Bachmann, R, Loyeung, A, Matolcsy, Z & Spiropoulos, H 2020, 'Powerful CEOS, Cash Bonus Contracts and Firm Performance', Journal of Business Finance & Accounting, vol. 47, no. 1-2, pp. 100-131.
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We investigate whether powerful chief executive officers (CEOs) influence the conditions of their cash bonus contracts. Specifically, we examine (i) the association between CEO power and the proportion of ex-ante cash bonus to base salary (bonus ratio), (ii) the association between CEO power and the relative use of non-financial to financial performance targets in cash bonus contracts, and (iii) the performance consequences of incorporating non-financial targets in cash bonus contracts. Results show that powerful CEOs are associated with greater ex-ante bonus ratios and higher proportions of non-financial performance targets compared to less powerful CEOs. Furthermore, the use of quantitative and corporate social responsibility (CSR)-related non-financial performance targets is positively associated with subsequent firm performance, and the use of undefined non-financial performance targets is negatively associated with subsequent firm performance. These results are robust to alternative econometric specifications and variable definitions.
Bedford, DS 2020, 'Conceptual and empirical issues in understanding management control combinations', Accounting, Organizations and Society, vol. 86, pp. 101187-101187.
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© 2020 Elsevier Ltd This paper discusses several conceptual and empirical issues related to understanding combinations of management control (MC) practices. First, the paper clarifies the meaning of the two main perspectives for investigating MC combinations – MC packages and MC systems. Second, the paper considers how researchers can improve theory development concerning the effects of MC combinations by explicating the causal mechanisms through which they arise. Third, the paper discusses whether loose coupling provides an informative perspective for understanding MC combinations, particularly in relation to how organizations adapt MC practices to contextual changes. Finally, the paper comments on the main empirical approaches for investigating MC combinations. Recent studies, especially those in this special issue, are drawn upon to illustrate how these issues relate to MC research.
Bedford, DS, Spekle, RF & Widener, SK 2020, 'Budgeting and Employee Stress in Times of Crisis: Evidence from the COVID-19 Pandemic'.
Brown, P, Ly, T, Pham, H & Sivabalan, P 2020, 'Automation and management control in dynamic environments: Managing organisational flexibility and energy efficiency in service sectors', The British Accounting Review, vol. 52, no. 2, pp. 100840-100840.
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Automation has been conceptually explained in management accounting research as an antecedent to control problem avoidance (Emmanuel, Merchant, & Otley, 1990). However, the question of how automation is implicated in more dynamic service-based environments remains unanswered. We apply the Adler and Borys' (1996) bureaucracy framework to explain how enabling controls allow organisations to simultaneously pursue organisational flexibility and energy efficiency (Ahrens & Chapman, 2004; Jorgensen & Messner, 2009). Subsequently, we examine how automation and its related management control are designed and used in a dynamic service-based organisation, where goal attainment and the energy efficiency of its buildings are critical. In doing so, we explain how automation-related standardisation is adjusted by enabling control attributes (repair, flexibility, internal transparency) to advance user flexibility. Additionally, standardisation minimises the loss in energy efficiency when less optimal repair control behaviour manifests. Our study adds more depth to the work by Merchant and Van de Stede (2017) by exploring how automation complements labour in dynamic environments. Our findings offer greater understanding of how automation and management control systems are designed and used to enhance organisations' energy efficiency in dynamic service-based environments. In doing so, we advance extant environmental management accounting studies (Virtanen, Tuomaala, & Pentti, 2013).
Chen, X, Le, CHA, Shan, Y & Taylor, S 2020, 'Australian policy uncertainty and corporate investment', Pacific-Basin Finance Journal, vol. 61, pp. 101341-101341.
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This study examines the impact of economic policy uncertainty (EPU) on capital investment by Australian firms. Following a replication of prior US evidence (Gulen and Ion 2016), we show that EPU has a persistent and negative effect (up to four years) on capital investment by Australian Stock Exchange (ASX) listed firms, in contrast to the more short-lived effect of EPU in the US. The different results are consistent with the high proportion of ASX-listed firms in the resources and mining industries, where investment projects frequently proceed in stages and have time-to-build considerations. In accordance with real option theory, the findings reinforce the notion that EPU can dampen investment opportunities due to investment irreversibility.
