Corporate governance and accounting conservatism in Islamic banks

We examine whether Islamic banks are more likely to be conservative in their financial reporting than conventional banks, as well as how Islamic banks' unique corporate governance system affects accounting conservatism behaviors. Using a large sample of Islamic banks and their matched non‐Islamic banks; based on total assets and geographic location, in 15 countries, we find Islamic banks are more likely to deploy accounting conservatism as measured by loss avoidance, abnormal loan loss provisions, and C‐score, respectively. Islamic banks are about 95% more likely to be more conservative in accounting practices than their counterparts, depending on different model specifications. In addition, we report several board characteristics, such as size, independence, reputation, tenure, and diversity, are important determinants of accounting conservatism in Islamic banks. This relationship indicates certain board traits lead to greater monitoring roles, consequently reducing unethical behavior and increasing the degree of conservatism in accounting practices.     

Comparing financial and social costs for top‐down versus fixed‐band selection: A practical application with bus drivers

A number of solutions have been proposed to the diversity‐validity dilemma arising from the use of cognitive ability tests in employment selection. Cognitive ability tests predict training and job performance but also produce adverse impact against minority groups. Although banding reduces adverse impact, it has been criticized for also reducing the utility of the selection process. We assessed the social and financial impact of a fixed band approach with top‐down hiring across several hiring scenarios with a pool of bus driver applicants. Overall, the fixed band approach reduced adverse impact without substantially reducing the cost effectiveness of the hiring process. We discuss the implications of these two approaches in the context of the diversity‐validity dilemma. Copyright © 2016 ASAC. Published by John Wiley & Sons, Ltd.     

The Role of Firms in Resilient Systems: A Multi‐Level Framework

In this paper, we articulate a multi‐level resilience‐based framework explaining how firms facilitate stronger system‐level resilience. The framework stresses the importance of firm interdependence, describing how pooled versus sequential/reciprocal patterns of interdependence influence the resilience antecedents of diversity, slack, and redundancy. We argue that the inter‐firm practices of self‐governance and supply chain collaboration function to maintain resilience antecedents at more moderate and effective levels. This work builds on prior resilience research that has remained focused on either firm or system levels of analysis by stressing the value of firm interdependence as an important contingency for effective system resilience. Copyright © 2018 ASAC. Published by John Wiley & Sons, Ltd.     

Protect,profit, profess,promote: Establishing legitimacy through logics of diversity in Canadian accounting firm recruitment documents

Prospective accounting recruits are increasingly diverse. Drawing on a theoretical framework that combines legitimacy theory, impression management, and institutional logics, we use content analysis to examine how the eight largest Canadian accounting firms refer to diversity in their recruitment websites. Our analysis reveals accounting firms adopt multiple institutional logics and various impression management strategies to enhance legitimacy in the eyes of prospective diversity‐sensitive employees. We find four “Ps” of diversity‐related institutional logics—protect, profit, profess, and promote—all of which are at play in accounting firms' websites. Further, we find that diversity is far from being an institutionalized concept. Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd.     

A comparison of the legislated employment equity program,federal contractors program,and financial post 500 firms

We investigated the impact of employment equity legislation, compliance regulations, and the absence of these requirements on the diversity practices of Canadian firms. A field survey involving CEOs and Human Resource Executives of 286 firms covered under the Legislated Employment Equity Program (LEEP), Federal Contractors Program (FCP), and Financial Post 500 (FP 500) companies was conducted. Results indicate that CEOs of LEEP firms reported a greater commitment to managing diversity. LEEP firms, and to some extent FCP firms, also had adopted more practices (e.g., policies, recruiting, training, and accountability) supportive of employment equity than FP 500 firms. It appears that employment equity remains the most effective tool for promoting equity and diversity in Canadian organizations. Copyright © 2010 ASAC. Published by John Wiley & Sons, Ltd.     

Firm Shutdown During the Financial and the Sovereign Debt Crises: Empirical Evidence from Portugal

This paper examines Portuguese firms’ survival over the business cycle and investigates whether the effect of firm size varies across the phases of the cycle and with the type of shock associated with periods of economic contraction. Our results show that smaller firms are more likely to shut down than larger firms. Within each size band, however, we found that during the two crises examined, micro firms experienced hazards of closing (relative to large firms) at least similar to those observed in the pre-crisis period, while medium-sized firms were found to have been more vulnerable during the financial crisis period but showed more resilience during the sovereign debt crisis. The results suggest that during the sovereign debt crisis, firms faced a higher probability of closing than they did during the financial crisis.     

To improve investors' valuation of accounting earnings in emerging markets: evidence from Taiwan

The valuation of accounting earnings is related to the level of earnings management used by the firm. In emerging markets where earnings management is typically pervasive, investors lose confidence in accounting earnings and thus tend to under‐value earnings. Using data from Taiwan, we show that better governance characteristics are associated with improved investor valuation of accounting earnings. Under weaker governance structures, such as excessive control on the part of majority shareholders, small board size, and chief executive officer/chairman of the board duality, the market tends to under‐value accounting earnings. Reducing controlling shareholders' ownership, increasing board size, and reinforcing the monitoring function of the board improves investors' ability to value accounting earnings. Copyright © 2010 ASAC. Published by John Wiley & Sons, Ltd.     

