Bedford, DS 2015, 'Management control systems across different modes of innovation: Implications for firm performance', Management Accounting Research, vol. 28, pp. 12-30.
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© 2015 Elsevier Ltd. This study examines the use of management control systems (MCS) across different modes of innovation and the effects on firm performance. Specifically, this study draws on Simons' levers of control framework to investigate how top managers attempt to simultaneously balance exploration and exploitation, which place contradictory requirements on firms. Using data collected from a survey of top managers in 400 firms this study demonstrates that the patterns of use and interdependencies among control levers associated with enhanced performance differ depending on the mode of innovation. The findings show that control levers are independently associated with enhanced performance in firms that specialize in either exploration or exploitation, suggesting that levers operate as supplementary rather than as complementary controls in these contexts. However, in ambidextrous firms, diagnostic and interactive levers are shown to have interdependent effects on performance. Furthermore, some evidence suggests that both the combined and balanced use of these levers contributes to generating dynamic tension necessary for managing contradictory innovation modes.
Bedford, DS & Malmi, T 2015, 'Configurations of Control: An Exploratory Analysis', Management Accounting Research, vol. 27, pp. 2-26.
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© 2015 Elsevier Ltd. There is growing interest in how management controls operate together as a package of interrelated mechanisms. Although theoretical debate dates back to the seminal paper of Otley (1980), there remains little empirical analysis of how control mechanisms combine. To increase knowledge in this area this study explores how multiple accounting and other control mechanisms commonly combine and the associations these combinations have with firm context. From a cross-sectional sample of 400 firms, this study presents an empirically derived taxonomy of five control configurations used by top managers, labelled as simple, results, action, devolved, and hybrid. Many of these patterns closely resemble control configurations common to the literature, while others represent distinctively contemporary arrangements, such as flexible variants of traditional bureaucracy (action), and instances where multiple and seemingly conflicting control types intermesh (hybrid). In analyzing these configurations this study provides accounting and control researchers with empirical observations to refine and extend existing control frameworks and theory.
Bedford, DS & Sandelin, M 2015, 'Investigating management control configurations using qualitative comparative analysis: an overview and guidelines for application', Journal of Management Control, vol. 26, no. 1, pp. 5-26.
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Configuration theory is concerned with understanding complex phenomena involving multiple and interacting attributes. The theory is consistent with a long line of research recognizing that management controls operate as complex packages or systems. However, empirical research aimed at understanding management control configurations is relatively scarce. One possible reason is the lack of appropriate methods. This paper introduces a promising case-oriented method for understanding complex phenomena called qualitative comparative analysis. This paper provides a basic guideline for applying the method, outlines how the method can be combined with more conventional research approaches, and offers suggestions for future research into management control configurations.
Bugeja, M 2015, 'The Impact of Target Firm Financial Distress in Australian Takeovers', Accounting & Finance, vol. 55, no. 2, pp. 361-396.
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Of the motives that have been advanced to explain corporate acquisitions, the least explored is the acquisition of a target experiencing financial distress. This study addresses this void by examining whether target firm financial distress is related to takeover: attitude, premiums, payment method, competition and outcome. Despite inconsistent findings across our distress measures the tenor of the results suggest that distressed targets receive higher premiums and are less likely to be offered cash consideration. Additionally, takeover completion is lower and takeover competition higher for targets in financial distress. Financial distress does not influence whether a takeover is hostile or friendly. © 2013 AFAANZ.
Bugeja, M & Loyeung, A 2015, 'What drives the allocation of the purchase price to goodwill?', Journal of Contemporary Accounting & Economics, vol. 11, no. 3, pp. 245-261.
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© 2015 Elsevier Ltd. This study examines the proportion of the purchase price allocated to goodwill after the successful acquisition of a publicly listed firm. Using hand collected data we document that 42% of acquirers record a nil amount for goodwill. We find that the amount allocated to goodwill is generally unrelated to target firm economic characteristics. In contrast, consistent with managerial opportunism, we find a positive association between the use of accounting based bonus plans to compensate acquiring firm CEOs and the amount allocated to goodwill. The amount allocated to goodwill also increases after Australia adopted IFRS which no longer required goodwill to be systematically amortised. Other variables associated with goodwill recognition include the acquiring firm's leverage, the takeover premium, whether the target and the bidder operate in the same industry, existing goodwill in the target firm before the takeover announcement and the method of payment used in the acquisition.
Bugeja, M, Czernkowski, R & Moran, D 2015, 'The Impact of the Management Approach on Segment Reporting', JOURNAL OF BUSINESS FINANCE & ACCOUNTING, vol. 42, no. 3-4, pp. 310-366.
