WHAT DO AUDITORS DO? OBVIOUSLY THEY DO NOT SCRUTINISE THE ACCOUNTING AND REPORTING

Auditors and auditing firms are important actors in the process of institutionalising accounting standards. However, the formal and institutional requirements to de facto ensure professionalism and independence in the Swedish municipal sector have been strongly questioned. The aim of this paper is to investigate and explain how deviations from accounting standards are treated and reported by auditors. The results indicate deficiency in both competence and independence among the auditors. The institutional arrangements in Sweden do not seem to ensure that auditors facilitate and support the implementation of accounting standards.     

Editorial Environmental regulations in the Swedish forest industry. What is the real problem?

The Swedish forest industry faces many regulations. In many cases they are used to eliminate, or diminish, negative external effects on the environment. The aims of most regulations are well accepted among decisions makers in the industry and in society. However, in many cases the implementation can present problems, the reason being bureaucracy.The Ortviken paper mill is located just north of Sundsvall, which is a middle-sized town in the northern part of Sweden. SCA, one of the world's largest forest companies, owns and operates the mill. In the beginning of the 1990s, Ortviken planned for an expansion, which was considered necessary for the company's strategy and potentially profitable. But in order to build a larger plant, SCA first needed a licence from the local authorities which showed that conditions laid down in the Law of Planning and Building were met. After that, the project needed approval by the environmental authorities according to their specific laws and requirements.SCA finally succeeded in getting all the permissions needed. But the whole process took more than 10 years, despite the fact that it was carried out in close co-operation with the local authorities.While waiting for the final approvals, SCA applied for permission to expand production without changing the present emission levels. The existing permit also included a ceiling on production since emissions usually are proportional to production. However, in this case SCA wanted to increase production by only 5 %, and emissions would not exceed allowed levels. But the application was refused. The company was not allowed to increase production above the existing ceiling without a completely new application to the environmental board. The processing time for such an application would cover about two years and cost an unknown amount of money.Recently, the same company decided to analyse the possibilities of expanding production at the Tunadal sawmill, which is located in the same area. One of the alternatives was to build a completely new mill with new technology at a new and suitable site. However, a pilot study showed that the handling time just for the local planning process would be seven years and cost around 10-15 million SEK (approximately 1.5 million Euro).In addition, two years would be required for the environmental approval, so that the whole process from planning to actual start of the investment would require about 10 years.These long handling periods are of course an effective obstacle to investment. No board of directors dares to decide on an investment costing hundreds of millions of Euro if the time span of uncertainty from decision to actual start of the factory is 10-15 years.Not only has the time span necessary to fulfil the new requirements caused problems. An enormous amount of detail is needed to fulfil the requirements of an environmental impact assessment for an investment. For instance, a temporary pile of soil requires a separate analysis of the consequences for the environment, and companies are required to specify the kind of fuel used in trucks that (an unspecified number of years ahead) will drive the garbage from the building site. All these problems are particular troublesome for heavy industries like the forest industry and other industries (e. g. the steel industry and the chemical industry) that deal with material processing.What this Swedish example shows is that it is perhaps not environmental regulation per se that can make an obstacle to industrial expansion. There is no problem for the Swedish forest industry in fulfilling the technical conditions on emission levels. The crucial factor is time. The example also shows that it is not the core content of environmental regulations that is troublesome, but how these regulations are handled and formulated. It is not the environment that is the enemy, but the bureaucracy around it.Sören WibeSLUDepartment of Forest EconomicsSE-90183 UmeåOla CarlénSLUDepartment of Forest EconomicsSE-90183 Umeå     

Nonstationarity and Stochastic Stability of Relative Income Clubs

The recent literature on “convergence” of cross‐country per capita incomes has been dominated by the two hypotheses of “global convergence” and “club‐convergence,” pertaining to limits of estimated income distribution dynamics. Utilizing a new measure of “stochastic stability,” we establish two stylized facts regarding short‐ and medium‐term distribution dynamics. The first is non‐stationarity of transition dynamics, in the sense of changing transition kernels, and the second is emergence, disappearance, and re‐emergence of a “stochastically stable” middle income group. This middle income group emerges as the gap between rich and poor clubs gets larger, and it changes the dynamics of transition to and from the rich and poor clubs, eventually narrowing the gap between the poor and rich as the middle club vanishes. Analyzing the stochastic stability of middle‐income groups is thus a first step toward understanding higher‐order dynamics of narrowing or widening of the gap between rich and poor countries.     

