Arnold, B, Bateman, H, Ferguson, A & Raftery, A 2017, 'Partner-Scale Economies, Service Bundling, and Auditor Independence in the Australian Self-Managed Superannuation (Pension) Fund Industry', Auditing: A Journal of Practice & Theory, vol. 36, no. 2, pp. 161-180.
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SUMMARY Using proprietary Australian Taxation Office (ATO) data, this study examines audit pricing, service bundling, and independence issues in the self-managed superannuation fund (SMSF) sector, the fastest growing and largest segment of the Australian $2 trillion retirement savings industry. We consider the impact of partner-level scale effects for a large sample of SMSF audits for the three years to June 2010. After controlling for factors known to determine audit fees, we find evidence of fee discounting by partners with large client portfolios. However, when the dependent variable is redefined to the total “bundle” of services (including audit and non-audit fees), the firms of partners with larger client portfolios are shown to earn bundling fee premiums. This finding suggests industry specialists price strategically using audits as a conduit to supply higher margin non-audit services (NAS) to clients with more resources. Last, we find no evidence the supply of NAS impairs auditor independence, alleviating joint supply concerns raised in the Cooper Review.
Bedford, D & Spekle, R 2017, 'Construct Validity in Survey‐Based Management Accounting and Control Research', Journal of Management Accounting Research, vol. 30, no. 2, pp. 23-58.
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© 2018, American Accounting Association. All rights reserved. The capacity for survey-based research to advance theoretical knowledge is heavily dependent on the degree to which the measures used capture the constructs that they are intended to represent. Despite the importance of construct validity, the management accounting and control (MAC) literature tends to devote less attention to construct validity than other areas of organizational research. In this article, we discuss contemporary thinking about construct validity and examine how this compares to established practice in MAC research through a systematic review of survey studies from 1996 to 2015. Based on this review, we identify four areas where greater attention is warranted: specifying construct dimensionality, justifying the choice of the measurement model, distinguishing between causal indicators and composite indicators in formative measurement models, and being judicious in the use of single item measures. We discuss the implications of each issue and provide suggestions on how they can be addressed.
Bond, D, Czernkowski, R, Lee, Y-S & Loyeung, A 2017, 'Market reaction to non-GAAP earnings around SEC regulation', Journal of Contemporary Accounting & Economics, vol. 13, no. 3, pp. 193-208.
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This study examines the impact of Regulation G in 2003 and the issuance of Compliance and Disclosure Interpretations (C&DIs) in 2010 – on the reporting of non-GAAP earnings. The study finds that (i) both Regulation G and C&DIs are associated with an increase in the quality of non-GAAP earnings exclusions (i.e. the exclusions are more transitory and have less predictive power for future operating earnings). (ii) Regulation G led to a decrease in the amount of total positive exclusions used to meet or beat analysts’ forecasts, but C&DIs partially reversed this result. (iii) Regulation G increases, and C&DIs decrease, the earnings response coefficients (ERCs).
Bugeja, M & Loyeung, A 2017, 'Accounting for Business Combinations and Takeover Premiums: Pre- and Post-IFRS', Australian Journal of Management, vol. 42, no. 2, pp. 183-204.
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The adoption of International Financial Reporting Standards (IFRS) in Australia in 2005 resulted in goodwill accounting shifting from systematic annual amortisation to impairment testing. We examine whether IFRS adoption changed the association between takeover premiums and the difference between a target firm’s pre-acquisition market and book values (pre-acquisition step-up). Our results show a negative association between takeover premiums and the pre-acquisition step-up of the target firm. This association reduces however, after Australia adopted IFRS and no longer required goodwill amortisation. Consistent with the incentives arising from contracts written around accounting numbers, our results are strongest for bidding firms which compensate their CEO using an accounting-based bonus plan. These results are robust to a battery of sensitivity tests.
Bugeja, M, Matolcsy, Z & Spiropoulos, H 2017, 'Is Non-Executive Directors' Pay or Industry Expertise Related to Takeover Premiums, Abnormal Returns and Offer Price Revisions?', Australian Journal of Management, vol. 42, no. 3, pp. 355-375.
