Chief Audit Executive as Supervisory Board Member and Executive Compensation Contracts

This paper studies a unique phenomenon in China's corporate governance—that chief audit executives (CAEs) sit on supervisory boards (CAE duality)—and examines its effects on executive compensation contracts. Using a sample of listed firms between 2010 and 2018, we find a significant positive relation between CAE duality and pay-for-performance sensitivity, which suggests that the dual position helps integrate monitoring resources and reduces agency costs. This positive relation is more pronounced when companies face a stricter monitoring environment and in non-state-owned enterprises (non-SOEs) than in SOEs. In addition, we find that the recent reforms on compensation strengthen the role of CAE duality in SOEs. Further analysis identifies the reliability of performance information (i.e., earnings quality) and reduced executive self-interested behaviours (i.e., perquisite consumption) as the influencing mechanisms that increase the demand for performance-based compensation and thus improve pay-for-performance sensitivity.     

Identifying Worldviews on Corporate Sustainability: A Content Analysis of Corporate Sustainability Reports

Companies commonly issue sustainability or corporate social responsibility (CSR) reports. This study seeks to understand worldviews of corporate sustainability, or the corporate message conveyed regarding what sustainability or CSR is and how to enact it. Content analysis of corporate sustainability reports is used to position each company report within stages of corporate sustainability. Results reveal that there are multiple coexisting worldviews of corporate sustainability, but the most dominant worldview is focused on the business case for sustainability, a position anchored in the weak sustainability paradigm. We contend that the business case and weak sustainability advanced in corporate sustainability reports and by the Global Reporting Initiative are poor representations of sustainability. Ecological embeddedness, or a locally responsive strategy that is sensitive to local ecosystems, may hold the key to improved ecological sensemaking, which in turn could lead to more mature levels of corporate sustainability worldviews that support strong sustainability and are rooted in environmental science. This must be supported by government regulation. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

The impacts of value chain upgrading on the export of processed food

Upgrading in global value chains (GVCs) is an important path for developing countries to move along to capture higher benefits. Several qualitative studies of GVCs have identified two main upgrading types: economic (product, process, functional, and inter-sectoral) and social upgrading. The upgrading concept is widespread in productive sectors such as processed food, which has become a key export for developing countries. However, they have confronted multiple product standards required by global buyers. This study uses a case study of Thailand’s processed food exports (TPFEs). Although Thailand is a leading exporter of processed food, the country needs to upgrade in many areas related to production to meet global product standards and requirements. If Thailand fails to comply with global product standards, it will lose its export competitiveness. This study uses a gravity model to evaluate the impact of economic and social upgrading (EUP and SUP) on TPFEs. Our results show that upgrading types are significant in TPFEs, particularly for exports to developed countries. Process upgrading has a negative impact on TPFEs because of increased production costs to comply with product standards. However, process upgrading can lead to increased producers’ and exporters’ knowledge about how to comply with international standards. Consequently, process upgrading exhibits a lagged positive effect on TPFEs.     

Efficiency,economy and effectiveness—but what about ethics? Supreme audit institutions at a critical juncture

Ethics is increasingly recognized as one of several important dimensions of performance. Yet, performance audit, or value-for-money audit, as conducted by supreme audit institutions (SAIs), does not typically include this dimension. Instead, the focus is on the classical ‘three Es’ (efficiency, economy and effectiveness). The reluctance to address issues of ethical misconduct has taken the audit practice of SAIs to a critical juncture, where the legitimacy of these audits ultimately is at stake. This paper explains why SAIs need to add a fourth ‘E’— ethical audit. Possible implications are discussed.     

Flexibility in the gig economy: managing time on three online piecework platforms

Gig economy platforms seem to provide extreme temporal flexibility to workers, giving them full control over how to spend each hour and minute of the day. What constraints do workers face when attempting to exercise this flexibility? We use 30 worker interviews and other data to compare three online piecework platforms with different histories and worker demographics: Mechanical Turk, MobileWorks, and CloudFactory. We find that structural constraints (availability of work and degree of worker dependence on the work) as well as cultural‐cognitive constraints (procrastination and presenteeism) limit worker control over scheduling in practice. The severity of these constraints varies significantly between platforms, the formally freest platform presenting the greatest structural and cultural‐cognitive constraints. We also find that workers have developed informal practices, tools, and communities to address these constraints. We conclude that focusing on outcomes rather than on worker control is a more fruitful way to assess flexible working arrangements.     

