Does the Ethical Culture of Organisations Promote Managers’ Occupational Well-Being? Investigating Indirect Links via Ethical Strain

The present study had two major aims: first, to examine the construct validity of the Finnish 58-item Corporate Ethical Virtues scale (CEV; Kaptein in J Org Behav 29:923–947, 2008) and second, to examine whether the associations between managers’ perceptions of ethical organisational culture and their occupational well-being (emotional exhaustion and work engagement) are indirectly linked by ethical strain, i.e. the tension which arises from the difference in the ethical values of the individual and the organisation he or she works for. The sample consisted of 902 managers from different organisations, in middle and upper management levels, aged 25–68 years. The results of the confirmatory factor analysis (CFA) provided support to the hypothesised eight-factor structure of the CEV scale; i.e. the scale contained the factors of clarity, congruency of supervisors, congruency of senior management, feasibility, supportability, transparency, discussability and sanctionability. In addition, it emerged from the CFAs that the high intercorrelations of these factors can be explained by the second-order factor of ethical culture. The managers’ perceptions of the ethical culture prevailing in their organisations were associated with their occupational well-being both directly (high-work engagement) and indirectly via a low level of ethical strain (low-emotional exhaustion). Thus, the findings indicated that the ethical culture of organisations plays a major role in managers’ occupational well-being.     

Do cash flows reported by firms articulate with their income statements and balance sheets? Descriptive evidence from Finland

Using data for a sample of listed Finnish firms for 1995–97 this paper examines the coincidence of reported cash flows with corresponding cash flows estimated from income statement and balance sheet data. The issue is important in light of prior empirical studies that have analysed the properties and usefulness of cash flow information derived from income statements and balance sheets. In addition, financial analyses of firms not disclosing cash flow statements are implicitly based on the assumption that income statements and balance sheets are useful in producing unbiased and efficient estimates of cash flows. The overall findings indicate that reported cash flows do not always articulate with income statements and balance sheets and that non-articulation can be observed in cash flows from operating, investing and financing activities. The differences between reported and estimated cash flows prove to be mostly random. The findings on cash flows from operating activities indicate that differences attributable to operating income and working capital are partially countervailing. The findings also suggest that the differences do not materially affect firms' relative rankings based on financial ratios. A detailed analysis of an individual company indicates that differences arising from the allocation of short-term liabilities to operating and financing activities can be important. Overall, the results call for the refinement of the standards and guidelines of cash flow reporting practices.     

The Information Content of Cash Flows and the Random Walk: Evidence from the Helsinki Stock Exchange

Using a sample from the Helsinki Stock Exchange, this paper examines whether observed market reactions to unexpected cash flows are sensitive to the random walk assumption of cash flow behaviour. We consider the random walk (with drift) model commonly used in related literature, and we consider cash flow expectations generated with individually estimated parsimonious univariate time series models and an index model. Market reactions to unexpected cash flows are indiscernible under the random walk assumption, while significant market reactions are found when expectations of cash flows are measured with models which better capture their time series properties. Prior studies that rely on the random walk assumption have probably been biased against finding a significant market reaction to cash flow information.     

Reassessing the Structure of Enduring Leisure Involvement

The study compared the importance of spending time in interacting with nature to other leisure activities regarding recovery from work demands. In addition, a multiple mediation model between time spent in interacting with nature and need for recovery through four mediators was tested. Employees of five organizations answered a questionnaire (N = 527). Exercise and being outdoors during free-time was evaluated as the most effective activity for recovery from work stress, and the time spent in interacting with nature was mentioned as second in importance. Time spent in exercise and being outdoors, life satisfaction, and relaxation mediated significantly the relationship between time spent in interacting with nature and need for recovery from work.     

Expected Returns and Idiosyncratic Risk: Industry-Level Evidence from Russia

We explore a relation between expected returns and idiosyncratic risk in Russia. Investors in the Russian stock market cannot fully diversify their portfolios due to transaction costs, information gathering and processing costs, and shortcomings in investor protection. This implies that investors demand a premium for idiosyncratic risk. We estimate the price of idiosyncratic risk using MIDAS regressions and a cross section of Russian industry portfolios. We find that idiosyncratic risk is economically significant and commands a negative (positive) premium, on average, of 10.0% (8.0) per year before (after) the global financial crisis in 2008. The results remain unaffected after controlling for global pricing factors and return reversal.     