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We examine the association between various takeover outcomes and bidding firm non-executive directors’ (NEDs) compensation and expertise in the target firm industry. In our sample of 272 acquisitions by ASX listed firms between 2004 and 2011, we find that NEDs’ relative compensation and industry expertise have a negative association with the bid premium. We also find that NEDs’ relative compensation is positively associated with the bidding firm’s market reaction to the takeover announcement, and NEDs’ industry expertise is associated with a lower likelihood of an increase in the offer price, particularly for M&As viewed negatively by the market. These results are consistent with higher NEDs’ relative compensation and industry expertise leading to more effective board monitoring and advising.
Bugeja, M, Matolcsy, Z & Spiropoulos, H 2017, 'The CEO pay slice: Managerial power or efficient contracting? Some indirect evidence', Journal of Contemporary Accounting & Economics, vol. 13, no. 1, pp. 69-87.
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This paper uses the CEO Pay Slice (CPS) to provide insight into the managerial power versusefficient contracting debate on CEO compensation. Based on a sample of 9978 U.S. listedfirms for the period 2001–2010 our evidence is inconsistent with managerial power. Forinstance, we find that the CPS of a newly appointed CEO does not differ to that of the out-going CEO and also does not increase over time. Furthermore, we find no relation betweenthe CPS and subsequent firm performance, or between a measure of excess CPS and subse-quent firm performance. In addition, we show that most firms are quick to reduce excessCPS levels. However, for a small subsample in which excessive CPS persists, we observe anegative relation between CPS and subsequent firm performance. Overall our evidence islargely consistent with an efficient contracting explanation of CEO compensation asopposed to a managerial power explanation
Greve, J, Ax, C, Bedford, D, Bednarek, P, Brühl, R, Dergard, J, Ditillo, A, Dossi, A, Gosselin, M, Hoozée, S, Israelsen, P, Janscheck, O, Johanson, D, Johansson, T, Madsen, D, Malmi, T, Rohde, C, Sandelin, M, Strömsten, T, Toldbod, T & Willert, J 2017, 'The Impact of Society on Management Control Systems', Scandinavian Journal of Management, vol. 33, no. 4, pp. 253-266.
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© 2017 Elsevier Ltd The aim of this study is to investigate whether certain configurations of management controls dominate in certain societies (socio-cultural contexts) and whether the effectiveness of a given archetype of management control systems (MCSs) varies depending on the socio-cultural setting—the society—in which it operates. The study focuses on three socio-cultural groups and the corresponding institutional contexts (an Anglo-Saxon group, a Central European group, and a Northern European group) and three MCS archetypes (delegated bureaucratic control, delegated output control, and programmable output control). We use unique data from a cross-national, interview-based survey encompassing 610 strategic business units from nine countries (seven European countries plus Canada and Australia). The idea that firms tend to adapt MCSs to the socio-cultural context does not gain empirical support in this study. No significant differences in the distribution of MCSs between the three socio-cultural groups are noted. However, we do find that programmable output control has a more positive impact on effectiveness in Anglo-Saxon cultures, while delegated output control has a more positive impact on effectiveness in Northern Europe. Taken together these findings indicate that distinct differences between societies make a particular MCS design more appropriate in a given society, but where such differences are not dramatic (as in the present case), multiple MCS designs can be found in the same society.
Grosse, M, Kean, S & Scott, T 2017, 'Shareholder say on pay and CEO compensation: three strikes and the board is out', Accounting & Finance, vol. 57, no. 3, pp. 701-725.
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AbstractFrom 2011 in Australia, if over 25% of shareholders vote against a non‐binding remuneration resolution, firms are awarded a ‘strike’. We examine 237 firms that receive a strike relative to matched firms, and find no association with any measure of CEO pay. However, we do find that strike firms have higher book‐to‐market and leverage ratios, suggesting that the remuneration vote is not used to target excessive pay. We also find that firms respond to a strike by decreasing the discretionary bonus component of CEO pay by 57.10% more than non‐strike firms and increasing their remuneration disclosure by 10.95%.
Lanis, R, Richardson, G & Taylor, G 2017, 'Board of Director Gender and Corporate Tax Aggressiveness: An Empirical Analysis', Journal of Business Ethics, vol. 144, no. 3, pp. 577-596.
