JOINT ANNUAL CONFERENCE OF BRITISH ACCOUNTING AND FINANCE ASSOCIATION (BAFA) NORTHERN AREA GROUP AND INTERDISCIPLINARY PERSPECTIVES SPECIAL INTEREST GROUP THEME: ‘ACCOUNTING FOR VALUE AND GOVERNANCE’ MONDAY 9TH AND TUESDAY 10TH SEPTEMBER 2013 NOTTINGHAM CONFERENCE CENTRE NOTTINGHAM BUSINESS SCHOOL NOTTINGHAM TRENT UNIVERSITY Welcome We are pleased to welcome you to Nottingham Business School, Nottingham Trent University for the 2013 joint annual conference of the British Accounting and Finance Association (BAFA) Northern Area Group and Interdisciplinary Perspectives Special Interest Group. We appreciate your presence and hope that the conference will provide you with the opportunity to meet and socialise, discuss research ideas, and present current research and receive constructive feedback that will help you take your research forward. A special welcome to our keynote speakers Professor Andy Stark, Manchester Business School and Professor Richard Taffler, Warwick Business School. We feel privileged to have them here today and would like to extend our appreciation to them for agreeing to speak during this conference. We hope that you will enjoy and benefit from their talk and expertise over the course of the conference. We would also like to extend our appreciation to the Journal of Applied Accounting Research (JAAR) for agreeing to devote a special issue for selected papers presented at this conference to be published at the end of 2014. The special issue will be edited by Professor Musa Mangena and Dr Jia Liu. The papers submitted to the special issue will be subjected to double-blind peer review in line with the journal’s normal practice. Submissions to the JAAR special issue must be made online by 30 November 2013 via: http://mc.manuscriptcentral.com/jaar and should indicate that the manuscript is intended for this special issue. Please prepare your manuscript according to JAAR author guidelines on https://emeraldinsight.com/products/journals/journals.htm?id=JAAR#news. We hope you have an enjoyable, productive and sociable conference. Organisers: Professor Musa Mangena Dr Mohammed Faisal Ahammad Shish Malde 1 Keynote Speakers Professor Andrew Stark Andrew Stark is the Coutts Professor of Accounting and Finance at Manchester Business School, having held prior faculty positions at Yale School of Management (visiting), and the universities of Essex, Ulster, Maryland and Manchester. He was given the British Accounting Association Distinguished Academic Award in 2003. He is currently one of the editors of the Journal of Business Finance and Accounting and is a past joint-editor of the British Accounting Review. He is a past chairperson of the British Accounting Association. He is a member of 2008 Research Assessment Exercise Main Panel I and is the chairperson of Sub-Panel 35 (Accounting and Finance), having previously been on the Research Assessment Exercise Panels for Accounting and Finance in 1996 and 2001 and for Business and Management in 2001. He was chairperson of the Quality Assurance Agency Subject Benchmarking Group for accountancy. Professor Richard Taffler Richard Taffler is Professor of Finance and Accounting at Warwick Business School. Previously he held a chair at Manchester Business School and was the Martin Currie Professor of Finance and Investment at the University of Edinburgh. An authority on behavioural finance, he has published over a hundred academic and professional papers and books, and is frequently quoted in the media. His work has been published in top academic journals such as the Journal of Accounting and Economics, Journal of Accounting Research, Journal of Business Finance and Accounting and Journal of Banking and Finance. Richard's interests include the identification and exploitation of stock market anomalies, including the market's inability to deal with bad news appropriately, fund manager storytelling, performance and nature of their investment decisions, financial distress, retail investor gambling in the market and the impact of CEO overconfidence and narcissism on firm performance. He has recently been developing the new area of emotional finance which explores the role unconscious fantasy plays in investment and financial decisions. 2 LIST OF DELEGATES Name Hermann Rapp Doris Merkl-Davies Sarah-Closs-Stacey Sherie Harding Atef Mohamed Ahmed Emily Namiyingo Mei Yu Carl Bridge Lyton Chitambo Jing Li Heba Abou El Sood Iman M Arafa Chris Kelsall Mark Mulcahy Florian Meier Kamil Omoteso Elaine Conway Sonja Gallholfer Padmi Nagirikandalage Odile Barbe Sophie Raimbault Agyenim Boateng Thamir Albarrak Babatunde G Adeyeye Andrew Higson Andy Stark Sheehan Rahman Marwa Hassaan Jim Haslam Rasha Kassem Abdalla Shalla Anas Alhazmi Christian Herzig Don Harradine Graham Pitcher Organisation Anglia Ruskin University Bangor University Bangor University Bangor University Beni-Suef University Egypt Birmingham City University Birmingham City University Bolton, University of Bournemouth University Bradford, University of Cairo University Cairo University Central Lancashire, University of Cork, University College Coventry University Coventry University Derby, University of Glasgow, University of Glyndwr University Email [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] Groupe ESC Dijon Bourgogne Groupe ESC Dijon Bourgogne Huddersfield, University of KFU Lagos, University of [email protected] Loughborough University Manchester Business School Manchester Business School Mansoura Faculty of Commerce Newcastle, University of Northampton, University of Nottingham Trent University Nottingham Trent University Nottingham Trent University Nottingham Trent University Nottingham Trent University [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] 3 Hafez Abdo Jing Wang Mohammad Faisal Ahammad Musa Mangena Petra Molthan-Hill Salama Hasen Shish Malde Sue Alcock Thao Ngoc Nguyen Tom Spencer Zhao Huang Jing Chen Stewart Smyth Jia Liu Diane Jamieson Chaudhry Ghafran Richard Taffler Abeer Hassan Nottingham Trent University Nottingham Trent University Nottingham Trent University Nottingham Trent University Nottingham Trent University Nottingham Trent University Nottingham Trent University Nottingham Trent University Nottingham Trent University Nottingham Trent University Nottingham Trent University Nottingham, University of Queen’s University Belfast Salford, University of Sheffield Hallam University Sheffield, University of Warwick Business School West Scotland, University of [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] 4 CONFERENCE PROGRAMME DAY 1: MONDAY, 9 SEPTEMBER 2013 Time 9:00 – 09:45 Event/Session Registration and coffee/tea Room 9:45 – 10:00 Welcome and introductions: Professor Musa Mangena Bowden Conference opening: Dr Stephanie Walker, Associate Dean (Research), College of Business, Law and Social Sciences (BLSS) 10:00 – 11:30 Session: Financial Accounting Bowden Chair: Prof Andy Stark A Preliminary Investigation of the Role of IFRS 6 in Harmonising Accounting for the Extractive Industries, by Hafez Abdo and Theresa Dunne Fair value accounting, statutory audit and global financial crisis - an empirical analysis by Kamil Omoteso and Umar Aziz The Information Content of Interim Management Statements, by Sheehan Rahman, Thomas Schleicher and Martin Walker Session: Management Accounting Kilpin Chair: Prof Jim Haslam Customer profitability analysis in support of strategic decisions by Graham Simons Pitcher Exploring the literature on Cost Accounting Systems (CAS) within the changing dynamics of organisations in a Sri Lankan (Developing Country) context, by Nagirikandalage, P and Binsardi, A The impact of participative budgeting on subordinates’ performance-the Nigerian experience, by Babatunde Gbade Adeyeye, Olatunde Julius Otusanya and Olayinka Marte Uadiale Session: Corporate Social Responsibility Lecture Theatre 1 Chair: Dr Don Harradine The integration of stakeholders’ interactions in corporate social responsibility disclosure practice: Customers’ Perspective by Audrey Boyd and Abeer Hassan Corporate social responsibility and competitive advantage for UK apparel companies by Juh Yan Tan and Mei Yu Risk management and organisational stakeholders by Shishir Malde 5 11:30 – 12:00 Coffee/tea Break 12:00 – 13:00 Keynote Speaker (Professor Andy Stark) Bowden ‘Accounting Numbers, Market Values and Stock Market Returns— Implications for Accounting Research’ Chair: Dr Jia Liu 13:00 – 14:00 Lunch Old Library 14:00 – 15:30 Session: Critical Accounting Bowden Chair: Prof Richard Taffler An analytical framework of corporate narrative reporting research by Doris Merkl Davies and Niamh Brennan Accounting as differentiated universal for emancipatory praxis: accounting delineation and mobilisation for emancipation(s) recognising democracy and difference by Sonja Gallhofer, Jim Haslam and Akira Yonekura Understanding the nature and assessing the impact of institutional logic on the CIR practices adopted by Egyptian listed companies by Iman M Arafa and Omneya Abdelsalam Session: Corporate Reporting Kilpin Chair: Dr Agyenim Boateng Which XBRL Implementation? by Hermann Rapp Format of intellectual capital disclosure and their relations with market factors by Jing Li and Musa Mangena Session: Public services Lecture Theatre 1 Chair: Shish Malde 15:30 – 16:00 Tax credits: How does the HMRC affect the financial hardship of claimants? By Sarah Closs-Stacey Cooperatives or public services? Social housing and accountability by Stewart Smyth Corporate and operational strategy, resource allocation and the interface with performance management systems in the UK university sector, by Carl Bridge Coffee/tea Break 6 16:00 – 17:30 Session: Corporate Social Responsibility Bowden Chair: Prof Sonja Gallhofer Substantive management or green wash - Environmental reporting following a public controversy with a stakeholder by Doris MerklDavies and Sherie Ann Harding Sustainable development disclosure by Egyptian Listed companies by Atef Mohamed Ahmed CSR, CFP and Investment ranking - A fair reflection on value? By Elaine Conway Session: Corporate Governance Kilpin Chair: Dr Chris Kelsall The impact of audit committee characteristics on Non-audit service fees: An empirical analysis of large UK companies by Chaudhry Ghafran 17:30 – 18.15 The effect of corporate governance on bank financial performance: Evidence from the Middle East by Ehab K. A. Mohamed , Mohamed A. Basuony and Ahmed M. Al-Baidhani Executive compensation and Performance: An