The effect of organizational structure on efficiency: Evidence from the Spanish insurance industry

This paper provides new information on the effects of organizational structure on efficiency by analyzing Spanish stock and mutual insurers over the period 1989–1997. We test the efficient structure hypothesis, which predicts that the market will sort organizational forms into market segments where they have comparative advantages, and the expense preference hypothesis, which predicts that mutuals will be less efficient than stocks. Technical, cost, and revenue frontiers are estimated using data envelopment analysis. The results indicate that stocks and mutuals are operating on separate production, cost, and revenue frontiers and thus represent distinct technologies. In cost and revenue efficiency, stocks of all sizes dominate mutuals in the production of stock output vectors, and smaller mutuals dominate stocks in the production of mutual output vectors. Larger mutuals are neither dominated by nor dominant over stocks in the cost and revenue comparisons. Thus, large mutuals appear to be vulnerable to competition from stock insurers in Spain. Overall, the results are consistent with the efficient structure hypothesis but are generally not consistent with the expense preference hypothesis.     

Fee pressure and the longitudinal dynamics of audit engagement budgeting and reporting

Using longitudinal data from an international accounting firm, this paper investigates how budgeted and reported audit hours change in response to prior budget variances, fee pressure, and budget pressure imposed by audit firm management. This investigation is motivated by concern regarding the association between these factors and quality-reducing audit behaviors. The results for audit firm management budgeting show that budgets increase following unfavorable variances, and that fee pressure does not affect the budgeting process. Regarding engagement team reporting behavior, we find that both prior unfavorable variances and fee pressure are associated with subsequent reduction in reported audit hours. Further, when audit firm management imposes budget pressure on engagement teams, they respond by reducing reported hours. Overall, the results provide evidence on the interplay between audit firm management and engagement teams in responding to prior variances, fee pressure, and budget pressure during the period 2001-2003.     

Re-examination of the effect of ownership structure on financial reporting: Evidence from share pledges in China

In this paper, we present evidence that firms with concentrated ownership manage earnings when their large shareholders have an incentive to do so.The large sha...     

The effect of financial reporting quality on CEO compensation structure: Evidence from accounting comparability

This study examines the effect of accounting comparability on the design of CEO compensation structure. After controlling for firm-specific attributes, we find that accounting comparability is positively associated with CEO equity-based compensation intensity and pay-performance sensitivity. This suggests that the improved comparability increases the usefulness of equity-based compensation and a firm is willing to offer more equity-based compensation contracts to CEOs and increase their pay-performance sensitivity. Further, we find that the impact of comparability on the CEO’s compensation contract increases with information asymmetry, which is consistent with the notion that accounting comparability is a quality of financial reporting that facilitates the use of equity-based compensation in a poor information environment. Our analysis also reveals that the effect of accounting comparability on CEO compensation structure is greater when a firm’s corporate governance is strong, consistent with the complementary relation between comparability and the exiting corporate governance in determining CEO compensation schemes. Overall, our evidence suggests that firms utilize more equity-based compensation as a proportion of total compensation under greater accounting comparability and enhance the alignment between equity-based compensation and firm performance.     

The effect of tax revenue budgeting errors on fiscal balance: evidence from the Swiss cantons

This study is an empirical analysis of the impact of direct tax revenue budgeting errors on fiscal deficits. Using panel data from 26 Swiss cantons between 1980 and 2002, we estimate a single equation model on the fiscal balance, as well as a simultaneous equation model on revenue and expenditure. We use new data on budgeted and actual tax revenue to show that underestimating tax revenue significantly reduces fiscal deficits. Furthermore, we show that this effect is channeled through decreased expenditure. The effects of over and underestimation turn out to be symmetric.     

Technology driven organizational structure of the firm

We model a corporate firm with a variable internal organizational structure that adapts to various degrees of technological cooperation. The entrepreneur determines the organizational structure that maximizes profits under participation constraints. Wages are determined by an internal cooperative pay-system, constrained by external reservation wages. We show that closer cooperation between production-workers results in a shorter organization with enhanced positional wages relative to the external benchmarks. The corporate firm is embedded in a competitive market economy that determines reservation wages and market prices. We also allow for more general technologies and provide conditions guaranteeing a finite optimal size of the firm. We thank Rob Gilles, Dolf Talman and an anonymous referee for their comments on a previous version of this paper.     

