Bank lending ‘manias’ in theory and history

A popular view of banking crises sees them as consequences of prior bank lending manias. Such manias are supposed to be especially likely in legally unrestricted banking systems, where banks can issue notes and are not subject to statutory reserve requirements. Here it is argued that the bank lending mania hypothesis (1) exaggerates the role of subjective factors, including bankers' confidence or optimism, as a stimulus to bank lending, and (2) is not supported by evidence from past, legally unrestricted banking systems.     

The consumerism of ‘voice’ in Norwegian health policy and its dynamics in the transformation of health services

The policy of voice consumerism in Norwegian health policy has enabled patients to be involved in discussions about professional practice. Principles of openness have been successfully introduced in services bound by professional autonomy and discretion. This article demonstrates the influence that Norwegian patients and their representatives have been able to have on service provision in brain injury rehabilitation and mental healthcare.     

Striking a balance between ‘Sir’ and ‘Dude’

This postcard reflects on an issue common to many academics, whether they teach accounting, politics or—as in my case—commercial law to business and economics students. Creating an open and effective relationship with students is a balancing act undertaken by educators across the board—and no less by my accounting colleagues down the hall. In teaching commercial law to accounting students, I was recently reminded of the importance and occasional difficulty in maintaining a healthy ‘two-way’ relationship. I trust the following may connect with accounting educators and others who are also trying to achieve the right balance.     

Regulators as ‘agents’: power and personality in risk regulation and a role for agent‐based simulation

We critically examine how evidence and knowledge are brokered between the various actors (agents) in regulatory decisions on risk. Following a précis of context and regulatory process, we explore the role power and personality might play as evidence is synthesised and used to inform risk decisions, providing a review of the relevant literature from applied psychology, agent‐based simulation and regulatory science. We make a case for the adoption of agent‐based tools for addressing the sufficiency of evidence and resolving uncertainty in regulatory decisions. Referring to other environmental applications of agent‐based decision‐making, we propose how an agent model might represent power structures and personality characteristics with the attending implications for the brokering of regulatory science. This critical review has implications for the structuring of evidence that informs environmental decisions and the personal traits required of modern regulators operating in facilitative regulatory settings.     

‘Weighting and Scoring’ in Theory and in Practice

Starting with the Treasury's Green Book definition of the ‘weighting and scoring’ technique in option appraisal, the authors resolve a challenging theoretical paradox and then look at the strength of the current bridge between theory and its practical implementation. Two case studies in which the technique is treated as ‘standard NHS practice’ are critically evaluated. The article concludes with suggestions for better implementation of such easily abused quantitative methods.     

Leadership through action learning: a bottom-up approach to ‘best practice’ in ‘infection prevention and control’ in a UK NHS trust

This article reports on the outcomes of an action learning leadership intervention in a National Health Service (NHS) acute trust in partnership with a UK business school. This contribution provides an empirical example of the potential benefits of non-hierarchical leadership. Over a three-year period, 45 nurses took part in an initiative designed to reduce the number of health care associated infections (HCAI) in a large NHS acute trust. By 2010, serious reportable infections were reduced by around 300, providing an efficiency benefit in the region of £3 million and improved patient safety. The turnaround is significant, and although not exclusively attributable to this initiative, the trust is convinced that the intervention has been pivotal.     

The ‘performativity thesis’ and its critics: Towards a relational ontology of management accounting

This paper explores accounting's mediating role in bringing theoretical statements from economics into life. It addresses the so-called performativity thesis that claims that economic theory does not just observe and explain a reality, but rather shapes, formats and performs reality. Accounting mediates in that process by creating cognitive boundaries that embed societal practices in economic theory. However, the performativity thesis is not without criticisms. Its main criticisms concern a lack of proof of the thesis; an overestimation of the power of economics to extend beyond the virtual; and a lack of a critical stance. In order to bring more nuance in the discussion on the performativity thesis the paper reflects on evidence from the field of accounting. The review of accounting studies reveals how accounting, to different degrees, is implicated in strategic and operational activities in markets and organisations and how it is a performative mechanism of economisation. Moreover, in order to accentuate the ‘good’ in society and to challenge the ‘bad’, the paper suggests a further development of (critical) management accounting research into the performativity of both economics and other social theories. A relational ontology of management accounting that is in politics and that is sensitive to ‘unlocalisable’ virtual powers of social-historical formations of management accounting may be developed.     