Examination of the UK Nonprofit Organisations by Girlie Ndoro, Agyenim Boateng and Musa Mangena Round table discussion on the BAFA strategic plan Bowden Chair: Dr Jia Liu 18:15 – 18:30 BAFA Northern Area Group Annual General Meeting Bowden Chair: Dr Jia Liu IPSG Open Executive Committee Meeting Kilpin Chair: Stewart Smyth 19:30 – 23:00 Conference Dinner Old Chemistry Theatre 7 DAY 2: TUESDAY, 10 SEPTEMBER 2013 9:30 – 11:00 Session: Corporate Governance Bowden Chair: Prof Andy Stark The Impact of Severe Loss Events on Board Quality by Mark Mulcahy Sustainable reporting and the role of corporate governance by Chris Kelsall Corporate governance and bidder returns: Evidence from China’s domestic mergers and acquisitions by Christopher Muganhu and Jia Liu Session: Auditing Kilpin Chair: Dr Graham Pitcher The role of forensic accounting in anti-corruption by Atef Mohamed Ahmed Corruption: Can External Auditors Detect It? By Rasha Kassem Improving audit report information value : evidence from auditor's assessment justification based on the French experience by Odile Barbe and Sophie Raimbault 11:00 – 11:30 Coffee/tea Break 11:30 – 12:30 Keynote Speaker 2: Professor Richard Taffler Bowden ‘Interdisciplinary research in finance: Some new perspectives’ Chair: Stewart Smyth 12:30 – 13:30 Lunch 13:30 – 15:00 Session: Corporate disclosure Old Library Bowden Chair: Dr Kamil Omoteso Determinants of attribution statements on corporate financial performance outcomes in the annual report - an empirical analysis of UK listed firms by Florian Meier and Musa Mangena Compliance with International Best Practices in Emerging Stock Exchanges- The Case of Egypt and Jordan by Marwa Hassaan Corporate governance and greenhouse gases voluntary disclosures in united kingdom: a mixed-method approach by Lyton Chithambo and Ven Tauringana 8 Session: Banking and finance Kilpin Chair: Dr Hafez Abdo Efficiency in the banking sector of a developing country by Roman Matousek, Thao Ngoc Nguyen and Chris Stewart 15:00 – 15:15 The Life Cycle of IPO firms in China by Dairui Li and Jia Liu Ownership Concentration and Regulatory Capital Adequacy: Implications to Bank Risk Taking by Heba Abou El Sood End of conference (Coffee/tea) 9 ABSTRACTS The abstracts are given in presentation order. A Preliminary Investigation of the Role of IFRS 6 in Harmonising Accounting for the Extractive Industries Hafez Abdo (Nottingham Business School) and Theresa Dunne (University of Dundee) Abstract The extractive industry is characterised as a sizable, capital intensive, profitable industry, however, it lacks a direct cost-revenue relationship. Investments in this industry go through four distinct stages: (i) acquisition; (ii) exploration and evaluation; (iii) development; and (iv) production; and the time lag between the initial investment and cash flow collection could be 15 years or more. Accounting for extractive industries has historically been practiced by one of two methods: successful efforts (SE) or full cost (FC) method. The choice of method adopted leads to different accounting figures; the main dilemma relates to determining “when is a cost an asset and when it is an expense” (Luther, 1996: 70). Whilst the SE method capitalises only the costs that lead to successful discoveries and expenses all other costs, the FC method capitalises every cost incurred by an entity in searching for minerals. This difference in the treatment of the costs, which could be billions of dollars, leads to different accounting figures being disclosed in the income statement and the balance sheet of a reporting entity. The significant effects of the uncertainty associated with exploration for mineral resources on smaller companies lead them to use FC (Malmquist, 1990), while larger and more profitable companies tend to use SE. However, the use of two methods makes it difficult for stakeholders to make like with like comparisons for decision making purposes. Therefore efforts have been geared towards harmonising accounting practices for the extractive industries. One of the most sustained efforts culminated in the release IFRS 6: an international financial reporting standard for the extractive industries. This paper, through a preliminary analysis of the accounting policies of a number of oil and gas companies, investigates the role of IFRS 6 in harmonising accounting practices by extractive industries. This paper will build on previous research and investigate the usefulness of IFRS 6 in bridging the differences between the accounting treatment of exploration and evaluation costs under the successful efforts and full costing methods of accounting. 10 Fair Value Accounting, Statutory Audits and the Global Financial Crisis: An Empirical Analysis Umar-Farook Aziz and Kamil Omoteso Abstract This paper primarily examines the role of the Fair Value Accounting (FVA) and the statutory audit function in the current global financial crisis (GFC) with a view to strengthening the financial reporting system in preventing a future GFC. The perceptions of accountants, auditors and accounting academics on role of FVA in the GFC and the measures that were most likely to enhance the audit function. These views were gathered through semistructured online and postal questionnaires. Based on the theory of inspired confidence, the findings from the survey suggested that auditors were not a significant contributor to the current GFC even though they should have taken greater care in auditing high risk financial institutions. This conclusion was reinforced by the results of the financial statement analysis of ten US and UK-based financial institutions through the Altman's Z-scores and the Ohlson's Logit bankruptcy models. The study’s result does not show FVA to be a primary cause of the current GFC as it considered to be superior to the historic cost model. FVA was, however, considered to have made the auditor's job more difficult when verifying asset valuations. In addition, factors relating to accounting curriculum, expansion of the auditor's role, frequent meetings between regulators and auditors, mandatory rotation and knowledge required from other disciplines were identified as the most important factors in enhancing the statutory audit function that will restore stakeholders’ confidence and minimise the risk of a future GFC. Keywords: Fair Value Accounting, Auditing, Global Financial Crisis 11 The Information Content of Interim Management Statements Sheehan Rahman, Thomas Schleicher, and Martin Walker* Abstract We contribute to the current EU debate about mandatory versus voluntary quarterly reporting. We make this contribution by empirically examining a key argument made by the proponents of a voluntary quarterly reporting regime, namely that interim management statements, IMSs, are unlikely to provide any incremental information to equity investors and hence should be made voluntary. The empirical analysis proceeds in two stages. In the first stage we follow Beaver (1968) and calculate price variability and trading activity on the IMS publication day and test whether these metrics are significantly greater than comparable metrics from a non-report period. In the second stage we follow Beaver et al. (1980) and examine, through a reverse regression of earnings on returns, whether IMS publication day returns are informative of same-year earnings changes. Our empirical findings provide strong evidence of abnormal price and abnormal trading activity on the IMS publication date. Our results also indicate that this price activity is highly predictive of impending annual earnings changes. These findings are inconsistent with the argument that IMSs are unlikely to contain value-relevant information and are unlikely to be informative of future firm fundamentals. Keywords: EU Transparency Directive, Interim Management Statement, Kay Report, Share returns, Share trading volumes. 12 Customer profitability analysis in support of strategic decisions Dr Graham Simons Pitcher (Nottingham Trent University, Nottingham Business School) [email protected] Purpose The purpose of the paper is to explore the extent to which the management accounting technique of customer profitability analysis can be utilised to support strategic decision making within organisations. Method The analysis is based on participative observations supported by key informant interviews within four separate organisations. The use of multiple case studies enables a range of customer relationships to be explored. Findings A variety of measures are used in practice to ascertain the relative profitability of customers. There is evidence that customer profitability analysis supports strategic decisions. There is a strong link to marketing strategy and customer development and as a consequence customer profitability analysis can provide insight into resource allocation and long term planning. Limitations The four cases selected were based on existing contacts of the author and were selected because of the knowledge of their use of customer profitability analysis. Practical implications The findings highlight areas where customer profitability analysis can provide valuable insight. However, the development of customer profitability analysis as a regular reporting tool has implications for the design of management information systems to ensure that it can be undertaken cost effectively. Originality The use of multiple case studies covering a range of customer relationships indicates the variety of analysis that can be deployed to support strategic decision making. Key words: Customer profitability analysis, strategic decision making, customer relationships Classification: Case study 13 Exploring the literature on Cost Accounting Systems (CAS) within the changing dynamics of organisations in a Sri Lankan (Developing Country) context Nagirikandalage, P and Binsardi, A (Business School, Glyndwr University, Wales ) Email for correspondence: [email protected] or [email protected] Abstract A cost accounting system (CAS) can be simply defined as one designed for accountants to assist them make decisions and implement financial planning and control, which includes, among others, input measurement, inventory valuation, cost accumulation and others. Theoretical and empirical literature reveals that different internal and external factors influence the demand for CAS. For example, some studies have adopted a contingency approach to suggest that CAS depends on the implementation aspects