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© 2015 John Wiley & Sons Ltd. Accounting standard setters have increasingly attempted to align external segment reporting disclosures to a firm's internal reporting structure. We study how this move to the management approach for segment reporting impacted the number of reported segments and the extent of line item disclosures when Australia adopted IAS 14 (revised) and IFRS 8. We find that both standards led to firms disclosing a greater number of segments. An examination of the motives behind the non-disclosure of segments suggests that segment information was withheld for agency cost reasons. We find only limited support for the proprietary cost motive for non-reporting of segments. We also document that IFRS 8 led to a reduction in the amount of line item disclosure. Consistent with a proprietary cost explanation, the decrease in disclosure is greatest for firms with a higher number of profitable segments. Our results indicate that the change to the management approach to segment identification is not associated with the properties of analyst forecasts, nor did it lead to increased analyst following.
Bugeja, M, Lu, M & Shan, Y 2015, 'Cost Stickiness in Australia: Characteristics and Determinants', Australian Accounting Review, vol. 25, no. 3, pp. 248-261.
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This study presents empirical evidence on cost stickiness using a large sample of Australian listed firms from 1990–2010. We find cost behaviour in Australian firms is sticky on average, with a lower degree of stickiness than in United States firms. Costs increase by 0.885% with a 1% increase in sales revenues, but decrease by only 0.797% for a 1% decrease in sales. The degree of cost stickiness demonstrates a ‘U’ shape over the period and increases after the adoption of International Financial Reporting Standards. Sticky cost behaviour, however, is not evidenced in the resources, construction and retail industries. We document evidence consistent with the argument of adjustment costs of employed resources, managerial incentives and agency costs. The degree of cost stickiness in Australia increases with a firm's asset and employee intensity, and when managers have strong incentives to avoid decreases in earnings or losses, but is less pronounced when revenues decline in the preceding period and in firms with strong governance mechanisms. Our results provide important implications for external stakeholders’ understanding of firm performance.
Bugeja, M, Patel, V & Walter, TS 2015, 'The Microstructure of Australian Takeover Announcements', Australian Journal of Management, vol. 40, no. 1, pp. 161-188.
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Using several microstructure variables, this study provides an intra-day examination of aggressive
trading around Australian takeover announcements. We conduct this analysis for both target
and bidding firms. We examine aggressive trading (i.e. by those who initiate the trade) using the
abnormal behaviour of returns, trading volume, volatility and time-weighted spreads and depth.
In addition, we develop a novel profit/loss measure (PLM) based on trade initiation and provide
new evidence using the recently developed volume-synchronised probability of informed trading
(VPIN) metric. In a univariate setting, these measures provide evidence of increased aggressive
trading in Australian target firms. Further, after controlling for several microstructure variables,
multivariate analysis reveals the presence of abnormally elevated time-weighted spreads prior to
the announcement date for target firms. We show that VPIN is significantly elevated for target
firms, especially in the four days prior to the takeover announcement.
Coulton, JJ, Saune, N & Taylor, SL 2015, 'Overvalued equity, benchmark beating and unexpected accruals', ACCOUNTING AND FINANCE, vol. 55, no. 4, pp. 989-1014.
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We investigate the extent to which the overvaluation hypothesis provides incentives for managers to beat earnings benchmarks, and whether this benchmark beating can be reliably interpreted as evidence of earnings management. We carefully identify firms immediately above earnings benchmarks that have a priori, overvaluation-based incentives to achieve the benchmark. We therefore focus on benchmark-beating observations where manipulation is most likely, providing a more powerful test of the existence of opportunistic financial reporting. Consistent with overvaluation-related incentives encouraging earnings management, we find that overvalued firms that just exceed levels-related earnings benchmarks have higher unexpected accruals than firms with less extreme valuations.
Ferguson, A & Pündrich, G 2015, 'Does Industry Specialist Assurance of Non-Financial Information Matter to Investors?', AUDITING: A Journal of Practice & Theory, vol. 34, no. 2, pp. 121-146.
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SUMMARYPrevious studies in the financial economics literature highlight the value of non-financial information in Internet and telephony stocks (Amir and Lev 1996; Trueman, Wong, and Zhang 2001). Other studies consider the financial and share price performance implications of assurance of non-financial information such as ISO 9000 certification (Corbett, Montes-Sancho, and Kirsch 2005), Total Quality Management awards (Hendricks and Singhal 1997), and non-financial information disclosure (Coram, Monroe, and Woodliff 2009). However, prior studies have occurred in settings where disclosure and assurance of non-financial information is voluntary. We provide evidence on the value of assurance of non-financial information where the assurance of public resource disclosures made under the JORC Code by Australian Mining Development Stage Entities are mandatory. The assurance role undertaken by Competent Persons reporting under the JORC Code bears many close similarities to the financial reporting assurance role undertaken by auditors. Further, the information environment of MDSEs is characterized by high information asymmetry and the reality that the utility of non-financial technical information supersedes financial statement information in firm valuation. We document very weak evidence of greater abnormal returns evident when reserve disclosures are provided by specialist mining consultants. In supplementary analysis, we test for implications of switching mineral consultant and find that clients experience significant positive abnormal returns when the successor is larger. Overall, our findings support the insurance hypothesis, in that mandatory specialist assurance matters little where litigation risk is low.