Network vs integrated organizational structure of cooperative banks: Evidence on the Italian reform

We empirically investigate the impact of the regulatory change from a network organizational structure to an integrated one on scale economies, scope economies, and market power in cooperative banks. We exploit the passage of the Italian cooperative bank reform in 2016. Using a difference-in-differences identification strategy, we examine a treated group of 424 cooperative banks and a matched control group of 192 commercial banks over the period 2009–2019. Our findings indicate that cost scale and scope economies of cooperative banks are positively affected by the reform, while their profit scale and scope economies are not affected. Lastly, the Lerner Index is positively affected by the reform. Overall, the reform enhances cooperative banks' ability to exploit advantages related to a larger size and diversification.     

The spillover effect of shareholder activism: Evidence on firm reporting

This study examines the spillover effect of shareholder activism against target firms on financial reporting by non-target firms in portfolios held by the same activist shareholders. We find that firms that are not the target of institutional shareholders’ activism campaigns report more positive abnormal accruals. Cross-sectional tests indicate that the effect is more pronounced i) for firms that have more opportunities to engage in upward earnings management, or for firms with less effective alternative monitoring forces, and ii) when investors are more sensitive to good news. We also find that the effect is stronger when activist shareholders are more experienced, are waging more confrontational campaigns against target firms, and have larger holdings in non-target firms. We further find that non-target firms tend to report lower magnitude of asset write-downs, are more likely to restate financial statements and meet or beat earnings benchmarks, and exhibit a more optimistic tone in their 10-K/10-Q filings. Overall, our findings suggest that firms tend to window-dress their mandatory reporting to preempt possible shareholder activism against them.     

矩阵式组织结构管理模式探索

20世纪50年代,伴随着组织的发展壮大,在美国开始出现了一种新型组织结构形式——矩阵式组织结构。该组织结构于20世纪60至70年代在一些大型著名企业中应用成功,并受到管理学界的追捧。矩阵式组织结构不仅具有灵活调配资源、信息传递路径短、     

Making charity effectiveness transparent: Building a stakeholder‐focussed framework of reporting

Effectiveness in achieving mission is fundamental to evaluating charity performance, and is of central concern to stakeholders who fund, regulate and otherwise engage with such organisations. Exploring the meaning of transparency in the context of stakeholder engagement, and utilising previous research and authoritative sector discussion, this paper develops a novel framework of transparent, stakeholder‐focussed effectiveness reporting. It is contended that such reporting can assist the charity sector in discharging accountability, gaining legitimacy and in sharpening mission‐centred managerial decision making. Then applying this to UK charities’ publicly available communications, it highlights significant challenges and weaknesses in current effectiveness reporting.     

The effect of participative budgeting on job satisfaction and performance: Role ambiguity as an intervening variable

The results of studies into the effects of participative budgeting have been equivocal. This study seeks to explain the process by which participation in budget setting affects managers' performance and job satisfaction. A model is developed to show how role ambiguity acts as an intervening variable in the link between participation and outcome criteria. Empirical results indicate that budgetary participation acts indirectly, via role ambiguity, to influence job satisfaction and performance.     

Assessing the effectiveness of financial reporting harmonization for emerging market banks: The case of Banco Serfin

In the last decade there has been a proliferation of financial crises in emerging markets. To some extent, the suddenness and magnitude of some of these crises have been blamed on poor financial reporting standards for bank loan losses. As a result, prior to providing countries with “financial bailout” funds, international investors and international financial organizations have increasingly required that countries harmonize their bank financial reporting standards with international financial reporting standards.Given this trend, this case requires students to assess the effectiveness of efforts to harmonize loan financial reporting (with International Financial Reporting Standards) for Mexican banks during (and after) the country’s financial crisis of the late 1990s. Students are required to assess the extent to which both pre-crisis standards as well as new, post-crisis standards complied with international financial reporting standards. They are also required to assess the impact of the new standards on the reporting practices for loans of one particularly troubled financial institution. Through the examination of this institution’s accounting practices for loans, students obtain a familiarity of the shortcomings of emerging markets’ banks’ loan financial reporting as well as the factors which influence the adoption of international financial reporting standards by emerging market banks.     

The effect of personal portfolio reporting on private investors

Information search is costly for private households, especially in relation to their wealth. This paper investigates how retail customers react to free portfolio reporting—and thus reduced search costs—in a unique experimental setting. A large German direct bank sends portfolio reports to 10,000 customers while maintaining a control group of equal size and structure that receives no reports. Analyzing demographics as well as detailed portfolio and trade data, we find that gender, wealth, trade frequency, risk tolerance, and diversification drive the interest in portfolio information. Reading a portfolio report also triggers trading actions; thus, investors seem to appreciate the reduced information costs and act on the information. In addition to contributing to the financial literature on households’ information acquisition, this study derives valuable implications for financial institutions regarding communications and services for their customers.     

