Corporate Financial Control Mechanisms and Firm Performance: The Case of Value-Based Management Systems

Abstract:  We examine the performance of 84 firms that adopt value-based management (VBM) systems during the period 1984-1997. The typical firm significantly improves matched-firm-adjusted residual income after adopting VBM. This improvement persists for the five post-adoption years studied. After controlling for possible sample bias, we find that large firms show less improvement than small firms. We find a negative relation between tying compensation to VBM and post-adoption performance. We also find that firms reduce capital expenditures following VBM adoption, but that the reductions in spending do not differ based on the firms' growth opportunities. Overall, the evidence suggests that VBM improves economic performance and the efficient use of capital.     

Managerial Incentives and Corporate Fraud: The Sources of Incentives Matter

Operating performance and stock return results imply that managerswho commit fraud anticipate large stock price declines if theywere to report truthfully, which would cause greater lossesfor managerial stockholdings than for options because of differencesin convexity. Fraud firms have significantly greater incentivesfrom unrestricted stockholdings than control firms do, and unrestrictedstockholdings are their largest incentive source. Our resultsemphasize the importance of the shape and vesting status ofincentive payoffs in providing incentives to commit fraud. Fraudfirms also have characteristics that suggest a lower likelihoodof fraud detection, which implies lower expected costs of fraud.     

Was technological change in the early Industrial Revolution Schumpeterian? Evidence of cotton textile profitability

Price and profit data between the 1770s and the 1820s from accounting records of three Lancashire cotton firms help to illumine the nature of the economic processes at work in early industrialization. Many historians have seen the Industrial Revolution as a Schumpeterian process in which discontinuous technological change led by the mechanized factories of the cotton industry created large profits for innovators that persisted in succeeding decades while technology slowly diffused. In this view imperfect capital markets limited the use of the new technology, keeping profits high. Reinvestment of these profits gradually financed expansion of innovating firms. The new technology dominated only after a long diffusion process. The evidence here, however, supports a more equilibrium view in which the industry expanded rapidly and prices fell in response to technological change. Expansion of the industry led to dramatic declines in the prices of cotton goods as early as the 1780s. There is no evidence of super-normal profits thereafter. Prices continued to fall and output expand thereafter as cost-reducing technological change continued.     

An Exploratory Study in Community Perspectives of Sustainability Leadership in the Murray Darling Basin

This article explores the emergence of leadership during implementation of a water saving initiative in the rural community surrounding Barren Box Swamp in the Murray Darling Basin, Australia. Qualitative data analysis indicated that the system elements affecting the type of leadership to emerge included the extent to which the groups were engaged in the process, the level of access to resources, and the level of investment in the outcomes of the project. Although these results reinforced key aspects of complex problem-solving through collaboration, they demonstrated varying degrees and types of both engagement and leadership within the case community. Given the current finding that these varying elements can coincide within one system, this case suggests that each community’s characteristics, resources and context will determine the optimal combination of leadership style and level of collaboration needed to facilitate sustainable community development.     

Organized labour in the borderless world: globalization,deregulation and union strategy in Australia

Recent Australian federal governments have responded to broadening global markets and expanding international trade with policies of deregulation, labour market reform and industrial relations decentralization. This has thrown up major challenges for unions across the board, but the differential impacts of policy on different parts of industry and the labour market mean that the challenges facing different unions are likely to vary significantly. Using data from our 1996 Australian National Trade Union Survey, we investigate the degree to which particular rypes of unions favour specific strategic orientations. We find systematic differences between blue-collar and production industry unions on one hand, and white-collar and service industry unions on the other. On this basis, we make inferences about the likely future of Australian unions.     

Work, organisation and Enterprise Resource Planning systems: an alternative research agenda

This paper reviews literature that examines the design, implementation and use of Enterprise Resource Planning systems (ERPs). It finds that most of this literature is managerialist in orientation, and concerned with the impact of ERPs in terms of efficiency, effectiveness and business performance. The paper seeks to provide an alternative research agenda, one that emphasises work- and organisation-based approaches to the study of the implementation and use of ERPs.