Agricultural cost accounting development in Britain: the contributions of three men from Wye - a review note

This note summarizes the contributions of three agriculturalists (Hall, Orwin and Wyllie) to agricultural cost accounting development in Britain in the early twentieth century. Through an examination of their writings and advocacies, an account is provided of their pioneering work in applying cost accounting to farm activity in Britain. Some contrary positions on agricultural costing that also emerged during their period of advocacy are also outlined.     

An Italian forerunner of modern cost allocation concepts: Lorenzo De Minico and the logic of the 'flows of services'

This article provides an analysis of the thoughts of an Italian academic who lived in the first half of the twentieth century, Lorenzo De Minico, in particular it regards his approach to the allocation of common costs. De Minico's main concern was with the conventional, subjective allocation methods proposed by Italian practitioners and academics of his time. He valiantly searched for a methodological approach based on using causality as the basis for linking costs to cost objects. The most interesting finding of De Minico was the concept of 'flows of services' and his commitment to offering a convincing answer to the problem of general or common cost apportionment that went beyond 'traditional' criteria. De Minico's 'flows of services' referred to the outputs of resources consumed in indirect services. These indirect costs can be considered easily 'directly attributable' only if it is possible to measure the connected 'flows of services'. The article shows that the concept developed by De Minico in early twentieth century of Italy confirms the idea that some theoretical frameworks for a causal allocation of common costs were in existence many decades before information technology made such systems a practical proposition.     

Efficiency in accounting education: evidence from Turkish Universities

It is important to see efficiency of accounting education in order to fully understand the operational environment of companies. In this study, the 45 public universities in Turkey was investigated by using Data Envelopment Analysis [DEA]. In order, some definitions for the outputs and inputs are required for the model. The criteria developed by American Assembly of Collegiate Schools of Business (AACSB) is used as definitions for inputs, is used and the result of the Selection Exam for Public Personnel [SEPP] is used to measure efficiency in accounting education. According to our results, Turkish universities are successful in producing the most appropriate output. They are usually using their input components in a favorable way. According to our model accounting education delivered in the undergraduate programs of the higher education system in Turkey is generally effective. But universities are using resources excessively to get the output. On the departmental basis, Turkish universities are technically effective to a great extent. It is determined that the departments of labor economics, industrial relations and partially public finance are more effective departments. According to resource usage, while the most effective departments are departments of public finance, departments of business administration are the most ineffective ones.     

Early cost management practices, state ownership and market competition: the case of the Royal Textile Mill of Guadalajara, 1717-44

Existing literature on the deployment of cost techniques in early public sector organizations largely relies on archival evidence gathered from late eighteenth and nineteenth-century settings. Arguably, these contexts are characterized by a number of idiosyncratic characteristics that advise caution in generalizing conclusions beyond the institutional elements that forged those settings. Our investigation examines the case of the Royal Textile Mill of Guadalajara (RTM), a setting characterized by state ownership, competitive markets, organization of production around medieval guilds, and recruitment of foreign experts to conduct productive operations. Our findings show that the management of RTM deployed cost accounting techniques that comprised aspects such as control of raw materials and waste, control of labour and management, and allocations of overhead to product costing. We also find evidence which departs from predictions that standards relating to the control of raw materials should have preceded the implementation of labour cost standards.     

Sticky cost behaviour: evidence from small and medium sized companies

This paper investigates whether cost stickiness occurs in small and medium sized companies using a sample of Italian nonlisted and listed firms during the period 1999–2008. Our findings show that cost stickiness emerges only for the total cost of labour and not for selling, general and administrative (SG&A) costs, cost of goods sold and operating costs. Stickiness of operating costs is only detected in a sample of listed companies. We further contribute to the literature on sticky cost behaviour by discussing critical issues associated with the extant approach of empirical analysis and interpretation of sticky cost behaviour.     

Concepts of cost and profit in Chinese agricultural treatises: with special reference to Shengshi Nongshu and Pu Nongshu in the seventeenth century

This article analyses the use of the concepts of cost and profit in Chinese agricultural treatises. Special attention is given to the agricultural works Shengshi Nongshu and Pu Nongshu in the seventeenth century. The analysis shows how Chinese people applied the concepts of cost and profit to agricultural production. This paper also analyses the reasons for the lack of further progress of Chinese accounting in the eighteenth and nineteenth centuries. It concludes that Chinese accounting reached its peak in the Ming and Qing dynasties under a feudal framework and that accounting development has been strongly associated and constrained by its social environment, including political and cultural constraints.     

Cost accounting standard and cost accounting systems in Japan. Lessons from the past - recovering lost traditions

This paper aims to show two things. The first is how Japanese culture has contributed to the development of Japanese cost accounting history. The second is to reveal the research possibilities of cost accounting history. This paper also reviews the salient features of several important examples of these aspects of cost accounting practice in Japan. It therefore explores, through some practical illustrations, how and why Japanese cost accounting differs from that found in the West.     

Managerial risk appetite and asymmetry cost behavior: evidence from China

Managerial risk preferences have considerable impacts on a firm’s cost management through committed resource adjustment decisions. We investigate whether a firm’s cost behaviour is influenced by managers’ risk appetite and find that cost stickiness increases with managers’ risk-seeking. The positive relationship between risk-seeking and cost stickiness is weaker for firms with higher levels of manager capacity. We further find that the moderating effect of managerial capacity is more pronounced in non-state-owned enterprises, in less competitive industries, and in areas with lower degrees of marketisation. These results suggest that managers’ personal characteristics are key factors that affect sticky cost behaviour.     

