Book Review

Organisational risk propensity directly affects the decision‐making behaviour of employees, with linked impacts on the ongoing prosperity of the organisation. The literature on an individual's risk behaviour is extensive. However, few studies investigate the risk propensity of an organisation. This study uses primary data from interviews within a major change programme in a FTSE100 pharmaceutical organisation to explore the characteristics of organisational risk propensity. The data are analysed using open coding procedures from Grounded Theory in order to fragment the category of ‘organisational risk propensity’ into some constituent properties and dimensions. An integrative framework is then inductively derived which provides insights into risk propensity within the case context; together with some cues for implementing changes to the organisation's risk propensity if so desired. The output from this research also provides a useful base from which to develop a survey instrument for assessing organisational risk propensity.     

Non-technical skills for managing risk and performance in financial trading

Recent large-scale failures in financial institutions have been found to be caused, in-part, by human factors-related issues in financial trading. In other environments where risk management and performance are intertwined, a human factors approach is often adopted to understand how the ‘non-technical skills (NTS)’ (leadership (LD), decision-making (DM), situation awareness (SA), teamwork) of organisational actors influence outcomes. Yet, to date, there has been minimal application of human factors research in financial trading. This study (i) identifies ‘real-world’ (i.e. non-laboratory) research studies investigating the NTS important for performance in financial trading, (ii) examines and synthesises data on the NTS found to underpin good or poor performance and (iii) considers the quality and coverage of research investigating NTS in financial trading, and identifies potential areas for future research. Nineteen studies were identified through a systematic literature search and then content-analysed for associations between NTS and performance in financial trading. The review found a range of decision-making (e.g. heuristics and biases, intuitive DM, emotional regulation) and LD skills (e.g. setting standards, monitoring behaviour, encouraging speaking-up) to have been identified as important for managing risk and performance in financial trading environments. Furthermore, SA (e.g. information search and assessment strategies, vigilance, identifying ‘noise’ data) and teamwork (e.g. avoiding ‘role’ conflict, communication between traders) were found to be important, yet remain less explored within the literature, and should be the focus of future research. NTS appear essential for effective risk management within the financial sector, yet further field research is required to examine the context-relevant behaviours that underpin safe activity. This will facilitate the development of evidence-based systems for assessing and training NTS competencies.     

Goodwill write-off and financial market behaviour: An analysis of possible relationships

The aim of this contribution is to verify whether there exists a reaction of financial markets to the new accounting method for goodwill introduced by SFAS 142 and IAS 36. Our research hypothesis is that financial markets should have no significant reaction to the goodwill write-off following the impairment test, since the latter's outcome represents an economic estimate without financial significance. The hypothesis was checked by the analysis of the companies added to the Standard & Poor's Europe 350 index over a three-year period, taking note of goodwill write-off announcements and relating them with the stock market prices and their volatility. The results demonstrate a correlation between the goodwill write-off and the behaviour of financial markets, while the same connection cannot be evinced for prices volatility. Also, what comes out from our analysis is that markets need a relatively long period, over one semester, before absorbing in full the effects resulting from the write-off announcement.     

A behavioural theory of the fund management firm

The paper outlines a behavioural theory of the fund manager (FM) firm comprising investment decisions (at stock and portfolio levels) by teams and individuals, and of an organisation process and contextual resource factors affecting decisions. FM organisational processes interacted with resources to enhance investment team decision conditions, costs and processes. Enhanced conditions and reduced decision costs were expected to improve the chances of FM success via new information production and better-quality decisions. These dynamic elements to FM firms can be interpreted as tentative organisational means to deal with major problems of behaviour, uncertainty and information asymmetry at the heart of the valuation, investment and performance problems facing FMs. Field research was conducted in 15 FM firms during 2004–2011. A grounded theory approach was employed in processing the data. This led to improvements in empirical understanding of behaviour within FM firms and markets. The results were discussed relative to relevant literature and previous grounded theory. This created a new conceptual tool to investigate FM underperformance and variety in FM styles. The paper demonstrated an empirically rich model of hierarchy, information production, capital allocation and other resource usage in financial institutions and discussed how this created further opportunities for research.     

The relationship between lack of controllability and proactive work behaviour: an empirical analysis of competing theoretical explanations

The controllability principle suggests evaluating managers solely based on performance measures they can control. In practice, however, companies often disregard this principle. Therefore, our study addresses organisational benefits linked to the lack of controllability in measures used for managers’ performance evaluations. We draw on important case-based findings to establish a positive ‘base relationship’ between lack of controllability and proactive work behaviour. We test this base relationship with a large-scale sample and find that companies encourage higher levels of proactive work behaviour when they rely on less controllable performance measures. Drawing on recent developments in role theory, we advance previous research and extend the base model by including the theoretical construct of flexible role orientation. We examine different mechanisms through which flexible role orientation potentially impacts the base model. Using survey responses from 432 managers, we find evidence for a mediation model as opposed to an interaction model. Specifically, we find that lack of controllability enhances role conflict, which in turn induces more flexible role orientations ultimately resulting in higher levels of proactive work behaviour.     