where the external environment interacts with the organisational structure, technology, and decision making styles. Conversely, some other studies have adopted an institutional approach to show that the implementation of CAS as a social and institutional practice is influenced by organisational changes. The main purpose of this paper is to identify theoretically the determinants of CAS and explore the role of CAS within the changing dynamics of an organisation, especially in a Sri Lankan (developing country) context. Hence, this research aims to look at the theoretical perspectives on the application of CAS from the approaches of both contingency and institutional theory. The proposed methodology for the research is to carry out a systematic review of relevant literature and provide critical analysis. In this way, it should be possible to understand CAS from various theoretical approaches as well as from empirical evidence from some developed and developing countries. This research is intended fill the gap in the CAS literature in a Sri Lankan context since much of the research undertaken has focused on developed countries. Key words: Cost accounting systems, Systematic review, Contingency theory, Institutional approach 14 THE IMPACT OF PARTICIPATIVE BUDGETING ON SUBORDINATES’ PERFORMANCE – THE NIGERIAN EXPERIENCE BABATUNDE GBADE ADEYEYE1 OLATUNDE JULIUS OTUSANYA2 OLAYINKA MARTE UADIALE3 UNIVERSITY OF LAGOS, NIGERIA ABSTRACT There have been a lot of unofficial and unwritten conflicting remarks by both the Supervisors and their Subordinates with respect to participation in the budgetary process in Nigeria. While some subordinates claim that their superiors do not allow them any opportunity to make their own contributions to the preparation and implementation of the budgets, some managers claim that their subordinates are not willing to make meaningful contributions to the budgetary process because of what they termed “the fear of unknown”. They claim that usually, subordinates are afraid to accept responsibilities for fear of the budget not been successfully implemented. If these claims by the supervisors and their subordinates are not properly addressed and proffer proper solutions to, preparation and implementation of budgets may suffer a serious set back in many organisations in Nigeria, possibly with adverse effect on Nigeria’s economy. This study therefore sets out to investigate the budgetary process in Nigeria with a view to determining whether or not these remarks have inhibiting tendencies on top management with respect to allowing Subordinate managers to participate in the budgetary process and its implementation; and on Subordinate managers’ readiness and willingness to honestly participate in the budgetary process and its implementation. Specifically, the study seeks to determine whether or not top management should give their Subordinate managers the opportunity to participate in the preparation of budgets; and whether or not this will lead to improved performance of the budget by the Subordinate managers who are to ensure the success of budget performance in organisations. The study used primary source of data collection through the aid of structured questionnaire to seek the opinion of respondents. The respondents are those involved in the budgetary process in some randomly selected companies in Lagos-State of Nigeria. The results of the study suggest that allowing Subordinate managers to participate in the budgetary process significantly influence their performance positively. The study therefore, suggests some recommendations, which if accepted and implemented, could enhance the performance of Subordinate managers in Nigeria. Keywords: Budgeting, Participation, Subordinates, Motivation, Performance. 15 The integration of Stakeholders’ interactions in Corporate Social Responsibility disclosure practice: customers’ perspective Audrey Boyd and Abeer Hassan (University of the West of Scotland) Abstract Previous literature concerning stakeholder engagement is split into two groups. The first group has focused on stakeholders’ engagement from companies’ perspective, looking at how the strategic management of companies can be influenced by stakeholders’ involvement (Ditlev-Simonsen and Midttun, 2011; Gallego-Alvarez et.al., 2009; Roberts 1992; Ullman, 1985; Freeman, 1984). The second group has focused on stakeholders’ engagement from stakeholders’ perspective (Bhattacharya, et al., 2009). However, there is very little research into the effectiveness of stakeholder engagement from both stakeholders’ and companies’ perspective. This study will cover this gap by investigating stakeholders’ engagement from both companies and stakeholders’ point of view, with the focus on customers as one of the main stakeholders. Therefore, the broad aim of this study is to assess the extent to which companies are utilising the benefits of customer engagement. To achieve the main aim, key sub-aims are to establish if companies that disclose on customer engagement are (1) more likely to be pro-active in their approach to corporate social responsibility (CSR), (2) Can successfully influence their customers’ attitude to CSR, (3) Can successfully influence their customers’ behaviour and effectively involve their customers in their CSR. To achieve the aims, the study adopted two-stage methodology. In the first stage, the researchers examined only 60 (out of the UK FTSE top 100) UK companies’ reports that classified as Business to customer (B2C), in order to conclude if companies that disclose on customer engagement are more likely to be ‘pro-active companies’. In the second stage and in order to analyse the effects of customer engagement, from the customers’ perspective, a survey is conducted with 160 customers from the well known brands from different sectors to find out if customers’ engagement results in pro-active customers. The initial results from the 60 UK companies revealed that companies that engage with their customers are more likely to be pro-active; compared with companies that do not disclose on customer engagement. Analysis of the survey results show that customer engagement does not play a role in influencing customers’ CSR behaviour. Further analysis was conducted to investigate customers’ level of pro-activity, and the main influencing factor was found to be age; mature respondents are more likely to participate in pro-active CSR behaviours. It was concluded that there is a communication problem when companies engage with their customers in relation to CSR. Companies are not communicating effectively and thus customers are unaware of their motives or they are sceptical. Therefore, companies are not fully utilising the benefits of customer engagement. In conclusion, this study proposes that effective customer engagement can provide benefits for companies, customers and society at large. Effective customer engagement has the potential to maximise the efficiency of companies’ CSR activities through increased customer participation; thus encouraging customers to become ‘pro-active.’ 16 Corporate social responsibility and competitive advantage for UK apparel companies Juh Yan Tan1 Birmingham City University Mei Yu2 Birmingham City University ABSTRACT Purpose: This paper aims to identify the link between corporate social responsibility (CSR) and a company’s competitive advantage. Design/methodology/approach: Firstly, 21 companies that have market presence in the UK are analysed to differentiate their responsive and strategic CSR practices. Secondly, the study uses a questionnaire to investigate consumer awareness of CSR, and the buying preferences of consumers in the UK relating to CSR. Findings: The companies analysed are found to reap sustainable benefits by pursuing strategic CSR practices. Most of the consumer respondents have a basic understanding of the term CSR, and CSR is ranked as the lowest priority purchasing decision when faced with other factors by majority of respondents. The low level awareness of CSR activities by customers is a key obstacle to companies reaping maximum strategic rewards for their CSR efforts. Practical implications: The paper provides recommendations on how companies can align their CSR initiatives with their strategies to gain competitive advantage. Companies should communicate good CSR practices to the public. In addition, consumer awareness may increase when companies engage their customers in their CSR practices. This can be used as an opportunity for smaller enterprises or new entrants to compete with the market leaders. Originality/Value: Through both the company and customer studies the gap is identified. This paper provides some insight for UK apparel companies to engage their customers to reap strategic rewards for their CSR efforts. Keywords Corporate social responsibility, competitive advantage, United Kingdom Paper type Research paper 1 Juh Yan, Tan, Birmingham City University, Birmingham B42 2SU, U.K. Email: [email protected] 2 Corresponding author: Dr Mei Yu, Birmingham City University, Birmingham B42 2SU, U.K. Email: [email protected] 17 Risk management and organisational stakeholders Shishir Malde (Nottingham Business School, Nottingham Trent University) Abstract The prima facie rationale for the management of risk in the fields of economics and finance suggests that such activity does not create or enhance corporate value (Smithson, 1998). Yet there is a plethora of literature, mainly from practitioner-based books and articles, on how business and financial risk may be managed. Furthermore, empirical investigation suggests that corporations engage in significant risk management and risk reduction activity (Mallin et al, 2001), often going significantly beyond legislative or regulatory requirements. This paper starts by explaining the reasons behind the initial rationale, and then explores the empirical and theoretical literature, which considers why corporations engage in risk management activity despite the initial argument that it is value-neutral. Finally, the paper justifies the need for alternative empirical studies which consider stakeholders and corporate risk management and thereby to contribute to the existing knowledge in these areas. 