Accruals and the naïve out-of-sample prediction of operating cash flow

Recent evidence indicates that a naïve no-change out-of-sample forecast of operating cash flow is as accurate as regression model forecasts. The current study uses this evidence to compare the accuracy of two naïve cash flow forecasts: 1) a pure no-change forecast and 2) a no-change forecast which includes adjustments for changes in accounts receivable, inventory and accounts payable. The size- and accrual-matched results indicate that the naïve cash flow forecast with accruals is notably more accurate than the naïve forecast without accruals. Moreover, the results indicate that large sums of positive accruals are more useful for cash flow prediction than large sums of negative accruals. Overall, the study provides creditors, analysts and other members of the financial community with an efficient and effective protocol for cash flow prediction.     

Audit committee characteristics and firm performance during the global financial crisis

We address the question ‘do governance enhancing audit committee (AC) characteristics mitigate the firm performance impact of significant‐adverse‐economic events such as the Global Financial Crisis (GFC)?’ Our analysis reveals that smaller audit committees with more experience and financial expertise are more likely to be associated with positive firm performance in the market. We also find that longer serving chairs of audit committees negatively impacts accounting performance. However, accounting performance is positively impacted where ACs include blockholder representation, the chair of the board, whose members have more external directorships and whose chair has more years of managerial experience. We contribute to the growing body of research on the impact of audit committee governance attributes on performance during times of financial distress.     

An “unofficial” history of race relations in the South African accounting industry, 1968–2000: Perspectives of South Africa's first black chartered accountants

“Official” histories are, typically, written by those with the most power and influence. In the case of the accounting industry, the content of professional journals and histories of major firms or professional leaders are taken as the most authoritative sources to uncover the past. In this paper, we contrast articles on racial inclusion published in South Africa's leading professional accounting journal with the experiences of black chartered accountants in the country. We interviewed 38 of the first 220 black CAs in South Africa. Their stories of discriminatory treatment by accounting firms contrast sharply with the official version of history gleaned from the professional journal. Sharing their stories herein helps correct the historical record.     

The role of social networks and institutions in the internationalization of Russian entrepreneurial firms: Do they matter?

Drawing upon network theory and institutional theory, this paper examines the influence of networks on the internationalization of Russian entrepreneurial firms. Our case analysis suggests that within the context of the Russian environment, networks play a much less important role in the internationalization process than it is usually assumed in the literature. For the Russian entrepreneurial firms examined in our study, the most important factor in their internationalization was their engagement in honest business practices that established trust and commitment in their relationships with international business partners. This study underscores the importance of the institutional context of an entrepreneurial firm’s country.     

A tale of two marketplaces: Consumption restriction, social comparison, and life satisfaction

Analysis with reports from more than 56,000 consumers across 38 countries reveals that social comparison (upward/downward) moderates the relationship between consumption restriction and life satisfaction. Specifically, insufficient access to goods and services combined with the likelihood of making upward social comparisons lowers life satisfaction??this negative consequence also is exacerbated by poverty. Most studies focus on wealthier consumers given importance of material abundance to affluent lifestyles; this investigation suggests that materialism also influences lives of impoverished consumers. Challenging our conventional wisdom, these results reveal that social comparisons are significantly more powerful determinants of life satisfaction for people in much poorer, developing societies than for people in more affluent societies. Specifically, compared to their affluent counterparts, impoverished consumers experience greater decreases in life satisfaction when their access to goods and services is lower than others within their societies.     

UK EXCESS SHARE RETURNS: FIRM SIZE AND VOLATILITY

Using the family of GARCH-M(p, q) models and UK data comprising of the market portfolio and a portfolio of smaller company shares over the period January 1970 through June 1994, this paper provides support for the notion that the degree of market capitalisation is an important factor in the analysis of risk-return relationships. The evidence reported supports the view that, although both portfolios appear to be driven by the persistence of volatility shocks, there exist significant differences in risk-return behaviour.     

Necessity conditions in voting theory

In this paper we take some concepts of necessity conditions in voting theory first developed by Inada, Sen, and Pattanaik and refine those concepts to deal with the more commonly discussed case of fixed numbers of voters. These new concepts are then applied to the study of domain restrictions designed to yield quasitransitive and transitive social preference relations. Along the way, a conjecture of Pattanaik is settled.