Examination of U.S.-based Japanese subsidiaries: Evidence of the transfer of the Japanese strategic cost management

As a result of global competition, many Japanese companies are now operating in the United States. This article presents a survey of the management accounting methods employed by U.S.-based Japanese manufacturers and documents evidence about the current direction of accounting practices that are being transferred from Japan to the U.S. work environment. The results of the study show that most of the U.S.-based Japanese firms are similar to Japanese domestic firms in their use of management accounting methods of target costing and value engineering, variable costing, and strategic adaptation of traditional methods such as standard costing and budgeting. It is also evident that U.S.-based Japanese affiliates may be influenced by U.S. practices, as shown by significant usage of activity-based costing and internal rate of return for evaluating capital investment projects. This article is an important part of a continuing effort to study the development of management accounting among foreign-owned subsidiaries in the U.S., helping them to meet the challenges of global competition. Additionally, expanding this line of research on foreign subsidiaries that apply world class management accounting practices in other countries may assist U.S. multinational firms in their overseas subsidiaries' operations. Two limitations of this study and, thus, suggestions for future research are identified. First, the data on U.S.-based Japanese affiliates were collected for one point in time. Second, this study did not match each U.S.-based Japanese affiliate with its parent in Japan.     

The U.S. current account deficit and the expected share of world output

We investigate the possibility that the large current account deficits of the U.S. are the outcome of optimizing behavior. We develop a simple long-run world equilibrium model in which the current account is determined by the expected discounted present value of its future share of world GDP relative to its current share of world GDP. The model suggests that under some reasonable assumptions about future U.S. GDP growth relative to the rest of the advanced countries—more modest than the growth over the past 20 years—the current account deficit is near optimal levels. We then explore the implications for the real exchange rate. Under some plausible assumptions, the model implies little change in the real exchange rate over the adjustment path, though the conclusion is sensitive to assumptions about tastes and technology. Then we turn to empirical evidence. A test of current account sustainability suggests that the U.S. is not keeping on a long-run sustainable path. A direct test of our model finds that the dynamics of the U.S. current account—the increasing deficits over the past decade—are difficult to explain under a particular statistical model (Markov-switching) of expectations of future U.S. growth. But, if we use survey data on forecasted GDP growth in the G-7, our very simple model appears to explain the evolution of the U.S. current account remarkably well. We conclude that expectations of robust performance of the U.S. economy relative to the rest of the advanced countries is a contender—though not the only legitimate contender—for explaining the U.S. current account deficit.     

IFRS and U.S. GAAP: Assessing the impact of reporting incentives on firm restatements in foreign and U.S. markets

This study examines the impact of reporting incentives on firm restatements in foreign and U.S. markets. We investigate whether financial reporting, using International Financial Reporting Standards (IFRS) results in quality disclosures, given differences in institutional and market forces. This study examines the quality of financial statements prepared in accordance with IFRS and U.S. GAAP by concentrating on firm restatements as a measure of earnings management. Our results indicate that there is no significant difference in the value of restatements due to differences in accounting standards when the rule of law is high in the international market. Furthermore, firms with better law enforcement and higher traditions of law and order, tend to have smaller restatement amounts or less earnings manipulation. This study contributes to the literature by providing evidence of the quality of financial information prepared under IFRS and its dependency on the institutional factors and market forces of a country.     

International expected real interest rates: New tests of the parity hypothesis and U.S. fiscal policy effects

This paper investigates the links among expected real interest rates across countries and also those between international expected real interest rates and U.S. fiscal policy. We analyze the cross-sectional mean of international ex-post real interest rates as an estimator for the mean international expected real interest rate. Our results strongly reject the international expected real interest rate parity hypothesis; reveal that U.S. budget deficits have no independent effects on international real rates given the impact of U.S. government defense spending; and suggest that forces other than U.S. fiscal policy account for the post-1980 rise in international real rates.     

Taxing audit markets and reputation: An examination of the U.S. tax shelter controversy

From 2002 to 2007, the nation's largest CPA firms faced allegations of illegal activity related to the sale of tax shelters: EY, KPMG and PwC paid fines; KPMG was investigated by a federal grand jury; and EY faced a criminal inquiry. These shelter events occurred shortly after the 2002 collapse of Arthur Andersen, when policy makers were concerned about audit market concentration. This is the first paper to provide a chronological summary of how the tax shelter controversy started and ended. We investigate the stock market reaction to tax shelter news developments between 2003 and 2005 to make inferences about the market's view of audit competition and CPA firm reputation. Our results are consistent with market concern over large audit firm concentration, evidenced by large negative returns for clients of all audit providers upon the KPMG grand jury investigation announcement. We also find that tax shelter activities impact both the reputation of the accounting profession and the individual CPA firms marketing tax shelter products.     

