Block ownership and firm-specific information

This study examines the impact of block ownership on the firm’s information environment. Previous research shows that stock price efficiency depends on the cost of acquiring private information, as well as on the precision of this information. Blockholders have a clear advantage over diffuse, atomistic shareholders in terms of the precision and acquisition cost of their private information. We hypothesize that this informational advantage will manifest itself primarily in the firm-specific component of stock returns. Our empirical findings confirm that blockholders increase the probability of informed trading and idiosyncratic volatility, and decrease the firm’s stock return synchronicity. These results hold for both inside and outside blockholders, but are insignificant for blocks controlled by employee stock ownership plans (ESOPs). Overall, our findings support the contention that ownership structure plays a significant role in shaping the firm’s information environment.     

Towards a bioregional approach to tropical forest conservation: Costa Rica's Greater Osa Bioregion

Even by neotropical standards, the Osa Peninsula on the Southwest Pacific coast of Costa Rica contains extraordinary levels of biodiversity and endemism. Despite a 40-year history of conservation in a country known for its conservation efforts, the greater Osa Bioregion and its complex of protected areas face an uncertain future. Habitat fragmentation and genetic isolation threaten the long-term survival of the Osa's signature species, while Osa policymakers with limited resources struggle to address dilemmas posed by illegal resource extraction and uncertain and changing land tenure. More recently, the socio-political landscape has changed with the emergence of a ‘landed conservation gentry,’ sharing the Osa's ecological wealth with the poor frontier campesino. A review of conservation efforts in the Osa through the political ecology construct of bioregionalism provides an opportunity to further define this construct in the distinct context of neotropical forest conservation. In this article we review the theoretical underpinnings of bioregionalism, focusing on its value for neotropical forest conservation, and apply it to the mosaic of public and private lands that encompass the Greater Osa Bioregion. We characterize the complex and shifting governance framework for Osa conservation focusing on the current conservation initiative, the Osa Biological Corridor project. We conclude with the suggestion that bioregionalism's emphasis on reconciliation of humans and their environment—‘reinhabitation’—an implicit goal of the Osa Biological Corridor project, may offer the best hope for the future.     

Integrated 1000-year planning

This paper develops the concept of integrated 1000-year planning. The products of 1000-year planning, referred to as 1000-year plans, are intended to deal with issues on a global scale and address the survival of humanity and the protection of the earth’s environment. One thousand years is an appropriate global planning horizon because it is long enough to unmask big picture problems that appear to be invisible to today’s societies. Furthermore, this time horizon encourages the perspective that over the long-term, many problems that seem unsolvable today, and therefore receive little attention and few resources, can indeed be overcome. Topics of 1000-year plans are numerous and include: energy, land use, carbon management, oceans, biodiversity, nuclear and hazardous waste, water, human settlements, near-earth objects, and space exploration. The argument is made that responsibilities for action by current generations to benefit future generations be based on risk assessments and risk thresholds. In the near-term, 1000-year planning must be driven by an international grassroots coalition of scientists, policy analysts, environmentalists, planners, and concerned citizens.     

Governance,tax and folk tales

This paper develops a particular narratological approach to analyse a common category of narratives: individuals’ accounts of their organization’s context and purpose. In two phases of interview research with 45 senior UK accounting professionals (tax officials, tax advisors to, and tax directors of, multinational companies) we focus on a pivotal period in the governance of UK taxation. We advocate analysing what ordinarily could be called ‘real world’ narratives about this context (‘tax tales’) as if they were folk tales. This approach draws on an influential analysis of folk tales by Propp. Our theoretical contribution is to show how features of strong or dominant plots, of the kind that structure folk tales, also help accounting professionals to make sense of this complex governance environment. This helps us understand personal projects of sense making in a context that is technically, legally and morally complex and has implications for governance, for policy, and for accounting as a professional project.     

Systems approaches to economic development for indigenous people: a case study of the Noongar Aboriginals of Australia

This paper illustrates a case study in the application of systems approaches to securing economic development for a specific group of indigenous people in Australia. The case study combines Field Anomaly Relaxation (FAR) with Effects-Based Operations (EBO) planning to realise more purposeful actions and endeavours in pursuit of economic development. The approach is a hybrid of Checkland’s Soft Systems Methodology (SSM), Rhyne’s FAR and an advancement of the EBO process emerging from within national security domains. The paper focuses primarily on the use of FAR as a means of understanding an economic development problem space within a present and future orientation, with minor reference to EBO planning as a method of bringing about purposeful change within a combined solution and design space. The paper seeks to demonstrate the utility of ‘soft’ approaches, such as FAR, in the exploration of economic undevelopment and how more purposeful corrective actions can result if they are harnessed to a deepened understanding of the problem space.     