Ferguson, AC & Lam, P 2015, 'Backdoor Listings in Australia', JASSA, no. 1, pp. 24-32.
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We study a large sample of Australian backdoor listings (BDLs) over the period from 1994 to 2014. BDLs account for roughly 13 per cent of all firms going public on the Australian Securities Exchange and are popular among hi-tech firms and those with foreign-domiciled assets. We find that the BDL market is likely influenced by the sentiment in the initial public offering (IPO) market, with the number of BDLs announced in a year being negatively (positively) correlated with the number of IPOs lodged (the percentage of IPOs withdrawn) in the prior year. Contrary to common belief, BDL transactions take longer to complete than IPOs, since they typically combine both a reverse takeover and the public listing process. Roughly three quarters of our sample raised equity capital as part of the BDL process.
Jiang, W, Lu, M, Shan, Y & Zhu, T 2015, 'Evidence of Avoiding Working Capital Deficits in Australia', Australian Accounting Review, vol. 26, no. 1, pp. 107-118.
Jin, K, Shan, Y & Taylor, S 2015, 'Matching between revenues and expenses and the adoption of International Financial Reporting Standards', Pacific-Basin Finance Journal, vol. 35, no. Part A, pp. 90-107.
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© 2014 Elsevier B.V. We examine changes in the matching between contemporaneous revenues and expenses in Australian financial reporting. Matching is fundamental to the economic demand for accrual accounting in preference to simple cash measures. Our results indicate that the revenue-expense relation has declined in Australia during 2001-2005, but improved following implementation of International Financial Reporting Standards (IFRS). The improvement is largely attributable to increases in the association of operating expenses and 'other' expenses with contemporaneous revenues. These results are in sharp contrast to documented declines in matching among US firms, and also highlight a positive outcome associated with Australian firms' mandatory adoption of IFRS.
Kamal, O, Brown, D, Sivabalan, P & Sundin, H 2015, 'Accounting information and shifting stakeholder salience: an industry level approach', Qualitative Research in Accounting & Management, vol. 12, no. 2, pp. 172-200.
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Purpose – The purpose of this research is to understand how accounting information mobilises stakeholder salience at an industry level. Design/methodology/approach – A case study method using an explanation building approach was applied to gather information surrounding dairy industry stakeholder uses of accounting information to communicate their salience, in the historical context, leading to, and the events surrounding the milk price “war” in Australia. The Mitchell et al. (1997) stakeholder salience framework was used to advance our understanding of the different ways accounting can be mobilized by stakeholders with different types of salience attributes, at an industry level. Findings – This empirical analysis produces two insights into the relation between accounting and stakeholder salience. First, there is evidence as to how accounting information impacted on stakeholder salience at an industry level by demonstrating how accounting information (in)directly communicated and justified the increase of a stakeholder’s level of salience. Second, the Mitchell et al. (1997) model is extended by attributing levels of importance to each stakeholder attribute. It was found that, in this setting, power was the most salient attribute of the three, usurping legitimacy and urgency, leading to the outcomes observed. Research limitations/implications – ...
Lanis, R & Richardson, G 2015, 'Is Corporate Social Responsibility Performance Associated with Tax Avoidance?', JOURNAL OF BUSINESS ETHICS, vol. 127, no. 2, pp. 439-457.
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© 2014, Springer Science+Business Media Dordrecht. This study examines whether corporate social responsibility performance is associated with corporate tax avoidance. Employing a matched sample of 434 firm-year observations (i.e., 217 tax-avoidant and 217 non-tax-avoidant firm-year observations) from the Kinder, Lydenberg, and Domini database over the period 2003–2009, our logit regression results show that the higher the level of CSR performance of a firm, the lower the likelihood of tax avoidance. Our results indicate that more socially responsible firms are likely to display less tax avoidance. Finally, the results from our additional analysis show that the CSR categories community relations and diversity represent particularly important elements of CSR performance that reduce tax avoidance.
Loyeung, A & Matolcsy, Z 2015, 'CFO's Accounting Talent, Compensation and Turnover', Accounting & Finance, vol. 55, no. 4, pp. 1105-1134.