The control dynamics of outsourcing involving an early-stage firm

Firms in the early stage of their organisational lifecycle experience challenges that shape the adoption of management controls. They are also recognised for their use of outsourcing. However, the accounting research has provided limited insight on how these control challenges and inter-organisational control concerns interact to influence the adoption of specific controls within an outsourcing relationship involving an early-stage firm. Exploration of this gap provides a key motivation for this paper. Contrary to existing management control and organisational science literature, we find a strong preference for new or enhanced action controls. Conversely, we find low levels of interest in result controls by managers within the buyer but not the supplier firm. These preferences influence inter-organisational control adoption within the frame of an incomplete outsourcing contract that emphasises flexibility in terms of relationship exit. Within the limits of a case study methodology, we argue that adoption of inter-organisational controls is shaped by tensions between the control challenges of early-stage firms, the control preferences of managers within these firms and inter-organisational control concerns. These findings have theoretical implications, expanding the Davila et al. [2009. Reasons for management control systems adoption: insights from product development systems choice by early-stage entrepreneurial companies. Accounting, Organizations and Society, 34 (3–4), 322–347] framework and the Merchant [1985. Control in Business Organizations. Boston, MA: Pitman] control typology into an ESF inter-organisational control context.     

Corporate culture and CEO turnover

We study the effect of corporate culture on the relationship between firm performance and CEO turnover. Utilising a measure of cultural dimension developed in organisation behaviour research, we quantify corporate culture by assessing official documents using a text analysis approach. We employ this quantification to examine the impact of culture on CEO turnover, especially in the case of poor firm-specific performance. First, we find strong evidence of a negative relationship between firm-specific performance and CEO turnover. Second, we demonstrate that the probability of a CEO change, on average, is positively influenced by the competition- and creation-oriented cultures. The negative relationship between firm-specific performance and CEO turnover is reinforced by the control-oriented culture and reduced by the creation-oriented culture. Finally, we study the CEO insider or outsider succession and observe that the creation-oriented culture has a negative relationship with the probability of hiring an outsider. Moreover, the creation-oriented culture weakens the negative relationship existing between the firm-specific performance under the incumbent CEO and the probability of hiring an outsider.     

Taking notice of risk culture – the regulator’s approach

Following the financial crisis and a series of mis-selling and ‘rigging’ scandals in the financial services, organisational culture, and particularly the risk culture of organisations, has come to be regarded as a key issue for both financial firms and their regulators This paper considers the extent to which regulatory published notices, ‘Final Notices’ (FNs), relating to breaches of the regulatory Handbook, are able to provide lessons, or pointers, in the development of ‘appropriate’ cultures. By undertaking a qualitative content analysis of all the FNs in 2012, we examine the extent to which FNs draw attention to issues of culture, and to the regulator’s analysis of the drivers of culture published as part of its treating customers fairly (TCF) initiative. The analysis finds that, although not easy to extract, there are important learning points in FNs relating to organisational culture, and in particular to the factors driving behaviours and outcomes that are signs of poor culture. This paper suggests that, whilst it may not be for a regulator to dictate firms’ culture, it could do much more to make use of the content of FNs as a learning tool for firms; particularly in the context of its cultural framework for TCF. This would support the ‘outcomes-based’ approach being espoused by the UK’s regulators.     

董事会特征与内部控制目标的实现——来自中国上市公司的经验证据

以2009～2011年中国A股上市公司为研究样本,实证研究了董事会特征与内部控制各目标之间的关系。研究发现,董事会特征与财务报告可靠性、经营效率效果以及法律遵循性之间的相关关系与假设并不完全契合。独立董事比例和审计委员会的设置与内部控制目标的实现显著正相关,在各指标间无差异。董事会会议频率对内部控制目标的实现作用不显著。董事长与CEO两职合一一定程度上能够提高企业的经营效益,但与财务报告可靠性、法律法规遵循性却呈负相关关系。     

Financial Management Strategy in a Community Welfare Organisation: A Boardroom Perspective

This paper presents the results of a four year participant observation study of boardroom deliberations and resulting financial management strategies in a large not–for–profit religious based community welfare organisation. Employing a complete membership research approach and informed by grounded theory analysis, the study develops a micro–theoretical framework portraying boardroom financial management and accountability strategising. The study finds that the strategic focus on mission financing was conditioned by the contested formulation of strategic objectives, core organisational service philosophies, and executive–board member interaction. A significant observed outcome of the strategic mission financing focus was the management of accountability and disclosure, to which two key strategies were contributory. These were the exercising of financial control and the exercising of relationships management. The findings offer hitherto unavailable insights into strategic financial management and accountability processes and their context at the boardroom level in the religious not–for–profit community welfare sector.     