A High‐Growth Firm Contingency Test of the Formalization‐Performance Relationship

The effect of formalization in high‐growth firms' performance is still unclear. We propose that formal commitment‐based human resource practices contribute positively to the financial performance of established high‐growth firms but have little effect on emergent ones. Using a sample of 101 Portuguese high‐growth firms (2006–2009 period), we tested the effect of formal HR practices during the high‐growth period in their financial results two years later (2011). Our results suggest that adopting a formal performance appraisal and a formal R&D function contributed positively for the performance of only established firms, while adopting a formal training activity negatively affected the performance of only emergent firms.     

Disentangling CEO compensation: A simultaneous examination of time,industry, and firm‐level effects

Despite decades of research, how CEO compensation is determined remains an enigma. Drawing on agency, managerial hegemony, and institutional theoretical perspectives, we use hierarchical linear modelling—a multilevel analytic technique—to examine how firm‐, industry‐, and time‐level effects drive CEO compensation in US corporations. Results show that while cash salary is mostly driven by firm‐specific factors, equity‐based compensation responds to time‐level effects with firm‐ and industry‐level effects playing a marginal role. We argue that such evidence is consistent with the institutionalization of the CEO compensation determination process through the widespread adoption of benchmark peer‐group comparisons. Such practices underlie economy‐wide changes in CEO compensation that are increasingly disconnected from other fundamental firm‐ or industry‐specific factors. Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd.     

Behaviour‐Based and Outcome‐Based Control Systems: A Meta‐Analytic Study

Sales control systems are instruments used by firms to improve performance and other organizational outcomes. To understand their antecedents and consequences, this paper conducts a meta‐analysis based on 104 studies. The results showed significant relationships between behaviour‐ and outcome‐based control systems and the complexity of the products, bonuses, financial performance, sales innovation, organizational support and satisfaction with supervisors. The outcomes revealed that behaviour‐based control systems were the most effective mechanism in turbulent markets and for determining financial performance. However, outcome‐based control systems were the most efficient instrument for complex products.     

CEO Attributes,Board Composition,and Acquirer Value Creation: A Canadian Study

We examined CEO attributes, board composition, and ownership structure for their relationship to the share performance of the acquiring company around the acquisition announcement. Based on 273 acquisitions by Canadian firms from 1998 through 2002, we have shown that the levels of CEO and director ownership as well as the level of board independence were positively associated with the short‐term financial performance of the acquirer. Board size was negatively related to value creation. Finally, cash‐based deals and cross‐border transactions were also positively related to increases in shareholder wealth for the acquirer. Copyright © 2011 ASAC. Published by John Wiley & Sons, Ltd.     

Modelling the Link Between Management Practices and Financial Performance. Evidence from Small Construction Companies

This paper develops a structural model to investigate the direct and indirect effects of owner–manager and company characteristics and selected management practices on the financial performance of a sample of 218 small Belgian construction companies. The results show that the owner–manager and company characteristics (experience, education, financial knowledge, knowledge of cost accounting, company size and age) have no direct significant impact on financial performance. However, several significant paths have been found between the owner–manager and company characteristics and management practices. As far as the direct effects of the management practices are concerned we observe several significant paths from the management practices to financial performance. Our findings indicate that a model approach by including owner–manager and company characteristics and management practices in an intertwined way is necessary when exploring their effects on small business financial performance.     

Impact of Network Position and Knowledge Diversity on Knowledge Creation: The Empirical Setting of Research Communities

We examined the role of network position and knowledge diversity as related to new knowledge creation within a network of 239 academics from business administration departments at four universities. Analyses of their 1,827 publications involving 1,541 coauthors between 1986 and 2008 revealed an inverse U‐shaped relationship between network centrality and knowledge creation. Moreover, knowledge diversity positively moderated the association between centrality and the quality of the knowledge created, but negatively moderated the centrality‐knowledge quantity relationship. Copyright © 2012 ASAC. Published by John Wiley & Sons, Ltd.     

Financial Constraints and Small and Medium-Sized Firms’ Export Propensity: Evidence from Portuguese Manufacturing Firms

The internationalization of firms through exports is often crucial to their survival and growth in this era of globalization. This is particularly the case for small and medium-sized enterprises (SMEs) operating in small and saturated markets, as is the case in Portugal. However, firms face several barriers to exporting, and this study aims to verify whether financial constraints influence a firm’s export propensity. The empirical analysis is based on a sample of 12,732 Portuguese manufacturing SMEs during the period 2008–2012, and tests two different proxies of financial constraints: the liquidity and leverage ratios. The results indicate that the SMEs in less healthy financial positions are less likely to export than the others are, although the impact of financial constraints on these Portuguese firms appears to be relatively small.     

