the CSED practices during the survey period. Furthermore, the results also indicate that the firm size, audit firm and financial performance are associated with the level of CSED practices; while the results suggest that profitability factor is insignificant. On the overall, consistent with the previous studies that were examined the same determinants of CSR disclosure; this paper also seeks to provide description for such practices in one of developing countries, Jordan, as a modest contribution, which can enrich the existing literature relating to the CSR practices. Correspondence Details Tareq BANI-KHALID Dundee Business School University of Abertay Dundee. United Kingdom Email: [email protected]

The Impact of the ‘Arab Spring’ on Corporate Social Accounting
Practices With a Specific Focus on Libyan Companies Tariq S Almontaser (Henley Business School) This study discusses the recent literature, which has been collected by the researcher thus far, concerned with finding the inferred relationship between social accounting practices in oil companies, operating in Arab Spring Countries and the effects of the Arab Spring. Specifically, the study focuses on the effects of significant reorganization in top-level company management which took place in many Arab Spring countries on corporate social accounting practices. This reorganization of top-level management, an outcome of the recent revolutionary events, may have had significant consequences on the Social accounting practices performance in oil companies because of altered political expectations. This study seeks to contribute to an understanding of corporate social responsibility within Arab spring countries across the following dimensions: the importance of social disclosure; the potential influence of changing political issues in terms of managerial attitudes; identification of obstacles which may hinder the adoption of environmental & social disclosure in Libyan oil companies. Correspondence Details Tariq S ALMONTASER Business Informatics, Systems and Accounting Henley Business School University of Reading Whiteknights Reading RG6 6UD United Kingdom Email: [email protected]

The Politics of CSR Disclosure: Empirical Evidence of a Developing
Country Melita Mehjabeen (Manchester Business School) Studies on CSR disclosure has received increased attention in academia for a long time. The objective of this research is to explore the association of political connections of firms, corporate governance and ownership structures with the level of CSR disclosure in a developing country. A growing body of literature on CSR disclosures in emerging economies has found the role of external pressures, primarily pressures from national and international media, foreign customers, foreign partners and donors, state and the parent companies etc. to be significant drivers of CSR disclosure in many countries. However, the influence of political affiliation or linkage on the organizations has not been considered in CSR studies despite the widespread presence of corporate political activities like donations and sponsorships in both the context of developed and developing counties. Using the notion of traditionalism of Weber, this paper links CSR disclosure to political connections and familial power, which has not been addressed in CSR studies widely. It attempts to provide an insight into the explanatory powers of politically motivated CSR disclosures in developing countries with fragile democracy and weak institutional environment. Using political linkage, components of corporate governance and different ownership structures as independent variables, OLS multiple regression analysis is conducted to investigate the relationship with the level of CSR disclosure in the annual reports of Bangladeshi listed companies. Results indicate that political connection is a significant determinant of CSR disclosure. Politically connected firms tend to provide more CSR information. The presence of family members in the board also indicates that the family controlled firms in developing countries provide more CSR information. On the contrary, foreign and institutional investors are also significant determinants of CSR disclosure, associating negatively to the level of CSR disclosures. This finding suggests that the CSR disclosure in a traditional setting is very different from the CSR disclosure in the developed western world. This study, further attempts to provide empirical evidence that in a traditional society, the disclosures of CSR information is to express public loyalty to a powerful political family in power and also that the traditionalist culture mediates the rational/legal framework of corporate governance in Bangladesh. Correspondence Details Melita MEHJABEEN Accounting and Finance Group Manchester Business School Booth Street West Manchester M15 6PB United Kingdom Email: [email protected]

Public Finance Led by Sheila Ellwood and Pam Stapleton

Implementation and Regulation of Public Private Partnerships (PPPs): A Comparative
View of the UK and Kenya Edwin Orero (Royal Holloway, University of London) The use of Public Private Partnerships (PPPs) to deliver public services has become quite prevalent in recent years. In the UK, whose PPP framework has been considered to be among the best developed PPP programmes in the world, the use of PPPs has increased since the introduction of the Private Finance Initiative (PFI) by the Conservative Government in 1992, with the main objective of introducing private finance for public sector projects. PPPs are now increasingly used to help deliver public services in sectors as diverse as Health, Education and Roads Transport. PPPs have also been used in other parts of the world too. In Europe, PPPs have been used in various countries including Italy, Spain and Ireland while they have also been implemented in North America and in Australia. Increasingly, they are being used in developing countries, including in sub-Saharan Africa and in Kenya. While different reasons have been given for introducing PPPs and for involving the private sector in the delivery of public services, the form through which PPPs are implemented, regulated and controlled remains open to further research given that each country and region of the world operates within its own unique context. Even though the spread of PPPs can be viewed through the lens of policy transfer, the specific drivers of the PPP policy and structures through which PPPs are implemented could be different. By making a comparison between Kenya specifically and the sub-Saharan Africa area in general with the implementation of PPPs in the UK, this research paper seeks to determine the PPP implementation at a societal level and its unique structures. The UK is seen to have had a deeper and broader experience with PPPs and possibly as the source of the PPPs policy transfer. Given the complexities of PPPs and their eclectic use in the provision of public services in different areas such as health, education, transport infrastructure, prisons, waste water management and information technology, it is important to understand why countries have adopted PPPs, how they are being implemented and how the PPP projects are regulated. Moreover, the extended length of a PPP, the possibility of an “incomplete contract” in PPPs, the involvement of the voting public as a user of PPP services, the move by governments to involve the private sector in the provision of public services and the suggested opacity in PPP processes make it important to determine how this takes place. Correspondence Details: Edwin ORERO School of Management Royal Holloway, University of London Egham TW20 0EX United Kingdom Email: [email protected]

Post-Implementation Evaluation of Value for Money in NHS PFI Projects
Ekililu Salifu (Essex Business School) Since the inception of the Private Finance Initiative (PFI) policy in 1992, successive governments have embraced, modified and expanded the use of the policy into many other arears of the public sector. The key gravitational force towards which the justification of the continued use of the policy has been the justification of the PFI delivering Value for Money (VfM). Despite its centrality to the pursuit of the policy, VfM in PFI has been presented in the literature as an elusive concept and as a “grammar of multiple meanings”. Previous research have sought to both explore the concept as well as its assessment of the contracting stage of the PFI project and have found aspects of the procurement which possibly might inhibit the delivery of VfM in the operational stages of the project. Relatively fewer studies have sought to evaluate the actual delivery of VfM in the operational stage of the contract. This study does seeks to explore the evaluation of VfM in operational PFI contract. Using a critical theory approach and Bourdieu’s theory of practice, the concept and practice of evaluating for VfM is problematized as not been neutral but as articulations of privileged parties to the conception and evaluation process whose representations has achieved negotiated dominance over those of other parties in the field of PFI and project evaluations. Using a combination of Document analyses and interviews, the study intends (via case studies) to explore the problematized conception of VfM in PFI and its evaluations thereof. Correspondence Details Ekililu SALIFU Essex Business School University of Essex Wivenhoe Park Colchester CO4 3SQ United Kingdom Email: [email protected]

Attitudes and Behaviour Toward Taxation: Case Study “The Muslim community
in Ireland and Scotland” Riad Cheikh (Cairnes Business School) The topics of tax compliance and tax evasion are as old as taxes themselves, and yet they remain areas of discovery, probably as long as taxes would exist. Recently, tax researchers have started to focus much more on solving the mystery behind why the individuals comply with taxes , while tax evasion seems to be more rational (Torgler, 2003). This matter has obtained growing interest in the tax compliance literature in the last decade. Considering tax morale as the intrinsic motivation to pay taxes, might explain the high degree of tax compliance (see, e.g.,(Alm et al., 1992, Feld and Frey, 2002, Frey and Feld, 2002, Frey and Torgler, 2006). Baldry (1986) pointed out that the decision whether or not to evade is influenced mostly by “morale compunctions”. Therefore, examining the factors that shape tax morale would be a key to solve this puzzle. Surprisingly, very little research has been conducted in this topic. Feld and Tyran (2002, p.199) pointed out that “All in all, too little is known as to which motivations of citizens shape tax morale”. Moreover, Frey and Feld (2002) mentioned that nearly all studies referred to “tax morale” as a black box, without interfering or at least discussing the factors that arise or maintain it. This research will attempt to fill this gap by identifying the factors that shape tax morale. It is believed that by projecting some lights on those factors, a better understanding would be drawn about tax morale and to what extent tax morale affects the level of tax compliance. As well as, the precise chain of rasioning that taxpayer uses on deciding whether to fully compliance or not. Moreover, it will be argued that tax morale is likely to be influenced by religion, and that studying the effect of religion would definitely fertile the tax compliance literature in general, and tax morale in particular. The Islamic approach would be adopted in this research for a many reasons; mainly, Muslims have to pay each year a certain amount of money called “Zakat”, which many scholars consider it similar to ordinary tax systems since it has almost analogous objectives, which makes it worthy to study this alternative tax system. Examining a community that hold a different ideology than the vast majority of the surrounding environment and society would be an ideal situation to test the social factor of tax morale and its effect on tax compliance behaviour. This study will use a questionnaire that will be distributed out in the two countries: Ireland and Scotland. The questionnaire composed of two sections. The first section covers different hypothetical tax compliance scenarios. The second section includes general information about participant’s background and attitudes Correspondence Details Riad Cheikh Cairnes Business School National University of Ireland, Galway New Castle Road Galway Ireland Email: [email protected]