Chen, X, Lu, M & Shan, Y 2020, 'Changes in corporate effective tax rates during three decades in Japan', Pacific-Basin Finance Journal, vol. 62, pp. 101367-101367.
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© 2020 Elsevier B.V. This study compares changes in corporate effective tax rates (ETR) between firms in Japan and the United States. Using a sample of U.S. firms from 1988 to 2016, the declining trend in corporate cash and Generally Accepted Accounting Principles (GAAP) ETR measures is initially confirmed. However, different from the results of cash ETR documented in Dyreng et al. (2017), GAAP ETR declines more rapidly for large U.S. multinational firms than for purely domestic firms, suggesting that multinational firms have better opportunities to implement cross-border tax-saving strategies. For Japanese firms, after controlling for the decrease in the statutory tax rate, there is no obvious time trend in GAAP ETR for multinational firms, but small and medium domestic firms experience a significant decline in ETR. Similar to Dyreng et al., we do not find any evidence that the time-series trend in ETR can be explained by firm characteristics of Japanese or U.S. firms.
Endrawes, M, Feng, Z, Lu, M & Shan, Y 2020, 'Audit Committee Characteristics and Financial Statement Comparability', Accounting & Finance, vol. 60, no. 3, pp. 2361-2395.
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Financial statement comparability enables weighing the similarities and differences in financial performance between firms. Prior studies mainly focus on the role of accounting standards in the production of comparability, but the role of economic agents has been largely overlooked. We find that a firm's audit committee size and financial expertise affect its financial statement comparability. Financial information tends to be more comparable among industry peers when audit committees are larger and more members have financial and accounting expertise. The effect of audit committee expertise on comparability is stronger for firms with less independent and smaller boards, for firms with non‐Big 4 auditors and for firms with CEOs serving as the chairperson of the boards.
Grosse, M, Ma, N & Scott, T 2020, 'Evidence on compensation consultant fees and CEO pay', Australian Journal of Management, vol. 45, no. 1, pp. 15-44.
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Regulators and previous research have expressed concern about the effect of compensation consultants on CEO pay. We use the Australian setting, where fees for both compensation and other consulting services supplied by compensation consultants are mandated disclosures for all firms, to provide evidence on the role of compensation consultants on CEO pay. We find that the use of compensation consultants or remuneration advisers, fees for compensation services and positive residual compensation service fees are associated with higher CEO pay. In contrast, both the provision and the proportion of fees from other services provided by compensation consultants are not. Furthermore, these positive associations are not observed when a Big 4 accounting firm is the compensation consultant. JEL Classification: G38, M12, M48, M52
Le, CHA, Shan, Y & Taylor, S 2020, 'Executive Compensation and Financial Performance Measures: Evidence from Significant Financial Institutions', Australian Accounting Review, vol. 30, no. 3, pp. 159-177.
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AbstractWe survey the use of financial performance measures in determining executive pay among significant Australian financial institutions. We document evidence of the pervasiveness with which externally disclosed non‐GAAP (non‐Generally Accepted Accounting Principles) financial measures are also used internally to determine variable remuneration, with the apparent popularity of cash profit after tax in short‐term incentives plans. Our evidence also highlights the increasing use of peer group‐adjusted measures (e.g., relative cash earnings per share and return on equity ranking against a peer group) in determining longer‐run incentives, despite the fact that members of the peer group do not measure financial performance in a directly comparable manner. Detailed analysis of the four major trading banks (Australia and New Zealand Banking Group, Commonwealth Bank, National Australia Bank and Westpac) reveals differences in the way non‐GAAP earnings measures are calculated across the major banks, as well as some variation over time in the way individual banks measure performance. We also document evidence of non‐GAAP earnings restatements, with around 25% of non‐GAAP results subsequently being restated. These restatements are more likely to result in a downward revision of the initially reported non‐GAAP result than an upward revision. We therefore conclude that existing measures of financial performance used to determine senior executive compensation are not as ‘objective’, as might be assumed.
Li, J, Shan, Y, Tian, G & Hao, X 2020, 'Labor cost, government intervention, and corporate innovation: Evidence from China', Journal of Corporate Finance, vol. 64, pp. 101668-101668.