Infrastructure public–private partnership project ecosystem – financial and economic positioning of stakeholders

The purpose of this paper is to construct an analytical cash flow-based project model to facilitate project appraisal of both private investors and public sector. With the help of the model that focuses on ecosystem and its stakeholders, it is simpler to identify potential conflicts usually encountered in public–private partnership (PPP) projects. The model construct is based on classical cash flow accounting and cost–benefit analysis. In the model, the flows of cash (private investors) and the flows of costs and benefits (public investors) are integrated in a single framework. The model shows that within the ecosystem the investors' (public vs. private) social, economic and financial targets are not necessarily coinciding. Prospecting of common ground and win–win situations becomes a crucial success factor for any PPP project. The paper discusses the policy and investment strategy implications for successful PPPs.     

Book Reviews

This paper examines factors affecting the owner-manager's voluntary decision to hire an auditor in small firms. Using a random sample of 412 small private companies in Finland responding to an Internet survey, we first probe the institutional boundaries of a prior UK study [Collis, J., Jarvis, R., and Skerratt, L., 2004. The demand for the audit in small companies in the UK. Accounting and business research, 34 (2), 87–100] and conclude that its main findings can be generalised to a different regulatory setting (Finland) typical of many Continental European countries. Second, we broaden the prior research by testing new hypotheses regarding the drivers of an audit among small companies. We hypothesise and find evidence that outsourcing of critical accounting functions creates information asymmetry between the owner-manager and the external accountant, which may arouse the need for monitoring the external accountant through a voluntary audit. In addition, we find, as hypothesised, that tax advisory services provided by the external accountant reduce the likelihood of a voluntary audit. Moreover, we hypothesise that receiving a qualified opinion from the auditor reduces the likelihood of hiring an auditor voluntarily, whereas firms experiencing financial distress would be more willing to have their financial statements audited. We find evidence consistent with these hypotheses.     

International business travelers’ psychological well-being: the role of supportive HR practices

This study examines the effects of the job demands and job resources typical of international business travel (IBT) on psychological well-being (job exhaustion, vigor and satisfaction with work-related travel) among 232 Finnish IBTs. The study is theoretically based on the job demands-resources model and both health impairment and motivational processes were examined alongside the interaction effects of job demands and job resources. Path analysis based on structural equation modeling showed that, of the job demands, workload and pressure experienced in work demanding IBT predicted job exhaustion, but risks related to travel destinations did not. Viewed as job resources, supportive HR practices for traveling (well-functioning and safe travel arrangements and an opportunity for post-travel recovery) predicted vigor and satisfaction with traveling work. They also provided a buffer against the negative effects of the risks of travel destinations on job exhaustion and boosted satisfaction with work travel under circumstances of high risk related to travel destinations. Our findings indicate that organizations should pay greater attention to the workload and the pressure under which IBTs work, and develop supportive HR practices, especially for IBTs who experience high safety and health risks, for example, at their destination.     

Holiday travel,staycations, and subjective well-being

The tourism industry thrives on the notion that holiday travel improves well-being. However, scientific evidence that holiday travel is more beneficial than spending free time at home is lacking. Using the Effort-Recovery and the Limited Resources model as theoretical basis, this study investigates whether workers behave, think, and feel differently during travel than during leisure time spent at home. In a five-week longitudinal field study, we followed 24 workers during free evenings after work, a free weekend at home, and on a free weekend of domestic travel. Within-person differences were investigated between these three occasions in behavior, cognition, and emotions. During travel, employees slept more, engaged more in physical and social activities and less in obligatory activities than during free evenings after work. Hedonic well-being was higher and ruminative thinking lower during travel than during free evenings after work. Physical distance from home and work was related to engagement in resource-providing rather than resource-consuming activities and seems to translate into mental distance from everyday worries. Differences between holiday travel and weekends at home were small. Still, the findings suggest that travel may provide feelings of remoteness in places with novel and fascinating qualities, free of chores.