Finance and Financial Services Led by Stuart Hyde and Norman
Strong

Structural Reforms in the Banking Sector – An Empirical Analysis
of Market Reactions Margit Münzer (IAE Business School Toulon) The financial crisis revealed the costs and risks arising from “too big to fail” banks. Between October 2008 and October 2012, more than 5 trillion EUR (40.3% of EU GDP) of state aid measures were approved in order to support and stabilize the financial sector. In consequence, numerous reforms have been discussed and implemented on the national, European and international level. One of these reforms is the separation of banking activities which aims at reducing the implicit and explicit subsidy of banks, facilitating resolution and recovery, reducing capital and resource misallocation and improving competition. Interestingly, the reform has been implemented in numerous countries such as France, Germany, the UK and the US in a different manner. The purpose of this paper is to analyse the reactions of stock returns and CDS spreads of banks to the different structural reforms in the aftermath of the financial crisis, employing the event-study methodology. The paper sheds light on the effect of the recent structural reforms on the financial markets and may thus answer the question how these reforms are perceived by market participants. It contributes to the existing literature by focusing explicitly on recent structural reforms and may be helpful by assessing potential market reactions regarding the future structural reform on the EU level. Correspondence details: Margit MÜNZER IAE Business School Toulon GRM Research Center 70 Avenue Roger Devoucoux 83000 Toulon France Email: [email protected]

The Impact of Asset Securitisation on Credit Risk Taking Behaviour
in Commercial Banks Lama Ezz (Brunel University) Asset securitisation as a credit risk transfer technique has experienced a remarkable growth since the late 1990s across Europe and worldwide. Such significant increase can be attributed to the advantages recognised by different market participants, as well as regulatory drivers (e.g. Basel I). The related regulations were based on the assumption that securitisation strengthens the entire banking system for credit risk sharing and diversification benefits. The latter benefits were confirmed by the early empirical studies, which heavily concentrated on bank's incentives to securitize. Although securitisation has been widely supported in the literature, the recent financial crisis of 2007/2008 has unfolded the risks inherent in securitisation process, and posed challenges for the appropriate risk assessment by all parties involved in such transactions; originators, regulators, credit rating agencies, and investors. More recent studies have reached conflicting results regarding the implications of securitisation on credit risk. This study aims to analyse the effects of asset securitisation on credit risk taking behaviour in banks. More specifically, it investigates the changes in capital requirements and liquidity ratios driven by the usage of asset securitisation, which can be considered as key drivers for banks to invest in risky loans. It further evaluates the influence of Basel International Capital Framework (Basel I,II) on banks' incentives to take excessive risks. This study will be informed by stakeholder-agency theory. Hence, it attempts to provide insights on agency theory and its implications on the recent financial innovations. A theoretical framework was developed to help examining the risk implications of asset securitisation in banks, and clarifying the possible inter-connections between variables. To address these research objectives, a quantitative study will be undertaken. Secondary data analysis will be conducted using accounting reports and securitisation data of a sample of European commercial banks over a period from 2000 to 2009. This study contributes to the literature concerning the implications of securitisation activities on originators by extending it to address the changes in credit risk-taking incentives; Capital and Liquidity, and examining their effects jointly on the lending behaviour of banks. Prior research have concentrated only on one of the latter incentives even though they could possibly be interrelated. Further, previous studies were mostly conducted in US banks. This study attempts to have a primary look at the European market. This market has distinct collateral characteristics in terms of regulatory and accounting treatments, and unique structural features that raised the researchers' interest in it. Considering the most recent amendments of Basel regulations, the findings of such research could be particularly valuable for the ongoing discussions on the weaknesses of the securitisation process. This may help regulators and policymakers in designing a comprehensive and sound securitisation framework. Correspondence Details Lama EZZ Brunel Business School Uxbridge UB8 2PH United Kingdom Email: [email protected]

Wavelet De-Noising and Volatility Forecasting in the International Stock Markets
Abdel Razzaq Al Rababa’a (Stirling Management School) This study provides empirical evidence that extracting the latent volatility part is important in stock market forecasting. Wavelet transform is employed as a powerful pre-processing technique, which can decompose the series into multi-levels and filter out the noise, In the next stage, the de-noised return series are fed into a group of asymmetric and long-memory models belong to ARCH/GARCH family in order to generate one step-ahead forecasts of daily index returns for eight major international stock markets. During the de-noising process, two popular thresholding procedures in mathematics are used, namely, hard and soft thresholds. Consistent with Capobianco (1999), our first conclusion indicates that using the statistical error measures, wavelet-based forecasts are generally improved for all the employed models, with the Soft thresholding has proved to provide the most accurate forecasts in most scenarios. Interestingly, we found that the ranking of models became clearer after de-noising. Further, the evidence of superiority of our overall de-noising procedure is also supported by the results obtained from the tests of equal predictive ability. Last, the performances of the models are also assessed according to the interval-based VaR measures with 1% and 5% selected as initial probability coverage rates, PFs and TUFFs. Here we found that neither on original nor on de-noised return series, such a model is clearly faring the best. This finding is not new in finance literature and previous works (Brooks & Persand 2003 and Marcucci 2009) also concluded the same. Nevertheless, when the 99% confidence interval is used, more models have found able to pass the three tests of coverage after de-noising with soft shrinkage, and this is consistent with our findings based on the statistical error measures. The same conclusion is reached for the proportion of exceedances and TUFFs at 1%, with the long-memory models being the best, then GARCH model came next for majority of the analyzed return series. Correspondence Details Abdel Razzaq AL RABABA’A Stirling Management School Stirling FK9 4LA United Kingdom Email: [email protected]

Earnings Management in the UK Led by Mark Clatworthy and
Steve Young

The Contagion of Aggressive Reporting Practices Through Board Networks: The
UK Evidence Nguyet Nguyen (Kent Business School) This research investigates if the contagion of aggressive earnings management practices through board interlocks exists in the UK, and if yes, why. Expanding on the existing literature, the research first of all examines whether aggressive reporting practices, using accruals and real operation management, spread between UK firms via shared directors. Using a sample of 6,371 observations with available data, the research has obtained initial evidence consistent with aggressive reporting practices spreading one firm to another if the two firms have a common director. In particular, the research finds that being linked with a focal firm within two years after the firm reports too highly inflated earnings via accruals management (cash flow, production cost and discretionary expense management) significantly increases the likelihood of the exposed firm also being aggressive using accruals management (cash flow, production cost and discretionary expense management, respectively). Correspondence Details Nguyet NGUYEN Kent Business School University of Kent Canterbury CT2 7NZ United Kingdom Email: [email protected]

Does Earnings Management by UK Firms Improve Predictability of Core
Earnings? Kostas Pappas (Manchester Business School) This paper tests whether the predictive value of accruals-based and real earnings management for core earnings, is related to the smoothness of companies' reported earnings. I argue that the motives for engaging in earnings management differ between firms that smooth income and those that do not. The sample consists of publicly listed UK firms from 1994-2013. Focusing initially on predicting one year ahead changes in earnings, my results indicate that income smoothing firm’s exhibit significantly different earnings management behaviour than non-smoothers, relying on different level and direction of earnings management to achieve their targets. Further analysis indicates that aggregating real earnings management conceals useful information about the overall real earnings management strategy of the firm. I also find a significant difference in the relationship between one year ahead analyst forecast revisions and measures of earnings management between smoothers and non- smoothers. Correspondence Details Kostas PAPPAS Manchester Business School Booth Street West Manchester M15 6PB United Kingdom Email: [email protected]

IFRS – Comparative Studies Led by David Alexander and Andy
Stark

Market Reaction to SEO Announcements upon IFRS Adoption Mostafa El
Harakeh (University of Manchester) This study explores the market reaction to new equity issuance upon the adoption of International Financial Reporting Standards (IFRS) in 2005. The study includes all publicly listed companies in the United Kingdom and France. I selected the United Kingdom as a representative of common-law countries and France as a representative of code-law countries. I differentiated between legal systems because IFRS widely reflect common-law accounting standards. These two countries are highly comparable economically, which allowed me to implement a difference-in-difference methodology in comparing the results of IFRS adoption between both countries. The genesis of our theoretical argument is information asymmetry. IFRS adoption is expected to mitigate information asymmetry, which will consequently affect investors’ reaction to new equity issuance announcements. I expect less negative reaction in France than the negative reaction in the United Kingdom because IFRS is expected to have a greater effect in code-law countries. Also, I test the change in dividend pay outs in both countries. The findings suggest that dividend pay outs have increased in France after IFRS adoption; however, no significant change in dividend pay outs was recognized in the United Kingdom. This study contributes to the literature of financial reporting through showing one of the economic consequences of adopting new accounting standards like IFRS. The main implication from this study is that, when fixing other factors such as law enforcement, industrial infrastructure and economic state, unifying accounting standards among countries tends to minimize differences in firms financial decisions. Correspondence Details Mostafa EL HARAKEH S6.11 Weston Hall Sackville Street Manchester M1 3BB United Kingdom Email: [email protected]