The effect of voluntary clawback adoption on non-GAAP reporting

We examine the effect of voluntary adoption of clawback provisions on non-GAAP earnings disclosures. Prior literature documents that voluntary clawback adoption improves financial reporting quality by increasing the costs of misstating GAAP earnings. However, managers may respond to perceptions of reduced discretion over GAAP reporting by increasing their reliance on non-GAAP earnings disclosures. Using a propensity score matched sample, we find that non-GAAP earnings disclosure frequency increases and non-GAAP exclusion quality decreases after clawback adoption, consistent with a more opportunistic use of non-GAAP reporting. Additional cross-sectional tests help support this interpretation.     

The effect of rankings on honesty in budget reporting

We conduct an experiment to investigate the effect of rankings, which are pervasive in practice, on the honesty of managers’ budget reports, which is important for sound decision making in organizations. Participants in our experiment are ranked in one of four ways: (1) firm profit, (2) own compensation, (3) both firm profit and own compensation, and (4) randomly, which serves as our baseline condition. None of the rankings affect participants’ remuneration. Compared to our baseline (random rankings) setting, where participants indeed exhibit honesty concerns, we find that rankings based on firm profit significantly increase honesty and that rankings based on own compensation significantly decrease honesty. Participants who received both rankings were significantly more honest than participants in the own compensation rankings condition. We did not, however, find significant differences in honesty between the both rankings and firm profit rankings conditions. As such, participants in the both rankings condition seemed to focus more on the firm profit metric than on the financially congruent own compensation metric. We also find that our results are stable across periods, suggesting that the effects of rankings neither increased nor dissipated over time. We discuss the contributions of our study and concomitant findings to accounting research and practice.     

The effect of disclosure committees on non-GAAP reporting quality

I examine whether company-implemented disclosure committees help to improve non-GAAP reporting quality. I find that firms with disclosure committees provide higher quality non-GAAP performance metrics and that the exclusions used to calculate their non-GAAP numbers are less persistent for future operating income and operating cash flows. Moreover, I find that firms with disclosure committees are less likely to receive SEC comment letters about non-GAAP disclosure. For firms that receive comment letters about non-GAAP reporting, disclosure committees can help to improve non-GAAP reporting quality. Comparing the influence of audit committees and disclosure committees, I find that audit committee financial experts have stronger monitoring effects than those on disclosure committees. Meanwhile, legal experts on disclosure committees provide similar monitoring compared to audit committees’ financial experts. Finally, the interaction between audit committee financial experts and disclosure committee legal experts produces the strongest effect on non-GAAP reporting quality. In sum, my analyses suggest that disclosure committees can provide important monitoring of non-GAAP reporting.     

The effect of external reporting on managerial decision making: Some antecedent conditions

Behavioral research in accounting has largely been concerned with examining the effects accounting information has on its recipients. One area which has received little attention despite its potential importance, however, concerns the process by which the behavior of the information sender may be influenced by the act of communicating information to recipients. Within this paper, it is hypothesized that the decision impact of the act of communicating information is conditioned by the extent to which information senders perceive external recipients as relying on financial accounting information and by the cognitive style of the information sender. Results obtained from a questionnaire distributed to corporate managers and to independent auditors provide support for accepting both of these hypotheses. Implications for future research are discussed.     

Multinationals do it better: Evidence on the efficiency of corporations' capital budgeting

With U.S. multinational enterprises playing increasingly important roles in the global economy, it is important to understand the efficiency of their capital budgeting decisions. We examine an unbalanced panel of 332 U.S. firms from 1992–2000. Using the deviation of a firm's estimated marginal Tobin's q from a benchmark as an indicator of effective resource allocation, we find that widespread multinationals make more efficient capital budgeting decisions. We also test whether this reflects the MNEs' investment locations, but do not obtain support for the hypotheses that they might be monitored by more agents or more successfully resist pressures from interest groups and governments.     

Discrepancies between the roles of budgeting

Based on a number of recent empirical investigations of budgeting in Sweden, the paper emphasises the importance of considering the different linguistic and expressive components of budgeting in organizations. A number of such expressions of the budgetary role are outlined. Consideration is given to their different organizational contexts and, in an attempt to better appreciate their simultaneous contemporary functioning, their historical development. Both the organizational and research implications of such an expressive analysis of budgeting are emphasised in the conclusion.