Deregulation and earnings management: The case of the U.S. airline industry

This paper examines earnings management dynamics in the airline industry during the airline industry deregulation of 1978. We expect that earnings management would increase after deregulation, since industry deregulation generally increases managerial discretion, whereas internal corporate governance systems are sluggish in adapting to newly changed environments. As corporate governance structures become more effective in tempering highly discretionary managers, and as capital markets learn more about how to design better management incentive systems, managers’ incentives and capacity to engage in earnings management will diminish. Based on industry data, we find that the magnitude of absolute values of discretionary accruals increase significantly in the post-deregulation period. Managers in the airline industry were inclined to engage in income increasing earnings management after deregulation. However, the increased level of earnings management then decreased to return close to the level seen during the regulation period. The findings support the predicted deregulation impact on earnings management dynamics.     

Performance management and organizational strategy: How to design systems that meet the needs of confrontation strategy firms

The link between organizational strategy and performance management system design has been examined in numerous studies. Invariably, strategy is conceptualized using archetypes developed in the 1970s and 1980s. Scholars have increasingly questioned the wisdom of relying on strategic archetypes that are plainly dated and conspicuously disconnected from the possibility of firms competing head-to-head, not out of choice but out of necessity. Cooper (1995) calls such a situation the undertaking of a confrontation strategy. Using an exploratory research design, this paper draws on nine qualitative case studies to examine how performance management systems are designed to meet and support the implementation of a confrontation strategy. Initially six firms, spanning a variety of what were expected to be mature, highly competitive industries likely to feature confrontation strategies, were recruited for participation. This initial study was then followed by a more concentrated examination of one particular industry: the banking industry. Findings from the total case study sample of nine firms lead to the presentation of an original table contrasting the unique performance management system designs associated with the three distinct strategies of cost leadership, differentiation, and confrontation. In particular, and in contrast to firms pursuing cost leadership or differentiation strategies, firms with confrontation strategies are likely to feature collaborative organizational cultures, lean organizational structures, and training and development programs that focus on developing empowered, multi-skilled teams of self-governing and coordinating employees. The exploratory intent of the paper, and thus its reliance on a small sample size of nine organizations, may limit the generalizability of the paper’s findings. In spite of this limitation, the findings offer opportunities for researchers to move beyond the exploratory approach presently adopted and empirically test the confrontation strategy and performance management system linkages proposed. Additionally, practitioners are likely to benefit from a clearer understanding of the type of performance management system design needed to support confrontation strategies.     

Strategy and management control systems: A study of the design and use of management control systems following takeover

This paper describes and analyses the approach taken by four well-known Swedish companies to management control following takeover. The findings suggest two factors which can explain how the management control systems were designed and used after an acquisition: the corporate strategy of the acquirer and the business strategy of the acquired company. The case studies show how these forces could impose mutually inconsistent requirements on the management control system of the acquired firm, and also how these inconsistencies were resolved.     

Competitive forces and the importance of management control systems in emerging-economy firms: The moderating effect of international market orientation

Using survey and archival data from exchange-listed Chinese firms, we investigate the relationship between competitive forces (i.e., the threat of foreign entrants and buyers’ bargaining power) and the importance that the firms place on their management control systems (MCS), and whether the firms’ international market orientation moderates this relationship. We examine five MCS practices—formal procedures, strategic planning, budget targets, approval procedures, and participative budgeting—both as a package and separately. We predict and find a positive association between the threat of foreign entrants and the importance that the firms place on their MCS, but this association is larger for firms competing predominantly in the domestic market than for those competing predominantly in international markets. Further, we predict and find that the association between buyers’ bargaining power and the importance that the firms place on their MCS is larger for firms competing predominantly in international markets than for those competing in domestic markets. We probe deeper into our empirical findings using qualitative data collected from post hoc interviews with managers of Chinese firms and those of international firms operating in China. We discuss the implications of our findings and provide some directions for future research.     