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© 2020 Elsevier B.V. We examine the inducement effect of labor cost on corporate innovation in emerging markets. To establish causality, we adopt a difference-in-differences approach, based on the variations generated by the passage of the new Labor Contract Law in China, as well as an instrumental variable approach. We find the inducement effect of labor cost is more pronounced for Chinese non-state-owned enterprises, firms without political connections, and firms with low labor productivity. Our results support the induced innovation hypothesis in that increases in wages will induce invention and technology adoption, but also suggest that government intervention through state ownership and political connections largely decreases this inducement effect. Our findings have implications for emerging markets regarding the transition from a low-cost labor development model to an innovation-driven growth model.
Lu, M, Shan, Y, Wright, S & Yu, Y 2020, 'Operating cash flow asymmetric timeliness in Australia', Accounting & Finance, vol. 60, no. S1, pp. 587-627.
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AbstractOperating cash flow (CFO) asymmetric timeliness occurs when CFO reflects bad news more quickly than good news. We examine the presence and determinants of CFO asymmetric timeliness in Australia, where substantial differences in reporting requirements of cash flow components, in characteristics of listed companies and in the degree of conservative financial reporting produce contrasting findings to those in the United States. We find supportive evidence for the novel ‘sticky cost behaviour’ explanation and also the product‐pricing strategy, but not the life cycle hypothesis. These findings are useful for investors and analysts concerned with forecasting the future values of companies.
Malmi, T, Bedford, DS, Brühl, R, Dergard, J, Hoozée, S, Janscheck, O, Willert, J, Ax, C, Bednarek, P, Gosselin, M, Hanzlick, M, Israelsen, P, Johanson, D, Johansson, T, Madsen, DØ, Rohde, C, Sandelin, M, Strömsten, T & Toldbod, T 2020, 'Culture and Management Control Interdependence: An Analysis of Control Choices That Complement the Delegation of Authority in Western Cultural Regions', Accounting, Organizations and Society, vol. 86, pp. 101116-101116.
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© 2020 Elsevier Ltd This study examines the influence of cultural regions on the interdependence between delegation of authority and other management control (MC) practices. In particular, we assess whether one of the central contentions of agency theory, that incentive contracting and delegation are jointly determined, holds in different cultural regions. Drawing on prior literature, we hypothesise that the MC practices that operate as a complement to delegation vary depending on societal values and preferences, and that MC practices other than incentive contracting will complement delegation in firms in non-Anglo cultural regions. Using data collected from 584 strategic business units across three Western cultural regions (Anglo, Germanic, Nordic), our results show that the interdependence between delegation and incentive contracting is confined to Anglo firms. In the Nordic and Germanic regions, we find that strategic and action planning participation operate as a complement to delegation, while delegation is also complemented by manager selection in Nordic firms. Overall, our study demonstrates that cultural values and preferences significantly influence MC interdependence, and suggests that caution needs to be taken in making cross-cultural generalisations about the complementarity of MC practices.
Pham, H, Sutton, BG, Brown, PJ & Brown, DA 2020, 'Moving towards sustainability: A theoretical design of environmental performance measurement systems', Journal of Cleaner Production, vol. 269, pp. 122273-122273.
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© 2020 We develop and explain how environmental performance measurement systems (EPMS) can be designed to overcome some key design issues identified from extant EPMS research. We take an interdisciplinary approach integrating science and sustainability theories into accounting research to theoretically develop six key design principles for a valid decision-useful EPMS framework. Our theoretical framework, comprising established theoretical and causal links between the organization's summary sustainability measure and its drivers, provides insight into how management decisions at the operational level influence economic and environmental sustainability value created for the organization, thus supporting sustainability-related decision making. We test the framework in an irrigated agriculture setting using simulation modeling. Measured parameter values for key sustainability measures theoretically derived from the design principles are compared with optimal values to identify production processes for improvement. The empirical results showed significant simultaneous improvement in water and economic sustainability performance, resulting from a change in one targeted production practice. While our model demonstrates how the quality of sustainability-related information and decision making can be improved within a specific organizational setting, it also provides a generalizable tool for resolving the wicked problems of sustainable natural resource use.
Sikochi, S & Ma, L 2020, 'LULA: Transforming Transport and Mobility (A)', Harvard Business Publishing.