18 An analytical framework of corporate narrative reporting research Doris M. Merkl Davies (Bangor University) Niamh M. Brennan (University College Dublin) We provide an analytical framework for conceptualising the theoretical orientation of corporate narrative reporting research. Our taxonomy constitutes a heuristic device for viewing differences between different research perspectives on corporate narrative reporting. The taxonomy is based on a 2x2 matrix scheme which focuses on two implicit a priori knowledge-constituting assumptions underlying researchers’ beliefs on the object of research, namely (i) order (agency vs. structure) and (ii) action (rational vs. nonrational). The four orientations identified are agency-rational (e.g., agency theory, attribution theory), agency-non-rational (e.g., Weick’s theory of sense-making), structure-rational (e.g., critical theory), and structure-nonrational (e.g., legitimacy theory, institutional theory). Each orientation is reflected in the metaphor of the organizational actor engaged incorporate narrative reporting, namely (1) the economic (homo economicus), (2) the constructionist (homo fabulans), (3) the critical (homo publicus), and (4) the social (homo socialis). These orientations constitute endpoints to continua on which corporate narrative reporting research occupies a particular position somewhere between the extremes. We advocate the use of theoretical perspectives which overcome the dualisms inherent in the framework, as these result in partial understandings of corporate narrative reporting. Keywords: Agency, Structure, Taxonomy, Corporate narrative reporting. 19 ACCOUNTING AS DIFFERENTIATED UNIVERSAL FOR EMANCIPATORY PRAXIS: ACCOUNTING DELINEATION AND MOBILISATION FOR EMANCIPATION(S) RECOGNISING DEMOCRACY AND DIFFERENCE Sonja Gallhofer (University of Glasgow)* Jim Haslam (Newcastle University) Akira Yonekura (Heriot-Watt University) ABSTRACT We seek to add to efforts to treat the relationship between accounting, democracy and emancipation more seriously, giving recognition to difference in this context. We note the significance of accounting’s delineation in impacting upon the emancipatory potential of accounting including vis-à-vis envisaged developments for democracy. We elaborate a way forward in respect of accounting’s delineation – a pragmatic differentiated universalism. Informed by this insight, we construct a vision or framing of accounting mobilisation for emancipatory praxis that takes democracy and difference seriously. Accountings that are part of a differentiated universal are envisaged here as the targets of and reflections of emancipatory praxis. We put forward our vision or framing as a contribution that we hope stimulates further discussion. *Author for correspondence 20 Understanding the nature and assessing the impact of institutional logic on The CIR practices adopted by Egyptian listed companies Iman M Arafa (Cairo University-Egypt) and Omneya Abdelsalam (Aston Business School) Abstract: Since the nineties of the last century, an extensive research has been conducted to investigate the corporate disclosure practices over the Internet. These practices have been commonly known as Corporate Internet reporting (CIR). The research in this domain has mostly pursued to identify the different types of disclosed information over the Internet and measures the extent of these practices by a number of companies operating in either a single country or within a group of countries. In reality, the corporate online information presents one part of an entire CIR system. This unitary analysis which is largely followed by prior research provides insufficient information of other elements constructing the CIR system such as the undertaken procedures, involved participants and more importantly the logics imposed by the institutional environment. Thus, understanding these constructs is not only essential to gain more knowledge about the entire CIR system, but also to provide further insights into the logic governing such practices. Most of CIR research on the developing countries has implicitly conceived that CIR practices are subject to a similar logic as the one embraced in the developed countries ,yet this is not necessary the case in some developing countries. For instance, the CIR research on the developed countries reveals that the logic underpinning the adoption of CIR practices is constantly developing, largely driven by efficiency and pursues to advance the communication with current and potential investors. However, social, culture, professional and legal pressures tend to impose more impact on the CIR practices instead. Thus, studying the CIR practices through the institutional lances along with the systems approach would provoke new findings related to the impediments hindering the progress and/or the diffusion of the CIR practices, specifically in the developing countries. The findings may be of an interest to both; practitioners and academics. Therefore, the current research explores the nature of the implicit institutional logic or logics that compete on institutionalizing the CIR practices in the Egyptian companies. The research was implemented at two consecutive stages. The first stage encompasses several semistructured interviews with seven of actively trading listed Egyptian companies during the period (June- December 2009). These companies possessed a website containing some provision of corporate information at that time. They also represent different cases from different industries. The interviews focused on understanding the perceptions, attitudes and role of the involved or related individuals to identify the embraced logic. At the second stage, 115 active websites of Egyptian listed companies were captured and analysed during December 2010- February2011. The researchers utilized the disclosure index designed by Abdelsalam et al. (2007) after adaptation to investigate how the identified institutional logic may dictate the types of corporate disclosures and quality attributes of the contained information. Keywords: Institutional theory, Corporate Internet Reporting, Institutional logic. 21 Which XBRL implementation? Dr Hermann Rapp Anglia Ruskin University Email: [email protected] ABSTRACT Purpose – This study focuses on different ways in which XBRL-based reporting of corporate financial data is implemented in various national jurisdictions. In particular, the implementation of the UK and Germany are analyzed with regards to the development process of the underlying taxonomy and whether information flows are kept confidential. This paper argues that taxonomy openness and free information flow are critical factors enabling an innovative and highly adaptive environment which better allows for full exploitation of the strengths of interactive data. Design/methodology/approach – Using a mixed methods approach results of existing empirical research are complemented by interviews with leading industry specialists, software vendors, auditors and corporate decision makers. The research design is using a comparative case study methodology (Yin 2003). Findings – Overall, results indicate that awareness for the impact and potential of machine readable and interactive data and its application in the area of accounting and finance is only emerging. Currently, XBRL implementation in the UK and Germany is pushed by regulators and data are not freely available. However, the sustainability of XBRL implementations and the realization of its potential in accounting and finance will be decided by its acceptance and use in organisations and financial markets. Key aspects are found to be the underlying concept of the semantic web, its suitability for current business models, the availability of web services technologies based on XML and the attitude of actors. Originality/value – These results suggest that interdisciplinary research efforts are needed to better understand the impact and potential of XBRL implementation for data governance and data management. To advance further theory and practice of data governance, it is recommended that the business side consisting of value and process flow perspectives and the technology perspective mostly concerned with execution issues should be reflected by interdisciplinary research to achieve synergies between these different perspectives. Keywords Information systems and accounting, XBRL (eXtensible Business Reporting Language), Corporate financial reporting, environmental and social aspects of accounting, business and shareholder value, Corporate financing and investment decisions, capital markets, interactive data, business intelligence and decision making Paper type Conference paper 22 Format of Intellectual Capital Disclosure and Their Relations with Market Factors Jing Li (School of Management, University of Bradford) Musa Mangena (Nottingham Trent University) Abstract With the calls for information on intellectual capital (IC), an increasing number of studies have employed content analysis to analyse the state of IC disclosure practice of firms. However, the presentational format of IC disclosure is yet to be examined in the literature. In addition, while there is an increasing number of studies exploring factors affecting IC disclosure, particularly corporate governance mechanisms, there is little evidence on the impact of market factors (such as the market-to-book ratio and share price volatility) on IC disclosure. Therefore, this study uses content analysis to examine the level of IC disclosure provided in the annual reports of 100 LSE listed UK firms from the perspective of presentational format, i.e. in text, numbers and graphs/pictures. IC disclosure by format is measured by a 61-ICitem research instrument. The study also examines the relations between market factors of market-to-book ratio and share price volatility, and IC disclosure indexes for each of the three presentational formats, controlling for corporate governance variables and company characteristics. We find that text is the most commonly used format for IC disclosure, whilst IC disclosures in graph/picture form are still at a rudimentary stage. It is also found that factors that affect IC disclosure in text and numerical forms are broadly similar, i.e. they both are significantly associated with market-to-book ratio, corporate governance variables of board independence and audit committee size, and firm size. In addition, frequency of audit committee meetings and share concentration are significantly associated with IC disclosure in numerical form, whilst listing age is marginally related to IC disclosure in text. On the other hand, graphs/pictures in the communication of IC information are primarily used by large firms and firms with more volatile share prices, and are less likely to be used by firms with greater board independence. Our findings suggest that the underlying factors that drive various formats of IC disclosure are different, with market factors playing an important role. The low level of IC information in graphs/pictures identified in this study may suggest that greater attention is needed from regulatory bodies on the role of graphs and pictures in annual reports. 