Management accounting innovations for rationalizing the cost of services: The reassessment of cash and accrual accounting

ABSTRACT

Management accounting can be a useful tool in austerity government because it produces information about the costs of public services and can be used for informed decision-making. Spanish local governments are required to submit data on the cost of their services to central government, which publishes this information online. The calculation of costs is based on budgetary cash accounting instead of accrual accounting; therefore cash accounting is being used for decision-making and accrual accounting has no role in this process. This paper critically analyses the innovation from three perspectives: the use assigned to the cost information in the legal framework; the opinion of academics and experts; and the perception of professionals about the usefulness of the information produced with the new system.     

Short-selling and cost of equity: evidence from China

In this study, we take advantage of the gradual lifting of the short-selling ban in China and find that firms affected by the lifting of the ban experience a lower cost of equity. In addition, the affected firms also incur less earnings management, higher market liquidity and higher investment efficiency. Further evidence shows that firms’ cost of equity increases after their stocks are no longer eligible for short selling. Our inferences are robust to alternative measures of cost of equity, and to using a propensity score-matched sample. Our study contributes to the literature by providing evidence that short sellers play a monitoring role in the Chinese stock markets and sheds light on the benefits of short selling in emerging markets.     

The designing of corporate accounting law in Japan after the Second World War

After the Second World War, during the neutralization of the controlled economy of wartime Japan, a design for a Corporate Accounting Law was elaborated by the Investigation Committee on the Business Accounting System. The Investigation Committee tried to establish not only new business accounting standards but also a central and independent administrative organ of corporate accounting regulation on the basis of the Corporate Accounting Law. The Corporate Accounting Law was expected to lay the legal foundation of the new corporate accounting regulation regime in Japan. Nevertheless, even though the original design of the fundamental accounting law was never realized, it should be considered the starting point for our understanding of external accounting history in post-war Japan.     

Audit results,market reactions and accounting conservatism: evidence from China

This paper examines China's securities market reactions to publication of the audits of state-owned companies. The impact of audit reports on accounting conservatism is also discussed. Recommendations are made for improving the current system.     

The implications of unverifiable fair-value accounting: Evidence from the political economy of goodwill accounting

I study the evolution of SFAS 142, which uses unverifiable fair-value estimates to account for acquired goodwill. I find evidence consistent with the FASB issuing SFAS 142 in response to political pressure over its proposal to abolish pooling accounting. The result is interesting given this proposal was due in part to SEC concerns over pooling misuse. I also find evidence consistent with lobbying support for SFAS 142 increasing in firms’ discretion under the standard. Agency theory predicts such unverifiable discretion can be used opportunistically.     

The 'particular gain or loss upon each article we deal in': an aspect of mercantile accounting, 1300-1800

Merchandise accounts for each category of goods, voyage or venture are a prominent feature of many ledgers of the period 1300 to 1800. The characteristics of these accounts and the uses to which such accounts were put are considered.     

The influence of the nature of government accounting and reporting in decision-making: evidence from Switzerland

A key objective of government accounting and reporting has been to achieve accountability and its use in that respect has been well documented, however its use for decision-making has had less coverage. This article addresses the latter issue, providing evidence from Switzerland that the accounting basis used (accrual versus cash) influences decision-making. This is the result of the effect that the different approaches have on the nature of the information used for decision-making. Switzerland was among the first western democracies to adopt accrual accounting at both state (canton) and local levels of government in the 1980s. The Swiss federal government followed in 2007. The main examples of the use of accrual information in decision-making are: the focus on self-financing of investments in order to control borrowing, as well as the fiscal policy targets of debt reduction and maintenance of capital. All three require accrual basis information. Therefore accrual basis information is key in fiscal decision-making in Switzerland.     

Political connections,auditor choice and corporate accounting transparency: evidence from private sector firms in China

This article investigates the way in which political connections impact auditor choice. Using a political connection index constructed based on the bureaucratic ranks of executive managers and board members in Chinese private sector firms, we find that for firms with weak political connections, the likelihood of hiring high‐quality auditors increases with the degree of political connectedness, while it decreases with political connectedness for firms with strong political connections. This inverse U‐shaped relationship is particularly pronounced for firms with ownership structures that intensify agency problems. Finally, we find that political connections and accounting transparency also have an inverse U‐shaped relationship.     

The effect of accounting firm mergers on the market for audit services: New Zealand evidence

This article examines the outcomes of accounting firm mergers using data about the frequency of audit switches, the numbers of partners in the respective firms, and perceptions revealed in interviews with partners. Evidence from client switches does not show any evidence that the mergers were followed by cost reductions, or of collusion to force prices up. The effects of the mergers appear to have been elsewhere—the merging firms reduced partner numbers substantially, increasing partner leverage so that individual remaining partners were better off. Data from interviews confirm these findings, and show that the culture of individual firms had a significant effect on determining which group of partners controlled the merged firm.     

The internationalization of British professional accounting: the role of the examination exporting bodies

This paper extends the seminal study of the role of the UK accounting profession undertaken by Johnson and Caygill (1971). It is argued that the influence of the British accounting profession upon overseas countries has changed significantly from the export of UK accountants to the export of examinations. This has greatly facilitated the attainment of a UK qualification by overseas nationals and thus enhanced the international influence of UK accounting principles and practices. The possible implications of this trend for importing countries are also explored. Finally, the paper discusses the impact of this new development upon the professional body which is the leading provider of overseas examinations.     

Female directors on the board and cost of debt: evidence from Australia

We examine whether the presence of female board members has any impact on the cost of debt among Australian listed companies. We find that female presence on the board is negatively associated with the cost of debt. Most importantly, our findings support the argument of critical mass theory that a certain threshold of gender balance is required for enhancing board effectiveness. Our results are valid irrespective of alternate model specifications and endogeneity issues. Overall, the results provide support to the ASX Corporate Governance Principles and Recommendation for the appointment of female directors on corporate boards.