Challenging epistemologies: Exploring knowledge practices in Palikur astronomy

Attempts to resolve the duality of ‘indigenous knowledge’ and ‘Science’ raises the problem of the tenability of knowledges. Arguing that multiculturalist approaches to knowledge are inadequate because knowledge cannot be based solely on consensus within a community, the article explores ways in which indigenous knowledges might be evaluated in relation to science. Using the example of a Palikur (Amapá, Brazil) narrative of an astronomical seasonal cycle, the author draws on current thinking in the field of epistemology to describe ways in which these specific cognitive practices are compatible with those in the sciences, while the moral economy in terms of which the narrative makes sense offers a way of understanding an alternative socio-cultural basis for framing rationality. One of the futures of ‘indigenous knowledge’, it is argued, is that in breaking down the duality in which it is strung in relation to the sciences, there is the possibility of broadening the range of acceptable epistemic practices, and admitting alternative moral economies into the sciences.     

The effect of CEO reputation and explanations for poor performance on investors’ judgments about the company’s future performance and management

Two experiments are conducted in which MBA students make judgments about a company’s future performance and management’s reputation after the company reports poor financial results. Information about the CEO’s pre-existing reputation is manipulated at three levels (favorable, unfavorable, or none) and the plausibility of management’s explanation is manipulated at two levels (plausible or implausible). Generally, the results indicate that management’s explanations influence investors’ judgments of the company’s future performance and that judgments about management were jointly influenced by both manipulated factors. Specifically, our results indicate that a pre-existing favorable management reputation is an enduring trait that is not damaged even when management offers an implausible explanation. Our results are consistent with Mercer (2004) but inconsistent with other research (40 and 53) suggesting that a good reputation is easily lost. Our results also indicate that offering a plausible explanation improves the reputation of managers with an unfavorable reputation. We also find that judgments about management’s intentions for explaining poor performance represent a partial mediator for judgments about management’s reputation. Finally, we provide evidence that judgments about the company’s future performance and management’s reputation are consequential in that they are associated with investors’ equity judgments.     

Litigation environment and auditors’ decisions to accept clients’ aggressive reporting

This study contributes to accounting and auditing literature by addressing two empirical questions: (1) whether litigation environment affects auditors’ decisions to accept clients’ aggressive reporting and (2) whether litigation environment, client business risk, and client retention pressure interact and jointly affect auditors’ decisions to go along with clients’ preferred accounting choices. Fifty-nine (59) US and sixty-one (61) Hong Kong auditors employed by the Big-4 accounting firms participated in this study. The result shows that litigation environment has a significant effect on auditors’ decisions. Auditors who practice in more litigious environments tend to be less willing to go along with clients’ aggressive reporting than those who practice in less litigious environments. This study also confirms that there is a significant interactive effect between litigation environment, client business risk, and client retention pressure on auditors’ decisions to accept clients’ aggressive reporting choices. Implications of the empirical findings for policymakers, standard-setting organizations, and international accounting firms, as well as directions for future studies, are discussed.     

The social constitution of regulation: The endogenization of insider trading laws

Accounting research, whether founded in an economics or sociological paradigm, has generally treated regulation as an exogenous part of the environment that shapes the behavior of those who operate within it. Recently, joining those who have advanced the regulator capture hypothesis, the exogenous presumption of the regulatory framework has been challenged by institutional theorists within the sociology literature, and it has been reasoned that those regulated seek to influence the regulations applied to them to gain advantage. In effect, the actions of those regulated “endogenize” the regulations that gird them. Employing this emerging strand of institutional theory research, we probe efforts to “endogenize” the Securities and Exchange Commission’s (SEC) regulation of insider trading. More specifically, applying both latent and manifest content analyses, we examine archival material relating to the development of insider trading regulations, focusing in particular on the social negotiation of the SEC’s Rule 10b5-1, which prohibits company officers from trading in their company’s stock while in “knowing possession” of material, non-public information. Our results suggest that those regulated by 10b5-1 effectively influenced this regulation (viz., by way of successfully advocating for an affirmative defense provided for so-called “planned trades”). Our analysis suggests that endogenization is an on-going, recursive process marked by moves and counter-moves among contending factions. Implications are explored.     

