Correspondence to what? Coherence to what? What is good scenario-based decision making?

This paper provides a framework for the evaluation of scenario planning and other strategic decision making methods or techniques. If scenario planning is useful, we should be teaching it in schools and we as individuals should be using it to cope with the uncertainty inherent in modern life. A prerequisite to this is the need to identify why, where and how (in what way) scenario planning and other methods or techniques are useful. Here, I review evaluations of scenario planning. Taking a Brunswikian perspective, I highlight the issues that have failed to be addressed in this evaluation. I demonstrate that there are many ways in which scenario planning could be useful other than those that have appeared in previous discussions. These multiple routes are dependent upon the interaction between the individual organisation, the environment in which they are operating and the method being followed.     

The Robustness of the APT to Alternative Estimators

We test the robustness of the APT to two alternative estimation procedures: the Fama and MacBeth (1973) two-step methodology; and the one-step procedure due to Burmeister and McElroy (1988). We find that the APT is indeed sensitive to the chosen estimator and assumptions about the factor structure of stock returns. We believe that our findings have implications for the estimation of asset pricing models in general.     

Managers’ segment disclosure choices under IFRS 8: EU evidence

We examine the impact of proprietary and agency cost motives on segment disclosure quality and quantity and how the adoption of the principle IFRS 8 affects this impact. By using hand-collected data, our results show that proprietary and agency costs play a relevant role in determining the quality and quantity of segment disclosure. We find that proprietary costs are a particularly relevant reason for providing lower segment disclosure quality post-IFRS 8. Our results also suggest that firms’ segment disclosure choice is dependent on disclosure dimension. These results contribute to the ongoing debate regarding IFRS 8 and have valuable implications for accounting regulators.     

Measuring rural consumers’ willingness to pay for quality labels using experimental auctions: the case of aflatoxin‐free maize in Kenya

Aflatoxins are a common health hazard in tropical countries, especially in rural areas. New methods to reduce aflatoxin levels in food staples, as well as cheaper test methods, are being developed, but consumers’ willingness to pay (WTP) for these improvements is unknown. A survey was conducted with a representative sample of rural consumers (1,344 in total, 63% women) in all major maize‐production zones of Kenya. The survey included an experimental auction with maize products of different qualities. The results showed that many rural consumers were aware of aflatoxins, but few understood their health risks. Respondents were willing to pay a premium for maize tested for aflatoxins and labeled, but asked a high discount for maize that was visibly contaminated with moldy grain. The premium was higher for respondents with education and in regions with aflatoxicosis outbreaks. Knowledge of aflatoxins substantially reduced the overall WTP, but did not increase the WTP for tested maize. Welfare analysis indicates that mandatory testing would result in substantial benefits if the cost of testing can be lowered to below the premium.     

All of work? All of life? Reconceptualising work‐life balance for the 21st century

This paper argues that the study of work‐life balance to date has, in the main, adopted a restricted conception of both “work” and “life”, which does not take account of recent developments in life worlds, working arrangements and employment relationships. “Life” has hitherto been viewed as largely comprising caring activities for dependent children, whereas “work” has been premised largely on a traditional model of work, characterised by full‐time, permanent employment with one employer and a conventional understanding of what work involves. This means that extant research and theory only provides a partial view of the work‐life needs and experiences of the workforce. In the paper, we propose extending conceptions of both work and life to incorporate different life worlds and social groups and different working arrangements and employment relationships.     

Corporate social responsibility in emerging economies: Investigating firm behavior in the Indian context

Scholars have questioned the appropriateness of using a western‐centric framework to investigate corporate social responsibility (CSR) in emerging economies. This study assesses the appropriateness of using such a framework in one emerging economy—India. More specifically, the drivers of CSR and their impact on firm‐level CSR activity in the Indian context are investigated and compared with those in developed economies. Content analysis of 369 CSR policy statements of publicly traded Indian firms revealed the factors that drive CSR activities of Indian firms are similar to those found in developed economies. However, the ways firms respond to the drivers of CSR are surprisingly different in the Indian context, and these differences can be traced to attributes of the Indian socio‐cultural context. Implications and recommendations for future research conducted in India, and in other emerging economies, are offered.     

Accounting Discretion in Goodwill Impairments: UK Evidence

This study examines managers’ use of discretion in determining goodwill impairment losses following the mandatory adoption of IFRS 3 “Business Combinations,” and whether this discretion reflects opportunistic reporting by managers or the provision of their private information. Although IFRS 3 was issued to improve the accounting treatment for goodwill and provide users with more useful and value‐relevant information regarding the underlying economic value of goodwill, it has been criticized on the grounds of the managerial discretion inherent in impairment testing. Therefore, ex‐ante, it is unclear how the impairment‐only approach has affected the reporting of goodwill impairment losses. After controlling for economic factors, empirical results reveal that managers are exercising discretion in the reporting of goodwill impairments following the adoption of IFRS 3. Specifically, goodwill impairments are more likely to be associated with recent CEO changes, income smoothing and “big bath” reporting behaviors. However, the results also indicate that goodwill impairments are strongly associated with effective governance mechanisms suggesting that managers are more likely to be exercising their accounting discretion to convey their private information about the underlying performance of the firm rather than acting opportunistically. These inferences are robust to various modeling specifications and variable definitions, suggesting that IFRS 3 has provided managers with a framework to reliably convey their private information about future cash flows consistent with the IASB's objectives in developing the impairment standard.     

Making Sense of One Dollar CEO Salaries

We examine the determinants and outcomes of Chief Executive Officers (CEOs) accepting a $1 salary, a compensation practice that occurs relatively frequently in high‐profile firms and is debated by regulators, investors, and the media. Using a hand‐collected sample of 93 CEOs from 91 firms between 1993 and 2011, we examine the triggers preceding the $1 salary decision, the factors associated with the decision, subsequent stock returns, and the outcomes for the CEOs. Our evidence is consistent with two explanations for the phenomenon: (i) it is a gesture of sacrifice by CEOs of firms in crisis, and (ii) it is a signal of better future performance by CEOs of growing firms. Our analyses highlight the two different circumstances and shed light on an interesting debate that has thus far been supported only by anecdotal evidence.     

Green decisions: demographics and consumer understanding of environmental labels

This research examined the demographic profiles of Australian green consumers in relation to their satisfaction of environmental labelling. It examined consumers’ understanding of labelling and empirically investigated the association of demographic profile of consumers with their attitudes towards such labels. The results indicated that some of the demographic variables were significant, which is largely consistent with earlier findings by other researchers in this area. Label dissatisfaction was higher in the older and middle age respondents. However, some respondents disagreed that labels were accurate while commenting that labels were easy to understand. The key issue arising from the findings is that in order to provide perception of accuracy in labels, it is an option to use Type I or Type III labelling on products. These labels are, arguably, more credible because they are endorsed by third party labelling experts. This would come at a cost and for green products that use third party labelling, they will also have to bear in mind to keep the prices competitive.     

Creative destruction Zhu Jia Jiao, China

Chinese water towns have experienced tourism investment since the adoption of the Open Door Policy in 1978. These river-based settlements offer an ancient small-town atmosphere, historic architecture, and a diversity of heritage commodities. The implications of this development in one such town, Zhu Jia Jiao, are examined through application of the model of creative destruction. Data collected on investments, tourist numbers, and resident attitudes reveal that this destination is in the model’s second stage of advanced commodification, which may be maintained if limits are placed on arrivals. Findings should be beneficial to other communities which are basing their development on marketing small-town heritage.