Sikochi, S & Ma, L 2020, 'LULA: Transforming Transport and Mobility (B)', Harvard Business Publishing.
Sikochi, S & Ma, L 2020, 'LULA: Transforming Transport and Mobility (C)', Harvard Business Publishing.
Wakefield, J & Frawley, JK 2020, 'How does students' general academic achievement moderate the implications of social networking on specific levels of learning performance?', Computers & Education, vol. 144, pp. 103694-103694.
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Wells, P, Lanis, R, Govendir, B & McClure, R 2020, 'Does the Australian Taxation Office disclosure of information impact the costs of tax aggressiveness: Evidence from the Tax Laws Amendment (2013 Measures No.2) Act 2013 over the period 2015-2018', Australian Tax Forum: a journal of taxation policy, law and reform, vol. 35, no. 3, pp. 521-565.
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This paper evaluates the impact of disclosure by the Australian Taxation Office of tax return data over the period 2015 to 2018 on corporate tax aggressiveness. While there is evidence of changes in corporate tax payments, there is no evidence that this occurred for companies where there was evidence of corporate tax aggressiveness. Rather, the major cause of changes is the magnitude of tax payments in prior periods where high tax payments are likely to be followed by a reduction in tax payments.
Barker, S, Suri, H, Gregory, B, Warner, A, White, A, Venkiteswaran, V & Lightfoot, U 1970, 'Learning from COVID-19 to futureproof assessment in Business Education', https://2020conference.ascilite.org/wp-content/uploads/2021/04/ASCILITE-2020-Conference-Proceedings.pdf, ASCILITE, Virtual.
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The prevalence of face to face invigilated exams in Business Schools across Australia and New Zealand (indeed around the world) needed to be reconsidered quickly during the recent COVID- 19 pandemic crisis. With teaching and learning activities moving to online mode due to social distancing requirements, the need to consider technology enabled assessments and how they could be efficiently and effectively implemented became a crucial focus of universities in early 2020, affecting staff and students alike. This paper looks at the experiences of a group of academics and academic developers from five ANZ Business Schools and the lessons that they learnt from these experiences.
Bedford, A, Spiropoulos, H, Matolcsy, Z & Vojvoda, K 1970, 'Powerful Chief Executive Officers of Target Firms and Merger and Acquisition Outcomes', UTS Emerging Accounting Researcher Consortium, Sydney.
Boersma, M, Bedford, D & Johns, K 1970, 'Addressing Modern Slavery through Strategic Transparency - A Study of the Australian Cleaning Industry', Society for the Advancement of Socio-Economics, Virtual.
Chapman, P, Wieder, B & Ossimitz, ML 1970, 'How IT Management Capabilities and AccountingInformation Systems generate CompetitiveAdvantage', https://aisel.aisnet.org/pacis/, Pacific Asia Conference on Information Systems 2020, Dubai (online).
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The present study investigates whether IT project and service management capabilities generate competitive advantage and to what extent the performance of accounting information systems plays a mediating role in this value generation. The results of the analysis of survey responses of senior financial managers of medium and large Australian organisations suggest that, while both IT project and IT service management capabilities have a positive impact on AIS performance, it is only the project management capabilities – in combination with higher performance of the future-oriented AIS components – which create competitive advantage. The results support the view that AIS potentially hold sufficient value, rarity, inimitability and non-substitutability to act as complementary resources (Amit and Schoemaker 1993), interacting with other organisational capabilities and resources to obtain a competitive advantage. However, it is only the future-oriented (planning, budgeting and forecasting) components which create such advantage – in combination with IT project management capabilities.
Grosse, M, Ma, N & Scott, T 1970, 'Evidence on compensation consultant fees and CEO pay', Australian Journal of Management, Paris Financial Management Conference, Paris, pp. 15-44.
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Regulators and previous research have expressed concern about the effect of compensation consultants on CEO pay. We use the Australian setting, where fees for both compensation and other consulting services supplied by compensation consultants are mandated disclosures for all firms, to provide evidence on the role of compensation consultants on CEO pay. We find that the use of compensation consultants or remuneration advisers, fees for compensation services and positive residual compensation service fees are associated with higher CEO pay. In contrast, both the provision and the proportion of fees from other services provided by compensation consultants are not. Furthermore, these positive associations are not observed when a Big 4 accounting firm is the compensation consultant. JEL Classification: G38, M12, M48, M52.
