Accountants’ hybridization and juridification: a critical reflection on the fight against organized crime

Policy-makers and regulators are increasingly focusing on fighting organized crime. Preventing criminal organizations infiltrating an economy involves multiple groups of professionals operating in complex regulatory environments. This paper looks at whether the current regulations for the management of assets seized from organized crime are adequate. The focus is on the Italian setting, and the research included interviews with accountants, judges and police officers involved in the management of seized entities. The results have application worldwide.     

Regulatory technologies,risky subjects,and financial boundaries: Governing ‘fraud’ in the financial markets

Among the myriad changes to have impacted the regulation of financial markets in recent years, one of the most significant yet least recognized is the growing role of technology in the regulatory process where it is used to detect emerging problems in the marketplace and guide the enforcement process. Current applications range from surveillance technologies, to datamining and risk profiling tools, to data visualization and graphing programs. Using the term ‘regulatory technologies’, this paper examines in detail two such technologies and assesses not only their benefits and limitations, but also their more subtle role in shaping the very criteria through which financial transactions and market actors are represented, framed, and assessed for their regulatory merit. To the extent that this process hinges on the ability to make distinctions on the grounds of risk, typicality, and appropriateness, these technologies play a critical role in shaping the boundaries of enforcement and thus the scope and depth of the regulatory vision. This is revealed to have significant implications for our understanding of the place of technology in regulation and for the types of questions that must be addressed in discussions of financial governance.     

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.     

Pitching research: ‘Qualitative cousins’, the ‘extended family’ and ‘living harmoniously’

This paper reviews Faff (2018) with particular emphasis on the Qualitative Pitch proposed by Lodhia (2017). In the spirit of constructive engagement envisioned by Faff (2018), the purpose of this paper is to revisit the Qualitative Pitch and to clarify any misconceptions or misunderstandings. This paper is not a critique but rather a reflective piece on the potential offered by the Qualitative Pitch as a viable tool for pitching qualitative research ideas. The basic premise of this paper is that the Qualitative Pitch, drawing upon Faff's (2015) pitching template, provides qualitative researchers with specific tools and a consistent framework for articulating qualitative research. It is therefore proposed that the Qualitative Pitch should be the used as the initial template for designing qualitative research projects rather than being transitioned to once a threshold barrier is reached.     

Twenty years of Hong Kong and Macao under Chinese rule: being absorbed under ‘one country,two systems’

This paper examines the implementation of ‘one country, two systems’ (1C2S) in the two former Western colonies, Hong Kong and Macao, as a policy innovation in managing inter-governmental relations of a large, diverse country like China. 1C2S embodies internal tensions because the Hong Kong and Chinese governments have multiple and often incompatible goals. After 20 years, these two special administrative regions (SARs) of China are gradually being absorbed.     

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.     

Pitching research: ‘qualitative cousins’ and the ‘extended family’

This study has two related goals – one very specific and one more general. The specific goal is to constructively engage with Lodhia (2017) on the issue of whether and to what extent ‘qualitative cousins’ are well served by Faff's (2015) original pitching research (PR) template. Using this ‘cousins’ focus as a primer, the more general goal is to update the agenda created by Faff (2015) and in so doing, explore the ‘extended family’ of PR work/resources now available.     

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.     

‘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.     

Determinants of hedge fund performance during ‘good’ and ‘bad’ economic periods

We analyse the drivers of hedge fund performance, focusing simultaneously on fund size, age, lockup period, fund strategies, business cycles and different market conditions, dealing with the omitted variable bias. We use exogenous break points and a switching Markov model to endogenously determine different market conditions. We find that HFs deliver positive alpha only during “good” times, irrespective of their fundamentals. During “bad” times, they minimise their systematic risk. Small and young funds, and those with redemption restrictions deliver higher alpha compared to their peers during “good” times. Finally, specific strategies deliver significantly negative alpha during “bad” times.     

On theory as a ‘deliverable’ and its relevance in ‘policy’ arenas

This paper comments on Lee Parker's paper on “Qualitative management accounting research: deliverables and relevance”. Using it as a starting point, it highlights the need for more informed modes of theorizing as opposed to ‘more theories’ and the performative effects of theorising. Theories and theorising already matter although what they ‘deliver’ and influence will be contingent on their instantiation in specific action nets. Further, in order that such social practices might continue to generate desirable consequences, stronger forms of research training should be developed.     

‘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.     

Asymptotics of the probability of minimizing ‘down-side’ risk under partial information

We consider minimizing the probability of falling below a target growth rate of the wealth process up to a time horizon T in an incomplete market model under partial information and then study the asymptotic behavior of the minimizing probability as T → ∞. This problem is closely related to an ergodic risk-sensitive stochastic control problem under partial information in the risk-averse case. Indeed, in our main theorem we relate the former problem to the latter as its dual. As a result we obtain an explicit expression for the limit value of the former problem in the case of linear Gaussian models.     

Public sector pay: Comparability,no‐strike agreements,and ‘pendular’ arbitration

Leaving aside the disputes, like the miners’ and the teachers’, that have flared into the open, there is evidence of growing resentment within the public sector at the Government's pay policy (see page 9). This paper, an edited version of a speech to the CIPFA annual conference in June this year, suggests a way forward for both public and private pay.     

Consequences matter, ‘risk’ is marginal

Critical comments by Palm and Slovic on a previous article of mine (L. Sjöberg, Consequences of perceived risk: demand for mitigation, Journal of Risk Research 2, 129–149) are discussed. Palm’s arguments are largely based on misreading of my article, and her own studies, which she described in detail, are largely irrelevant in the present discussion. Slovic’s arguments are met by pointing out that the many references he cites in favour of his standpoint are mostly quite misleading and irrelevant. Furthermore, I present two new studies where the riskiness of activities was investigated, as well as the risk of unwanted events caused by such activities. All results very clearly support the conclusion that seriousness of consequences is a more important determinant of demand for risk mitigation than risk or probability of unwanted events, or riskiness of activities that can lead to such events.     

Looking for leaders: ‘Balancing’ innovation,risk and management control systems

Using the concept of institutional leadership we explore how leaders balance creativity and product innovation against administrative arrangements such as risk management and management control. Using two case companies we produce distinct contrasts to this balance with neither showing the ambidexterity needed to ‘secure’ (Selznick, 1957) the value of innovation and exploration and develop risk management and control systems for exploitative activities. One case company stuck to its past trajectory of innovation, ignoring risk management and control; the second case company had systems for its exploitative operations but was struggling to maintain any value of innovation and exploration. Nevertheless, one over-riding similarity in both organisations was that the leadership of the risk systems and management controls was with the engineers; accountants were not to be seen.