IFRS for SMEs: A Comparative Study of the UK and
Albania Sonila Gkorou (Brunel University London) Small and medium-sized entities (SMEs) account for more than 95% of companies worldwide. Following the adoption of IFRS in 2005 for group companies in many countries, the IFRS for SMEs was issued by the IASB in 2009. It is a single accounting standard designed to meet the needs SMEs and other non-publicly accountable entities in any jurisdiction. National governments can decide which entities will be eligible to use it. There is a considerable literature on the impact of the application of IFRS for SMEs in different countries. However, most studies focus on individual countries, a group of EU member states or a group of developing countries. The purpose of this study is to investigate the context in which the IFRS for SMEs has been adopted or adapted in the UK, as an example of a developed country, and in Albania, as an example of a developing country, which is planning to join the EU. It will also examine the factors that affect the implementation of the standard in each country. The study contributes to the literature by examining the similarities and differences between these two countries. This paper presents the results of a literature review that examines the accounting history of the UK and Albania and the processes for adopting/adapting the IFRS for SMEs. Correspondence Details Sonila GKOROU Brunel University London College of Business, Arts and Social Sciences Brunel Business School Eastern Gateway Building Uxbridge UB8 3PH United Kingdom Email: [email protected]

Does the Mandatory Adoption of IFRS Produce Similar Benefits Under
Different Institutional Conditions? Makailla McConnell (University of Sussex) This thesis contributes to the growing body of literature measuring the impact of mandatory IFRS adoption, specifically changes in comparability and quality of financial statement for Canadian and Brazilian firms. These countries have similar IFRS adoption dates and their different institutional conditions are typical of those that are observable in common and code law countries respectively. The extant literature reports mixed results for the impact of IFRS adoption but is in agreement that differences in institutional factors such as legal, tax, enforcement and cultural regimes are associated with the variation. This has far reaching implications for the global aim of creating of a single set of high quality international accounting standards as adoption in different countries with different institutional environments may produce different results. This thesis adds to existing knowledge on the capital market effects of IFRS adoption to investigate whether capital market effects reported in prior literature are generally applicable across different institutional conditions. The investigation is based on the application of positive accounting theory and on insights from the analysis of agency relationships to generate predictions and refined measurement of the relative IFRs adoption benefits of improved financial statement quality and improved comparability between Canada and Brazil that are typical of common and code law countries respectively. Correspondence Details Makailla McCONNELL School of Business, Management and Economics Jubilee Building University of Sussex Brighton BN1 9RH United Kingdom Email: [email protected]

Auditing 1 Led by Chris Humphrey and Stuart Turley (from
8.30 to 10.30 am)

Applying Role Theory to External Auditors: A Preliminary Study Karen-Ann
Dwyer (Dublin City University) Auditors experience role conflict between their professional duties to shareholders, company management, boards of directors and their own business interests. The objective of this study is to understand auditor roles and whether, and to what extent, role conflict impacts external auditor behaviour. Auditor role conflict will be analysed by examining two questions:  To what extent does role theory apply to auditors?  Why do auditors experience role conflict? This paper comprises a pilot study of auditor role conflict, applying content analysis to examples of auditor role conflict. This pilot study will provide the starting point of a larger more systematic empirical study of auditor role conflict. The first stage derives an analytical framework of auditor role conflict. This involves applying role theory definitions from the prior literature to the auditing environment, analysing the role theory theoretical model in the context of external auditors and examining the auditing literature for instances of role theory concepts, including role conflict. This first stage is important to evaluate how role theory applies to external auditors and will help increase our understanding around external auditor roles. The second stage will apply content analysis to examples of auditor role conflict collected from a review of the prior auditing literature. The examples will include extracts from academic and practitioner articles and will include extracts of qualitative interviews and abstracts or findings. A detailed codebook is developed based on topics and sub-topics derived from the analytical framework in stage one. While there is a large body of research on role conflict in general organisational behaviour, there are a limited number of papers on role conflict in auditing. What papers there are were primarily written in the 1970s. Koo and Sim’s (1998) more recent study is focused on a specific region, Korea, and has some limitations. Auditor role conflict papers primarily focus on one type of role conflict. This research extends the analysis and examines the four types or role conflict in the auditing environment (e.g. inter-sender role conflict, intra-sender role conflict, person role conflict and conflict between expectations of the role holder and role sender). In addition this research examines the role of auditors in the current climate and how role conflict impacts current external auditor behaviour. This research will be of interest to stakeholders such as auditors, investors, audit committees and regulators. These stakeholders will benefit from an increased knowledge of how role theory and role conflict applies to external auditors. This study will enhance our understanding of auditors’ role performance and effectiveness. Correspondence Details Karen-Ann DWYER Dublin City University Glasnevin Dublin 9 Ireland Email: [email protected]

Managing Conflicting-Interests Risk in Accounting Firms Maria Ishaque (Anglia Ruskin
University) The last decade has witnessed numerous corporate accounting scandals that brought the integrity of professional accountants and that of accounting/audit firms into question. Evidence suggests that the conflict of primary and secondary interests faced by these professionals played a central role in such collapses. However, despite the increased legislative and regulatory efforts to manage such conflicting interests, the deviations of professional accountants from serving the primary interest of profession is still largely pervasive in accounting firms (Farrell, 2014; Crump, 2013; Moore et al. 2010). This study looks at conflict of interests through the lens of risk management wherein the ‘conflicting- interests risk’ denotes ‘the likelihood that a professional accountant, in the event of conflicting interests, might deviate from serving the primary interest of profession (i.e. deviates from acting in the best interest of public: provision of appropriate audit opinion)’. Although this problem of professional accountants’ deviant behaviour in the face of conflicting interests is well documented in the literature (Mayer et al. 2013; Gino and Galinsky, 2012), there remains a clear lack of adequate solutions. This problem is largely pervasive and thus more research is needed due to, at least, three reasons: First, the existing weak and ineffective measures to manage conflict of interests that professional accountants face (Moore et al. 2010; Bazerman and Banaji, 2004). Second, there is very little or even no consideration given to behavioural interventions for addressing conflict of interests (Bazerman and Gino, 2012; Ayal and Gino, 2012). Third, the lack of knowledge about how conflicting interests operate at individuals’ level (Bazerman and Gino, 2012; Nelson et al., 2004). In an attempt to propose a plausible solution to the above research problem, this study aims to develop ‘a behavioural framework to facilitate an effective management of conflicting-interests risk in professional accounting firms’. Using the basic principle of social cognitive neuroscience that; ‘a thorough understanding of any behaviour requires multiple levels of analyses’, the behavioural interventions for the intended framework will be sought by understanding accountants’ behaviour in the face of conflicting interests at the social, the cognitive, and the neural levels. The theoretical framework of this study is informed by two theories from psychology - ‘social cognitive theory’ and the ‘dual-process theory’. The accounting firms, professional accountants, and the regulators of accounting profession will be principal beneficiaries of this research. I believe that my research is interesting-cum-unusual in my area of study for not only because it adopts the insights from social cognitive neuroscience and that it employs theories from psychology, but also because it looks at conflict of interests through the lens of behavioural risk management. This multidisciplinary research based on the combination of accounting with psychology and neuroscience is perhaps the first in the ‘risk management research’ and the ‘conflicting-interests research’ in auditing. From methodological perspective, the robustness of the experimental design I will adopt for empirical part of my study can be considered a further contribution. Finally, the findings of my research will open doors for future researchers seeking to employ multidisciplinary approach for examining conflicting-interests risk from a behavioural perspective. Correspondence Details Maria ISHAQUE Anglia Ruskin University Bishop Hall Lane Chelmsford CM1 1SQ United Kingdom Email: [email protected]

Pricing of Audit Services: Evidence from Egypt Donia S Abdelrazik
(Plymouth Business School) In recent years, there is a growing trend in auditing research about discussing how audit services are priced. Some researchers were interested in evaluating the effect of changes in the regulatory environment surrounding auditing profession on audit fees. Others were interested in evaluating the effect of different determinants of audit fees related to client and auditor attributes This study purpose is to explore some key auditor attributes determinants that up till now prior literature still show some contradiction in results about their relationship with audit fees. Also most prior studies were concerned with the determinants of audit fees in developed countries with a limited number of studies that were undertaken in developing countries. Nonetheless, as far as we know, no empirical studies were found on the factors that influence audit fees in the Middle East. This study second purpose is to process actual data taken from a developing market, Egypt, which was never explored by prior literature of audit fees. According to a pilot study made in Egypt about determinants of audit fees, the preliminary results indicated that audit fees is mostly the decision of audit partner. Taking into consideration the conflict in results of previous studies concerning the relationship of audit fees with some of the partner's attributes, and the lack of research concerning other attributes. It may be very interesting topic to make an integrated examination of a variety of audit partner attributes that might affect audit pricing decisions in a developing country like Egypt. The results of this study might help in clarifying some of the determinants of pricing of such a service, i.e. auditing, to companies, regulators, or even financial statement users. Correspondence Details Donia S. ABDELRAZIK Plymouth Business School Plymouth University Drake Circus Plymouth PL4 8AA United Kingdom Email: [email protected]