Methodological issues in the use of financial ratios

It appears that the extensive use of financial ratios by both practitioners and researchers is often motivated by tradition and convenience rather than resulting from theoretical considerations or from a careful statistical analysis. Basic questions, such as: Is the control for firm size, a major objective of the ratio form, called for by the theory examined; what is the structural relationship between the examined variables and size; and what is the optimal way to control for industry-wide factors, are rarely addressed by users of financial ratios. The major purpose of this study is to discuss the conditions under which conventional tools, such as financial ratios and measures of industry central tendency, achieve the intended objectives of analysis (e.g., size control). Various issues related to financial analysis, such as spurious correlation due to a common denominator, the choice of an optimal size variable, and the treatment of outlier observations, are also examined.     

ORGANISATIONAL COMMITMENT IN THE POLICE SERVICE: EXPLORING THE EFFECTS OF PERFORMANCE MEASURES,PROCEDURAL JUSTICE AND INTERPERSONAL TRUST

This study aims to investigate whether, and how, the use of performance measures, procedural justice, and interpersonal trust interact to affect organisational commitment of police officers. Drawing on a survey based on a sample of 57 senior officers within a single police force, we find that the use of performance measures, procedural justice, and interpersonal trust are positively associated with organisational commitment. Further analysis reveals that trust between officer and superior mediates the relationship between the use of non‐financial measures and organisational commitment, but procedural justice does not have a mediating effect on commitment. These findings are further explored through selected interviews with respondents.     

Accounting history and theorising about organisations

Historical accounting research has a substantial track record of using a variety of theoretical insights to better understand how and why accounting has contributed to, and been affected by, organisational change and development. The article outlines the emergence of a range of theories that have been employed by accounting historians, against the background of the development of accounting history as a significant disciplinary field within accounting research. From its investigation of accounting historians’ approaches to studying accounting as a central practice in organisational processes, it reveals how historical accounting studies have been informed by and contributed to theorisation of such organisational phenomena. The article concludes that theory is largely used to provide conceptual frameworks for historical narratives, with historical accounting research often focused on case studies of single organisations or organisational settings. However, theory has also been mobilised at more general levels, to provide meta-narratives of the rise of capitalism and the emergence of managerialism. Far from treating accounting as technical practice, accounting historians are revealed as conceiving accounting as social practice, impacting both human behaviour and organisational and social functioning and development. As social practice, accounting emerges deeply embedded and pervasive in organisations and societies.     

The influence of marketing communications strategy on consumer purchasing behaviour in the financial services industry in an emerging economy

The financial services sector is characterised by a high level of consumer perceived risk and irrational behaviour in decision-making, which is predominantly influenced by the effect of communication and the application of heuristics as a function of communication in consumer decision-making. This situation promotes marketing communication as one of the most essential activities that financial institutions rely on to mitigate the perceived risks and to satisfy consumers’ quest in understanding financial products. Hence the importance of this research is to establish the effects of marketing communication on consumer purchasing behaviour in emerging economies that are experiencing expanded financial markets but limited corresponding research insight. To achieve the aim of this study, the research uses data from 360 customers of selected financial institutions in Ghana. The hypotheses are tested using the structural equations modelling technique. The results of the study reveal marketing communication strategies evaluated have positive and significant impacts on consumer purchase behaviour. However, amongst the marketing communication strategies tested advertising and celebrity endorsement were found to have an insignificant relationship with consumer purchase behaviour. The study offers practical and theoretical insights into understanding the dynamics and nuances of the integrated marketing communication mix and how they influence the purchase behaviours of consumers.

     

The interrelationship between management control mechanisms and strategy

This paper examines the interrelationship between management control system (MCS) mechanisms and strategy. The traditional view is that the MCS is shaped by organisational strategy. More contemporary viewpoints, however, suggest that there may be a two-way relationship between the two variables. That is, MCS shapes, and is shaped by, strategy.We develop two research questions that describe the interrelationship between MCS and strategy, and test them using a public sector entity that experienced a strategic change. A retrospective longitudinal study, spanning five years and involving archival data, interviews and a questionnaire, was adopted. The analysis confirms the existence of a two-way relationship between MCS and strategy. We find that the interactive use of MCS mechanisms helps to facilitate a change in strategy, and that MCS mechanisms change to match a change in strategy.     