Creating financial value for tropical forests by disentangling people from nature

Efforts to address environmental problems have led to a rapid proliferation of mechanisms for creating financial value for nature. This paper argues that the creation of financial value for nature requires work to disentangle and frame the relation between people and nature so as to render this relation calculable, and that this work acts to alienate people from nature. To pursue and progress this argument, the paper analyses the work of the United Nations Framework Convention on Climate Change (UNFCCC) to establish a mechanism to create financial value for tropical forests based on their capacity to store carbon. The analysis finds that the UNFCCC’s work of disentanglement and framing, so as to render calculable the relation between people and forests, has created conditions that threaten to materially degrade the ecological value of tropical forest biodiversity and the cultural/spiritual value of forests to indigenous peoples. The findings support this paper’s argument that the alienation of people from nature is not simply a consequence of financial valuation, but rather is a necessary prerequisite for creating financial value for nature.     

Future health of indigenous peoples A human ecology view and the case of the Amazonian Shipibo-Conibo

Health has its basis in the relationships between human societies and cultures and the environment. The health of indigenous peoples living in traditional territories is threatened today by the destruction of this environment and the introduction of new contagious diseases; those who move to urban areas suffer even worse health because of ‘civilization’ diseases and the loss of the social networks that provide personal support and health care. Contrary to expectations, an epidemiological transition has not occurred in developing countries where many of these groups live. Two apparent underlying causes—persistent poverty and political inequality—are among the factors that will affect the future health of indigenous groups, together with trends in population, urbanization, and the environment. Indigenous groups can play a major role in determining that future and are already doing so through territorial-control projects aimed at protecting the environment on which their health and well-being depend.     

Accounting and business students’ approaches to learning: A longitudinal study

This study reports the results of an investigation into the learning approaches of undergraduate accounting and business students from three universities in Ireland who were exposed to a learning environment, namely the case study method, which aimed to encourage a deep approach to learning. In order to assess the effectiveness of the intervention, the ASSIST research instrument was used to investigate changes in students’ approaches to learning over time. Consistent with previous research, this study considers whether gender is related to students’ approaches to learning over time and if there are differences between students majoring in accounting or business in their approaches to learning. The results of the study indicate that the case study intervention was successful in some respects. However, contrary to expectations, an overall statistically significant increase in students’ surface approach to learning was found. Additionally, it is reported that changes in students’ approaches to learning over time are not associated with gender or degree program. The results of this study offer insights to accounting educators developing educational interventions to encourage deep approaches to learning.     

The domestic benefits of tropical forests: a critical review.

This review focuses on forests in the humid tropics and on two of their potentially most important benefits. These include hydrological benefits, such as erosion control and regulation of stream flows, and non-timber forest products, such as rubber, rattan, fruits, and nuts. The first benefit is motivational. Host countries capture only a small proportion of the global benefits, which stem from biodiversity conservation. Demonstration of palpable local benefits could help to build support for biodiversity-oriented projects. The second benefit is the magnitude of domestic benefits that could influence project financing. Sufficiently large net domestic benefits could justify financing of a project on narrow economic grounds, with biodiversity conservation as a by-product. Overall, it is noted that the quantifiable benefits of forest preservation in providing hydrological services and non-timber forest products are highly variable. These classes of domestic benefits may in general be smaller than popularly supposed. In view of this, the need for financing conservation from the Global Environmental Facility or other global sources is emphasized rather than placing the burden on domestic resources.     

Perceptions of the relationship between scenario planning and firm performance: A qualitative study

This paper presents research findings from the application of scenario planning in multinational firms that operate in competitive industries. We use exclusive and not publicly available data to investigate the link between scenario planning and firm performance from a qualitative perspective. The focus was primarily on firms that had real-life experiences with this strategic tool. Our research suggests that scenario planning is interwoven in how strategy is formulated and that it has a major influence on decisions taken by management. We also found that none of the firms reported formal efforts of assessing the success rate of scenario planning. Participants report that this is due to difficulties in measuring qualitative and quantitative outcomes and because standardized assessment tools are not readily available for this kind of strategic intervention. Overall, participants generally regarded scenario planning as an effective intervention with a positive contribution to the firms’ performance. When pressed for more detail, participants revealed that scenario planning techniques were useful in exploring the business environment and future risks, isolating trends, understanding interdependent forces, and considering the implications of strategic decision-making.     

How do firm- and country-level governance mechanisms affect firms’ disclosure?