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This paper builds on and contributes to the literature on Chief Financial Officer's (CFO) compensation and turnover. We contend that the accounting talent of CFOs can be measured by accounting errors that occur when CFOs implement accounting standards. We find (i) a positive association between the CFO's accounting talent and the CFO's compensation ex ante in the transition year; (ii) a positive association between the CFO's accounting talent and the CFO's bonus in the subsequent year (adoption year); and (iii) an inverse association between the CFO's accounting talent and CFO turnover in the subsequent year (adoption year). © 2014 AFAANZ.
Quinlan, M, Bohle, P & Rawlings-Way, O 2015, 'Health and safety of homecare workers engaged by temporary employment agencies', Journal of Industrial Relations, vol. 57, no. 1, pp. 94-114.
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Shifts in demographics, lifestyles and employment and business practices are generating increased demand for homecare services. While providing support to vulnerable members of the community, homecare workers are themselves vulnerable. Precarious work and isolated workplaces expose them to poorly controlled occupational health and safety (OHS) hazards. This study examined OHS issues encountered by homecare agency workers. Eighteen carers working in aged care, disability support and youth services were interviewed in Adelaide and the Barossa Valley, South Australia. Participants identified a range of OHS problems, including inadequate risk assessment, unsatisfactory OHS policies and procedures, poor training, lack of employment benefits, problematic working hours, lack of agency support and the demands of particular types of work. These findings provide preliminary evidence of significant OHS management deficiencies. The results require further investigation to guide the development of policies and practices intended to provide healthy, productive and sustainable work environments for homecare workers. Such policies and practices should address compliance with OHS and workers’ compensation legislation, the prevention of negative OHS outcomes, provision of effective mechanisms for workers to raise OHS concerns and implementation of support structures.
Richardson, G, Lanis, R & Taylor, GL 2015, 'Financial distress, outside directors and corporate tax aggressiveness spanning the global financial crisis: An empirical analysis', JOURNAL OF BANKING & FINANCE, vol. 52, pp. 112-129.
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© 2014 Elsevier B.V. We examine financial distress and tax aggressiveness spanning the global financial crisis (GFC) of 2008 and the impact of the interaction between board independence and firm-specific financial distress on tax aggressiveness. Our regression results show that both financial distress and the GFC are positively associated with tax aggressiveness. More importantly, we find that the positive association between financial distress and tax aggressiveness is magnified by the GFC. We also observe that the interaction between board independence and financial distress is positively associated with tax aggressiveness. Our results are robust to multiple measures of financial distress and tax aggressiveness.
Wieder, B & Ossimitz, M-L 2015, 'The impact of Business Intelligence on the quality of decision making - a mediation model', CONFERENCE ON ENTERPRISE INFORMATION SYSTEMS/INTERNATIONAL CONFERENCE ON PROJECT MANAGEMENT/CONFERENCE ON HEALTH AND SOCIAL CARE INFORMATION SYSTEMS AND TECHNOLOGIES, CENTERIS/PROJMAN / HCIST 2015, vol. 64, pp. 1163-1171.
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© 2015 The Authors. Published by Elsevier B.V. Business Intelligence (BI) systems have been a top priority of CIOs for a decade, but little is known about how to successfully manage those systems beyond the implementation phase. This paper investigates the direct and indirect effects of BI management quality on the quality of managerial decision making using PLS analysis of survey responses of senior IT managers in Australia. The results confirm this overall relationship (total effect), but also reveal mediating effects of data/information quality and BI solution scope. The study contributes to both academia and industry by providing first time evidence of direct and indirect determinants of managerial decision support improvements related to BI solutions scope and active management of BI.
Zhu, T, Lu, M, Shan, Y & Zhang, Y 2015, 'Accrual-based and real activity earnings management at the back door: Evidence from Chinese reverse mergers', Pacific-Basin Finance Journal, vol. 35, pp. 317-339.
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© 2015 Elsevier B.V.. We examine how Chinese reverse merger (RM) firms trade off and conduct income-increasing earnings management through accrual-based and real activities manipulation strategies. We find that Chinese RM firms engage in both real activities and accrual-based manipulation at higher levels than non-Chinese RM firms, regular US firms and other Chinese US-listed firms. Further analysis suggests that Chinese RM firms use real activities and accrual-based manipulation as substitutes and tend to transition to real activities management in the years after a reverse takeover. Big 4 auditors can effectively constrain both real activities and accrual-based earnings management in Chinese RM firms. We also find that accruals manipulation is more costly relative to real activities management in the short term because it predicts changes in post-acquisition operating performance in Chinese RM firms. Overall, the results provide practical implications to regulators, investors and auditors on the channels through which Chinese RM firms manipulate earnings and the economic consequence of those manipulations.