The Role of Audit Committees in Corporate Governance: The Case
of the Banks Sector in Libya Abdulhakim Masli (Nottingham Business School) Recent episodes of corruption and collapse in a number of major corporations have revealed weak control mechanisms and highlighted the need for greater transparency and in order to protect shareholders and stakeholders alike. The Enron collapse in particular led regulators and governments throughout the world to pay renewed attention to the audit committee as one of the key governance mechanisms. Similarly, the recent corruption has resulted in the creation of corporate governance guidelines which give a prominent role to audit committees. As the Libyan economy moves towards privatization, broadening of ownership and attraction of foreign investment, it has become important to review and improve the ways in which corporate governance operates in Libyan corporations, particularly audit committees. However, the results of some of previous studies generally indicate that there are several challenges and obstacles facing the internal audit function in these corporations. Considering that there is a strong working relationship between internal audit and the audit committee, findings like these suggest that there may be differences of the surrounding environment between the audit committees in Libya and those in the developed countries due to the potential impacts of these obstacles on the audit committees in Libyan corporations. While paying little attention to the effectiveness of audit committees in Libyan companies and their role in corporate governance by researchers and thinkers, this research seeks to contribute to this process which is not only by analysing the current role played by audit committees in corporate governance, but also whether the weakness of internal audit may have impact on the audit committees practices in Libya. Thus, the main aims of this research is to explore the current state of the audit committees practices in corporate governance in Libya, and to examine whether there is impact of the weakness of internal audit on the work of audit committees, as well as to investigate the main obstacles facing audit committees practices, and then identify significant actions can be undertaken to enhance the effectiveness of audit committees in Libya. Correspondence Details Abdulhakim MASLI Nottingham Business School Nottingham Trent University Burton Street Nottingham NG1 4BU United Kingdom Email: [email protected]

Corporate Governance and Financial Reporting Led by Elisabeth Dedman and
Christine Helliar

The Effect of Corporate Governance on Intellectual Capital Disclosure: The
Case of Jordan Mohammad Q Alshhadat (University of Reading) It is commonly agreed that corporate disclosure benefits the financial markets in different ways, especially mitigating information asymmetry problem and hence enhancing the market efficiency, solvency and firm value, as well as reducing uncertainty and market risks. As it has been recognized as a significant issue for participants of financial markets, Intellectual Capital Disclosure (ICD) has recently attracted tremendous attention by scholars and professionals worldwide. Since the world economy has transmitted, in mid eighteens of the last century to be knowledge oriented rather than an industry oriented, the importance of reporting knowledge-based resources that creating a value such as intellectual capital has increased. Moreover, ICD itself understood as indicator for the entity ability to overcome the survival’s challenges, maintain competitive edges against rivals and to maximize its value. ICD also acquiring attention of investors as it gives them valuable information about the investee companies and reducing the uncertainty about their future prospects. Despite the various advantages of reporting of value creating intangible resources, corporate practices, in both developed and developing countries, are still feeble and below expectations. this raise many questions; such as why companies do not pay sufficient attention to ICD, what are the common categories of ICD, and what are the determinants of amount of ICD? It is common known that sound corporate governance mechanisms result in enhancing the forms and quantity of corporate disclosures. Many studies have proven the existence of an impact of different proxies of corporate governance on the amount and nature of ICD practices. The current study aims to achieve the following objectives: 1. To explore the amounts (quantity) and quality of ICD among companies listed on Amman Stocks Exchange (ASE); 2. To identify nature and different forms of ICD among companies listed on ASE; 3. To determine the effect of corporate governance factors (board of directors structure and ownership structure) on the quantity and quality of ICD among listed companies on ASE; 4. To investigate the factors that influence the presence and level of ICD listed on ASE. Correspondence Details Mohammad Q. ALSHHADAT Henley Business School University of Reading Reading RG6 6UD, United Kingdom Email: [email protected]

Evolution of Corporate Governance Mechanisms in Greece and Earnings Management.
Anna-Fani Constantatos (University of Stirling) This paper investigates the relationship between earnings management and corporate governance in a Greek context, examining non-financial firms listed on the Athens Stock Exchange from 2006-2010. Greece has been in the spotlight for poor quality of financial reporting and it is of interest to investigate if companies in a code law country have made improvements in one dimension of financial reporting quality, earnings management, after the creation and implementation of corporate governance laws. The nature of accrual accounting gives managers the opportunity to determine earnings at their own discretion. The role of corporate governance is to ensure credible financial reporting by limiting managers’ opportunistic behavior through a number of monitoring measures. Greek businesses are mainly family-oriented with poor legal protection for investors. The expansion of Athens Stock Exchange in the late 1990’s, followed by the crash of 2000-2001, made the need for effective corporate governance mechanisms imperative. The year 2002 was a critical year for corporate governance in Greece. In May 2002, the first law was created that mandated Greek listed companies to enforce a set of governance guidelines. Based on an effort of continuous improvement, other corporate governance laws were also established, such as the mandatory creation of an audit committee from 2008, as well as other corporate governance laws in 2010. The establishment of laws concerning corporate governance mechanisms provided a stimulus for Hellenic Federation of Industries to prepare an updated Corporate Governance Code for listed companies as of December 2010, so as to educate and guide Greek listed companies on governance best practice. Motivated by these developments, this study examines earnings management through the use of accrual earnings management models. Earnings management is estimated using the DeFond and Park 2001 model and the cross-sectional version of the modified Jones model. Corporate Governance is examined through both the use of individual corporate governance characteristics, such as board size, board independence, CEO duality, audit committee existence and independence, as well as through the use of a corporate governance index. The use of an index as a proxy for governance quality captures the multidimensional nature of corporate governance and its use is complimentary to the use of individual corporate governance items to measure governance quality. Correspondence Details Anna-Fani CONSTANTATOS University of Stirling Stirling FK9 4LA United Kingdom Email: [email protected]

An Agency Theory Interpretation of the Relationship Between Corporate Governance
and Financial Reporting Quality: Evidence from MENA Countries Ahmed Sarhan (University of Huddersfield) Agency theory was developed as a result of the separation of ownership and control. Corporate governance can be referred to as the set of mechanisms designed to mitigate agency problems that arise between shareholders and managers because of the separation of ownership and control. Also, improving the quality of financial reporting and accounting information plays an important role both in terms of contractual and monitoring arrangements that are able to mitigate agency conflicts through decreasing information asymmetry between different parties of the agency relationship. This paper intends to examine the association between applying sound corporate governance attributes and financial reporting quality in emerging markets (i.e. MENA context). Specifically, the study will examine whether corporate governance mechanisms tend to act as complements or substitutes to financial reporting quality in mitigating agency conflicts, and whether this complementary or substitutive role is affected by the level of agency conflicts associated with each firm. Also, the study seeks to uncover the direction of the causality relationship between corporate governance mechanisms and financial reporting quality. Correspondence Details Ahmed SARHAN Department of Accountancy and Finance University of Huddersfield Business School Queensgate Huddersfield HD1 3DH United Kingdom Email: [email protected]

The Consequences of Corporate Social and Environmental Performance Led by
Ken McPhail and JeffreyUnerman

The Level of Corporate Social Performance and the Adoption of
CSR Voluntary Initiatives Bertha Pérez (University of Edinburgh) This paper investigates whether firms’ decision about adopting the United Nations Global Compact can be driven by their existing level of corporate social performance. CSR voluntary initiatives, also known as International Accountability Standards, have been classified according to their main characteristics, this is, if initiatives are based on principles, certifications, reporting guidelines or process standards. In order to be part of these initiatives, firms must have implemented a set of practices related to their corporate social responsibility. Prior literature focuses on why companies become members of these initiatives and whether these initiatives impact on the social performance of their members. However, the level of corporate social performance at the moment of the adoption of these initiatives remains unexplored. We focus on the United Nations Global Compact which is one of the largest initiatives worldwide based on Ten Principles that cover human rights, environmental issues, labour and anticorruption practices. Principles-based initiatives in general, and the United Nations Global Compact in particular, have been heavily criticized as a mechanism for cleaning corporate image and reputation for their lack of monitoring translated into free-riding. Based on these arguments, we isolated the existence of controversies at firm level from our original event history analysis to understand if they are related to the adoption of the United Nations Global Compact and therefore, as a possible tag for bluewashing. Furthermore, we are interested in the existence of changes in the strategy shown by early (leader) and late (laggard) adopters. This is, the changes in the level of corporate social performance related to the adoption of voluntary initiatives over the time. This is important to understand the role of principle- based initiatives within the business environment and society. This paper might be of interest as well of share owners (e.g. hedge funds, employees and individuals). Correspondence Details Bertha PÉREZ Business School University of Edinburgh 29 Buccleuch Place Edinburgh EH8 9JS United Kingdom Email: [email protected]