This paper examines how a country’s regulatory environment interacts with firms’ institutional corporate governance arrangements to affect the disclosure that these firms provide in their annual reports. Prior literature indicates that firms with stronger corporate governance arrangements demonstrate higher levels of disclosure. We investigate whether this effect varies with the legal environment. The transparency-increasing effect of strong corporate governance might be reinforced by a strong legal environment, suggesting a complementary relationship between these two factors with respect to transparency. However, strong corporate governance arrangements may serve as bonding mechanisms in weak legal environments, suggesting a substitutive relationship between corporate governance and the regulatory environment. Using a sample of listed firms from 16 European countries, we find evidence suggesting that corporate governance arrangements and the legal environment substitute with respect to their effects on corporate disclosure.     

The effect of strategic and operating turnaround initiatives on audit reporting for distressed companies

Empirical research on the effect of turnaround initiatives on audit reporting is scant. This paper addresses this gap by examining audit reporting for distressed companies and its association with a broad array of strategic and operating turnaround initiatives. In particular, we study the association between business risk information and going-concern decisions for distressed clients. Using a sample of distressed firms in the US manufacturing industry, we find that both short-term cash flow potential as well as strategic growth and hence long-term cash flow potential are necessary for strategic turnaround initiatives to have a mitigating impact on the auditor’s going-concern decision. Strategic turnaround initiatives for which only one of these two conditions holds and operating turnaround initiatives appear to function as going-concern risk factors as they are associated with a higher likelihood that a going-concern opinion will be issued. We also find that specialist and non-specialist auditors assess the mitigating potential of some but not all turnaround initiatives differently. Overall, our results suggest that auditors’ strategic risk assessment (typically done in a business risk auditing context) is associated with the outcome of the audit process (the opinion).     

Conservatism,SEC investigation,and fraud

We present evidence on the relationship between firms that have engaged in fraudulent financial reporting and accounting conservatism. We empirically investigate the extent to which US firms identified by the SEC in their Enforcement Releases demonstrate higher levels of conditional conservatism in order to mitigate information asymmetry and agency problems. Specifically, by assessing the timing of changes in the litigation risk environment for fraud firms, we document how differences in heightened legal liability guide changes in conservative accounting behavior. Compared to a matched non-fraud control sample, we document that fraud firms have significantly lower levels of accounting conservatism in the pre-fraud period. Consistent with changes in potential legal liability, we find an increase in accounting conservatism for fraud firms during the SEC investigation period. Subsequently, during the public discovery of fraud, any increases in accounting conservatism are marginal and appear to converge back to lower levels compared to the SEC investigation period. Overall, our findings suggest more temporary changes in conservative reporting in the short-term for fraud firms. We also document that increased levels of accounting conservatism for fraud firms are not due solely to the passage of the SOX Act. Our findings aid in explaining fraud firms’ incentives and opportunities for accounting conservatism and lend support for why standard setters, regulators and auditors should continue to monitor and re-evaluate conservatism’s short-term effects that are conditioned on changes in a firm’s risk environment.     

Bank capital,interbank contagion,and bailout policy

This paper develops a theoretical framework in which asset linkages in a syndicated loan agreement can infect a healthy bank when its partner bank fails. We investigate how capital constraints affect the choice of the healthy bank to takeover or liquidate the exposure held jointly with the failing bank, and how the bank’s ex ante optimal capital holding and possibility of contagion are affected by anticipation of bail-out policy, capital requirements and the joint exposure. We identify a range of factors that strengthen or weaken the possibility of contagion and bailout. Recapitalization with common stock rather than preferred equity injection dilutes existing shareholder interests and gives the bank a greater incentive to hold capital to cope with potential contagion. Increasing the minimum regulatory capital does not necessarily reduce contagion, while the requirement of holding conservation capital buffer could increase the bank’s resilience to avoid contagion.     

The contract,accounting and trust: A case study of an international joint venture (IJV) in the United Arab Emirates (UAE)

This paper reports on the results of a case study that examines the effect of the contract and accounting on inter-organisational trust in an international joint venture (IJV). The empirical setting of the research was an IJV relation between a United Arab Emirates (UAE) firm and its western partner. Data were gathered from multiple sources, including documents, observations, interviews and discussions with managers. The paper aims to explore the process of trust development and the role of the contract and accounting in this. We find that trust developed differently for the partners. Moreover the trust concerns of the partners were not the same. Based on this we conclude that trust was not automatically reciprocated. Instead it needs relating to other items such as the contract, accounting and also the institutional environment. The open-book accounting we observed could only be termed ‘partial’ because the western partner had access to the local partner's books but not the vice versa. But this partial open-book accounting created conflicts between the partners. We argue that developing one kind of trust through one particular medium may help one party but may damage the relationship between the partners.