Firm Characteristics,Shareholder Sophistication and the Incidence of a ‘First Strike’ Under the ‘Two Strikes’ Rule in Australia

To restrain ‘excessive’ executive pay, Australia introduced new legislation in 2011, commonly known as the ‘two strikes’ rule. This rule has predictable consequences for publicly listed firms and their directors. In this study, we investigate which firm characteristics are associated with the incidence of a ‘first strike’ under the two strikes rule. We find that the incidence of a first strike is positively associated with higher levels of CEO pay, lower ownership concentration, smaller firm size, higher level of institutional ownership and CEO duality. Additional analysis suggests that shareholders fail to differentiate between CEO pay, which is related to the economic characteristics of a firm, and the pay that is not related to firm characteristics. This finding suggests that, unlike US shareholders, Australian shareholders do not appear to have a sophisticated understanding of CEO pay structure.     

Rethinking development : A role for innovation networking in the ‘other two-thirds’

As global competition intensified and the rate of technological innovation and diffusion accelerated over the 1970s and 1980s, the sustainability of comparative advantage based solely on the existence of location-specific raw materials or cheap labour began to erode and innovation emerged as the key to competitiveness. For those few Third World countries that successfully passed through the window of opportunity for effective catchup strategies that opened in the 1970s, a base was laid for innovation in products, processes or organizational technologies. The ‘other two-thirds’, however, were singularly unprepared to meet the challenges of a changing technological and competitive environment. In large part this resulted from the contradictions generated by the mass production, import reproduction model to which they had remained wedded for several decades. During the 1980s, a number of changes took place, in the strategies of multinational corporations with respect to the internationalization of R&D and the role of overseas subsidiaries more generally, and in government policies with respect to the role of innovation in international competitiveness. A slow process of technological accumulation in both public and private sector enterprises and universities in Africa, Latin America and the Caribbean also got underway. These changes provide the foundation upon which well crafted policies to promote networks for innovation can be developed. In Latin America a number of such networks are already in place, and the article discusses the new role that both states and international donors are playing in stimulating and supporting them. A brief look at how such approaches might be adapted and generalized to Africa is also offered.     

A Consulting Giant; a Disgruntled Client: A ‘Failed’ Attempt to Change Management Controls in a Public Sector Organisation

There has been very little research into management consulting interventions in public sector organisations, especially in emerging economies. This paper aims to fill this void by narrating the empirics of a consulting assignment carried out by a large international consulting firm in a Pakistani public sector organisation. The study found that consultants’ recommendations of ‘businesslike’ management controls, such as a modern performance measurement system and a ‘state‐of‐the‐art’ information system, were rejected outright by the client management. Employing a critical realist perspective that focuses on the structural conditions facing both the client and the consultants, and on the strategies adopted by both parties, the study aims to explain the empirics of the case. Through structural and strategic analysis, this paper aims to enhance our understanding of the dynamics of management consulting in public sector organisations, especially in emerging economies.     

A comparative analysis of the evolution of a taxonomy for best practices: a case for ‘knowledge efficiency’

Taxonomies play an increasingly important role in knowledge management of business best practices, providing a basis by which to index, find and communicate knowledge. However, knowledge continues to evolve over time. As a result, taxonomies must also continue to evolve as organizations innovate and change. Reportedly, firms customize best‐practice taxonomies to meet their unique organization needs. Accordingly, we might expect organizations to generate dissimilar best‐practice taxonomies. However, taxonomies must also reflect the state of knowledge in the area being categorized, and thus are likely to be similar in many ways in different organizations. The purpose of this paper is to study how taxonomies change in different organizations and how they stay the same. In order to explain the parallels in organizational taxonomies, the notion of ‘knowledge artefact efficiency’ (or knowledge efficiency) is suggested to capture the concept that new knowledge is rapidly adopted by many organizations in their knowledge management systems. Copyright © 2009 John Wiley & Sons, Ltd.     

