Non-GAAP Earnings Disclosures on the Face of the Income Statement by UK Firms: The Effect on Market Liquidity

This study benefits by a special feature of the UK information environment which allows UK firms to disclose non-GAAP earnings on the face of the income statement to examine two interrelated questions. First, we ask whether the decision to disclose non-GAAP earnings on the face of the income statement is related to the firm's financial performance and corporate governance characteristics, and second, we investigate the effect of this disclosure decision on market liquidity. Using a dataset of 1227 hand-collected firm-year observations during the period 2006–2013, we show that better governed firms and firms with weaker financial performance are more likely to disclose non-GAAP earnings. Our evidence also suggests that this disclosure is associated with increased levels of market liquidity and the results hold after controlling for self-selection bias. We conclude that firms' decision to disclose non-GAAP earnings on the face of the income statement is more consistent with the incentive to provide information than to mislead the market.     

The linkage of HRM and knowledge-related performance in China's technology-intensive industries

This study examines the commitment-based and knowledge-based HR types to fully understand the role of HRM in China's technology-intensive industries. The relationships between the knowledge-based HR and commitment-based HR on firm performance were examined by using 156 firms in China's high technology industry in the Pearl River Delta area. The effects of innovation capability and workforce retention between HR and performance were also explored. The firm's innovation capability has been found to be an important determinant of firm performance. Retention has no significant impact on performance outcomes. HR plays a more important role in the growth stage of organizational life cycle. Implications for research and managerial practices are provided.     

Introduction: Transitional economies and changing notions of accounting and accountability

This paper explores the issue of the true and fair view (TFV) and the overriding principle within the European Union (EU), via a legally based analysis of the relationship between EU and national laws. We apply the supremacy of European law to methods of incorporating the TFV into national legislation, using Austria as a detailed case study, showing that all countries – maybe against their original intention – either have an override (as does Austria, contrary to the prevailing local opinion) or have failed to honour their EU commitments. As part of our argument, we explain the importance of the Roman law teleological principle in legal application and interpretation, as is well known in Continental countries. We show that the effect of the UK TFV override is in principle exactly analogous, only arguably even more powerful, which is not at all well known in Anglo-Saxon countries. We suggest reasons why the status quo ante in particular countries may be adhered to, and generalise the implications of our arguments.     

The expert problem: a survey

The survey is focused on the typical problems in information transmission from experts to non-experts. Attention is paid to the factors that can affect information disclosure in models that apply a game-theoretic approach to the use of professional advice. In the economic literature expertise is mainly analyzed as a special case of asymmetric information between expert and non-expert. The contributions are reviewed according to a double criterion, that takes into account both the preferences of the experts and the properties of communication. On one side, either the non-expert plays the role of a decision-maker, who chooses an action that is payoff-relevant for the expert, or the preferences of the expert directly depend on some measure of his reputation as a high-ability forecaster. On the other side, communication can range from pure cheap talk to completely verifiable messages.     

Reviews

UNITARY AUTHORITIES.

Coopers & Lybrand Deloitte, 1992: Partnership in Prosperity: local government's role in economic development. Association of County Councils: The review of local government — Paper No 6 (February).

THE NISSAN ENIGMA.

Garrahan, P. and Stewart, P. 1992: The Nissan Enigma: Flexibility at Work in a Local Economy. London: Mansell, £35.00 cloth, £12.99 paper.

THE INTELLIGENT REGION.

Cooke, P. and Morgan, K. 1991: The Intelligent Region: Industrial and Institutional Innovation in Emilia-Romagna. Cardiff: Regional Industrial Research, Report 7, PO Box 906, Cardiff CF1 3YN.

STRENGTHENING BRITAIN'S TECHNOLOGICAL PERFORMANCE.

Brunskill, 1.1992: Making It: A Federal approach to industrial policy. London: Institute for Public Policy Research, £10.00 paper.

INVISIBLE MINORITIES.

Wrench, J., Brar, H. and Martin, P. 1991: Invisible Minorities: The employment experiences and needs of black and ethnic communities in Harlow. University of Warwick: Centre for research in Ethnic Relations. Available from Harlow District Council.

RURAL RESTRUCTURING.

Gilg, A.W. (ed), 1992: Restructuring the Countryside: Environmental Policy and Practice, Aldershot: Ashgate Publishing Ltd, £32.50 cloth.     

Stakeholder influences on sustainability practices in the Canadian forest products industry

We examined how managers' perceptions of different types of stakeholder influences in the Canadian forestry industry affect the types of sustainability practices that their firms adopt. Both influences involving withholding of resources by social and ecological stakeholders and those involving directed usage of resources from economic stakeholders were found to drive such practices. We found that the industry and its stakeholders have moved beyond a focus on early stages of sustainability performance such as pollution control and eco‐efficiency. However, more advanced practices, such as those involving the redefinition of business and industrial ecosystems where firms locate in a region so that they can exchange and utilize wastes generated by other firms, are in their infancy. Stakeholders and firms in the industry are focused on the intermediate sustainability phases involving recirculation of materials and redesign of processes including sustainable harvesting of lumber. Copyright © 2004 John Wiley & Sons, Ltd.     

In search of the best human resource practices in chain stores in China

This paper is based on a recent survey of human resources (HR) practices from 83 chain stores in China. It differentiated managerial staff and operating employees according to different types of HR configurations. It also identified high and low adoption based on bundling of HR practices using cluster analysis. The impact of HR practices alignment on enhancing firm performance was evaluated using high adoption cluster. The findings advance our knowledge in the High Performance Work Systems literature and offer important insights for executives in formulating effective HR management strategies.     

Barbara Thomaß, Ruhr-Universität Bochum

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