A Note on the Incremental Validity of Integrity Tests beyond Standard Personality Inventories for the Criterion of Counterproductive Behaviour

Although the validity of integrity tests for predicting the focal criterion of counterproductive work behaviour (CWB) is well‐established, little research has yet addressed the incremental CWB‐related validity of integrity tests beyond basic personality traits. The present research addresses this issue by re‐analyzing data adopted from Marcus, Lee, and Ashton (2007), in which four different overt and personality‐based integrity tests and the HEXACO‐Personality Inventory (Lee & Ashton, 2004) were related to CWB. Integrity accounted for practically significant proportions of incremental variance beyond personality across all integrity tests, yet effect sizes of incremental validity dropped considerably if Honesty‐Humility was added to traditional Big Five dimensions. In addition, findings suggest that CWB is best predicted by a combination of integrity and personality tests. Copyright © 2013 ASAC. Published by John Wiley & Sons, Ltd.     

Impact of industry sector on corporate diversification and firm performance: Evidence from Indian business groups

Prior business group (BG) studies implicitly assume that corporate diversification‐firm performance relationships are uniform across industry sectors. This generalization may lead to research implications that are not equally true for BG‐affiliated manufacturing and service firms. Drawing on strategy and marketing literature, this research addresses this scholarly gap. Our empirical analysis of a large sample of BG‐affiliated Indian firms over a five‐year period (2004‐2008) indicates that the influence of corporate diversification on firm performance is greater for affiliated service firms than affiliated manufacturing firms. Results also indicate that the influence of BG size and diversity on diversification‐firm performance relationship varies significantly depending on whether the focal firm belongs to the manufacturing or service sector. Firm's share ownership does not generate similar influence. Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd.     

Through the looking glass: Strategic organizational practices in strategic management

The field of strategic management indicates that there is no ‘one best way’ to manage strategy over time, leaving researchers with a pluralistic research setting. The findings here suggest that strategic organizational practices, a construct from the international business literature, can provide insight into the strategy formation process. I argue that strategic organizational practices, which are actor‐centered and embedded with values and beliefs, reflect both the content and process of strategy, and the organizational environment itself, thereby providing a pluralistic context of theoretical study. Through the exploration of four practices implemented by a large Canadian‐based multinational enterprise, the paper encourages a more explicit integration of strategic organizational practices, as a unit of analysis, into the field of strategic management. Copyright © 2017 ASAC. Published by John Wiley & Sons, Ltd.     

Does gender diversity on corporate boards increase risk‐taking?

We study the impact of board gender diversity on firm risk‐taking in a developing market. Our study is drawn from a sample of 30 Tunisian‐listed firms between 1997 and 2010. First, we found that women have a risk perception that leads to risk avoidance behaviour: the presence of women directors, even when there is one woman director, is positively associated with cash ratio. Second, we showed no significant relationship between board gender diversity and the propensity to take strategic or financial risk‐taking. Third, the presence of state officer/bureaucrats and/or politically connected women have a positive effect on cash holding and investment opportunities. Finally, we found that foreign investors do not invest in firms with gender‐diverse boards. We conclude with a discussion of contributions to scholarship and practice, and present avenues for future research. Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd.     

What does diversity management mean for the gender equality project in the United Kingdom? Views and experiences of organizational “actors”

There has been a shift at the organizational level away from a traditional “equal opportunity” paradigm underpinned by notions of social justice, with a specific focus on tackling gender inequalities towards a business‐led “diversity management” paradigm, with a focus on the individual and their contribution to the organization. We argue that diversity management as a concept and model has the potential to undermine the gender equality project, but drawing on a UK‐based study we conclude that whether or not it presently does so in practice is less clear. Nevertheless, our study, presenting views and experiences of multiple organizational actors, demonstrates the seductiveness of the diversity discourse, which could herald danger for the future direction and substance of the gender equality project. Copyright © 2010 ASAC. Published by John Wiley & Sons, Ltd.     

Understanding the Determinants of RiskMetrics/ISS Ratings of the Quality of UK Companies' Corporate Governance Practice

We examine the determinants of RiskMetrics/ISS Ratings of the quality of UK companies' corporate governance practice and investigate whether corporate governance mechanisms and firm specific characteristics affect these ratings. We also investigate the association between firms' financial distress and these ratings. Using data for nonfinancial Financial Times Stock Exchange (FTSE) 250 firms over the 2003 to 2009 period, we find that board independence, managerial ownership, institutional ownership, firm size, and profitability are associated with firms' corporate governance ratings. In addition, we find that more independent directors on the board, more institutional ownership, and larger size lead to a high level of board‐related ratings. Finally, we find no association between corporate governance ratings and financial distress. Copyright © 2012 ASAC. Published by John Wiley & Sons, Ltd.