23 Tax credits: How does the HMRC affect the financial hardship of claimants? Sara Closs-Stacey: PhD Proposal Abstract Purpose This is a multidisciplinary study of how the tax credit system works in practice. It seeks to understand the causes for why the tax credit system seems not to be able to achieve its main aims to alleviate financial hardship, but rather, seems to create or enhance financial hardship for claimants. This study focuses on the processes and practices that take place when the HMRC and tax credit claimant interact with one another, so that failures are illuminated, and prevented for the design of future welfare programs. This study combines public administration and accounting theories as well as quantitative and qualitative methods to examine the social, cognitive, and emotional practices of those involved in the UK tax credit system. Design/methodology/approach In order to address the main research question, this study will comprise of three main areas which are examined in the form of three interrelated papers: The first paper examines the effects of the tax credit system on tax claimants. It establishes the nature, existence, depth, degree and extent of the problem, using a combination of secondary qualitative and quantitative data. Tax credit claimant testimonials and government records are analysed using critical discourse analysis based on an abductive approach. Statistical data held by the HMRC database are analysed to explore particular trends of interest and the degree of the problem. The second paper examines the underlying reasons for the effects found in the first paper. For this purpose, it explores the micro-practices of, and encounters between, tax credit officials and claimants. This is based on ethnographic fieldwork of the everyday practices of tax credit officers, claimants and professionals. Primary data is collected through observations and interviews and are analysed using narrative and critical discourse analysis based on an inductive approach. The third paper explores ways of reducing the effects found and explored in the first and second papers. It illuminates the problems within the current tax credit system and explores how current practices, including the tax credit program, can be changed and improved. It draws its data from a constant and systematic process stemming from the data and conclusions found in research questions one and two. Research implications This study provides much-needed insights into the everyday practice of tax credits. As the complexity of this problem invites a multi-disciplinary approach, this study is likely to make theoretical and methodological contributions to existing public administration and accounting literature. Practical and social implications The insights provided by this study are of relevance to academics, practitioners (tax accountants), tax credit claimants, and policy makers. It provides an impetus for the 24 government to make changes to the tax credit system and empowers tax credit claimants to engage in political action. Originality/value Combining the use of various data sources and methodologies, this study provides unique and in-depth insights into the processes through which societal issues, identities and actual governing takes place within the tax credit system and how they impact on claimants’ lives. Keywords Tax credits, Practices, Ethnography, Critical Discourse Analysis. 25 Cooperatives or public services? Social housing and accountability Stewart Smyth (Queen’s University Management School, Belfast) Abstract Purpose – The paper illustrates and discusses the changing nature of accountability relations in the context public services that are transferred to a cooperative. The discussion raises questions about whether cooperatives can deliver the promised increased participation and/or renewal of democratic accountability. Design/methodology/approach – The empirical evidence is based on a case study into the changing accountability relations in social housing in Britain, using a critical realist and dialogical influenced analysis. Findings – The transfer process leading to the formation of the housing community mutual and the experience of its initial operation illustrate tensions between concepts of democratic accountability, increased accountability towards private finance providers and neoliberal forms of governance. The paper highlights the use of public finance to secure the transfer to the community mutual in preference to direct funding of council housing. Research limitations/implications – The paper is based on a single case study; however, the case study findings correspond to existing literature critical of the council housing transfer process. Originality/value – The paper deepens the debate about the role of cooperatives in the context of extending and renewing democratic accountability. Keywords: Accountability, governance, neoliberalism, cooperatives, social housing. 26 Corporate and operational strategy, resource allocation and the interface with performance management systems in the UK University sector. Carl Bridge – Senior Lecturer University of Bolton, Accounting and Law Department Deane Road, Bolton, BL3 5AB [email protected] Abstract The UK University sector in England is currently going through significant change and turbulence brought about by the Government’s recent decision to save circa 1.3 billion from University Funding and replace this with ‘top-up fees’ where Universities are now able to charge students up to a maximum of £9,000 for undergraduate courses, alongside the Government opening up the sector to private college providers. This paper is a developmental analysis of the writer’s on-going PhD Thesis which is looking at eight significantly different universities and how they are meeting the challenges of taking the whole academic body on to the next phase of their University’s journey, where the skill set, mix and working requirements may be very different from those set in the past. The aims and objectives of the research are to critically review the development of theories and frameworks of strategic planning, performance management control systems and resource allocation models, with specific reference to HEIs and their need to adapt to the ‘ever changing’ market place, establishing through empirical study, whether a link exists between strategic planning, operational performance management systems and resource allocation decisions. 27 Substantive management or greenwash? Environmental reporting following a public controversy with a stakeholder Sherie A. Harding, Doris M. Merkl-Davies, and Annika Beelitz S.A. Harding Llandrillo College, Llandudno, UK e-mail: [email protected] D.M. Merkl-Davies Bangor Business School, Bangor University, UK e-mail: [email protected] A.Beelitz Bangor Business School, Bangor University, UK e-mail: [email protected] ii Abstract We examine whether firms addressed stakeholder demands following a public controversy with an NGO over shortcomings in environmental performance (substantive management) or whether they merely created the impression of change (greenwash). The prior literature has predominantly focused on short-term organisational responses to legitimacy threats focusing on superficial change in the form of normalising accounts (e.g., denials, apologies, excuses) andstrategic restructuring (e.g., creating monitors and watchdogs and executive replacement). However, in order to determine whether NGOs serve as change agents of corporate behaviour, it is necessary to focus on organisational responses to stakeholder demands adopting a longer-term focus and involving more substantial changes in the form of strategy and its impact on observable outcomes. Strategy constitutes the implementation of policies and plans aimed at achieving specific goals which address stakeholder demands. Change in outcomes entails improved organisational performance.For this purpose, we examine the annual reports and CSR reports of three international sportswear firms after they were targeted by Greenpeace in its ‘Detox’ campaign over water pollution in their supply chain in China. In particular, we investigate whether the firms addressed Greenpeace’s demands to eliminate hazardous chemicals from their supply chain by changing their environmental policies and performance. We find a predominance of strategies aimed at merely creating an impression of change. This highlights the danger of firms co-opting NGOs for publicity purposes by superficially aligning themselves with their campaigns. Keywords: Environmental reporting, greenwash, water pollution, Greenpeace, change. 