Social Capital,Income Diversification and Climate Change Adaptation: Panel Data Evidence from Rural Ethiopia

The choice between specialisation and diversification of income is driven by multiple, interacting factors, such as economies of scale and scope, risk considerations, context, and household characteristics. Using panel data from Ethiopia, we investigate the role of social capital and the covariate risk of climate change and their interaction. We find that households with greater social capital tend to be more specialised, implying that diversification and informal insurance are substitutes in the mitigation of risk. We also find that this effect is significantly weaker in regions more prone to climate change, which is consistent with the average farmer being aware that informal insurance is not an effective protection against risks that affect the entire social network. We use instrumental variable random effects estimation to account for the plausible endogeneity of social capital and we also establish that our results do not depend on the poorest and most constrained individuals in our sample.     

Spatial movement patterns among intra-destinations using social network analysis

To explore popularly visited tourist locations, travel movement patterns, and movement points, this study collected samples of 321 Chinese tourists and 337 Japanese tourists who were visiting major tourist destinations in Seoul and its vicinity in South Korea. Results of analyzing movement patterns showed that Japanese tourists tend to be clustered around popular attractions, whereas Chinese tourists tend to spread over a larger area of attractions. Some specific shopping and amusement attractions were the locations most popularly visited by both groups. The start points and end points in the two groups’ itineraries were dissimilar overall, even though their patterns were similar in regard to major preferred tourist attractions. Thus, the findings of this study have the potential to contribute to understanding spatial mobility in a tourism destination through tracking tourists’ movement patterns.     

Institutional Economics as Theory of Policy Change: Impact of Past Policy Failures on Present Policy

Social scientists have developed several theories for understanding or evaluating policy change over time. Since all costs or benefits are not internalized owing to positive transaction costs, policymaking is always implemented under cost underestimation conditions and, therefore, is imperfect. I call this trait policy failure in this article. Furthermore, I show that a new framework combining the social costs approach and the legal/economic approach in institutional economics is suitable and can be applied to evaluating how past policy failures affect present policy, providing as an example the Fukushima nuclear disaster in Japan.     

‘It’s a Harsh Fact of Life with the RMA’: neo-liberalism and the realities of community sports facility development by the private sector in New Zealand

Despite the importance of facilities as primary sites for delivery of leisure and sport services, there has been a scarcity of academic literature on the provision of community sports facilities and the processes through which they are developed. In particular, this paper provides empirical analysis of leisure facility provision with a focus on practice and experience of policy and planning actors. By employing a case study approach and semi-structured interviews, the study identified a sharp contrast between the discourse of neo-liberalism and the realities of a highly regulated environment for the private sector under a national legislation of New Zealand, namely the Resource Management Act 1991. While both public and private actors recognised benefits of the resource consent process in mitigating the negative environmental impacts and facilitating public input, the findings also revealed its potential impediments to both private and philanthropic developments and their potential resultant benefits to communities and social citizenship due to its costly, restrictive and undifferentiated nature. Consequently, the paper suggests that future research needs to examine empirical evidence of how social citizenship and citizen engagement are enhanced by both public and private sectors through planning and development of community sports facilities and services.     

Winning us with trifles: Adverse selection in the use of philanthropy as insurance

Research Summary: We study the use of corporate philanthropy as a form of reputation insurance, developing a formal model of such insurance to examine how the terms of insurance in equilibrium change under different assumptions about the firm and its stakeholders. We then test the predictions from this model in the U.S. petroleum industry and find that philanthropic donations offer insurance‐like benefits, but are also positively associated with subsequent oil spills—firms that give more, spill more—with this association being stronger for spills that are under firms’ control and in states with low civic capacity. These results are consistent with an adverse selection/moral hazard equilibrium and suggest that the use of philanthropy as reputation insurance may benefit firms at the cost of society. Managerial Summary: Firms that donate to social causes develop a reputation for being socially responsible, and are often given the benefit of doubt when negative information about them comes to light. But are philanthropic firms truly more responsible? We argue that firms that donate more may be more likely to do harm—those that expect to do harm later are likely to give more now, and those that know their reputation protects them may become less careful. Evidence from the U.S. petroleum industry is consistent with this argument, with firms that give more having more subsequent oil spills, but only the type of spills that are under the firm's control, and only in states where the firm faces weaker scrutiny.