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© 2015 Springer Science+Business Media Dordrecht This study examines the impact of board of director gender diversity on corporate tax aggressiveness. Based on a sample of 418 U.S. firms covering the 2006–2009 period (1672 firm-year observations), our ordinary least squares regression results show a negative and statistically significant association between female representation on the board and tax aggressiveness after controlling for endogeneity. Our results are consistent across several measures of tax aggressiveness and additional robustness checks.
Matolcsy, Z & Wakefield, J 2017, 'Multinational headquarter control of wholly owned foreign subsidiaries', The British Accounting Review, vol. 49, no. 3, pp. 275-293.
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© 2017 Elsevier Ltd This paper examines how contingent factors, important for wholly owned foreign subsidiary operation, affect the management control system exercised by multinational corporation headquarters. We focus on two sets of contingent factors: first, strategic factors relating to corporate and competitive strategy; and second, factors related to integration internal and external to a multinational corporation. We apply a control archetype approach to more comprehensively consider the controls exercised, relative to extant literature. Our evidence is based on data from a cross-sectional survey completed by 159 Australian multinational corporation headquarters. Our findings indicate activity sharing corporate strategies, low cost competitive strategies, and higher internal integration, lead to greater degrees of control of wholly owned foreign subsidiaries. Differentiation based competitive strategies and external integration have less substantial and narrower implications on the degree of control exercised. These findings are robust to sensitivity tests and are consistent with our expectations that headquarters exercise a higher degree of control in contexts perceived as less problematic.
Sundin, H & Brown, DA 2017, 'Greening the black box: integrating the environment and management control systems', Accounting, Auditing & Accountability Journal, vol. 30, no. 3, pp. 620-642.
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PurposeThe purpose of this paper is to adopt an agency theory approach to investigate the integration of environmental issues into management control systems (MCS). Prior environmental accounting research has focussed on increasing organisations’ environmental accountability by “monitoring” through external reporting to stakeholders. However, this overlooks the alignment of agents’ interests within the firm.Design/methodology/approachA qualitative case study is undertaken in a large Australian listed property trust to investigate how agents’ interests may be integrated with environmental objectives through the use of MCS.FindingsFrom the case an analytical framework is developed to illustrate how environmental issues are incorporated into organisational behaviour through MCS. The findings include, single objective environmental MCS; multiple objective MCS, which include priorities that specify environmental and economic trade-offs; and balancing MCS, which provide overarching decision-making principles without priorities.Practical implicationsThe findings provide examples of how an organisation may integrate environmental issues across a range of MCS and the things to consider in doing so.Originality/valueThis paper draws on an agency perspective as an approach to incorporate environmental issues into MCS and to align behaviour. It explains a new way in which tensions can be managed. This study is one of the first to adopt the control package approach in investigating the in...
Thirathon, U, Wieder, B, Matolcsy, Z & Ossimitz, M-L 2017, 'Big Data, Analytic Culture and Analytic-Based Decision Making Evidence from Australia', Procedia Computer Science, vol. 121, pp. 775-783.
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This study investigates how managerial decision making is influenced by Big Data, analytics and analytic culture. The results of a cross-sectional survey (n = 163) of senior IT managers reveal that Big Data Analytics creates an incentive for managers to base more of their decisions on the analytic insights. However, we also find that the main driver of analytic-based decision making is analytic culture. Considering that culture – in contrast to Big Data Analytics tools and skills – is a resource which cannot be change easily or quickly, we conclude that firms with a highly analytic culture can use this resource as a competitive weapon. Finally, our analysis reveals that managers in smaller organizations are significantly more likely to base their decisions on analytic results than managers in large organizations, which suggests the former use analytics to remain competitive against their larger counterparts.
Ax, C, Bedford, DS, Bednarek, P, Brühl, R, Dossi, A, Dergard, J, Ditillo, A, Gosselin, M, Greve, J, Hoozée, S, Israelsen, P, Janscheck, O, Johanson, D, Johansson, T, Madsen, DØ, Malmi, T, Rohde, C, Sandelin, M, Strömsten, T, Toldbod, T & Willert, J 1970, 'The Impact of Participation in Strategic Planning and Action Planning on Management Control Effectiveness: An Analysis of Independent and Joint Effects'.