Carbon Practice, Carbon Reputation and Corporate Economic Performance: An Empirical
Investigation of UK Quoted Companies Alireza Rohani (Anglia Ruskin University) Climate change and carbon footprints can be considered as the most urgent concerns facing society and key issues of corporate responsibility. Social and political concerns about the related issues of climate change, global warming and carbon emission have been heightened by number of factors including carbon tax and carbon offset schemes, growth in emissions trading, voluntary initiatives such as Carbon Disclosure Project and so forth. This study aims to investigate the extent to which corporate carbon reputation is influenced by carbon performance and carbon disclosure and the extent to which such reputation can affect corporate economic performance. This study integrates three streams of sustainability research. First, this research examines not only the relationship between carbon performance and carbon disclosure, but also the relationship between carbon performance and what is being disclosed (i.e. symbolic or behavioural disclosure). Second, this research adds to the limited number of studies by examining not only the relationship between the level of corporate carbon disclosure and carbon reputation but also which type of disclosure (i.e. symbolic and behavioural) may enhance the carbon reputation of the business. Finally the current study aims to investigate the relationship between carbon reputation and economic performance and the potential indirect relationship that carbon performance and related disclosure may have on economic performance through their influence on carbon reputation. Legitimacy theory predicts a negative association between carbon performance and carbon disclosure. It suggests that companies use disclosure to reduce the negative effects of actual performance. Also this theory suggests that such disclosure can protect corporate reputation by protecting corporate legitimacy and hence proposes that increased disclosure may enhance corporate reputation or lessen the effect of poor carbon performance on corporate reputation. According to resource based theory, such reputation which is classified as intangible asset also is critical for the firm not only because of improving economic performance and its possible value creation, but also due to its intangible nature making replication by rivals more difficult. To achieve the aim of the current study, a longitudinal study based on secondary data over a period from 2009 to 2012 is conducted. Carbon performance is obtained from corporate annual report, sustainability report and/or corporate website. Content analysis of carbon footprint-related articles published by UK newspapers of the sampled companies is undertaken to measure corporate carbon reputation. Likewise, content analysis of corporate annual report and sustainability report is undertaken to measure the level and the extent of symbolic and behavioural carbon-related disclosure. Finally, financial data related to economic performance of companies is acquired from Datastream and/or Fame. Correspondence Details Alireza ROHANI Lord Ashcroft Business School Anglia Ruskin University Chelmsford Campus Chelmsford Essex United Kingdom Email: [email protected]

The Relationship Between Company’s Financial Performance and Environmental and Social
Performance: An Empirical Study on Program for Pollution Control, Evaluation and Rating (PROPER) in Indonesia Cacik R Damayanti (University of Canberra) Increase in population growth and the rapid rise of industrialization caused severe pollution and environmental problems in Indonesia. Industrial pollution contributed 25%-50% of water pollution in Java and environmental degradation caused the reduction of forest areas in Sumatra and Borneo at the rate of 3.4 million hectares per year. In order to tackle the environment problems, the Indonesian government created PROPER (Program for Pollution Control, Evaluation and Rating) in 1995 and implemented Corporate Law no 40/2007 Article 74 as well as Investment Law no 25/2007 Article 15 in 2007. Those two regulations require all corporations to perform their environment and social responsibility. However, the enactment of those regulations created a conflict between the government and the business communities. Some companies argue that the implementation of the regulations creates additional burden to companies because it increases their cost and reduces their net profit, while there are companies that were voluntarily disclosing their environmental activities, suggesting otherwise. The purposes of this research are to examine the effects of the companies’ environmental and social performance (ESP) on their financial performance as well as to investigate whether companies’ economic success determines their ESP using PROPER as a benchmark. This empirical study will help to mitigate the conflict between the Indonesian government and some companies regarding the association of both variables. Previously, there are numbers of studies that examine the relationship between both variables but no conclusive empirical evidences were found and less findings that investigate the interrelationship between ESP and companies’ financial performance in one study. So, this study will enrich the literature review by providing an empirical result in Indonesia and presenting the interrelationship between ESP and FP as general, based on the industrial sectors and comparing the listed companies to state-owned companies. Furthermore, the study also investigates the influence of the new regulations in Indonesia on the companies’ ESP, based on the performance colour compliance level (code) maintained by the PROPER. The laws have altered the companies’ perception from “not conducting and reporting ESR” to “have to conduct and report ESR”. The numbers of companies that engaging ESP increase significantly. There will be new companies that awarded gold/green/blue/red/black ranking from PROPER, but an issue arises whether the companies that have labelled before will build up their works to above levels. The question is still remains whether the regulations encourage companies adequately to improve their ESP. Correspondence Details Cacik R DAMAYANTI Faculty of Business, Government and Law Building 5c68, University of Canberra Kirinary St Bruce - Canberra Australia Email: [email protected]

Accounting in Charities, the Public Sector and Universities Led by
Sheila Ellwood and Pam Stapleton

Financial Systems in UK Universities - A Case Study of
Three UK Universities Rui Dai (University of Bristol) The PhD dissertation identifies the impact of the major external pressures on UK universities, such as the introduction of the new £9,000 tuition fee regime, government changes to funding methods, increased transparency in teaching and research quality and the development of a globalised market in education as well as the internal initiatives for effectiveness and efficiency. It investigates the systems and structures in three UK universities, especially their resource implications (resource allocations and budgetary control) and technical implications (financial information systems), how they have changed in response to external changes and internal initiatives and whether they can facilitate the university to fulfil its objectives. The research explores the structure, decision rights and culture of the three universities using multi-dimensional analysis which involves cultural and political implications as well as a chronological analysis. The research uses semi-structured interview and study of documentation as research methodologies and Old Institutional Economics, Laughlin’s 1991 model and Lukes’ 3 dimensions of power as the theoretical framework. It explores the structure, decision rights and culture of the three universities using multi-dimensional analysis which involves cultural and political implications as well as a chronological analysis. Correspondence Details Rui DAI University of Bristol 15-19 Tyndalls Park Road Bristol BS8 1PQ United Kingdom Email: [email protected]

Institutional Work and Practicing Performance Management in Scottish NDPBs Mo
Yan (University of Edinburgh) Scottish Government has been officially promoting performance management practices since the introduction of National Performance Framework in 2007. More business-like behaviour is expected from public sector organisations. Although this initiative resembles the ‘soft regulation’ addressed by mostly Scandinavian researchers, this top-down change carrying new logic creates conflicts with the long-established public sector logics characterised by public service, professional conducts, and community building etc. As a group of major public service providers, Non-departmental Public Bodies (NDPBs), the consequences and side-effects of this governmental initiative are to be explored. This study aims to investigate the changes that are brought about by this new business-like logic and the responses from these NDPBs and key local individual actors situated in the intersection of these conflicting institutional fields. Using performance management practices as the empirical foci, this research intends to provide an in-depth insight into these practices in these organisations empirically as well as contributing to institutional logics perspective and its micro-foundation theoretically. Correspondence Details Mo YAN University of Edinburgh Business School 29 Buccleuch Place Edinburgh EH8 9JS United Kingdom Email address: [email protected]

The Governance of UK Museums and Art Galleries: Implications for
Accountability Aminah Abdullah (Royal Holloway, University of London) The objective of my research is to explore the governance of UK national museums and art galleries, and the influence of political and regulatory contextual forces on their strategic objectives and actions. It focuses on investigating to what ends, how and by whom museums and art galleries are governed, the key governance processes and the extent these processes help the organisations achieving their accountability objectives. The study also examine challenges encountered by these organisations when governing. The government’s governance of public sector organisations in the modern state has become a political, calculative and reflexive practice. This research conceives national museums and art galleries as a technology used by the government to govern the population. They are used to: improve the quality of leisure and life of the inhabitants, educate them about their legacy, and discipline the population to think and act according to cultural norms. They are important mechanism to governments across the globe whose survival is contingent upon the wellbeing (both spiritual and material) of their inhabitants. A theoretical framework for this research is developed by drawing from the concept of governmentality and is fleshed out by using data collected from: (1) relevant government’s documents, published annual reports, corporate plans and funding agreements of three museums and three art galleries located in London, and (2) interviews with representatives from Department for Culture, Media and Sport (DCMS), trustees, senior management team, curators and accountants. The notion of governance is more complex in the public sector than the private sector as there are numerous principals and expectations to account to. The findings suggest that, in practice the governance of UK national museums and art galleries is influenced by the government, through reporting of annual report and key performance indicators, and appointment of board of trustees. However, the key performance indicators are symbolic as there is no reward or punishment for over/ (under) performance. This study contributes to theory through its elucidation of concept of governmentality by developing a framework for understanding governance in the context of museums and art galleries. At the empirical and policy levels, this is a unique study that enlightens the governance of UK museums and art galleries and how they use public funds to legitimise their existence in society. Correspondence Details Aminah ABDULLAH School of Management Royal Holloway, University of London Egham Hill Egham TW20 0EX United Kingdom Email: [email protected]

Finance and Economies Led by Stuart Turley and Norman Strong

The Sustainability of Emergent Powers in the Aftermath of the
Global Financial Crisis Dina Jaccob (Cairo University) This paper analyses the role of emerging powers in the global trading system and highlights the negotiating positions of emerging powers after the outbreak of the global economic crisis and shifting competitive advantage from West to East. For the last ten years BRICS and other emerging economies – including EAGELS, CIVETS, Next 11, 7% Club, MINT and TIMBI - have been critical drivers of global economic growth. They remain the locomotive of the economic growth, delivering more than 60% of all global growth in 2008 with the funding of this growth not dependent on foreign sources of capital. O’Neill estimates that the combined GDP of BRICS economies would be as large as that of G7 by 2032. It was projected by 2050 that the emerging market economies will account for almost 80 percent of global output, with the BRICS members alone making up 44 percent of global GDP. Hence, BRICS economies would be wealthier than most of current developed countries. In the next few decades emerging blocks is likely to replace the present G-7. The emerging markets are rapidly becoming sources of capital funding for the developed world. The key large emerging markets have all moved from being net external debtors to net external creditors over the last few years. The majority of them have eliminated their current account deficits, strengthened their foreign exchange reserves and boosted their fiscal positions. In order to assess the economic sustainability of these emergent powers, this study applies a Growth Environment Score (GES), which aims to summarize the overall structural conditions and policy settings for countries globally. Improving long-term foundations is a key to converting potential into reality. The GES aims to capture the principal factors that are known to affect an economy’s ability to grow. The choice of the components has been based on the extensive literature on the determinants of growth. Each of the variables included has been found to have a significant and relatively robust effect on growth in various cross-country growth regressions. In addition, the 13 variables represent macroeconomic stability, macroeconomic conditions, technological capabilities, human capital and political conditions which are available for a large number of countries and updated on a regular basis. The 13 variables are applied to the emerging blocks presented in this study for the period from January 2000 till January 2015. This paper concludes the increasing role of emergent powers in the international financial system especially after the global financial crisis. BRICS has sustainable growth rate which enhances its potential role internationally. Correspondence Details Dina JACCOB Cairo University Faculty of Economics and Political Science Euro-Mediterranean Studies Department Office 95 – 4th Floor – Main Building Al-Orman Giza 12613 Cairo Egypt Email: [email protected]