U.K. and U.S. trading of British cross-listed stocks: an intraday analysis of market integration

This article analyzes intraday patterns for U.K. and U.S. tradingof British cross-listed stocks. For each market, the intradaypatterns for these stocks closely resemble those of otherwisesimilar, non-cross listed stocks. There is a 2-hour period eachday when cross-listed stocks are traded both in New York andin London. This overlap is characterized by concentrated tradingas private information, originating in New York, gets incorporatedinto prices in both markets. Cross-border competition for orderflowtends to reduce already declining spreads in London. By contrast,New York specialists maintain     

International portfolio diversification: A study of linkages among the U.S., European and Japanese equity markets

In this paper, we examine the short-term linkages among five leading stock markets with the objective of evaluating the case for international portfolio diversification as well as the stability of stock market interdependence after an exogenous shock. We utilize daily closing equity price data from U.S., U.K., France, Germany and Japan during the period from January 1999 to February 2002 and investigate the joint impact of any four equity markets on the fifth market. The findings indicate that even though the interdependencies among the markets are significant, there is still room for international portfolio diversification. Also, the study provides mixed results for the hypothesis that the international market correlations change after an exogenous shock. The tests of stability of correlations are based on before-and-after analyses of two events: the introduction by the European Union of the euro as official currency and the September 11, 2001, terrorist events in U.S.     

The Impact of the U.S. and the Japanese Equity Markets on the Emerging Asia-Pacific Equity Markets

Using a tri-variate vector autoregression model, we study the relationships between the four Asian emerging equity markets: Hong Kong, Korea, Singapore and Taiwan, and the two largest equity markets in the world: U.S. and Japan. We find that while most of the unexpected variations in stock returns in these Asian emerging markets is explained by domestic own shocks, the impacts from the U.S. and Japan are larger in Hong Kong and Singapore than in Korea and Taiwan. This foreign effect is pronounced after the Crash of the October 1987, especially in Singapore. This revised version was published online in August 2006 with corrections to the Cover Date.     

The Evolution of Standard Costing in the U.K. and U.S.: From Decision Making to Control

Decision making and control are two fundamental components of industrial management that are aided by accounting information. This article traces the evolution of standard costing in the U.K. and U.S. and describes how it has served these two purposes over time. At the start of the industrial revolution, standard costing, in the form of past actual costs, aided managers in make-or-buy, pricing, outsourcing and other routine and special decisions. In the late nineteenth century, as the mass production of homogeneous products became more common, predetermined, norm-based standard costs were promoted as the means to control operations and reduce waste. The use of predetermined costs was recommended by both academic and professional branches well into the twentieth century. Since the mid-1980s, norm-based standards have come under fire for not providing appropriate strategic signals in an era of global competition, continuous improvement and perpetual cost reduction.
This article compares the nature of standard costing practices in the British Industrial Revolution with those that evolved in the U.S. under scientific management. The enquiry is not limited to double-entry systems and, like Miller and Napier (1993), the domain is broadened to include other forms of cost-keeping practices. We utilize primary and secondary sources to argue that the environment and rationales for standard costs have changed fundamentally over time. It is speculated that in the future standard costing will be used far less for individual accountability or operational control, but will return to its decision-making roots in the form of long-run cost targets that benchmark the success of continuous cost-reduction efforts.     

美国经济不稳中国是否成为投资热门?

据《联合早报》2000年12月22日报道,踏入12月,香港各大证券行争先恐后推出证券商报告,并举办记者会,实行"齐齐唱好"中国,认为在美国经济不稳之时,中国是亚洲区内最有发展潜力的市场.     

Stock option compensation: impact of expense recognition on performance indicators of non-domestic companies listed in the U.S.

The IFRS 2, Share-based Payment, requires that companies recognize the fair value of employee stock options as an expense. To ascertain the impact recognition will have on companies domiciled in countries subject to accounting standards issued by the IASB’s liaison standard setting partners, this research examines the pro forma stock option disclosures provided in Form 20-F by Australian, British, Canadian, French, German, Japanese, and Irish companies.The findings indicate the average impact of expense recognition on diluted EPS will be approximately 40% and will be material at a 5% level for the majority of the companies. The impact varies significantly by country. On average the annual expense recognized will be approximately 15% of beginning stockholders equity. For the majority of the companies, the charge will represent less than 1% of beginning equity. Again the impact varies significantly by country.The findings indicate that absent requirements that stock compensation expense be recognized, a material upward bias will be reflected in performance indicators of many non-U.S. companies and cross-border comparability will be impaired. Since our analysis is based solely on data for the year 2000 for companies domiciled in seven countries, future research will be needed to ascertain the impact of expense recognition on a broader range of companies reporting under IFRS 2.     