Bedford, DS, Bisbe, J & Sweeney, B 1970, 'How Performance Measurement Systems help firms achieve Intended Ambidexterity: The role of Cognitive Conflict', Quantitative Empirical Research on Management Accounting, Shanghai.
Bond, D, Czernkowski, RMJ, Lee, Y-S & Loyeung, A 1970, 'Market Reaction to Non-GAAP Earnings Around SEC Regulation', Journal of Contemporary Accounting and Economics, Accounting & Finance Association of Australia and New Zealand (AFAANZ)- annual conference, Gold Coast, Australia, pp. 193-208.
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© 2017 Elsevier Ltd This study examines the impact of Regulation G in 2003 and the issuance of Compliance and Disclosure Interpretations (C&DIs) in 2010 – on the reporting of non-GAAP earnings. The study finds that (i) both Regulation G and C&DIs are associated with an increase in the quality of non-GAAP earnings exclusions (i.e. the exclusions are more transitory and have less predictive power for future operating earnings). (ii) Regulation G led to a decrease in the amount of total positive exclusions used to meet or beat analysts’ forecasts, but C&DIs partially reversed this result. (iii) Regulation G increases, and C&DIs decrease, the earnings response coefficients (ERCs).
Chen, X & Ma, L 1970, 'Herding behavior in equity crowdfunding', The 2017 Accounting and Finance Association of Australia and New Zealand Conference, Adelaide, Australia.
Christodoulou, D, Ma, L & Vasnev, A 1970, 'Estimation Bias in Residuals: An Analysis in the Context of Earnings Management Literature', The 2017 Accounting and Finance Association of Australia and New Zealand Conference, Adelaide, Australia.
Ferguson, A, Lam, H & Ma, N 1970, 'Market Reactions to Auditor Switches under a Regulatory Consent Regime: Evidence from Australia', 2017 UTS Australian Summer Accounting Conference, Sydney, Australia.
Ghannam, S, Grosse, MJ, Loyeung, AL & Ma, N 1970, 'The Role of Powerful CEOs in the Appointment of Accounting Financial Experts to the Audit Committee', Accounting Theory and Practice Conference & Asian Accounting Associations conference.
Ghannam, S, Grosse, MJ, Loyeung, AL & Ma, N 1970, 'The Role of Powerful CEOs in the Appointment of Accounting Financial Experts to the Audit Committee', Paris Financial Management Conference.
Ghannam, S, Matolcsy, ZP, Spiropoulos, H & Thai, NJ 1970, 'The Role of Powerful Chairman in Mergers and Acquisitions', American Accounting Association Annual Meeting.
Ghannam, S, Matolcsy, ZP, Spiropoulos, H & Thai, NJ 1970, 'The Role of Powerful Chairman in Mergers and Acquisitions', British Accounting & Finance Association Annual Conference.
Ghannam, S, Matolcsy, ZP, Spiropoulos, H & Thai, NJ 1970, 'The Role of Powerful Chairman in Mergers and Acquisitions', 40h European Accounting Association Annual Congress.
Grosse, M, Ma, N & Scott, T 1970, 'Comparative Advantage and Audit Fees', 15th Australian National Centre for Audit & Assurance Research Audit Research Forum, Canberra.
Grosse, M, Ma, N & Scott, T 1970, 'Evidence on compensation consultant fees and CEO pay in a mandatory disclosure setting', Journal of Accounting, Auditing and Finance Conference 2017, Journal of Accounting, Auditing and Finance Conference 2017, University of Otago, Dunedin, New Zealand.
Grosse, M, Ma, N & Scott, T 1970, 'Evidence on compensation consultant fees and CEO pay in a mandatory disclosure setting', 2017 Accounting and Finance Association of Australia and New Zealand Conference, Adelaide.
Grosse, MJ, Ma, N & Scott, T 1970, 'Evidence on compensation consultant fees and CEO pay in amandatory disclosure setting', Journal of Contemporary Accounting & Economics Annual Symposium 2017, Taiwan.