Explanations for Not Having an Audit Committee in a ‘Comply or Explain’ Regime

We utilise the Australian ‘comply or explain’ corporate governance regime to examine the explanations given for not having an audit committee and whether these explanations are consistent with underlying firm characteristics. We hand‐collect explanations provided by firms, and find the most common explanations are that the firm or board size is too small or that the firm is insufficiently complex to justify an audit committee. Thus, the reasons that firms provide for not having an audit committee are focused on internal factors limiting their ability to supply an audit committee. As we find that these explanations are associated with lower total assets, smaller board size and lower leverage, they are consistent with underlying firm characteristics. Thus firms are not providing inconsistent or unrelated explanations as pretexts to avoid forming an audit committee. Documenting that the explanations given for non‐compliance are associated with related firm characteristics should be of interest to regulators and policy makers.     

Re-framing a ‘subfusc’ Institute: Building on the past for the future at Chartered Accountants’ Hall, London, 1965–1970

The study which follows traces the circumstances surrounding the rebuilding of Chartered Accountants’ Hall, London, from ca. 1965 to 1970, in order to show how the Institute of Chartered Accountants in England and Wales consciously utilised the architecture of its remodelled headquarters for status-building purposes and for adjusting public perceptions of its role in society. It proceeds by outlining the Hall's prehistory, dealing with the earlier use of architectural effect by the Institute to build its status when Chartered Accountants’ Hall was first built in 1893. Setting the Hall's extension in the context of post-World War II Britain and a rapidly expanding Institute, it details the practicalities associated with the rebuilding; it also outlines the architectural climate of the times and reveals the architect's design ideas and use of architectural metaphors and iconography for status building and related purposes. The study makes clear the role of key individuals within the Institute in forwarding the project, as well as emphasising the unique, creative contribution of the architect. It also offers some refinements to the findings of Macdonald (1989) and McKinstry (1997) concerning the role and use of professional headquarters as status symbols.     

‘Ode to totalitarianism’, or, does the information society have a chance in Bulgaria?

This article analyses the paradox that the information revolution was one of the favourite ideas of the Bulgarian state over the last years of communist rule, and it was ‘discarded’ by the country's young democracy. The first part of the article is retrospective and considers informatization à la Bulgare and marks its specificities in comparison to the developed countries. The problems are discussed of the place of informatization in the ideological arsenal of the communist state, the causes hampering the implementation of the goals that the state had set itself. The second, prognostic, part presents two scenarios for the development of informatization in the transition period to democracy. The problems are analysed of the relative weight of the individual agents of high-technology development, of its specificities under a strong state power and of the role of the social sciences in elaborating social alternatives. In conclusion arguments are given for the answer to the question posed in the title.     

Telework remains ‘made to measure’ The large-scale introduction of telework in the Netherlands

About 25% of all jobs in the Netherlands can be done in telework. We cannot give a quantitative overview of the costs and benefits of telework, partly due to the ‘made to measure’ quality of telework projects, but a qualitative overview shows that overall telework will be beneficial both on the micro and macro level, provided its introduction is voluntarily for all involved. The main barrier to the introduction is that organizations do not know enough about the implementation process. Considering the differences between organizations, a large-scale introduction of telework can be stimulated by creating a large variety of telework examples. Telework will have to remain ‘made to measure’.     

A health service fit for the 21st century : The Welsh ‘Health and Social Care 2010’ project

‘Health and Social Care 2010’, a project of the Welsh Health Planning Forum, has been designed to link the overall strategy of the National Health Service in Wales with the planning of local health-care strategies. During the first phase of the project, forces that may impact on health and social services in the future have been identified, and consideration has been given to how the services could adapt to the expected changes. The result has been a vision of a new kind of health care based on clusters of services. Testable indicators of the vision's fulfilment have also been identified in the form of nine assumptions regarding specific future developments in the health and social services. Groups at several pilot sites have analysed these assumptions in terms of their achievability and desirability, thus illuminating potential roadblocks in reaching the desired future, as well as creative ways around these problems.     