GARCH in question … and as a benchmark

GARCH models of volatility are ubiquitous. Over the past twelve years, the GARCH industry has produced an almost infinite number of volatility time series from an extremely wide range of return series. The main purpose of this paper is to revisit the notion of volatility. Although we stop just short of questioning the necessity (and certainly the success) of GARCH, we demonstrate that for at least one type of data—long term interest rates—it is possible to essentially reproduce GARCH volatility time series with simple moving averages of deviations from mean return. We also demonstrate (empirically) a functional relationship between GARCH(1,1) parameters and the optimal moving average window width. At the present time these results are based on the utilisation of GARCH volatility as a benchmark against which we select the optimal number of terms in the simple moving average representation. One possible avenue of research that might lead to the removal of this requirement is suggested. An interesting applied result that emerged from our analysis is this: from 1952 to the present, USA interest rate volatility has the highest overall cross-correlation with the interest rate volatilities of other countries.     

Sustainability ‘wars’ in a New England town

A research project into large group decision-making in a New England Town Meeting surprised us with the degree to which sustainability came to be the axis around which political debate revolved. We identified two very different yet overlapping conceptions of sustainability: one emphasized fiscal responsibility; the other asserted the merits of environmental stewardship. Each of the two conceptions had proponents, with strong views about what constituted good versus bad governing practices, each with a strong sense of what was good for the town. In this paper, we sort out those meanings. We seek to understand and expose the contours of sustainability, how the discourses around sustainability enter political processes, and to shed light on ongoing debates about the form of governance best suited for a democratically inclined New England town. Methods involved both quantitative and qualitative approaches, including data collection and analysis activities that comprised four levels: (1) participant observation of the Town Meeting; (2) quantitative analysis of voting behaviors; (3) interviews with 30 of the 240 members of the Town Meeting; and (4) thematic analysis, codebook development, and coding. Finally, in the spirit of contributing to the making of a future possible world, the authors ponder the courses forward for democratic processes and the future of a town caught in a ‘pitched battle’ over the terms and stakes of sustainability.     

Demographic Dividends in the ‘South’, Ageing ‘North’, and ‘South-South’ Trade Diversification

The absence of clear convergence in incomes per capita and welfare between the North and the South, even in the face of spectacular growth rates in GDP in the emerging South, might be due to a terms of trade deterioration resulting from an expansion of production in the South which depresses the product’s price on world markets. This may originate from a “technical catch up” and also from a “demographic dividend” in the South relative to an ageing North. This article illustrates that some South-South trade diversification might mitigate the terms of trade deterioration and increase welfare gains in the South. We use a multicountry overlapping-generation general equilibrium model to simulate the magnitude of the terms of trade effect due to a demographic dividend in Turkey, and show that some trade diversification away from EU toward the South is a welfare improving policy for Turkey.     

‘Slow-burn’ spillover and ‘fast and furious’ contagion: a study of international stock markets

‘Fast and furious’ contagion across capital markets is an important phenomenon in an increasingly integrated financial world. Different from ‘slow-burn’ spillover or interdependence among these markets, ‘fast and furious’ contagion can occur instantly. To investigate this kind of contagion from the US, Japan and Hong Kong to other Asian economies, we design a research strategy to capture fundamental interdependence, or ‘slow-burn’ spillover, among these stock markets as well as short-term departures from this interdependence. Based on these departures, we propose a new contagion measure which reveals how one market responds over time to a shock in another market. We also propose international portfolio analysis for contagion via variance decomposition from the portfolio manager’s perspective. Using this research strategy, we find that the US stock market was cointegrated with the Asian stock markets during four specific periods from 3 July 1997 to 30 April 2014. Beyond this fundamental interdependence, the shocks from both Japan and Hong Kong have significant ‘fast and furious’ contagion effects on other Asian stock markets during the US subprime crisis, but the shocks from the US have no such effects.     

