Managerial accounting systems and organizational control: A role perspective

This paper proposes a new way of viewing the relationship between managerial accounting systems and organizational control. This is done to provide a structure around which control processes may be observed and research conducted. In the context of role theory several propositions are advanced in order to explain the relationship. Namely, it is noted that managerial accounting systems are useful in communicating role expectations, are important to motivation, and are useful in communicating organizational climate. Also, several factors concerning managerial style and social context were seen to influence the operativeness of these propositions.     

Executive pay and performance: the moderating effect of CEO power and governance structure

This paper examines the crucial question of whether chief executive officer (CEO) power and corporate governance (CG) structure can moderate the pay-for-performance sensitivity (PPS) using a large up-to-date South African data-set. Our findings are threefold. First, when direct links between executive pay and performance are examined, we find a positive, but relatively small PPS. Second, our results show that in a context of concentrated ownership and weak board structures; the second-tier agency conflict (director monitoring power and opportunism) is stronger than the first-tier agency problem (CEO power and self-interest). Third, additional analysis suggests that CEO power and CG structure have a moderating effect on the PPS. Specifically, we find that the PPS is higher in firms with more reputable, founding and shareholding CEOs, higher ownership by directors and institutions, and independent nomination and remuneration committees, but lower in firms with larger boards, more powerful and long-tenured CEOs. Overall, our evidence sheds new important theoretical and empirical insights on explaining the PPS with specific focus on the predictions of the optimal contracting and managerial power hypotheses. The findings are generally robust across a raft of econometric models that control for different types of endogeneities, pay, and performance proxies.     

The housing market impact of state-level anti-discrimination laws, 1960–1970

This paper measures the housing-market impact of state-level anti-discrimination laws in the 1960s using household-level and census-tract data. State “fair-housing” laws were the direct antecedents of the federal Fair Housing Act of 1968, and policy variation across states facilitates estimates of the laws' impact. During the 1960s, Blacks' housing-market outcomes improved relative to Whites', and the proportion of exclusively White census tracts declined markedly, but there is little evidence that the fair-housing laws contributed to those changes. There is some evidence that Black renters may have benefited from the laws, but the bulk of the evidence suggests insignificant effects on Blacks' housing-market outcomes, the level of residential segregation, and the value of property in predominantly Black neighborhoods.     

Individual’s financial investment decision-making in reward-based crowdfunding: evidence from China

This article extends the work of Cecere et al. (Appl. Econ., 49(57): 5802–5813, 2017) and explores the antecedents of backers’ decision to invest in projects from eight categories on a reward-based crowdfunding platform in China. We extract data from 2011 to 2016 from the pioneer Chinese reward-based crowdfunding site ‘Demohour’. Our empirical investigation using OLS reveals that feedback score, social capital (followers on Weibo, project sharing on social media) and project quality (number of updates) are key motivating factors in investment decision and subsequently, project success or failure. Robustness tests also confirm the findings.     

Financial Statement Comparability and the Efficiency of Acquisition Decisions

This study examines whether acquirers make better acquisition decisions when target firms’ financial statements exhibit greater comparability with industry peer firms. We predict and find that acquirers make more profitable acquisition decisions when target firms’ financial statements are more comparable—as evidenced by higher merger announcement returns, higher acquisition synergies, and better future operating performance. We also find that post‐acquisition goodwill impairments and post‐acquisition divestitures are less likely when target firms’ financial statements are more comparable. Finally, we find that acquirers benefit most from comparability when acquirers’ ex ante information asymmetry is higher, acquirers operate in volatile operating environments, and management knows relatively less about the target. In total, our evidence suggests targets’ financial statement comparability helps acquirers make better acquisition‐investment decisions and fosters more efficient capital allocation.     

On the spread of social protection systems

This paper undertakes an empirical analysis of the adoption of contributory social security systems and effective and specific contribution rates. Conditional on country-(time-)specific economic determinants of the setting of these components, the empirical analysis focuses on the role of contagion for policy adoption. Specifically, the paper assesses to which extent a country’s integration into the international network of economic and political cooperation, the similarity of political systems, and economic interdependence facilitate the adoption of a social security system, its components, and its contributions across economies. The findings suggest that proximity through common policy, geographical neighborhood, and common culture is important for the diffusion of any type of social security scheme among proximate countries. Further, contagion matters for the adoption probability of specific contribution systems as such, as well as for the setting of contribution rates for both employers and employees.     

Site and situation strategy in tourism planning: A Mexican case study

Mexico has experienced all the effects, good and ill, of a large and expanding tourist trade. Tourism's negative consequences--economic dependency, crime, cultural erosion--have manifested themselves in tourist ghettos along Mexico's northern border, on the Mexican Riviera, and in the capital. This study is an assesment of contemporary Mexican tourism planning as it relates to these problems, and further as it seeks to make tourism a stimulus to economically depressed areas of the nation. A case study approach is utilized to identify the strategy of site and situation selection for the new programmed resort complex at Cancun on the Caribbean coast of the Yucatan peninsula. It is concluded that Cancun embodies, at least for Mexico, a radical departure in tourism development. The resort is situated to attract a large foreign clientele and to create the greatest possible positive economic and social impact on a resident Mexican population that has suffered chronic underdevelopment.     

Equity‐based incentives and shareholder say‐on‐pay

We study the relationship between CEO pay‐performance sensitivity, pay‐risk sensitivity, and shareholder voting outcomes as part of the “say‐on‐pay” provision of the 2010 US Dodd‐Frank Act. Consistent with our hypothesis, we provide evidence that shareholders tend to approve of compensation packages that are more sensitive to changes in stock price (pay‐performance sensitivity). Our findings are consistent with theoretical predictions that outside owners approve of equity incentives as a means of aligning managers' interests with those of shareholders. We also document that future changes to equity‐based incentives are related to voting outcomes and that shareholders incorporate CFO incentives into their votes. Collectively, these results provide evidence of the importance of equity‐based incentives from the perspective of those most concerned with firm value and of the effectiveness of say‐on‐pay as a governance mechanism.     

Does audit report information improve financial distress prediction over Altman's traditional Z‐Score model?

We analyze empirically the usefulness of combining accounting and auditing data in order to predict corporate financial distress. Concretely, we examine whether audit report information incrementally predicts distress over a traditional accounting model: the Altman's Z‐Score model. Although the audit report seems to play a critical part in financial distress prediction because auditors should warn investors about any default risks, this is the first study that uses audit report disclosures for predicting purposes. From a dataset of 1,821 Spanish distressed private firms, we analyze a sample of distressed and non‐distressed firms and develop logit prediction models. Our results show that while the only accounting model registers a classification accuracy of 77%, combined models of accounting and auditing data exhibit considerably higher accuracy (about 87%). Specifically, our findings indicate that the number of disclosures included in the audit report, as well as disclosures related to a firm's going concern status, firms’ assets, and firms’ recognition of revenues and expenses contribute the most to the prediction. Our empirical evidence has implications for financial distress practice. For managers, our study highlights the importance of audit report disclosures for anticipating a financial distress situation. For regulators and auditors, our study underscores the importance of recent changes in regulation worldwide intended to increase auditor's transparency through a more informative audit report.