Banking, contract enforcement and economic growth

We develop a new model that links credit contracts enforcement to banking emergence and economic growth. It is shown that the development process is composed of three stages. In the first stage, the economy develops slowly due to a primitive technology of capital accumulation. The second stage marks the emergence of banking and the substitution of the primitive technology by a more productive modern technology that enhances growth. Finally in the third stage, our model enables the realization of a dynamic capital accumulation scenario without credit rationing. Another finding is that a reduction in the enforcement cost accelerates the emergence of the banking system.     

In the quest for their trust: the perceptions of families on accessing leisure services for disabled children

This paper is based on the findings of a research project commissioned by a public body in the English Midlands, UK. Telephone surveys, focus groups and individual interviews were the data collection methods. It focuses on the perceptions of 44 families on the barriers to accessing leisure services for disabled children. Although there are numerous advantages for accessing such services, the findings showed that the families had very few successful experiences with the current provision due to a number of structural barriers. Trust was perceived as crucial to access these services.     

Practices and Practicalities In Human Resource Management1

A wide-ranging research project covering change and its implementation in 27 companies provides the opportunity for the authors of this article to reassess the meaning and significance of HRM. They suggest that ‘it is too simple to dismiss HRM as “old wine in new bottles”.’ Rather, they find important changes taking place. But the true significance of HRM, they suggest, lies not in the fact that its practice actually does resolve underlying tensions but rather in its capacity to ‘manage’ these by ‘reducing, suppressing and glossing’ them. HRM itself is an outcome of the tensions in the employment relationship and, perhaps not surprisingly therefore, it continues to express them. the article ends with suggestions for future research.     

An empirical analysis of the day-of-the-week effect in stock returns: The case of U.S. and Japan

This article employs daily closing index data to investigate the relationship between the U.S. and Japanese equity markets. It reassesses and extends the Becker et al. (1990) methodology over a longer sample space. The article then advances the analysis further by estimating structural equation models and by including the exchange rate as an additional explanatory variable. The resulting multivariate econometric design shows that the U.S. equity market strongly affects the Japanese equity market Monday through Friday while the Japanese market exerts a weaker influence on the U.S. market with the influence observed only on Mondays and Wednesdays.     

Trends in international business thought and literature: The Arabian gulf countries

The Arabian Gulf countries represent an important economic segment of the Arab world and a vital market for foreign investors and exporters. Yet, most observers agree that the past successful economic growth derived from oil revenues cannot continue unless the economies in the Arabian Gulf are diversified and privatized. This structural adjustment process poses many challenges but also opportunities for local and foreign managers. This article reviews selected business trends in the region. These trends concern government economic policies, environmental concerns, services marketing, and management education.     

Has Devolution Increased Democratic Accountability?

This article examines the impact of devolution, the New Public Management and public management culture on accounting for democratic accountability in the first term of the devolved national assemblies and parliament in the UK. Although there is more openness, transparency, consultation and scrutiny with regard to budgets, accounts and performance as a result of devolution, there is extensive information overload. Thus, many politicians are highly dependent on the parliamentary division of labour and are reliant on experts and advisors functioning as buffers and filters of accounting information.     

Management and Risk Characteristics of Part-Time and Full-Time Farmers in Norway

The objective of this exploratory study was to provide empirical insight into how different categories of farmers perceive and manage risk. The data originate from a questionnaire of dairy and crop farmers in Norway. The associations between part-time and full-time farming and farm and farmer characteristics, farmers' goals and future plans, risk perceptions, and risk management responses were examined with simple t - and chi-square tests, as well as with logistic regression. The results indicate that full-time and part-time farmers' goals, risk perceptions, and management strategies differ significantly. Policy makers and advisers should consider these differences when developing policies and recommendations for the different types of farmers.