Acquirers’ earnings management ahead of stock-for-stock bids in ‘hot’ and ‘cold’ markets

The accounting literature has found evidence that acquirers in stock-for-stock M&A have typically managed earnings upwards ahead of a bid. Other literatures have concluded that, when stock prices are high and rising, M&A is higher, more M&A is financed with stock, market sentiment and stockholders’ perceptions of information appear to change, and in these circumstances new (arbitrage) motivations for M&A emerge. This paper revisits earnings management ahead of M&A in the light of these findings, comparing experience in ‘hot’ and ‘cold’ markets. It finds that such earnings management is more pronounced in hot markets; that only in such markets are positive discretionary accruals commonly associated with positive abnormal returns on the announcement of earnings; and that in such markets – against the expectations from signalling theory – these positive returns are not reversed on announcement of a stock-for-stock bid. The results suggest that the economic benefits achieved by engaging in earnings management during hot markets are indeed significant: in hot markets, we estimate that on average share acquirers engage in working capital accrual management equivalent to over a third of the average acquirer’s return on total assets in that year; and that this earnings management is associated with increases in market value which are statistically and economically significant, enabling the bidder to secure control of the target with fewer shares.     

‘It's the tip of the iceberg’: the hidden tensions between theory,policy and practice in the management of Freedom of Information in English local government bodies—evidence from a regional study

This article examines a major UK value-for-money study by Sir Roy McNulty in the context of the neoliberal public policy environment. This environment favoured rail's privatization, and subsequent reform attempts, which maintained the privatization model, have done little to address rail's fundamental problems. McNulty's proposals are examined in terms of their likely effects on the infrastructure authority and the train companies. The article concludes that, although McNulty correctly identified fragmentation as a key cause of rail's cost escalation, and noted the less fragmented nature of other European railways, its neoliberal focus meant that it missed the opportunity to reverse the process.     

OK in practice – and theory

This teaching note considers the experience of introducing an extended case study and simulation into an auditing course for second or final year undergraduates. Having reviewed the reasons for adopting a different approach to the teaching of auditing, the paper provides a case for the applicability of case studies, drawing a distinction between auditing practice and auditing theory and considering the different roles case studies can play therein. After setting out the redesign of the auditing course, the paper goes on to describe the extended case study, discussing the reception of the course, the limitations of the case study and resource implications.     

The ‘Jim Factor’—My Experience as a First-Time Accounting Tutor

Sandy Burton was a seasoned academic who played a major role in shaping American accounting regulation in the latter part of the twentieth century. A vocal reformer, he became a vigorous SEC Chief Accountant and thereafter New York City Deputy Mayor. He was a critic of accounting practice as well as academe, preaching the gospel of reform in writings and speeches. Contending that accounting was too narrowly focused, he called upon the accounting community to reinvent itself. He was profoundly dissatisfied with the nature of academic accounting research because it had been irrelevant to practice. Burton earned considerable respect for attempting to bridge the gap between accounting practice and academe.     

The magic of branding: The role of ‘pledge’, ‘turn’ and ‘prestige’ in fostering consumer trust in financial services

The purpose of this article is to study the impact of brand image on consumer trust through empirical investigation in the context of the financial services sector. While trust helps to bind consumers to brands, a strong brand image works like magic in reducing consumers’ risk perception and promoting trust. This study analyses how brand image influences consumers’ trusting intention through operationalising an interdisciplinary brand-trust model. Constructs and measures were drawn from interdisciplinary brand and trust literature and tested through employing EFA, CFA and structural equation modelling. Data were collected through a quantitative survey of 300 financial services consumers. Using the analogy of a magic trick, the study unveils the key role of financial services branding in engendering consumer trust in the ‘pledge’ or ‘prestige’ parts of the trick but not in the ‘turn’. The research contributes to the convergent and mutually inclusive theories of trust and branding as well as services marketing literature. For managers and policymakers in the financial services sector the findings will help them to effectively manage brand image and foster consumers’ trusting intention.