The Influence of an Economical Factors on the Flow of
Foreign Direct Investment to Saudi Market 1980 – 2012 (Econometric Study) Mohammed Binkhamis (De Montfort University) The purpose of this paper to study the influence of different macroeconomic variables and currency exchange rate on the foreign direct investment in Saudi Arabia since 1980 t0 2012. It has been applied different econometric tests of time series technique such as Unit Root testing, Regression analysis, Co- Integration Model, Vector Autoregressive and ARMA. The paper is demonstrating the significant result that may affect the flow of FDI to the market since 1980. Correspondence Details Mohammed BINKHAMIS De Montfort University Leicester Email: [email protected]

Anatomy of the 2009 Eurozone Sovereign Debt Crisis: Kindleberger-Minsky Paradigm
Amir Armanious (Macquarie University) This paper applies the Kindlerberger-Minsky Paradigm (KMP) on the Eurozone's fiscally troubled economies specifically Portugal, Ireland, Italy, Greece and Spain (PIIGS). The advent of the 2008 global financial crisis coupled with fragile economies in Greece, Portugal and Italy, housing bubble in Ireland and Spain and banking crisis in. This resulted in twin crisis, banking crisis and large debt levels associated with current account imbalances. This led to a crisis of confidence in addition to the widening of bond yield spreads and risk insurance on credit default swaps between PIIGS economies and Germany. The paper applies the six phase contemporaneous KMP of displacement, monetary expansion, speculative mania, financial distress, panic, and lender of last resort. The bubble’s origins in the displacement phase are caused by shadow banking system, off balance sheet finance, Euro introduction and stability and growth pact. It demonstrates how these events, combined with other technological and regulatory factors, resulted in debt crisis fuelled by the aggressive securitization of mortgages in terms of mortgage backed securities and collateralized debt obligations by many large European financial institutions and poor regulatory supervision. In this way it assesses the core actors in the process in terms of incentive and performance. The monetary expansion phase are characterized by lower interest rate, financial deregulations, loose monetary policies of ECB, off-shore financial centres and declining international competitiveness. The speculative mania phase analysed in terms of misreporting of statistics, tax evasion, increasing budget deficit, increasing current account deficit, speculations, financial institutions and corporate over leverage, incorrect credit ratings and inadequate corporate governance. The financial distress phase attained by deteriorating credit ratings, higher bond spread, spiked credit default swap, greater ted spread, loss of investor confidence and credit squeeze. The panic phase reached by credit crunch, contagion effect, higher public debt, Euro depreciation, high interest rate, regional recession, financial sector slump. The last phase is lender of last resort where proposed remedies already include the aggressive fiscal austerity measures and ECB monetary responses typical of the KMP. In conclusion, Eurozone sovereign debt crisis conform to the phases of KMP. All booms and crashes are related to liquidity where excess liquidity leads to speculation and revulsion results in liquidity crunch. Boom and bust starts with higher risk appetites and ends with lower risk appetites. Causes of financial crises are deregulations and the recovery requires regulatory reforms. Booms and crashes are assigned with fraud and scams. Bubbles mostly involve Ponzi financing. Therefore, regulatory and legislative actions are required within the creation of fiscal union. Correspondence Details Amir ARMANIOUS Macquarie University Sydney NSW 2109 Australia Email: [email protected]

Market-Based Accounting Research Led by Steve Young

Do Corporate Press Releases Drive Media Articles? Nikolaos Tsileponis (Manchester
Business School) Demand for financial reporting and disclosure is primarily caused by information differences and conflicting incentives between managers and other market participants. The financial media plays a significant role in disseminating material company information to investors. The financial press is expected not only to provide timely information to the investment community, but also to add new and useful information beyond the corporate disclosure. The purpose of this paper is to trace the relationship between company-initiated and press-originated articles, and to shed light on whether corporate press releases influence media articles. My sample consists of 100 U.S. companies randomly selected from the S&P 500 Index. Data on news coverage related to companies’ financial performance is collected from Factiva over a 13-year period (January 2000 – December 2012) using Intelligent Indexing codes assigned by the database. I provide evidence that company-originated articles have a significant impact on the flow of press-generated articles. There is a spike of media articles on the days surrounding corporate disclosures (on the same day as, and one day after a firm’s press release issuance), while media coverage is also a function of firm and story characteristics. Firms with large market capitalizations and extreme returns are more likely to receive coverage. Additionally, media articles seem to follow the quarterly reporting cycle. I contribute to the ongoing literature by distinguishing between firm-initiated news and external press coverage, and by investigating the role of corporate press releases as a stimulus for media coverage. As a consequence, I offer insights into the assumption of exogenous-to-the-firm media coverage. My study should be of interest to investors, managers, regulators, and other market participants. Correspondence Details Nikolaos TSILEPONIS Manchester Business School Crawford House Booth Street East Manchester M15 6PB United Kingdom Email: [email protected]

Which One is the Determinant of Bank Profit Persistence: Market
Power or Accounting Quality? Yuxiang Jiang (University of Glasgow) There are two opinions on the determinant of bank profit persistence. One party considers the competition level of the market is the determinant of profit persistence. The intense competition could take the excess profits away from profitable firms while bring more profits to firms earning below long- term equilibrium. As a result, the market profitability will be in equilibrium in the long run. However, the other party regards the accounting quality as the most influential factor on the earning persistence due to the managerial incentive to smooth earnings. Previous empirical studies show a negative relationship between profit persistence and competition level. It is in accordance with the economic theory that competition eliminates the abnormal profit and drives the profitability into equilibrium. On the other hand, there are empirical evidences showing that managers use accounting techniques to manipulate earnings to maintain profit persistence. These two schools only find the influence of one factor on profit persistence while there is no study taking both competition and accounting quality into account simultaneously. The US banking data from WRDs database is used to analyze. Some of previous works applied the autoregressive model to obtain the persistence coefficients. However, if the time period were short in the panel, the accuracy would be reduced. In this paper, the partial adjustment speed model is employed in order to improve the accuracy. In terms of the measure of competition, most previous researchers use market-level competition proxies, such as concentration ratios and Herfindahl indices. Nevertheless, no studies have been reviewed to use bank-level competition proxies and thus in this paper, Lerner Index will be used. Lower Lerner Index indicates that the market power is weak so the competition is intense. In addition, earning management will be used as the measurement of accounting quality. This factor will be derived from the results of an empirical model that test variability of net income is explained by a set of reasonable factors. The cross-section model is applied within the estimation. In banking, as far as we know, this paper is the first to investigate profit persistence from both accounting and economic perspectives. Nonetheless, further investigation is needed to search the interrelationship between market power and accounting quality. A second purpose of this paper is to find how banks are reacting to various conditions in helping smooth their profits. Correspondence Details Yuxiang JIANG Adam Smith Business School University of Glasgow Glasgow G12 8QQ United Kingdom Email: [email protected]

Financial Reporting for Banks Led by David Alexander and Martin
Walker

Adoption of IAS 32 and IAS 39 by Commercial Banks
in the Middle East Doaa H Aljamal (Anglia Ruskin University) Financial instruments form the vast majority of banks’ assets and liabilities regardless whether they are intended for investment, financial hedging or liquidity management purposes. This paper is focused on calculation “IFRS compliance ratio” from annual reports of Jordanian and United Arab Emirates banks; i.e. the compliance of information about financial instruments recognised by Jordanian and United Arab Emirates banks in their Statements of financial position with the requirements of IAS 32 Financial Instruments: Presentation and IAS 39 Financial Instruments: Recognition and Measurement. In global, the results of the survey have shown surprisingly high level of compliance with requirements of IAS 32 and IAS 39. However the study has discovered particular areas where compliance with IFRS requirements was relatively low. Examples are compound financial instruments, impairment of financial assets and transfers between particular groups of financial assets. The study has confirmed the need for the new standard – IFRS 9 Financial instruments where changes in areas mentioned are included. Further research will be focused on first application of IFRS 9 Financial Instruments in Jordanian, United Arab Emirates and Qatar banks, including the question of preliminary adoption of the standard (i.e. adoption before 2018) and understanding the new requirements for financial instruments included in IFRS 9. Correspondence Details Doaa ALJAMAL Anglia Ruskin University Bishop Hall Lane Chelmsford CM1 1SQ United Kingdom Email: [email protected]