Matolcsy, Z, Ghannam, S, Spiropoulos, H & Thai, N 1970, 'The Role of Powerful Non-Executive Chairman in Mergers and Acquisitions', World Finance Conference, Sardinia, Italy.
Matolcsy, ZP, Ghannam, S, Spiropoulos, H & Thai, N 1970, 'The Role of Powerful Non-Executive Chairman in Mergers and Acquisitions', Paris Financial Management Conference, Paris, France.
Ossimitz, M, Wieder, B, Chapman, P & Thirathon, U 1970, 'Management Accounting in the Big Data Era – Opportunities or Threats?', ERMAC 2017, Vienna, Austria.
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Over the past two decades, the digital revolution has brought along (a) ‘Big Data’, i.e. data which have rapidly become too big in volume, too diverse in nature and too rapidly changing to be handled in conventional databases and analysed using conventional tools, and (b) ‘data science’, “the study of the generalizable extraction of knowledge from data” (Dhar 2013), which develops and applies tools to manage and analyse (Big) Data. Data scientists are seen as new breed of managerial decision supporters, and insofar cross traditional management accounting territory.The aim of this study is to investigate the current and predict the future relationships between management accounting and the emerging data science discipline, based on a systematic analysis of the academic and practitioner literatures. While there is very little empirical evidence of an actual impact of data science on the management accounting profession, such impacts are predicted for the near future.Management accountants are expected to break with their traditions and collaborate with data scientists for mutual benefits. On the one hand, management accountants can be ‘data businesspeople’ or ‘horizontal data scientists’, who contribute essential business knowledge and data understanding to data science/Big Data projects. To succeed in such efforts, established and graduating management accountants face a need for up-skilling in technology, statistics, data mining, etc. and move into deeper analysis. Data scientists, on the other hand, can use their technical expertise to enrich established management accounting techniques and practices (e.g. the Balanced Scorecard, forecasting, etc.) with more advanced statistical or machine learning techniques.
Pham, H, Sutton, B, Brown, P & Brown, D 1970, 'Design of environmental performance measurement systems to support decision making in environmental and economic sustainability', 9th Conference on Performance Measurement and Management Control, Nice, France.
Pham, H, Sutton, B, Brown, P & Brown, D 1970, 'Overcoming Validity Problems with the Design of EPMS in an Agricultural Setting', 40th European Accounting Association Annual Congress, Valencia, Spain.
Thirathon, U, Wieder, B, Matolcsy, Z & Ossimitz, ML 1970, 'Impact of Big Data Analytics on Decision Making and Performance', http://icesal.org/proceedings.html (2017 nya), International Conference on Enterprise Systems, Accounting and Logistics, Thessaloniki, Greece.
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‘Big Data’ has become a major topic of interest and discussion for both academics and professionals in the IT and business disciplines, and case evidence suggests that companies engaging in Big Data outperform others. It has to be noted though that ‘Bigger’ Data as such does not provide any benefits, but it is rather how organisations make sense of data and gain insights from analysing the data. Analytic capabilities and practices are required to convert Big Data (BD) into insights which arguably improve decision-making and thereby organisational performance. While protagonists of such Big Data Analytics (BDA) imply that those effects exist, so far they have not been confirmed by rigorous empirical research.Data was obtained using a cross-sectional online survey which targeted Chief Information Officers and senior IT managers of medium-to-large Australian for-profit organisations and yielded 163 complete responses, which met the standard criteria for measurement reliability and validity. PLS-SEM and multiple bootstrapping methods were used to test the hypotheses, while controlling for firm size. The present study empirically confirms claims made in the literature that BD and related analytics lead to better performance. It also reveals that such benefits are achieved primarily because BDA creates additional incentives for managers to base their decisions on analytics, and that more analytic-based decision making actually leads to superior performance. Finally, the results of our study suggest that managers in organisations which engage in BD are generally more analytics-minded in their decision making, even if the analytic tools and methods used in support of their decisions are not particularly sophisticated.The results provide evidence that neither Big Data nor Big Data Analytics are just ‘hypes’, but they do actually lead to superior performance, partly directly and partly indirectly by creating an incentive for managers to rely on analytics when ...