Organisational control as cultural practice—A shop floor ethnography of a Sheffield steel mill

Field studies of management control and accounting have tended to study organisational meaning through practices. We identify three strands of practice research on organisational control (viz., governmentality, actor network theory, and accountability) and propose a forth: cultural practice. The study of control as cultural practice is grounded in observation because it conceives of cultural knowledge as practical and largely extra-linguistic. It conceptualises organisational control as an effect of the actions and ideas of organisational members beyond the ranks of management, thus widening the field of empirical inquiry. It also makes studies of steady state organisations more attractive thereby opening the possibility that the assemblages of people, purposes, and technologies, which give rise to specific forms of organisational control, may be understood as less ephemeral than, particularly, studies of governmentality and actor network theory have suggested. Our ethnography of a steel mill in Sheffield is based on 11 months of participant observation on the shop floors of the hot and cold departments. We argue that the subcultures of different shop floors were constituted in practices of control which enabled organisational members to pursue diverse objectives that were related to their various wider cultural aspirations. Organisational control practices relied on diverse accountings and accounts of organisational actions and purposes. Whilst we found considerable diversity between subcultures, we also found that individual subcultures, and the tensions and contradictions within them, exhibited much continuity. The ability of studies of organisational subcultures to bring out the diversity as well as continuity of practices holds considerable potential for our understanding of organisational control.     

The usefulness of a performance measurement system in the daily life of an organisation: a note on a case study

The design and introduction of performance measurement systems in business organisations continues to be one of the areas within Management Accounting that attracts a great deal of interest. We have focused on this field using the case study method, a research approach which is helpful for the development of greater understanding of innovative management accounting systems, discarding other methods, such as data collection through surveys.The research work we present here aims to examine the usefulness of performance indicators in a Spanish subsidiary of a North American multinational company dedicated to the car sector. The present performance measurement system, which undergoes annual revisions, was designed and introduced by the management team of the Spanish plant and does not exist in any other plant in the group with the same structure and complexity. How it works is not therefore the result of any imposition by headquarters but is rather the result of negotiation and consensus within the plant itself, its main aim being to motivate behaviour.Access to a wealth of both quantitative and qualitative information has enabled us to (i) observe the integration of this performance measurement system within the organisational structure of the plant, its continuing revision, the resources it has at its disposal, its usefulness for achieving employee involvement, its capacity to motivate learning, its relation with the incentive system, and also (ii) to suggest a correlation between certain measures of the performance measurement system and profitability.     

Organization size, budget cycle, and budget related influence in city governments: An empirical study

This paper explores the relationship between budgeting and perceived power in city government organizations. Data are reported from a survey of perceived budget influence in six city governments in Texas. The findings suggest that perceived influence varies by stage of budget cycle, city size, level of hierarchy, department function, and vertical vs horizontal direction of influence. For example, during budget formulation city managers were perceived as having the most vertical power. During budget implemetation, there was a perceived increase in department head vertical power and a decrease in city council power. Perceptions of horizontal power suggested that budget departments generally had greater perceived influence than operating departments for budget formulation, but not for budget implementation. The findings are used to develop a strategic contingencies model of budget-related power, and to suggest some research steps for testing the proposed model.     

Career growth opportunities and employee turnover intentions in public accounting firms

This study examines the role of career growth opportunities in explaining turnover intentions of junior auditors in public accounting firms via a survey of them. Prior studies in applied psychology and organisational behaviour argue that employees and their organisations have a social exchange relationship in which employees and organisations provide reciprocal benefits to each other. Extending this research, this paper proposes that career growth opportunities represent a critical benefit to lower level employees in accounting firms. When these employees believe that their firm provides this benefit, they reciprocate with stronger commitment to the firm which, in turn, leads to lower turnover intentions. This study also seeks to identify the causes or antecedents of employee beliefs about career growth opportunities. Two antecedents are proposed: the effectiveness of the firm's training programmes; and, the organisational prestige of the firm. Results of path analysis suggest that both training effectiveness and organisational prestige enhance employee beliefs about the career growth opportunities offered by the public accounting firms, which, in turn lead to higher commitment and lower turnover intentions.     

绿色金融发展与工业绿色转型耦合机制及实证评价——基于河南省17个省辖市的经验证据

在构建绿色金融发展指数与工业绿色转型指数的基础上,运用河南省总体数据及辖内17个地市数据对绿色金融发展与工业绿色转型的耦合协调状态进行实证分析。研究表明:绿色金融发展与工业绿色转型存在耦合协调关系,并且在2016年以前处于初级耦合状态,2016年以后,随着绿色金融体系的顶层设计与基层实践协同推进,其耦合协调度逐渐由中度协调阶段过渡到高度协调阶段。针对实证结论,提出构建激励约束机制、地方财政支持机制以及绿色金融与工业绿色转型对接机制等政策建议。