How do ‘busy’ and ‘overlap’ directors relate to CEO pay structure and incentives?

We examine how CEO compensation is affected by the presence of busy and overlap directors. We find that CEOs at firms with more busy directors receive greater total pay, fixed salary and equity‐linked pay and exhibit higher pay‐performance (delta) and pay‐risk (vega) sensitivities. Our results also suggest that CEOs at firms with more overlap directors take smaller total pay and equity‐linked pay and reveal lower delta and vega. We further show that the impact of busy and overlap directors on CEO pay is more visible for firms with less complexity and low information acquisition cost.     

Does board gender diversity improve the informativeness of stock prices?

We show that stock prices of firms with gender-diverse boards reflect more firm-specific information after controlling for corporate governance, earnings quality, institutional ownership and acquisition activity. Further, we show that the relationship is stronger for firms with weak corporate governance suggesting that gender-diverse boards could act as a substitute mechanism for corporate governance that would be otherwise weak. The results are robust to alternative specifications of informativeness and gender diversity and to sensitivity tests controlling for time-invariant firm characteristics and alternative measures of stock price informativeness. We also find that gender diversity improves stock price informativeness through the mechanism of increased public disclosure in large firms and by encouraging private information collection in small firms.     

An examination of the relationship between the disposition effect and gender,age, the traded security,and bull–bear market conditions

We analyze how gender and age, internal characteristics of retail futures traders—one that remains fixed while the other changes over a lifetime—and the security being traded and bull–bear market conditions, two external factors, are related to the disposition effect by separately tracking their trade-by-trade transaction histories over a period of close to six years on the Taiwan Futures Exchange (TAIFEX). We show that women and mature traders, compared with their male and younger counterparts, exhibit a stronger disposition effect. The effect is also stronger among traders who trade financial-sector futures contracts than among those who trade electronic-sector futures contracts. We further demonstrate that a bear market sees a stronger disposition effect.     

Does gender matter? The association between gender and the use of management control systems and performance measures

Literature shows that female (male) managers are more likely to adopt a transformational (transactional) leadership style, as well as make greater (lesser) use of information for decision-making. We draw on this research to investigate whether gender is related to a manager's use of management control systems (MCS) and performance measures. We surveyed the head of school of all schools across all Australian public universities. Our results indicate that females use MCS in an interactive manner to a greater extent than their male counterparts and make greater use of non-financial performance measures. We conclude with contributions to theory and practice.     

Discussion of ‘Strange bedfellows? Voluntary CSR disclosure and politics’

This article discusses the paper by Griffin and Sun (2013). Griffin and Sun (2013) investigate (i) the association between the company individuals and stakeholders political interests and the intensity of voluntary corporate social responsibility (CSR) disclosures, and (ii) investors response to these CSR disclosures. This discussion focuses on issues relating to five key areas of Griffin and Sun (2013), namely, the relationship between political interests and CSR disclosure intensity, the relationship between political interests and investors reactions to CSR disclosure, the political interest proxies employed, sample selection and the empirical analyses.     

Homophily versus monitoring: Do all female board directors drive the gender assignment of audit partners?

By examining the extent to which the proportion of female board directors affects the gender assignment of engagement partners, this paper contributes to the existing literature in several ways. First, we investigate the French mandatory joint audit setting, giving rise to a set of concerns with regard to the auditor pair composition. Second, we consider female directors according to their positions on the board in order to determine which of the homophily and monitoring arguments plays the greater part in the auditor selection process. Third, we address the moderating effect of the gender quota law on the link between female directorship and the choice of audit engagement partners. Using appropriate estimation methods, we find that female board members appointed to key monitoring positions (female independent directors and female audit committee members) choose gender-diverse engagement partners. However, counter to the gender similarity (homophily) argument, we find that female inside directors are negatively associated with the selection of gender-diverse engagement partners. The association between gender-diverse boards and gender-diverse audit partners is found to be more pronounced in the period following the enactment of the gender quota law, thereby providing some practical and policy implications with regard to capitalising on the benefits of gender diversity. Supplementary analyses support the preponderance of the monitoring argument over the homophily argument in the auditor selection process.     

Mickey Mouse and the IDioT principle for assessing research contribution: discussion of ‘Is the relationship between investment and conditional cash flow volatility ambiguous,asymmetric or both?’

Keefe and Tate ( 2013 ) provide both interesting and worthwhile insights into whether, under what circumstances and to what extent cash flow volatility impacts corporate investment. In the current paper, I have two related goals. First, more narrowly, I provide a constructively critical commentary on salient aspects of their empirical strategy, giving particular emphasis to the key drivers of Keefe and Tate's contribution to the literature. Second, illustrated in the context of Keefe and Tate, my broader goal is to give general advice especially aimed at novice researchers on how to make any empirical study more appealing to a critical reader.     

