Mandatory IFRS adoption and management forecasts: The impact of enforcement changes

We examine how concurrent enforcement changes affect the positive relationship between mandatory IFRS adoption and firms’ voluntary disclosure. We show that the increase in the issuance of management forecasts after IFRS adoption is smaller for firms from IFRS-mandating countries with concurrent enforcement changes than for those from countries without such changes. We find no difference in the increase of forecast informativeness between firms from IFRS-mandating countries without concurrent enforcement changes and firms from non-IFRS-mandating countries; however, firms domiciled in IFRS-mandating countries with concurrent enforcement changes exhibit a significantly smaller increase in forecast informativeness. Our findings suggest that better IFRS enforcement distinctly weakens (strengthens) the positive effect of IFRS adoption on voluntary (mandatory) disclosure.     

Why managers divest—Evidence from New Zealand's largest companies

Chief Executives from New Zealand's largest companies were surveyed to distinguish divesting and nondivesting companies, and to identify the relative importance of the factors and motives which led to the divestment of 208 business units in the period 1985 through 1990. The divesting companies were considerably larger and faster growing than nondivestors. The typical divestment was motivated by the need to convert unattractive assets into liquid form which could then be held to strengthen the balance sheet, or reinvested in either the core business or new areas.     

Behavioral assumptions and theory development: the case of transaction cost economics

From a critical realist perspective, I discuss the role played by behavioral assumptions in organization theories, and use transaction cost economics as an illustrative example. Core behavioral assumptions often constitute the foundation of the mechanismic explanations of a theory, and thus should play a pivotal role in theory development. I distinguish between assumption‐based and assumption‐omitted theory testing, and show that empirical research in transaction cost economics has been dominated by assumption‐omitted testing. To establish a solid foundation for a new theory, management researchers should pay more attention to assumption‐based testing. Copyright © 2006 John Wiley & Sons, Ltd.     

A Corporate Social Responsibility Framework for Accounting Research

Over the past two decades, there has been growing interest in corporate social responsibility (CSR) among accounting scholars. As a testament to this growing interest, two review papers on CSR were published last year in accounting journals. Implicitly guiding hypothesis development in CSR studies is the notion of a conflict between shareholders and stakeholders. We define CSR in terms of a win-win situation for shareholders and stakeholders: a CSR framework for strategic business purposes. We provide evidence supporting this outlook for CSR using cases pertaining to specific companies and findings from archival empirical studies. According to our CSR framework, resources allocated for CSR activity also help propel business strategy; as such, it is difficult to isolate CSR inputs and/or outputs due to problems of non-separability and multidimensionality. While measurement is a challenge, our framework nonetheless opens up various promising avenues for future research.     

Optimal interest rate rule in a DSGE model with housing market spillovers

This paper studies the optimal interest rate rule in a DSGE model with housing market spillovers (Iacoviello and Neri, 2010). We find that the optimal rule responds to house price inflation even when the stabilization of house price is not among the objectives of the policymaker, and that the strength of the response depends crucially on a few structural parameters.     

Optimal dynamic reinsurance with dependent risks: variance premium principle

In this paper, we consider the optimal proportional reinsurance strategy in a risk model with two dependent classes of insurance business, where the two claim number processes are correlated through a common shock component. Under the criterion of maximizing the expected exponential utility with the variance premium principle, we adopt a nonstandard approach to examining the existence and uniqueness of the optimal reinsurance strategy. Using the technique of stochastic control theory, closed-form expressions for the optimal strategy and the value function are derived for the compound Poisson risk model as well as for the Brownian motion risk model. From the numerical examples, we see that the optimal results for the compound Poisson risk model are very different from those for the diffusion model. The former depends not only on the safety loading, time, and the interest rate, but also on the claim size distributions and the claim number processes, while the latter depends only on the safety loading, time, and the interest rate.     

Co-production of service innovations through dynamic capability enhancement

The main aim of this paper is to investigate the effect of co-production practices with customers on service innovation. Specifically, we sought to determine whether dynamic capabilities (the specific abilities a company has to shape, reshape, configure, and reconfigure idiosyncratic assets to respond to changing technologies and markets) could mediate the effect of co-production on service innovation. In this paper, we examine the factors that could influence co-production practices and determine whether organizational commitment moderates the effect of co-production practice on an organization's dynamic capabilities. Using a survey approach of Taiwanese firms, we showed that dynamic capability fully mediates the effects of co-production practice on service innovation and that market orientation and customer matching have a significant influence on co-production practices. In addition, this study has empirically demonstrated that service firms would be well advised to engage in developing service innovation through enhancing their own dynamic capabilities.     

Labour Market Adjustments to Exchange Rate Fluctuations: Evidence from Canadian Manufacturing Industries

This paper provides some of the first empirical evidence on labour market adjustments to exchange rate movements in Canadian manufacturing industries. Controlling for endogeneity using generalized method of moments estimation, it is found that during the 1981–1997 period, exchange movements have a substantial impact on labour input and that this impact has grown over time as the manufacturing industries have become more exposed to trade. In contrast, the exchange rate effect on real wages is estimated to be virtually zero for all manufacturing industries.

Chinese multinationals on the New Silk Route: Managing political risk by branding the nation

Though Chinese multinational enterprises (CMNEs) have brought investment and opportunities to countries along the Belt and Road Initiative, there has been scepticism regarding the content and context of their investment. On the one hand, infrastructural development contributes to GDP formation and enhances the efficiency of productive inputs where international trade enhances technology and export development, which jointly provides a path to economic growth. On the other hand, critical issues such as debt sustainability and national sovereignty among countries that have gone through the decolonization process mean that CMNEs need to grasp the implication of political risk when investing. This article focuses on South and Southeast Asia, where China has historical socio‐economic relationship, and proposes a nation branding model combining tradition and modernity which can be the way forward for CMNEs to mitigate political risk in relation to the Belt and Road Initiative (BRI) investment. Nation branding of BRI could be seen as a continuity of China's unfinished business in globalization that has preceded the modern polity; nevertheless, there is a need to communicate a coherent and authentic message that reflects the reality of business operations.     

Dimensions of Chinese culture values in relation to service provision in hospitality and tourism industry

Factor and reliability analyses were employed in this exploratory attempt to investigate and refine the structure and dimensions of Chinese cultural values (CCVs) in relation to service provision. Based on the results of factor analysis, CCVs could best be conceptualized as a five-component construct that influences the attitude or behavior of employees in providing service. These five factors were identified as follows: Integration 1 (attitude towards work); Integration 2 (attitude towards people); moral discipline; status and relationships; and moderation. The identification of these dimensions has two major implications to human resource development and service management practice in the hospitality and tourism industry. First, Chinese cultural values play a critical role in determining specific interventions, challenges and barriers in service organizational management. Second, given the profound influence of Chinese cultural values on service provision, international tourism and hotel managers, particularly in human resource development, should realize the importance of ensuring that Western management practices are adopted critically in Chinese organizations. Given the limited amount of research on this topic, the findings generated from this study are very important in guiding future research and providing insights into an area that deserves more academic attention.