Asymmetric trading by insiders – comparing abnormal returns and earnings prediction in Spain and Australia

This paper examines whether the ‘external governance’ imposed by comparative financial accounting standards reduces the trading advantage of insiders. We do this by directly comparing insider trading returns and insider’s ability to predict future earnings from accruals in Spain and Australia. Results show higher excess returns and greater prediction of future earnings from conditioned insider trading in Australia that is then utilized by financial analysts to lower forecast errors – particularly in contrarian‐based accruals trading. Possible explanations include: (i) a high asymmetric quality for market‐based accruals, (ii) information transfer from informed insiders to uninformed insiders and financial analysts and (iii) a more timely dissemination of financial information in Spain through different ownership and governance structures.     

What Drives Security Issuance Decisions: Market Timing,Pecking Order,or Both?

We study market timing and pecking order in a sample of debt and equity issues and share repurchases of Canadian firms from 1998 to 2007. We find that only when firms are not financially constrained is there evidence that firms issue (repurchase) equity when their shares are overvalued (undervalued) and evidence that overvalued issuers earn lower postannouncement long‐run returns. Similarly, we find that only when firms are not overvalued do they prefer debt to equity financing. These findings highlight an interaction between market timing and pecking order effects.     

The effects of venture capital syndicate diversity on earnings management and performance of IPOs in the US and UK: An institutional perspective

This study examines the extent to which principal–principal agency conflicts within venture capital (VC) syndicates lead to additional principal–agent conflicts in IPO firms in two institutional contexts. Using a matched sample of 274 VC-backed IPOs in the US and the UK, it shows that the diversity of a VC syndicate increases pre-IPO discretionary current accruals, used as a proxy for earnings management, but the impact of such diversity is higher in the US. There is also evidence of higher underpricing and lower aftermarket performance in firms with higher earnings management and VC diversity, and these negative performance effects are also higher in the US. Our findings indicate that local and informal institutions have a significant effect on multiple agency conflicts in IPO firms and performance outcomes.     

Organizational patterns of economies: an ecological perspective

A complex adaptive systems paradigm can be used to abridge theorizing in ecological and economic sciences. The paper discusses economic flows, connectivity and stability from the perspective of theoretical ecology. The global economy, by analogy with ecosystems, appears to self-organize as an ascendent system: most of the world trade is done among the tiny fraction of technologically advanced countries and trade interaction strength exhibits a power law with exponential decay. Small world behavior and preferential attachment characterizes interactions among economic agents. Industrial economies and the world economic system as a whole appear to evolve towards the ‘maximum power’ efficiency. Development that fosters efficiency in the maximum power sense (all the world becomes industrialized) implies a trade-off in socio-economic diversity, and may be antithetical to the stability of the global economy. If we take an ecological perspective, then the problem of global development does not reside in the realm of technology or global governance. It boils down to the question of required natural balance in living systems, the balance between organized complexity and overhead, the harmony between efficiency and adaptability.     

Corporate labour share of income and the shadow economy: a cross-country analysis

This article addresses a link between the size of the shadow economy and the corporate labour share of income in the European Union. Fixed individual and time effects models suggest that there is a negative link between these two indicators. The coefficients are statistically significant if we control for other variables related to labour markets, such as unemployment rates or strictness of employment protection (regular contracts). Depending on the exact model specification, our estimates suggest that an increase in the shadow economy by 1% of GDP results in a 0.5–1% decline in the labour share of income in the corporate sector.     

Accounting Problems in Infrastructure Asset Valuation and Depreciation in New South Wales Local Government

The aim of this paper is twofold: (i) to investigate whether New South Wales (NSW) local government councils comply with Australian Accounting Standards in accounting for revaluation of their infrastructure assets and (ii) to assess any consequences for the reliability of financial reporting in NSW local government. Using road assets as an example, we analyse the results of revaluations of road assets undertaken by 89 NSW councils as reported in their financial statements during the period 2013 to 2016. In this analysis we focus on the effect of a change in accumulated depreciation and impairment loss component of fair value as a percentage of the gross replacement cost of the revalued assets. The analysis reveals that in most cases this effect is significant. However, the accounting and reporting of this effect is strikingly inconsistent between the councils. Based on a critical analysis of the accounting framework and disclosure of the revaluation effects, we conclude that the main reason for the change in the fair value of assets is altered estimates of remaining useful life. Furthermore, we argue that councils did not comply with the requirements of AASB 116 in determining the useful life of the assets.     

Connecting Eastern and Western Perspectives on Management: Translation of Practices Across Organizations,Institution and Geographies

The exchange of academic knowledge increasingly flows in both directions, from West to East and East to West. The result is a rich and ever increasing development of theory and understanding of practice, which is expected only to gain further momentum in the future. This paper seeks to help establish a foundation for further development of this fertile exchange of ideas between East and West. We reflect on the research focus of the main theories in management studies in East and West. We discuss the topics of East and West in selected areas of management studies, including competitive strategy, strategic leadership, and the human resource management to offer avenues for future research. Translating practices between the two contexts creates institutional, leadership, strategy and organizational challenges while providing new promising research avenues and opportunities to integrate East and West perspectives. We also offer a more critical view on the relationship between West and East, focusing specifically on the role of power and power relations in making sense of how management and organization studies treat issues of cultural, institutional and philosophical divergence.     

Corporate Governance and Performance in Publicly Listed,Family-Controlled Firms: Evidence from Taiwan

Using a multi-industry dataset of 228 firms listed on the Taiwan Stock Exchange (TSE) this paper analyses the effects of ownership structure and board characteristics on performance in large, publicly traded firms that are controlled by founding families. After taking account of possible endogeneity problems, we do not find that family control is associated with performance measured in terms of accounting ratios, sales per issued capital, earnings per share and market-to-book value. However, share ownership by institutional investors, and foreign financial institutions in particular, is associated with better performance. Our results indicate that board independence from founding family and board members’ financial interests have a positive impact on performance.     

Governance,ownership structure,and performance of IPO firms: the impact of different types of private equity investors and institutional environments

This paper examines performance effects of ownership concentration and two types of private equity investors (venture capitalists and business angels) in firms that have recently undergone an initial public offering (IPO) in the United Kingdom and France. We expand and contextualize nascent understanding of multiple agency theory by examining heterogeneity of private equity investors and by suggesting that multiple agency relationships are affected by different institutional contexts. We employ a unique, hand‐collected dataset of 224 matched IPOs (112 in each country). Controlling for the endogeneity of private equity investors' retained share ownership, we find support for the agency theory argument that concentrated ownership improves IPOs' performance. The research also shows that the two types of private equity investors have a differential impact on performance, and the legal institutions in a given country moderate this impact. Copyright © 2009 John Wiley & Sons, Ltd.