Risk Disclosure, Corporate Governance and Bank Value in MENA Listed
Banks Ahmed A Elamer (Huddersfield Business School) The 2007/2008 global financial crisis and several high profit corporate failures (e.g. Enron, WorldCom, AIG, Lehman Brothers), has revealed some of the weakness of the banking systems and shaken the confidence of both investors and regulators. Therefore, corporate failures has reignited the debate on sound corporate governance as whole and in particular, the effectiveness of risk management and risk disclosure especially in financial institutions. In addition, the introduction of IFRS 7 and Basel II, III will only increase the focus on risk disclosures quality (RDQ) by banks all over the world. In this paper, we concentrates on the financial institutions by review both the state of corporate governance and RDQ in MENA region. MENA countries share distinct but common characteristics like language, culture, and customs shape responses to new challenges. This paper therefore tries to fill gaps explored in the current literature in RDQ and corporate governance, by examines RDQ theoretically and empirically in the context of MENA financial institutions, because the topic and the region have received little attention in previous literature. In addition, the paper aims to extend our understanding of RDQ and determinants by examines the factors dominating RDQ in the MENA and its consequences, for example, we shed light on the effect of new regulatory frameworks on RDQ in developing countries, like IFRS, Basel II and III. A further determinant of RDQ examined in this study is corporate governance by providing up to date empirical evidence on the relation between RDQ and corporate governance characteristics in MENA countries and its consequences on bank value. This paper will contribute to the research area of risk disclosure by examining the influence of the financial crisis on RDQ for the MENA countries covering more than one research year over a long and recent period (from 2006 to 2013) Unlike prior literature to determine whether differences exist in the extent and variety of disclosure over time. Therefore, our work could extend the literature on the firms’ risk disclosure behavior through a longitudinal study, addressing the switch from voluntary disclosure regime to regulated one, and whether financial institutions have responded to the recent regulatory pressure to enhance disclosure, transparency and governance. The paper will contribute to governance and disclosure literature by providing an original and up-to- date insight on the current risk disclosure practices by developing risk-disclosure index for MENA region. Therefore, the results of this study can assist national and international policy makers and regulators in improving RDQ and hence reducing agency conflicts and information asymmetry in annual Risk disclosure. Correspondence Details Ahmed A ELAMER Huddersfield Business School Queensgate Huddersfield HD1 3DH United Kingdom Email: [email protected]

Disclosure and Transparency in the Annual Reports of Libyan Commercial
Banks Ali ELfadli (Henley Business School) The study evaluates the disclosure and transparency for Libyan commercial banks in their annual reports. It focuses on the disclosure and transparency as one of the most important corporate governance principles. An index based on the requirements of disclosure and transparency of international corporate governance code OECD, 2004 developed to evaluate the extent of disclosure and transparency for the sample of 6 banks over the period between 2007-2011. Using the new institutional theory perspective to interpret the result of this research will contribute to literature by providing evidence about the impact of institutional factors (isomorphism) on the patterns of Libyan commercial banks towards the compliance to the requirements of disclosure and transparency of corporate governance in Libyan commercial banks where significant reforms on corporate governance has taken place and where the culture is different to western countries. Correspondence Details Ali ELFADLI Henley Business School University of Reading Whiteknights Reading RG6 6UD United Kingdom Email: [email protected]

Auditing 2 Led by Chris Humphrey and Stuart Turley

Interest and Agency in Times of Institutional Transition and Regulation
- The Case of the German Audit Oversight System Lukas Loehlein (University of Luxembourg) As others have observed, financial auditing is caught up in a dialectic of failure whereby each crisis leads to a further round of institutional change. The focus of this study is the outcome of the most recent change: the establishment of formally independent audit oversight systems. By mobilizing the concept of institutional work, this paper sheds light on the actions of and between the central actors within the creation and transition processes of the German audit oversight system: the accounting profession, the regulators and the public. From an institutional point of view, these agents are critically important in times of institutional crisis and change, as they define and reproduce shared meanings and understandings. In Germany, external quality controls were first implemented in 2001. Together with the creation of the Public Oversight Board – in other words, the introduction of the "public" to the formerly closed accounting system – they represented the key elements of the newly established German audit oversight system. Although observers excluded the possibility of further regulatory rounds, the system was subject to various institutional changes in the following years. The German case is therefore emblematic of both institutional creation and institutional change, and thus encapsulating how different actors are intertwined within the organizational field. This fluid context is particularly suitable for the application of the concept of institutional work because only in this specific context actors are more likely to be fully aware of and engaged in acts of institutional agency. The interplay between the accounting profession, the regulators and the public at large is analysed on the basis of a longitudinal case study. To link micro-level actions of the accountancy profession and its interaction with both its members and the state to the more macro-level dynamics of institutional change, the analysis is based on both document analysis and qualitative expert interviews, including all relevant actors within the organizational field. Correspondence Details Lukas LOEHLEIN University of Luxembourg Faculty of Law, Economics and Finance 162a Avenue de la Faiencerie L-1511 Luxembourg Email: [email protected]

The Effect of Corporate Governance, Free Cash Flow and Agency
Costs on the Performance of Jordanian Corporations Mahmoud Al-Sheyab (Anglia Ruskin University) The relationship between corporate governance, free cash flow and agency costs and public corporations performance have gained considerable attention over the past decade among investors, academics, and decision makers. And this is due to popular belief that that corporate governance is a critical factor in improving the performance of companies. The corporate governance is considered one of the modern management systems, which followed recently in many developed and developing countries. The attention to corporate governance has recently increased during the past few years and this is because of the financial and economic crises witnessed by many countries. The aim of this study is twofold - firstly to identify the nature of the relationship between corporate governance, free cash flows and agency costs of the Jordanian public corporations, secondly, to determine the impact of corporate governance, free cash flows and agency costs on the operational performance, the value and security returns of Jordanian public corporations. In the light of an emerging financial market, as it is noted, such as the Jordanian market at which the corporate ownership concentrated on a limited number of investors that may indicate the existence of high agency costs, so the importance of the study stems from trying to shed the light on the impact of corporate governance, free cash flows and agency costs on financial performance indicators of Jordanian public corporations, and thus will help corporate boards of directors to adopt keen financial policies to reduce these costs, dividend policies for example. Moreover, Corporate Governance and free cash flow affects many of the company's financial indicators such as the ability of the entity to repay the debt, to pay dividends and to exploit investment opportunities. However, free cash flow is vulnerable to the wrong utilization by management. Thus, the problem of the research arises from our lack of knowledge about the effect level of free cash flows on agency costs, and the impact of each of them in light of corporate governance on the performance, value and security returns of Jordanian public corporations. And in the absence of consensus on the results of previous studies, this study came to test the validity of all the corporate governance theory, the free cash flows theory and agency theory in the light of Jordanian financial market conditions and the rapid increased demand for corporate governance and investor protection tools. Correspondence Details Mahmoud AL-SHEYAB Lord Ashcroft International Business School Anglia Ruskin University Chelmsford United Kingdom Email address: [email protected]

Impression Management in the Advertising Practices of Audit Firms Neil
J. Dunne (Trinity College Dublin) Despite the recent financial crisis, audit firms continue to enjoy privileges provided to them by society and status afforded to them from their standing as a profession. The purpose of this research is to study impression management in the advertisements of audit firms. The questions addressed by this research, which is at an early stage, are (1) whether audit firms use impression management in their advertisements to manage impressions of (i) trust (ii) business acumen and (iii) public service, and (2) who the targets of such impression management are. Drawing on an advertising appeals theoretical framework, the study will use content analysis to determine the degree to which the advertisements of audit firms seek to manage impressions. It will devise and apply an advertising appeals framework appropriate to audit firms, classifying by firm type (Big-4 vs non Big-4) and advertisement purpose (advertising of audit vs non-audit services, recruitment). The study considers a relatively under- researched issue (impression management by audit firms), which is a subtle and sophisticated process, and has implications for how we view the work of audit firms, as well as possible future research and regulatory action. Correspondence Details Neil DUNNE School of Business Trinity College Dublin College Green Dublin 2 Ireland Email: [email protected]

Corporate Governance 1 Led by Elisabeth Dedman and Christine Helliar

CEO Accountability for Corporate Lawsuits Jiafu An (University of Edinburgh)
Serious impacts that follow corporate lawsuits include negative stock performance, tarnished corporate reputation and constrained business opportunities for both litigants firms. Thus shareholder’s value can be severely damaged in such events. Despite the richness of literature on this issue, few studies take a further step to assess who should be taken accountable for such events. We draw on agency theory, which suggests that the board of directors should have the incentives to discipline unqualified CEOs who harm shareholders’ interests, to propose that the probability of CEO turnover in both litigant firms are higher than non-litigated firms, ceteris paribus. We use data to empirically test whether CEOs take accountability on such events in the context of rapidly evolving institutional transitions in China. We further conjecture that the incidence of CEO turnover is less sensitive to corporate lawsuits in state-owned entities (SOEs) since state ownership weakens the firm’s internal monitoring mechanism. Board independence, on the other hand, strengthens the effectiveness of internal monitoring and we therefore propose that the sensitivity of turnover-lawsuits is more pronounced in firms with a more independent board. As corporate litigation causes even more damage to financial distressed firms, we thus examine whether CEOs from financial distressed firms are more likely to be forced to leave after shareholders’ value is harmed in the event of lawsuits. Our empirical findings support our propositions. We find that firms that are involved in lawsuits, either as defendant or plaintiff, suffer from higher probability of CEO turnover than non-litigant firms, after controlling for endogeneity issue. For plaintiffs, we document that winning the case can mitigate the effects of higher CEO turnover rate. Evidence also supports our predictions on effects of SOEs and financial distress. This paper provides a vivid image of how effectively Chinese listed firms solve one of the main principal-agent problems: the diverging interests between manager and shareholders, thus lending evidence to the debate that whether corporate litigation can serve as an effective corporate governance mechanism. Theory on information asymmetry is also empirically tested in this paper. Correspondence Details Jiafu AN University of Edinburgh Business School 29 Buccleuch Place Edinburgh eH8 9JS United Kingdom Email: [email protected]