Lam, P, Ferguson, A & Hu, W 1970, 'Enough is enough: Policy uncertainty and acquisition abandonment', AFAANZ virtual conference, virtual.
McAllister, G, Sutton, N, Brown, D, Rawlings-Way, O & Harrison, B 1970, 'Using Public Inquiries as a Data Source for Accounting Research', Monash University Forum for Management Accounting, Melbourne.
Thirathon, U, Wieder, B & Ossimitz, ML 1970, 'Competitive Advantage through Analytics-Based Managerial Decision-Making and Big Data Analytics', https://aisel.aisnet.org/pacis/, Pacific Asia Conference on Information Systems 2020, Online.
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This study investigates how organizations can achieve a competitive advantage with Big Data analytics (BDA). The results of a cross-sectional survey of senior finance managers in Australia reveal that analytics-based decision-making (ABDM) is the main mechanism for converting analytical capabilities into a competitive advantage. The technical, interaction and business skills of analysts are important antecedents of both BDA sophistication and ABDM, but eventually, it requires managers to base their decisions on sophisticated analytic outputs to achieve competitive advantage from analytics.
Dhillon, R & Andon, P 2020, 'Accounting assemblages and intimacy in the pursuit of productivity and economic growth: The case of neoliberal governmentality of education in Australia and Singapore'.
Ferguson, A & Lam, P 2020, 'Information asymmetry, hedging and wealth effects of project finance loan approvals'.
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Prior studies of bank loan announcements depict significant capital market reactions. More recent evidence however, fails to identify such reactions (Fields et al. 2006, Maskara & Mullineaux 2011). In this study, we consider market reactions to loan initiations where the borrower has no prior record of bank lending. Zero-leverage firms are firms that have zero outstanding short-term or long-term debt in their capital structure (Strebulaev & Yang 2013). Using a unique hand collected sample of bank loan announcements for Australian Mining Development Stage entities, we find that both initial bank loans and subsequent bank loans attract significant market reactions. Further, we produce evidence consistent with announcements of such loans reducing information asymmetry which we proxy for with bid-ask spreads and trading volume. Our final analysis examines evidence of bank specialisation. We find that borrowers from the industry leader in terms of loan origination (Macquarie Bank) in this sector exhibit stronger abnormal returns.
Jackson, AB, Shan, Y & Taylor, SL 2020, 'Asymmetric Timeliness in Earnings: Insights from Earnings Disaggregation'.
Ma, L, Ma, N, Bedford, A & Vojvoda, K 2020, 'Patent database for Australian listed companies'.
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Patent data is sourced from the Australian Government’s Intellectual Property Government Open Data (IPGOD) 2019 (https://data.gov.au/dataset/ds-dga-a4210de2-9cbb-4d43-848d-46138fefd271/details?q=patent%202019). Companies are identified as a recipient of a patent if their current or historical company names, or the names of their controlled subsidiaries are named as the patent applicant in IPGOD. The standardisation and matching process is conducted following Mann (2018) and Kogan et al. (2017a, 2017b). Patent applicant and company/subsidiary names are rigorously cleaned and standardised by removing symbols (e.g., “,” or “@”) and common words (e.g., “Limited” or “Ltd”) for matching. The matching procedure is conducted following Mann (2018) and Kogan et al. (2017a, 2017b) using the Levenshtein distance. A full breakdown of the database construction is provided in Bedford et al. (2020). References Bedford, A., Ma, L., Ma, N., Vojvoda, K., 2020. Constructing a patent database for Australian listed firms. Working paper Kogan, L., Papanikolaou, D., Seru, A. and Stoffman, N., 2017a. Technological innovation, resource allocation, and growth. The Quarterly Journal of Economics, 132(2), pp.665-712. Kogan, L., Papanikolaou, D., Seru, A., & Stoffman, N., 2017b. Online Appendix to “Technological Innovation, Resource Allocation and Growth”. Mann, W., 2018. Creditor rights and innovation: Evidence from patent collateral. Journal of Financial Economics, 130(1), pp.25-47.).
