The Improbability of Fraud in Accounting for Derivatives: A Case Study on the Boundaries of Financial Reporting Compliance

ABSTRACT

This study responds to recent calls in the literature to examine fraud using detailed case studies, extending knowledge beyond individual incentives and capital market reactions towards a more contextualized understanding of the concept. We use an institutional logics perspective to challenge existing assumptions about a universally valid meaning of compliance, fraud, and faithful representation. Presenting the case of the Swedish bank HQ, we show how the interpretation of the accounting standard for option measurement varies across different enforcement bodies because the meaning of compliance is socially negotiated across the institutional logics of markets, financial regulation, and law. The independent decision-making of the different enforcement bodies leads to a systematic variation in the interpretation of principles-based accounting standards without ultimate coordination. To define consistent boundaries of compliance across institutional logics, and thus, to distinguish between fraud and allowable managerial discretion becomes problematic. Faithful representation, in turn, cannot be understood as financial statements reflecting a correct value or as financial statements being prepared in accordance with acceptable practice, as suggested in the earlier literature. Instead, faithful representation itself becomes a contextually bound concept, which can only be defined within an institutional logic.     

The compliance model of employment standards enforcement: an evidence‐based assessment of its efficacy in instances of wage theft

This article critically assesses the compliance model of employment standards enforcement through a study of monetary employment standards violations in Ontario, Canada. The findings suggest that, in contexts where changes to the organisation of work deepen insecurity for employees, models of enforcement that emphasise compliance over deterrence are unlikely to effectively prevent or remedy employment standards violations.     

Social Marketing of a Fortified Staple Food at Scale: Generating Demand for Fortified Rice in Brazil

ABSTRACT

This paper describes the social marketing strategy implemented by PATH and GAIN to create a sustainable market for rice fortification in Brazil and develop a replicable model relevant to other geographies. It draws on market research on consumer attitudes and practices, as well as key demand and consumer metrics before and after execution of the social marketing campaign in Brazil. This marketing endeavor succeeded in establishing the viability of introducing fortified rice in a country through a purely market-based approach. Whereas social marketing is vital to the introduction and scale-up of fortified staple foods through commercial markets, it is not sufficient to achieve meaningful scale and sustainability. Engagement from the public and social sectors, clear governance, and other factors are critical to substantial and long-term impact. Lessons from this first attempt to introduce a fortified staple food through a market-based approach are relevant to similar initiatives elsewhere.     

Management heterogeneity,competitive interaction groups,and firm performance

One of the fundamental problems in strategic management is to map a heterogeneous set of firms in an industry into subsets of firms within which firms are homogeneous in their conduct and performance. The strategic group concept provides an answer to this intriguing question. Researchers in strategic group theory argue that firms within the same strategic group are behaviorally similar and thus tend to compete more fiercely within the group than across groups. In this paper, we focus on the question whether firms within the same group show similar decision‐making characteristics. Strategic‐choice theorists argue that top management teams in firms have substantial discretion in determining the future strategic contour of firms. Upper‐echelon theorists also argue that top managers are the strategists who set the direction of firms and the pace of competition in the industry. Further, they argue that top management team characteristics are an important element that determines the market niche in which a firm competes and the strategic direction a firm follows. Based on these arguments, we expect that there will be a significant link between grouping of firms by the patterns of competitive interactions and grouping of firms by top management team heterogeneity. Moreover, we argue that the closer the TMT heterogeneity of a firm is to the dominant heterogeneity in the competitive interaction group, the better it performs. Copyright © 2000 John Wiley & Sons, Ltd.     