Accountability and Transparency in English Local Government: Moving from ‘Matching Parts’ to ‘Awkward Couple’?

Although excessive transparency and accountability demands can have a counterproductive effect on organisational performance (Bovens, 2005), longstanding hierarchical accountability structures to ensure financial conformance in English local government continue to endure. Interestingly however, the previously top‐down regime for performance accountability in English local government has been replaced by bottom‐up mechanisms such as greater transparency and a more open market for public services. Using the framework developed by Hood (2010), this paper will show how such reforms mean that transparency and accountability are moving from being ‘matching parts’ to an ‘awkward couple’, and how this has significant implications for public services.     

Discussion of ‘Is the objectivity of internal audit compromised when the internal audit function is a management training ground?’

This article provides a critique of the Rose, Rose, and Norman (2013) article. It focuses on four issues: (i) whether institutional details have been appropriately captured; (ii) whether experiments are an appropriate method to answer the authors' research question; (iii) whether the authors' hypotheses should predict an interaction; and (iv) whether the authors have relied on the appropriate theory.     

Is there useful information in the ‘use of proceeds’ disclosures in IPO prospectuses?

This study contributes evidence on the valuation relevance of the ‘use of proceeds’ disclosure in the initial public offering (IPO) prospectus. This article develops a classification of ‘use of proceeds’ disclosures that aims to capture information embedded in the disclosures relating to the purpose (growth, production, financing) and amount committed to specific assets. These measures are then related to IPO underpricing, survival prediction and expected and realised prospects of the IPOs. The results suggest the ‘use of proceeds’ disclosure categories have incremental information over other sources of information for underpricing, for predicting firm survival and in the case of some disclosure categories, for investors’ evaluation of the firms’ prospects and risks in the early years after listing.     

Is there an association between Vice‐Chancellors’ compensation and external performance measures?

We provide evidence on the pay for performance relation between Australian university Vice Chancellors’ compensation and independent measures of university teaching, research and other performance indicators provided by external ranking bodies. Our results show limited association between university rankings and Vice Chancellors’ compensation, but confirm that Vice Chancellors’ compensation is predominantly driven by size measures based on the different components of revenue. Further, we find that few universities offer performance‐based bonus payments. Our results are robust with respect to a number of sensitivity tests.     

Time dollars, work and community: from ‘why?' to ‘why not?'

Conventional notions of work and economics are failing our communities. We need to rethink how we can provide a chance for every member of society to secure work and have a minimally decent standard of living. This essay describes an innovative strategy that generates social capital by using a system of bartering time. Time Dollars schemes transform jobless individuals in communities from a burden into assets. People earn Time Dollars by helping others and then use them to buy essential services, purchase goods, and thus play an invaluable part in building and strengthening community. By freeing communities to ask ‘Why not?', Time Dollars mobilise human resources in a host of beneficial ways and open up a whole variety of hitherto unimagined possibilities.     

Company duplication – plain fraud or a ‘poor man's’ bankruptcy? A case study in the financial distress of small businesses

Two possible solutions to corporate financial distress are traditionally considered: commencing a formal bankruptcy proceeding or arranging an out‐of‐court capital restructuring. Corporate bankruptcy scholarship has largely ignored a third solution occasionally undertaken by small businesses, that is, resorting to self‐help measures. The purpose of this paper is to start filling the gap using a unique case study. The paper describes and analyses an existing phenomenon among small firms in Israel experiencing financial distress – company duplication. A typical scenario unfolds as follows. An entrepreneur who controls the financially distressed Company A registers a new Company B in an attempt to avoid a complete shutdown of her creditors' disturbed business. The assets of Company A are transferred to Company B in what appears to be fraudulent conveyance. Company B serves as a vehicle through which the original business is kept running. If necessary, the entrepreneur will also register Company C and repeat the process. Israeli law regulates company duplication in an ambivalent manner. On the one hand, conventional wisdom considers company duplication to be tantamount to fraud against Company A's unaware creditors. Accordingly, company duplication has been recently denounced by the Israeli Supreme Court as an illegitimate way of conducting business. The Court held that notwithstanding the principle of limited liability, an entrepreneur resorting to company duplication is personally liable to pay any debt of Company A that was not serviced by it. On the other hand, company duplicators do not face criminal charges. To the extent that company duplication is practiced by insolvent entrepreneurs, deterrence is therefore suboptimal, as insolvent duplicators are not sanctioned at all. Against this backdrop, this paper advances two normative arguments. First, a more sympathetic explanation should be considered to account for company duplication. An entrepreneur resorting to company duplication might actually be arranging for a ‘home‐made’ bankruptcy proceeding (i.e. buying time which could help the business establish its viability and regenerate). According to this narrative, the duplication mimics the role of a formal bankruptcy stay on unsecured creditors' collection efforts, thus suggesting that company duplication serves as ‘a poor man's’ bankruptcy proceeding. Second, this new explanation of company duplication, combined with the current level of suboptimal deterrence, mandates a re‐evaluation of this business pattern to assess its relative efficacy. I argue that at least in the Israeli context because of its special features, company duplication should be tolerated with regard to small businesses, assuming that the entrepreneur is not defrauding creditors or attempting to rescue a business that has failed due to economic rather than merely financial factors. To that end, company duplicators should be held personally liable to debts of the duplicated companies and be pursued with criminal sanctions only selectively, as explained in the paper. Copyright © 2011 John Wiley & Sons, Ltd.     