Individual voluntary arrangements: A ‘fresh start’ for salaried consumer debtors in England and Wales

Since the mid‐1990s the number of consumer insolvencies in England and Wales has grown exponentially. The UK's Insolvency Act 1986 offers two formal responses to personal insolvency: bankruptcy and individual voluntary arrangements (‘IVAs’). While consumers have used both these debt relief mechanisms in increasing numbers in recent years, IVAs—regulated agreements between debtors and creditors facilitated by a licensed insolvency practitioner, usually taking the form of a 5‐year payment plan—grew faster than bankruptcies between 2003 and 2006. However, the level of new IVA approvals fell back in 2007 and the first half of 2008. This article charts the transformation of the IVA from a bankruptcy alternative originally designed for insolvent traders and professionals into a tool of consumer debt relief. It then seeks to explain both the stellar rise in IVA usage among consumer debtors and the subsequent stalling of IVA growth. The rise of consumer IVAs can be attributed largely to supply side changes in the market for debt resolution—in particular the emergence of volume providers commonly referred to as ‘IVA factories’—while a sustained backlash against the procedure and the providers instigated by institutional creditors demanding higher recoveries accounts for the subsequent decline in approvals. The article concludes by considering the near‐term prospects for consumer IVAs within the context of the increasingly complex UK debt resolution market. Copyright © 2009 John Wiley & Sons, Ltd.     

The effects of devaluation on the trade balance: A critical view and re- examination of Mile's ‘new results’

In a often cited article, Miles (1979) claims to have shown empirically the validity of the global monetarist proposition that devaluations do not affect the balance of trade. This paper first uses Mile's own framework of analysis to reveal serious deficiencies in his methodology and tests that cast doubt on the validity of his results. In a respecified trade balance equation, we show that devaluations do affect the trade balance in the traditionally predicted direction. The pivotal difference between the two specifications arises from our inclusion of relative-price effects and longer lag structure for the exchange-rate variable.     

‘The Re Tea Corporation principle and junior creditors’ rights to participate in a scheme of arrangement – a view from Singapore'

This paper examines the application of the principle derived from Re Tea Corporation's case in recent schemes of arrangement to break negotiation deadlocks between senior and junior creditors of a financially distressed company. This paper argues against an overly technical application of the principle in Re Tea Corporation's case which might work injustice towards junior creditors by effectively shutting them out of a restructuring. This paper further explores how the holdout problem, which led to the formulation of the Re Tea Corporation principle in the first place, could be addressed while balancing the competing interests of junior claimants in a scheme of arrangement. Copyright © 2011 John Wiley & Sons, Ltd.     

‘Fair Value’ of Core Deposits in the EU version of IFRS: A Critical Review

The paper presents seven impacts of the introduction of core deposits models in credit institutions into International Financial Reporting Standards (IFRS). First, the equity of the credit institution will be higher for the core deposit premium adjusted for deferred tax. Second, the models make it possible for some financial instruments (e.g., interest rate swaps where the credit institution receives fixed payments and pays floating payments) to be designated as hedging instruments. Third, there is lower comparability of financial statements, as no standard business model of core deposits exists. Fourth, the models can be understood at the next step of relaxing of prudence (conservatism) and neutrality of IFRS. Fifth, there is inconsistency in the core deposit definition. By definition, these deposits should be stable for a long (infinite) period. Then, the present value of core deposits should be zero which is flawed. Sixth, there is inconsistency in the interest rate risk definition. Seventh, according to available information, the core deposits models have not been introduced into accounting in any national generally accepted accounting principles (GAAP) such as US GAAP. Thus the fair value of core deposits should be equal to the nominal value of these deposits. The accounting should not reflect the core deposits models. The carve‐out in the European version of IFRS should be removed.