28 Sustainable Development Disclosure by Egyptian Listed Companies Atef Mohamed Ahmed (Beni-Suef University, Egypt) Abstract: Purpose: this study aims to explore sustainable development disclosure through analysis the contents of sustainable development reports for registered Egyptian companies. Design/methodology/approach: this study applied on a sample of Egyptian companies which covered three sectors: (Banking, Telecommunication, and Real Estate sector).The researcher used the content analysis technique to analysis 30 annual reports. The researcher used some of the statistical techniques to test the hypotheses validity which are analysis the contents of annual reports in the light of Global Reporting Initiatives (GRI). Findings: the main findings refer that the sustainable development (SD) disclosure were used as a part in the annual reports inside registered Egyptian companies not as a standalone reports for sustainable development. Also, the researcher concludes that the (SD) disclosure for Egyptian companies does not fulfill the (GRI) requirements.Moreover, the researcher observed that almost all companies disclosed most of their sustainable development information on their annual reports under section titled: corporate social responsibility (CSR), not in separate reports for sustainable development. The most disclosed sustainable development information was related to the following areas: community development, employee satisfaction, environmental awareness, outstanding customer experience, meeting shareholder expectations, and community health. Also, the study concludes that the companies’ commitment with sustainable development disclosure was voluntary and not mandatory. So, the researcher advises policy makers to develop more restricted: institutional laws, accounting and auditing standards, ethical rules that encourage companies to adopt sustainable development reports as a standalone reports to cope with the GIR requirements. Originality/value: prior studies on sustainable development (SD) disclosure used a questionnaire survey approach to measure levels of sustainable development disclosure by Egyptian companies in their annual reports. This paper adds to the existing literature in sustainable development issue by using the results of the content analysis technique for annual reports inside Egyptian companies to explore the levels of SD disclosure by Egyptian companies. Since prior studies has concentrated on developed counties, I am strongly believe that the current paper contributes to the existing literature in sustainable development topic, as I am the first researcher to examine this topic in Egypt as an example of a developing country. The current study applied on a sample of Egyptian companies which covered three sectors. The researcher used the content analysis approach to analysis the annual reports across a period of time lengthy from (2007 -2012). Due to these limitations, a future research is needed to explore the motivations which encourage companies toward a disclosure of sustainable development. As well as, to discover the barriers of disclosure which related to sustainable development inside Egyptian companies in different sectors? Keywords: Sustainable Development Disclosure (SDD), Corporate Social Responsibility (CSR), Contents Analysis (CA), Global Reporting Initiatives (GRI), Egypt. 29 CSR, CFP and investment ranking – a fair reflection on value? E. Conway University of Derby, UK* Nottingham Trent University, UK [email protected] Purpose This paper aims to set out and critically review the current thinking on the relationship between corporate social responsibility (CSR) reporting and corporate financial performance (CFP). It focuses on large corporate reporting and also reviews ranking methodologies used to identify investment targets based on their CSR performance. This review will form the basis of further research into the use of a ranking methodology for evaluating CFP in small and medium sized businesses (SMEs). Design/methodology/approach An extensive review of literature discussing CSR and CFP will be undertaken, including a review of research around the ranking methodologies commonly employed by some companies to attract the ‘ethical’ investor on the basis of their CSR performance. Findings In general, the literature appears to support the view that well documented and reported CSR leads to better CFP than those companies who do not publicly engage in CSR. However, the nature of CSR reporting and therefore the variables used in ranking methodologies are principally focussed on delivering value to their shareholders, so much of the current research is centred on large, publicly quoted companies. Given that most employment around the world is generated from the SME business sector, less research has been directed at developing methodologies to support better CSR and hence CFP in these businesses. Originality/value This paper gathers all current thinking on the CSR/CFP debate, and in particular the use of ranking methodologies to drive investment decisions. It is of use to all academics and practitioners involved in CSR. 30 THE IMPACT OF AUDIT COMMITTEE CHARACTERISTICS ON NON-AUDIT SERVICES FEES: AN EMPIRICAL ANALYSIS OF LARGE UK COMPANIES Chaudhry Ghafran (The School of Management, University of Sheffield) The past two decades have witnessed a renewed focus on the governance of companies, motivated largely by a number of high-profile corporate failures, many subsequently found to possess either weak or non-existent governance structures. The almost universal response has been the introduction of stronger governance recommendations in the hope that these changes will serve both to prevent unacceptable behaviour and increase the external transparency of what companies do and how they do it. Ever since the initial recommendations of Cadbury (1992), audit committees have been identified as a potentially powerful source of improvement in corporate governance. Cadbury (1992) argued that appropriately structured audit committees have the potential to improve both the quality of companies’ financial reporting as well as ensuring the independence of the statutory external audit. This study investigates the impact of a range of audit committee characteristics on non-audit services purchased by FTSE-350 companies between 2007 and 2010. In developing the hypotheses, this study draws on both the established literature on the determinants of non audit services fees as well as the emerging literature on the impact of audit committees on non audit fees. In addition, this study links the analysis to current governance regulation which contains significant detail regarding the desired characteristics for audit committee effectiveness. This study investigates the impact of a variety of measures of audit committee size, independence, diligence and expertise on the level of audit fees paid by companies in our sample. Furthermore, this paper develops a number of composite measures of audit committee effectiveness and investigates whether they influence the purchase of non audit services fee decisions. The empirical analysis shows that audit committee members' financial expertise has a negative and significant impact on the nonaudit fee ratio, suggesting a strong support of members with financial expertise on issues relating to auditor independence. The study also documents that audit committee members serving longer on the boards do not prefer to purchase high amount of non-audit services from the incumbent auditor. This study also records a significant positive impact of the holding of additional directorships on the provision of non-audit fee ratio, thus signifying a profound support for the busyness hypothesis which argues that overstretched directors are not very good monitors of financial reporting quality. This paper adds contemporary evidence to the established general literature on the determinants of non-audit fees as well as making a specific contribution to the emerging literature on the impact of governance, especially audit committee governance, on non-audit fees (e.g. Abbott et al., 2003b; Mitra and Hossain (2007); and Zaman et al., 2011). Furthermore, by undertaking an analysis of companies over the period 2007-10 this study investigates these issues in a more contemporary setting than any prior study. These findings will also have policy implications as regulators around the world continue to define and refine the desired characteristics and behaviour of audit committees. Therefore, the findings of this study will ensure future policy changes regarding audit committees are adequately informed. 31 The Effect of Corporate Governance on Bank Financial Performance: Evidence from the Middle East Ehab K. A. Mohamed3, Mohamed A Basuony4, Ahmed M. Al-Baidhani Abstract Purpose - This paper investigates the effect of internal corporate mechanisms and control variables, such as bank size and bank age on bank financial performance. Design/methodology/approach - The sample of this study comprises of both conventional and Islamic banks operating in Yemen and the six Gulf Cooperation Council (GCC) countries, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates. Regression analysis (OLS) is used to test the effect of corporate governance mechanisms on bank financial performance. Findings – The results of this study reveal that there is a significant relationship between corporate governance and bank profitability. Board size, board activism, number of outside directors, and bank age significantly affect TobinQ. While, ROA and PM are affected by ownership concentration, audit committee, audit committee meetings, and the age & size of the bank. The results are consistent with previous literature that the correlation between corporate governance and firm performance is still not clearly established and that impact of corporate governance on bank financial performance in developing countries is still relatively limited. Practical implications - Emerging economies are likely to require more effective and stronger governance mechanisms than their western developed counterparts if they are to become equal, full, and active participants in the global financial marketplace. Originality/value – To the authors’ best knowledge, this is the first study that examines corporate governance and performance in Yemen and all the GCC countries’ banks. Keywords: board structure, ownership structure, audit committee, corporate governance mechanisms, bank performance, GCC, Yemen. Paper type: Research paper 3 Corresponding author; Faculty of Management Technology, German University in Cairo, New Cairo, Cairo, Egypt, Tel +202 27590764, Fax +202 27581041, Email: [email protected] 4 Corresponding author; School of Business, American University in Cairo, New Cairo, Cairo, Egypt, Tel +202 26153254, Fax +202 27923847, Email: [email protected] 32 Executive compensation and Performance: An Examination of the UK Nonprofit Organisations Girlie Ndoro*, Agyenim Boateng** & Musa Mangena*** *Nottingham University Business School, University of Nottingham, UK **Huddersfield University Business School ***Nottingham Trent University Abstract There has been extensive research on the determinants of CEO compensation in the context of profit-making organisations yet we see relative very little research on this subject on not-for profit making organisations. This study considers the determinants of executive compensation via a cross-sectional survey based on a sample of 105 UK non-profit organisations. Our findings indicate that organisational size, CEOs qualification and sector operation have a bearing on executive pay. However, the results suggest that CEO experience and tenure have no impact and significantly negative relation with CEO pay. Moreover, performance as measured by the level of fund raising and cost efficiencies appear not to be influencing factors on executive compensation. 