Dividends, Asymmetric Information, and Agency Conflicts: Evidence from a Comparison of the Dividend Policies of Japanese and U.S. Firms

We compare dividend policies of U.S. and Japanese firms, partitioning the Japanese data into keiretsu, independent, and hybrid firms. We examine the correlation between dividend changes and stock returns, and the reluctance to change dividends. Results are consistent with the joint hypotheses that Japanese firms, particularly keiretsu-member firms, face less information asymmetry and fewer agency conflicts than U.S. firms, and that information asymmetries and/or agency conflicts affect dividend policy. Japanese firms experience smaller stock price reactions to dividend omissions and initiations, they are less reluctant to omit and cut dividends, and their dividends are more responsive to earnings changes.     

French and U.S. trading of cross-listed stocks around the period of U.S. decimalization: Volume, spreads, and depth effects

We analyze how U.S. decimalization affects stocks cross-listed in France (Euronext) and the U.S. (NYSE). The French stocks examined are much larger than the non-U.S. stocks examined in prior studies of decimalization, and their U.S. trading is likely to be dominated by institutions. So, we explore whether a reduction in depths in the U.S. due to decimalization makes the U.S. market less competitive for institutions trading these French stocks. We find evidence consistent with the above. First, the average NYSE trade size for these stocks relative to that on Euronext declines substantially after decimalization. Second, we categorize individual trades by the number of shares traded. We find that mainly driven by large trades, the NYSE proportion of trading of French firms declines markedly after decimalization. Third, using regression analysis, we find that the decline in the U.S. share of institutional trading volume is significantly positively related with the decline in NYSE depths relative to Euronext, and the decline is greater for French firms. Overall, we find consistent results indicating a migration of institutional order flow in French firms to France after NYSE decimalization. Also, intraday analysis indicates that the institutional volume in both France and the U.S. is greatest when both the markets are open.     

信用衍生产品发展历程与规律——以美国为例

次贷危机发生后,曾经迅速增长的信用衍生产品市场金融产品急剧萎缩.本文以美国为例研究信用衍生产品发展历程,将其分为三个阶段:萌芽与发展、过度发展和萎缩.对三个阶段信用衍生产品市场发展和绩效进行分析,得出信用衍生产品的发展规律:信用衍生产品转移的信用风险在金融市场承受限度内,风险能被吸收,提高整个金融市场的稳定性和效率,但当超出市场承受能力,信用衍生产品反而会放大风险,并外溢到整个金融市场.发展信用衍生产品,应遵循规律,加强监管,避免市场过度膨胀.     

Comparing schools in the U.K. and New Zealand: individualizing and socializing accountabilities and some implications for management control

This paper contrasts educational reforms in New Zealand and the U.K. exploring the role of accountability in processes of management control. The paper focuses on the use of performance measurement in schools. Performance evaluation in the U.K. is, arguably, individualized, in New Zealand an organizational focus is retained The paper will seek to provide an account of the way that individuals have been called to account for their performance (Townley, 1996). Roberts' (1996) discussion of individualizing and socializing accountability is central because of its key claim that some forms of organizational accountability provide a separation of the strategic and moral consequences of action. This is seen as potentially damaging as it may free instrumental action from any form of ethical constraint, equally it may undermine any potential for collective action. In exploring this dimension we will examine the technologies of both financial accounting and management accounting which promote particular approaches to performance evaluation, accountability and control. Our argument raises questions as to the relevance of management accounting as a tool of control and whilst recognizing that financial accounting is also limited suggests that it is worth reconsidering its role in the context of a broader approach to performance evaluation.@e$g0     

Price Formation and Liquidity in the U.S. Treasury Market: The Response to Public Information

The arrival of public information in the U.S. Treasury market sets off a two-stage adjustment process for prices, trading volume, and bid-ask spreads. In a brief first stage, the release of a major macroeconomic announcement induces a sharp and nearly instantaneous price change with a reduction in trading volume, demonstrating that price reactions to public information do not require trading. The spread widens dramatically at announcement, evidently driven by inventory control concerns. In a prolonged second stage, trading volume surges, price volatility persists, and spreads remain moderately wide as investors trade to reconcile residual differences in their private views.