Institutional Investors and Corporate Governance Badar Al-Shabibi (Norwich Business School)
This paper aims to explore the role of institutional investors in improving corporate governance in companies in which they invest (investee companies). Furthermore, it attempts to investigate whether corporate governance characteristics themselves attract the institutional investment. Given the increased presence of institutional investors worldwide in the last few decades, their fiduciary responsibility in monitoring management actions has been the focus of many academicians and decision-makers. However, most of the empirical studies on institutional investors’ activism towards improving governance structures have been conducted in the US and the UK. Furthermore, these studies have covered limited corporate governance variables related to characteristics of the board of directors. Therefore, this research aims to examine the role of institutional investors in influencing key characteristics of the board of directors such as board composition (the independence of the board and key sub-committees), board activity (meeting frequency of the board and key sub- committees) board diversity (board age diversity, board gender diversity and key sub-committees gender diversity) and board busyness (number of directorship held in other firms by CEO, chairman, executive directors and non-executive directors). In addition, this research attempts to examine whether these characteristics attract the institutional investments. To fulfil the study objectives, the researcher planned to use quantitative methods which apply time- series and cross-sectional analysis. A sample of 300 listed firms is chosen from the six countries with the highest institutional investments worldwide from 2006–2012. The chosen countries are the US, Japan, the UK, France, Germany and Canada. Correspondence Details Badar ALSHABIBI Norwich Business School Norwich Research Park University of East Anglia Norwich NR4 7TJ Email: [email protected]

The Impact of Corporate Governance Practices on Shareholders’ Rights Prakash
Gautam (Lord Ashcroft International Business School) Over the past years, an increasing number of researchers have highlighted the importance of corporate governance practices. One of the main reasons behind poor corporate governance practices can be attributed to the failure to protect the shareholders’ rights. Shareholders are the owners as well as investors of the company. Without their investment, company would not exit. The original need for corporate governance stems from the separation of ownership and control in publicly held companies. Shareholders invest their capital in profit-making companies so that they can enjoy these profits in the future. Yet many shareholders do not have the time and expertise necessary to operate a firm and ensure that it earns a return on the investment. As a result, shareholders elect individuals with management expertise to run the company on a daily basis to see the firm’s activities enhance the company’s profitability and sustainability. Therefore, a company’s responsibility is to protect shareholders’ rights to maintain the business and develop a good corporate governance practice. The aim of this study is to examine the effects of corporate governance practices on the rights of shareholders. The rights of shareholders are classified as an economic, control, information and litigation. The previous literature argues that only two rights, the right to elect directors (Control) and the right to sell shares (economic) are the fundamental rights of the shareholders and law should protect these rights. Under the principle of Organizational for Economic Co-operation and Development (OECD), all rights have equal significance to the corporate governance practice and comply with the country's laws. When the shareholders have founder ownership in the company, there should not be an imbalance on their rights and necessarily focus to protect in the specific right. Therefore, this research will test each shareholders’ rights to find out the relation to corporate governance practice in the context of Nepal. This study employs both quantitative and qualitative methodologies with the regression analysis using social science research model in order to evaluate the contribution of level of Corporate Governance Practice for ensuring the strength of the rights of shareholders. Correspondence Details Prakash GAUTAM Lord Ashcroft International Business School Bishop Hall Lane Chelmsford CM1 1SQ United Kingdom Email: [email protected]

Corporate Governance 2 Led by Mike Adams and Andy Stark

Political Endorsement and Firm Performance: Evidence from Propaganda Coverage Weiwei
Cai (University of Edinburgh) Political connection is a ubiquitous phenomenon both in developed markets and emerging markets, and stirs up controversy over whether it is a blessing or a curse. However, the measurements of political connections in extant literatures are restricted to explicit indicators and based either on individual-level or firm-level connections. This paper introduces political endorsement as a new measurement for informal political connection which is implicit and can reflect both individual- and firm- level connections. By using propaganda coverage from 2009 to 2011 as the measure of political endorsement, we find that political connection is a main determinant of political endorsements. In addition, firms with larger size, younger age, more employees and no duality are more likely to be endorsed by government. After applying propensity scoring matching to control endogeneity, this paper certifies the positive impacts of political endorsement on firm performance and performance change, which provide supporting evidences for the value of political connections and resource dependence theory. Furthermore, by decomposing endorsement into 5 specific characteristics, we find that sequence and length of political endorsement are the major characteristics that trigger market reactions. This study fills the gap of political connection measurement by introducing political endorsement as a new implicit measurement, broadens the concept of endorsement and adds value to the ongoing debate over the value of political connection. Practically, the results are suitable for other forms of political endorsements, and can be generalized to fit other countries. The empirical results of this paper can further provide practical implications for both domestic and international investors who are interested in investing in emerging markets where institutional infrastructures are relatively weak. Correspondence Details Weiwei CAI University of Edinburgh Business School 29 Buccleuch Place Edinburgh EH8 9JS United Kingdom Email: [email protected]

Towards a Political Economy of Corporate Governance: A Critical Realist
Analysis Shaila Ahmed (Essex Business School) Due to the recent financial crisis and the subsequent bailouts of banks and other financial institutions, corporate governance (CG) has attracted much interest in research and policy reforms worldwide. Despite this recent surge in CG research, the extant CG literature is reportedly weak in terms of empirical illustration of CG practices at organizational level. It tends to be concerned more with ‘compliance’ than ‘practice’. Against such backdrop, this research empirically provides insight into the CG practices of public limited companies (PLCs) followed by the recent CG reforms in Bangladesh. Theoretically this research theorizes CG practices in the context of reforms using a critical realist lens: the internal conversation theory (ICT). To achieve the research objectives, a theoretically informed analysis of the in-depth interview findings triangulated with documentary survey and direct observation is undertaken. The findings suggest that CG practices within the PLCs have not changed substantially following the reform. This research documents evidence of ceremonial board, stage-managed AGM, and client-friendly audit practices. Those practices together with the relatively informal internal audit and financial reporting practices substantially reflected the dominance of the family institutions within the PLCs. The dominance of the family institutions apparently subverts the genuine spirit of the reform. From the perspective of ICT, CG practices are shaped by the actions of reflexive agents whose life projects bring them into contact with pre-existing structures which create dispositions to act in certain way than otherwise. It is through the internal conversation (exercising the reflexive power of deliberation), agents decide their ultimate course of actions which may or may not conform to the structural dispositions. To have an explanatory purchase on agential actions, therefore, it is important to capture both the nature of agency and the structural context within which it takes place.Overall, my analysis reveals the theoretical rigor of the ICT in explaining the empirically manifested CG practices. This research has some practical policy implications. Correspondence Details Shaila AHMED Essex Business School University of Essex Wivenhoe Park Colchester CO4 3SQ United Kingdom Email: [email protected]

Corporate Finance Practices and Corporate Governance Effect on Information Leakage
and Performance in Saudi Arabia Hamad Hatrash (Manchester Metropolitan University) Corporate finance theories have been subjected to empirical evidence, and there is little consensus on the way firms should come to the optimal corporate financial decisions. Few studies conducted comprehensive surveys about the corporate finance practices so there is little understanding of the relationship between the theory and practice behind corporate financial decision-making. Prior studies indicate that the financial decision-making process of companies is not always in line with academic rules and theories. Despite such evidence, most research has focused on listed companies in developed countries while limited research has been conducted in developing countries, especially the Middle East. Moreover, as far as I know, no research has focused on corporate financial decision practices in Saudi Arabia, even though Saudi Arabia is the sole Arab country in the G20 and one of the largest oil producer countries in the world. Given these considerations, section 1 and 2 of the PhD research will seek to fill this significant gap in the literature by comprehensively investigating corporate finance decision practices to determine whether theories are aligned with the decisions of financial managers, as well as to identify the effects of these decisions on firms’ performance in Saudi Arabia. In addition, the last financial crises have drawn increased attention to corporate governance at both the local and international level. The relationship between corporate governance, firms’ financial performance and information leakage has been the core issue in corporate governance research. In 2006, prompted by the loss of investor confidence in the Saudi market due to the stock market crash, the Capital Market Authority (CMA) in Saudi Arabia started to reform and develop the market by issuing corporate governance regulations to interested parties. Many of these regulations have become mandatory in the last few years. However, no comprehensive research has been conducted to investigate the effects of these reforms and regulations of corporate governance on information leakage and the performance of firms in the Saudi market. Therefore, section 3 and 4 of the PhD research will seek to fill this gap by focusing on the empirical investigation of the effects of current corporate governance of Saudi listed companies on information leakage prior to earnings announcements, and on firm performance. Correspondence Details Hamad HATRASH Manchester Metropolitan University Business School All Saints Campus Oxford Road Manchester M15 6BH United Kingdom Email: [email protected]

BAFA Conference abstracts 2015

BAFA Conference abstracts 2015

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