Generational Characteristics and Their Impact on Preference for Management Control Systems

Research indicates that different macro‐socialisation results in systematic differences in generational characteristics, which may in turn result in different generational workplace preferences for management control systems (MCS). An exploratory study was undertaken of three generations (Baby Boomers, Generation X and Generation Y) and their MCS preferences in a large Australian professional services firm. The results found that each generation exhibited different characteristics and these differences are linked to specific generational MCS preferences for goal setting, performance evaluation, administrative controls and incentives. These findings have implications for MCS design that attracts, motivates and retains employees, improves organisational performance, and manages intergenerational conflict.     

Emerging themes in banking: Recent literature and directions for future research

This paper presents a review of the recent banking literature centred on the core themes of performance, risk and governance of financial institutions. We write this review against the backdrop of the recent financial crisis and the major changes it caused to banking sectors in many countries. Several themes emerge, but the overarching issue relates to the need to better understand bank risk-taking incentives and the implications for systemic stability. Specifically, there is a need for more work on: the role of safety net subsidies and how these relate to systemic risk; financial innovation and the adoption of new products and processes; and how innovative behaviour links to risk-taking, market returns and contagion. Future research could also be directed to provide a better understanding of the inter-connections between competition, capital, profitability, liquidity and risk.     

Investor behaviour in response to Australia’s capital gains tax

We calibrate the effect of Australia’s Capital Gains Tax (CGT) on share prices and market activity. Based on a large sample drawn from all listed Australian companies for the years 1994–2007, we find significant tax‐loss selling (TLS) of shares that lost value over the financial year, which is reflected in unusually high trading volume and more sell orders in June and a rebound in July. There is some evidence that small mining stocks are particular targets for TLS. Interestingly, the 1999 CGT reforms, which introduced concessions for long‐term capital gains, did not reduce the incidence of TLS.     

The impact of banking sector reform in a transition economy: Evidence from Kyrgyzstan

We examine the impact of financial sector reform on interest rate levels and spreads using Kyrgyz bank-level data from 1998 to 2005. We find that, in addition to macroeconomic stabilization, structural reforms to the banking sector significantly contributed to lower interest rates. In particular, our results suggest that foreign bank entry and regulatory efforts to increase average bank size were important in reducing deposit rates. In contrast, we find little evidence that banking sector reform or macroeconomic stabilization has impacted interest rate spreads.     

Why has the investment-cash flow sensitivity declined so sharply? Rising R&D and equity market developments

The study of the investment-cash flow (ICF) sensitivity constitutes one of the largest literatures in corporate finance, yet little is known about changes in the ICF relationship over time, and the literature has largely ignored how rising R&D investment and developments in equity markets have impacted ICF sensitivity estimates. We show that for the time period 1970–2006, the ICF sensitivity: (i) largely disappears for physical investment, (ii) remains comparatively strong for R&D, and (iii) declines, but does not disappear, for total investment. We argue that these findings can largely be explained by the changing composition of investment and the rising importance of public equity as a source of funds, particularly for firms with persistent negative cash flows.     

Rethinking models of technology adoption for Internet banking: The role of website features

Research on the adoption of information technology, drawing on models borrowed from social psychology, typically views adoption as a function of individual attitudes, the influence of others, perception of ability to perform a particular behaviour, and facilitating factors. A significant limitation of these models, in technology-adoption situations, is failure to consider the features of the technology itself. This essentially theoretical paper introduces the construct ‘website features’ as potentially influential in technology adoption, and specifically Internet banking. Research evidence on the salience of such features is reviewed, and it is argued that the effective features and their impacts differ along the stages of the customer purchase process. A theoretical framework is developed for evaluating website design in relation to these stages. Incorporating this construct into existing models, it is argued, will advance marketing theory in an online environment and assist website designers in enhancing website effectiveness to the benefit of the business–customer relationship.     

Team earnings forecasting

While brokerage houses use both teams of sell-side analysts and individual analysts to conduct earnings research, there is no empirical research examining whether teams and individuals differ with regard to their forecasting performance or purpose. We first examine the most-often researched dimension of forecasting performance, earnings forecast accuracy, and show that teams are less accurate than individual analysts in general and their own individual team members in particular. We conjecture that teams focus their efforts on an alternative dimension of forecasting performance, timeliness, and show that team forecasts are timelier than those of individual analysts in general and their own individual team members in particular. Consistent with the notion that teams trade-off forecast accuracy for timeliness to comply with a market research demand, we show that team forecast revisions are associated with larger market responses than those of individuals. Finally, we illuminate the nature of team assignments by documenting that the firms that teams follow are in greater financial distress and larger in size.     

The effect of earnings surprises on information asymmetry

We examine the effect of earnings surprises on changes in information asymmetry. We hypothesize and find that asymmetry is lower (higher) in the quarter following positive (negative) earnings surprises compared to firms that meet the consensus analyst earnings forecast. The relations between earnings surprises and information asymmetry are stronger when the surprises are more likely to capture investors’ attention. Examining the source of these changes, we show that decreased information search activities is the most important factor for asymmetry declining after positive surprises; for negative surprises, decreased uninformed trading plays a dominant role increasing asymmetry.     

Media image of the CEO and the impact on auditors' perception of financial reporting reliability and client risk assessments

Regulators and legislators have recently adopted new governance reforms in an attempt to encourage more normative behavior by those in charge of organizations. It should not be surprising, therefore, that the image of the CEO projected by the media has become increasingly salient to decision makers. Still, the impact of CEO image on stakeholders' perceptions and subsequent behavior has received little attention by accounting researchers. In response to this void, we examine the relationship between two important environmental cues: CEO's image as presented in the media and earnings consistency. Our interest is the degree to which these variables influence auditors' perception of the ethics of corporate management, as well as their assessments of the risk of fraudulent financial statements. We document that auditor perceptions are influenced by positive media cues as well as negative cues. These results are inconsistent with auditors exercising professional skepticism which implies no reliance on positive cues, especially “managed media cues”. These results suggest that auditors, similar to others, are not immune to positive media cues about the CEO. This study contributes to the research literature examining factors that affect the perceived reliability of financial information by considering the effect of non-financial information—CEO image.     

On farmland prices and rents in Japan

Historically, the Japanese farmland market has been strongly regulated, although fundamental changes in policy were introduced in 1967 and 1980. This article examines the relationship between farmland prices and rents in Japan for 1955–2000 using the cointegration procedure of Johansen et al. (2000) , which admits structural breaks. Results show the presence of a cointegrating relationship with a significant break in 1980. There is Granger‐causality from prices to rents, which suggests that rents are determined within an institutional setting according to farmland prices. The rent–price elasticity is unity, which supports the notion of efficiency in the farmland market.