33 Room for Improvement: The Impact of Bad Losses on Board Quality Mark Mulcahy Abstract This paper studies the relationship between reporting a loss and changes in board quality. Specifically, this paper considers the impact of the severity of the initial loss (measured as the relative size of the loss as well as the market’s interpretation of the loss) on board quality (measured as the percentage of non-executive and independent directors on the board). Previous literature has examined, inter alia, the magnitude of earnings restatements, the merit of lawsuits and the type of SEC enforcement action as examples of conditioned crisis events that induce corporate governance to change. The study uses three years of governance information spanning the report of an initial loss for companies listed on the UK stock exchange. An industry and size matched control sample is used in a difference-indifference analysis to isolate the impact of the loss from underlying changes in board quality during the period. The findings in this study indicate that a severe initial loss precipitates an improvement in board quality and that this improvement mainly occurs begins before the loss is actually reported. Address for Correspondence: Mark Mulcahy, Accounting and Finance, University College Cork, Cork, Ireland email: [email protected] phone: + 353 21 4903212 34 Sustainable reporting and the role of corporate governance. Chris Kelsall (UCLan) Abstract: This research explores how the accounting community – in the form of the professional bodies (ICAEW and ACCA) and the big four firms (Deloitte; Ernst and Young; KPMG and PwC) currently present sustainability and sustainable reporting. Part of the reason for exploring this extant way of demonstrating a firms sustainability credentials (and also the services these firms offer) is to bring in the notion of a more praxis based sustainability approach, with some commonalities to corporate governance. This would develop a more vibrant, real time and two-way communication process. The final suggested alternative approaches for organisational sustainability engagement allows this work to start to draw some tentative linkages with the two concepts – sustainability and corporate governance. Keywords: sustainable reporting; corporate governance; communication; stakeholder engagement Contact Details: Chris Kelsall UCLan, Greenbank Building Preston PR1 2HE e-mail: cakelsall:uclan.ac.uk ; Telephone: (01772) 894548 Note: This is a working paper and should not be quoted without the author’s consent. 35 Corporate governance and bidder returns: Evidence from China’s domestic mergers and acquisitions Christopher Muganhu and Jia Liu (University of Salford) Abstract This study examines how corporate governance influences short-term and long-term bidder returns from China’s domestic mergers and acquisitions during 2001-2010. We examine a range of corporate governance measures covering ownership structure, board structure, insider ownership and managerial incentives while controlling for bidder and deal characteristics. Our initial results from events analyses show that market responses differ in ways which suggest a difference in how the market’s assessment of share price from the perspectives of short run and long run. Bidders obtain significant positive abnormal returns over the five-day event period but suffer significant wealth losses for two years following the deal completion. Our further analyses on factors driving the price difference show that executive ownership (positive) and state ownership (negative) exert opposite effects on the announcement period returns. The returns further differ by way of payments with positive (negative) effects from stock (cash) financing. Our long-term regression analyses show that the positive impact of executive ownership remains. Independent directors record a negative effect on abnormal returns. Nevertheless, board independence measured by the composite corporate governance index exerts a significant, positive effect on shareholder wealth. Our study highlights the need for the state to accelerate the share structure reform and formulate policies that encourage executive ownership and sound corporate governance. Keywords: M&As, bidder abnormal returns, corporate governance, China. 36 The Role of Forensic Accounting in Anti- Corruption Atef Mohamed Ahmed (Beni-Suef University Egypt) Abstract: Purpose: this study aims to explore the role of forensic accounting in develop skills, knowledge, and abilities of accounting graduates which enable them to deal with the financial and managerial corruption cases in order to prevent, discover ,and disclose all the corruption cases discovered. Design/methodology/approach: this study applied on a sample of accounting students and academics inside Egyptian universities, financial statements' prepares inside Egyptian companies which covered many sectors (Banking, Telecommunication , and Real Estate sector) , and external auditors as professionals. The researcher used a questionnaire survey sent to participants who were asked to explore their opinion about the role of forensic accounting in Anti- corruption. Findings: the main results refer that the financial and managerial corruption techniques were used inside Egyptian companies. Also, these techniques were the main reason behind the corruption cases. In addition, the researcher concludes that the forensic accounting mechanisms have a positive impact on develop skills, knowledge, and abilities of accounting graduates which enable them to deal with the corruption cases. So, the negative impact of corruption techniques on corruption cases has been decreased. As well as, accounting scandals will be minimized. Originality/value: Prior studies on forensic accounting were conducted in developed countries to explore the role of forensic accounting in Anti- financial and managerial corruption. To the best of the researcher knowledge there is no studies examined this issue in Egypt as a developing country. As a result, this article adds to the existing literature by using the results of a questionnaire survey distributed to academics, financial statements' prepares, and external auditors. Since, prior studies has focused on developed counties, the researcher strongly believe that the current study contributes to the existing literature in forensic accounting issue, as I am the first researcher to examine this issue in Egypt as an example of a developing country. The current study applied on a sample of accounting students and academics inside Egyptian universities, financial statements' prepares inside Egyptian companies which covered three sectors, and external auditors as professionals. The researcher used a questionnaire survey distributed to participants. Due to these limitations, a future research is needed to explore the motivations which encourage Egyptian universities toward adopt forensic accounting tools to design and develop accounting curriculum to cope with the great demand on accounting graduates who have experience in forensic accounting. As well as, to explore the role of forensic accounting in Anti- corruption in different sample (different Egyptian universities and different sectors). Keywords: Financial and Managerial Corruption, Unethical and abused Techniques for Financial and Managerial Corruption, Forensic Accounting (FA), Egypt. 37 Corruption: Can External Auditors Detect it? Rasha Kassem (University of Northampton) and Andrew Higson (Loughborough University) Purpose: The current study aims at expanding researchers’ and external auditors’ knowledge about corruption and the role of external auditors in combating it, as well as providing external auditors with a framework that might help them properly assess and respond to risks arising from corruption. Design/methodology/approach: The proposed framework is based on perceptions of external auditors working in audit firms and offices in Egypt. Data was collected using a questionnaire and semi-structured interviews. Findings: The outcome of the current study is a framework including types of corruption, a list of red flags of corruption ranked in order of their relative significance based on respondents’ perceptions, and suggested audit procedures to help external auditors respond to the heightened corruption risk factors Originality value: The current study expands researchers and external auditors’ knowledge about a type of occupational fraud that has been rarely investigated and is the first to examine areas related to corruption, i.e. external auditors’ role in detecting corruption, that have never been examined before in either prior literature or the Egyptian context. The current study is also the first to propose a framework that might help external auditors properly assess and respond to risk factors arising from corruption. Hence, the current study has both theoretical and practical implications Keywords: Occupational fraud; corruption; Egypt; fraud professional audit standards; external auditors; internal fraud; detecting corruption; fraud risk assessment; red flags of corruption; audit procedures Article Classification: Research paper 38 IMPROVING AUDIT REPORT INFORMATION VALUE: EVIDENCE FROM AUDITOR'S ASSESSMENT JUSTIFICATION BASED ON THE FRENCH EXPERIENCE Odile Barbe and Sophie Raimbault ESC Dijon Bourgogne - 29 rue Sambin - 21000 Dijon - France ABSTRACT Questions about the informational value of the auditor's report have been asked since the beginning of the 20th Century. The recent financial crisis has raised questions about the reliability and transparency of financial information and the usefulness of the auditor’s report. Prior academic and professional research highlights the information gap defined by IAASB (2011) as a gap between the information users need to make informed investment and fiduciary decisions and what is available to them through the entity's audited financial statements or other publicly available information. The audit report is one of the main outputs available to stakeholders and consequently there is a need for this traditional pass/fail audit report to adapt to present realities. The demand of users for additional information may be emphasized by the global complex business environment and the continuously more demanding financial reporting requirements. In this context, the MARC report (2011) proposes a framework for an extended audit reporting model with additional disclosures. The IAASB (2012) has asked for comments on whether the auditing reporting model established in France that requires auditors to include a separate section referred to as a ‘justification of assessments’ in their audit report is useful. This paper analyses the ‘justification of the auditor's assessment’ in the French audit report in order to determine its information value through a qualitative analysis. The paper uses a grounded theory approach and the framework on information quality attributes developed by Huang et al. to analyse the content of the ‘justification of assessments’ in 2011 audit reports of the French companies listed on the CAC 40 index. It considers whether they achieve the attributes of information quality identified by Huang et al. as the qualitative characteristics of relevance, accuracy, and understandability. The findings of the paper suggest that the ‘justification of assessments’ can meet these attributes and increase the informational value of the audit report by taking into account some adjusting provisions. This separate section in the audit report helps improve understanding and assist in interpretation of financial information by identifying critical issues in the financial statements. It can enhance the accuracy of information in two different ways. Firstly the auditor's assessment should give quantitative data on each issue and not only refer to the information disclosed in the notes. Secondly, the description of audit procedures should be more specific, especially those related to judgments made in preparing the financial statements, and avoid 3 technical language. Finally, this separate section can increase understandability if each assessment is disclosed separately in clear language using well defined terms. Our results emphasize the need to define a framework for audit quality which includes the objective of the audit report and its qualitative characteristics. Key words: audit report – information gap – audit procedures 39 DETERMINANTS OF ATTRIBUTION STATEMENT PROVISION ON CORPORATE FINANCIAL PERFORMANCE OUTCOMES IN THE ANNUAL REPORT Florian Meier (Coventry University) and Musa Mangena (Nottingham Trent University) Abstract This paper explores the determinants of causal attribution statements on performance outcomes given in annual reports of UK listed firms. It analyses how corporate governance factors and firm-specific characteristics influence the extent of attribution statement provision. Using data drawn from a sample of 142 UK firms listed on the London Stock Exchange for the year 2006, the results from regression analysis show that, in terms of corporate governance factors, the proportion of non-executive directors shows a positive association with the extent of attribution statements in the narrative sections of the annual report, whereas audit committee size shows a negative association. This suggests that corporate governance mechanisms influence attribution statement disclosure. Furthermore, certain firm-specific factors (profitability, new share issue) show a negative association with the extent of attribution statements. The results of this paper have important implications for policy makers and standard setters as they can provide feedback to policy makers about the effectiveness of corporate governance mechanisms and for improving disclosure in view of current regulations. The results can also inform discussions by standard setters and regulators about the adequacy of current regulations regarding performance explanations. Keywords: Attribution Statements, Corporate Governance, Disclosure, Management Commentary 40 Compliance with International Best Practices in Emerging Stock Exchanges- The Case of Egypt and Jordan Marwa Hassaan (Mansoura University Mansoura, Egypt) [email protected] Abstract This study examines the influence of board characteristics and ownership structure on the levels of compliance with IFRSs disclosure requirements by companies listed on the stock exchanges of two leading Middle East and North Africa (MENA) exchanges, Egypt and Jordan. A cross-sectional analysis of a sample of nonfinancial companies listed on the two stock exchanges for the fiscal year 2007 is employed. Univariate and multivariate regression analyses are used to estimate the relationships proposed in the hypotheses. An innovative theoretical foundation is deployed, in which compliance is interpretable through the Institutional Isomorphism Theory (IIT). The study extends the financial reporting literature, cross-national comparative financial disclosure literature, and the emerging markets disclosure literature by carrying out one of the first comparative studies of the above mentioned stock exchanges. Results provide evidence of a lack of de facto compliance (i.e., actual compliance) with IFRSs disclosure requirements in the scrutinised countries. The impact of corporate governance mechanisms for best practice on enhancing the extent of compliance with mandatory IFRSs is absent in the stock exchanges in question. The limited impact of corporate governance best practice is mainly attributed to the novelty of corporate governance in the region; a finding which lends support to the applicability of the proposed theoretical foundation to the MENA context. Keywords-MENA, Egypt, Jordan, IFRSs, BOD Characteristics, Ownership Structure, EGX, ASE, IIT 41 CORPORATE GOVERNANCE AND GREENHOUSE GASES VOLUNTARY DISCLOSURES IN UNITED KINGDOM: A MIXED-METHOD APPROACH Lyton Chithambo and Venancio Tauringana Abstract The study investigates the determinants of greenhouse gases voluntary disclosures by UK listed companies using a mixed-method approach. Specifically, we surveyed FTSE 350 senior company executives to determine whether they perceive company specific variables (size, profitability, gearing and liquidity) as having an influence in their greenhouse gases voluntary disclosure decisions. We then collected firm specific variables data and quantified greenhouse gases voluntary disclosures by the 40 companies that responded to the questionnaire. The Ordinary Least Squares regression results using secondary data indicate that company size is the only variable that is significantly associated with greenhouse voluntary disclosures. Similarly, the results of questionnaire survey suggest that only company size is perceived as having an influence on the extent of greenhouse gases voluntary disclosures. Our study contributes to extant literature by evaluating evidence of the efficacy of company specific variables greenhouse gases voluntary disclosures using both primary and secondary data. The lack of confirmation regarding the significance of most financial control variables using both secondary and primary data reinforces the need seriously consider the suitability of these variables in environmental and climate change disclosures. Keywords: Company specific, greenhouses gases, voluntary disclosures, mixed-method approach. 42 Efficiency in the banking sector of a developing country Roman Matousek School of Business, Management and Economics, Sussex University Thao Ngoc Nguyen5 Nottingham Business School, Nottingham Trent University Chris Stewart School of Economics, History and Politics, Kingston University Abstract To understand the degree of efficiency of the Vietnamese banking system from 1999 to 2009 we apply an innovative approach, introduced by Simar and Wilson (2007). We include a greater number of environmental covariates into the estimation which have not been employed in previous studies of Vietnam. This is also the first time efficiency scores are calculated for sub-samples based upon asset size and bank type. We find that there is a decline in bank efficiency between 2001 and 2002 (after the 11th September 2001 terror attacks on the US), and between 2007 and 2008 (the start of the global financial crisis). 5 Corresponding author: Thao Ngoc Nguyen, Nottingham Business School, Nottingham Trent University, Burton street, Nottingham NG1 4BU, Email: [email protected] or [email protected], Direct Line: +44 (0) 11 5848 3878. 43 The Life Cycle of IPO firms in China Dairui Li and Jia Liu Abstract We examine what factors determine the firm’s post-IPO transition into one of the states: healthy state, acquisition due to weak or strong performance, or delisting outright. Using logistic regressions, we find that delisting is predominantly influenced by issue-specific information, by the issuer’s financial status leading up to the eventual outcome, and by corporate ownership and governance structure. Acquisitions due to week or strong performance differ most significantly according to industry features, state ownership, agency costs, and the extent of board independence. Centrally we find that the trajectory in their aftermarket is shaped by corporate ownership and governance considerations. We conclude that the life cycle of IPO firms in China is mixed consequences of market selection and government control. JEL classification: G30; G32; G33; G34 Keywords: Initial Public Offerings; Firm Performance; Delisting; M&As; Corporate Ownership and Governance 44 Ownership Structure and Regulatory Capital Adequacy: Implications to Bank Risk Taking Heba Abou El Sood (Cairo University) Abstract This paper is motivated by recent corporate governance failures and policy discussions on the role of ownership structure in limiting bank risk taking at times of economic turmoil. Using a sample of U.S. bank holding companies, I investigate the influence of concentrated ownership on risk-taking behavior during the period 2002-2012. Results show that concentrated shareholders push banks towards less risky investments with respect to total assets, loans and off-balance-sheet items. Moreover, the larger is the regulatory capital ratio, the more blockholders advocate for risky positions. The regulatory capital adequacy effect is more pronounced for well-capitalized bank holding companies than for poorly capitalized bank holding companies. Finally, results show that blockholders, of banks with larger regulatory capital ratios, push for less risky positions during the financial crisis period of 2007-2009 relative to the pre-crisis boom of 2002-2006. Key words: Ownership structure, regulatory capital adequacy, risk taking, bank holding companies JEL Classification: G01 G21 G28 G30 G32 M41 THE END 45
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