The relationship between ownership and possession: observations from the context of digital virtual goods

This theoretical article highlights limitations in the current trend towards dichotomising full ownership and access-based consumption by recognising a broader, more complex array of ‘fragmented’ ownership configurations in the context of digital virtual goods (DVGs). In challenging this dichotomy, we recognise that the relationship between ownership and possession becomes particularly significant. We therefore consider how prominent DVG ownership configurations may shape the way in which possession is assembled, potentially reducing consumers’ scope of action relative to DVGs and leaving possession susceptible to disruption. Conversely, we acknowledge ways in which consumers’ continued attempts at possession may impinge upon the agency of ownership mechanisms within the market. Our analysis ultimately builds upon existing understandings of both ownership and possession, theorising their often overlooked relation in consumption.     

Concealment and verification over environmental regulations: a game-theoretic analysis

We consider a strategic situation in which a firm may conceal the illegal activity of violating environmental regulations and a regulator seeks to verify the illegality to punish the firm. We study two main factors, fines and social monitoring, that influence the firm’s decision in that situation. First, we find all the possible equilibria of our model and examine conditions of those two factors that lead to each equilibrium. Using the equilibrium conditions, we then study the optimal enforcement policies that induce the most socially desirable equilibrium and improve social welfare within each equilibrium. Our main findings are as follows. First, the two factors have a complementary relationship in getting the most desirable equilibrium: Certain high levels of fines and social monitoring are both needed. Second, if making the social monitoring above the certain critical level is impossible, setting the level of the fines as high as possible may be the optimal enforcement policy. Finally, if setting the fines above the certain critical level is not available, either, setting the level of the fines as low as possible might be optimal, and the higher level of the social monitoring does not necessarily bring higher social welfare.     

Organizations Behaving Badly: When Are Discreditable Actions Likely to Damage Organizational Reputation?

Everyday there are revelations of organizations behaving in discreditable ways. Sometimes these actions result in damage to an organization’s reputation, but often they do not. In this article, we examine the question of why external stakeholders may overlook disclosed discreditable actions, even those entailing ethical breaches. Drawing on stigmatization theory, we develop a model to explain the likelihood of reputational loss following revelations of discreditable actions. The model integrates four properties of actions (perceived control, perceived certainty, perceived threat, and perceived deviance), stakeholder motivation, and media coverage. Implications for theory and for practitioners concerned with reputation management are discussed.     

The International Trade Union Confederation: From Two (or More?) Identities to One

The International Trade Union Confederation was founded in 2006, consisting primarily of former affiliates of the International Confederation of Free Trade Unions and the World Confederation of Labour (although its creation was not formally a merger). I show how changes in the ideologies and identities of both confederations helped to overcome years of mutual antagonism and paved the way for unification. I consider the unification process in the broader perspective of the literature on trade union mergers but stress the need to focus on the role of ideas in such structural changes. The conclusion considers the problems the new confederation faces in developing a common set of ideas and a clear identity out of the separate orientations of its forerunners.     

Real and perceived losses from unemployment: a cross-country study

This article compares the Unemployment Rate (UR) as a measure of inefficiency with several other potential measures across 18 Organization for Economic Co-operation and Development (OECD) countries. Results show that the UR is not a very good measure of relative inefficiency between countries, it overestimates the number of individuals who would get jobs if the market is clear, the Dead Weight Losses (DWLs) of UR are remarkably low even in high unemployment countries and the aggregate perceived monetary losses by the unemployed as a proportion of Gross Domestic Product (GDP) are also uniformly low, although inframarginal individuals in some countries may perceive their losses to be high.     

The Impacts of Retail Promotions on the Demand for Orange Juice: A Study of a Retail Chain

This study examined the impacts of retail promotions on the demand for five brands of orange juices for a retail chain (referred to as Retailer X) and its competitors using the Rotterdam model. Results show that the combination of feature ads and displays had the largest impacts on retail revenue among the four promotional tactics considered, whereas temporary price reductions had no advertising impacts on retail revenue. Results also show that when Retailer X promotes an orange juice (OJ) brand using any of the tactics, a larger portion of the increased demand for the promoted brand comes from reduced demand for other brands of OJ in the same store or chain.A smaller portion comes from the decreased demand in Retailer X's competing stores in the same trading area.