Who issues Sukuk and when?: An analysis of the determinants of Islamic bond issuance

Using security issuer data from Malaysia, Indonesia, Saudi Arabia, and the United Arab Emirates from the 2001–2013 period, this study investigates how Islamic bond (Sukuk) issuers differ from conventional debt and equity issuers. An international comparative analysis of these three types of security issuers yields three key insights. First, accessibility to the Sukuk market is essential in choosing Sukuk issuance; other determinants will not promote the use of Sukuk, unless this requirement is first satisfied. Second, the low degree of financial constraints on a firm promotes Sukuk issuance, once the required condition of issuer accessibility to the Sukuk market is satisfied. Third, undervaluation of a firm in the pre-issuance period also encourages Sukuk issuance, once the issuer's Sukuk market accessibility condition is satisfied. Taken together, we conclude that Sukuk issuance is preferred along with market timing, once the pecking-order conditions of market accessibility are satisfied.     

Corporate Commitment to Sustainability – Is it All Hot Air? An Australian Review of the Linkage between Executive Pay and Sustainable Performance

Across time, companies have increasingly made public commitments to sustainable development and to reducing their impacts on climate change. Management remuneration plans (MRPs) are a key mechanism to motivate managers to achieve corporate goals. We review the MRPs negotiated with key management personnel in a sample of large Australian carbon‐intensive companies. Our results show that, as in past decades, the companies in our sample have MRPs in place that continue to fixate on financial performance. We argue that this provides evidence of a disconnection, or ‘decoupling’, between the sustainability‐related rhetoric of the sample companies, and their ‘real’ organisational practices and priorities.     

Audit committee financial expertise,gender, and earnings management: Does gender of the financial expert matter?

The effectiveness of the presence of financial expertise on the audit committee (AC) in reducing earnings management has been the subject of many previous studies with mixed findings. This paper suggests that the mixed findings may be due to prior studies not distinguishing between the genders of the financial experts on the AC. We investigate how financial expertise affects earnings management taking into account the gender of the financial expert. We use the data of a sample of 5660 US firm-year observations from 2007 to 2013 which was analysed using least squares regressions clustering by firm. The results indicate that proportion of financial expertise on the AC and gender reduces earnings management. We then group the AC financial experts by gender, and examine whether the gender of the financial expert matters. The results show that the proportion of female financial experts on the AC is significantly associated with less earnings management while the proportion of male financial experts does not significantly affect earnings management; this suggests that previous studies indicating that the presence of a financial expert on the AC may have been influenced by gender of the female financial experts. Further, our findings may also partly explain the contradictory findings of prior studies on the effect of financial expertise on the ACs effectivness.     

Material Misstatement of What? A Comment on Smieliauskas et al., ‘A Proposal to Replace “True and Fair View” with “Acceptable Risk of Material Misstatement” ’

This comment explores theoretical and practical aspects of the Smieliauskas et al. (2008 ), ‘A Proposal to Replace “True and Fair View” With “Acceptable Risk of Material Misstatement”, and develops the ideas outlined there. It is argued that these proposals are helpful, but theoretically incomplete. Theoretical developments relating to accounting aspects are offered, and proposed for others to take further. The pragmatic implications suggest difficulties in the operationalization of the ideas of the original paper in a world of multiple and inconsistent user needs.     

Does the Scope of the Sell‐Side Analyst Industry Matter? An Examination of Bias,Accuracy, and Information Content of Analyst Reports

We examine changes in the scope of the sell‐side analyst industry and whether these changes impact information dissemination and the quality of analysts’ reports. Our findings suggest that changes in the number of analysts covering an industry impact analyst competition and have significant spillover effects on other analysts’ forecast accuracy, bias, report informativeness, and effort. These spillover industry effects are incremental to the effects of firm level changes in analyst coverage. Overall, a more significant sell‐side analyst industry presence has positive externalities that can result in better functioning capital markets.