We examine the role of board characteristics on the performance of Australian credit unions during the period 2004–2012. Credit unions are unique as they are member‐owned institutions, and their directors are democratically elected by their members – an unusual governance structure that poses challenges for board effectiveness. We find that board remuneration, board expertise and attendance at meetings are associated with increased credit‐union performance and are consistent with the goal of maximising member benefits. While the unique features of credit unions limit the presence of external monitoring mechanisms, we provide evidence that these board characteristics are relevant for credit unions.
{"title":"Board Characteristics and Credit‐Union Performance","authors":"Luisa A. Unda, Kamran Ahmed, Paul R. Mather","doi":"10.1111/acfi.12308","DOIUrl":"https://doi.org/10.1111/acfi.12308","url":null,"abstract":"We examine the role of board characteristics on the performance of Australian credit unions during the period 2004–2012. Credit unions are unique as they are member‐owned institutions, and their directors are democratically elected by their members – an unusual governance structure that poses challenges for board effectiveness. We find that board remuneration, board expertise and attendance at meetings are associated with increased credit‐union performance and are consistent with the goal of maximising member benefits. While the unique features of credit unions limit the presence of external monitoring mechanisms, we provide evidence that these board characteristics are relevant for credit unions.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115671681","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The literature offers contradictory views on the informativeness of margin trading using various measures of information content. Utilising data from a Chinese margin‐trading pilot programme initiated in 2010, this paper investigates whether margin traders are informed by directly examining the return predictability of margin‐trading activity. We find that margin‐trading activities cannot positively predict future stock returns. Moreover, we explore some non‐informational trading strategies used by margin traders, e.g., positive‐feedback strategies and moving‐average trading rules. These results suggest that margin traders are noise traders rather than informed traders, and margin trading conveys no new firm‐specific information.
{"title":"Are Margin Traders Informed?","authors":"Dayong Lv, Wenfeng Wu","doi":"10.1111/acfi.12578","DOIUrl":"https://doi.org/10.1111/acfi.12578","url":null,"abstract":"The literature offers contradictory views on the informativeness of margin trading using various measures of information content. Utilising data from a Chinese margin‐trading pilot programme initiated in 2010, this paper investigates whether margin traders are informed by directly examining the return predictability of margin‐trading activity. We find that margin‐trading activities cannot positively predict future stock returns. Moreover, we explore some non‐informational trading strategies used by margin traders, e.g., positive‐feedback strategies and moving‐average trading rules. These results suggest that margin traders are noise traders rather than informed traders, and margin trading conveys no new firm‐specific information.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126586198","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Strategy execution has advanced to the area of not-for-profit, hybrid, as well as government organizations. The Balanced Scorecard (BSC) is a Strategic Performance Management System (SPMS) that lays a distinct focus on aligning strategic initiatives with non-financial indicators. This case study of a city hall addresses behavioral resistance against SPMS, as well as several technical pitfalls in its implementation. The target audience are experiences students, and the didactic approach is a flipped classroom. Students are being presented with solutions that intuitively make sense, but have severe flaws once they check the consistency of these suggestions with the theoretical concepts and the empirical evidence of the listed sources.
{"title":"Strategy Execution in Public Administration – A Case Study","authors":"R. Lueg","doi":"10.2139/ssrn.3717522","DOIUrl":"https://doi.org/10.2139/ssrn.3717522","url":null,"abstract":"Strategy execution has advanced to the area of not-for-profit, hybrid, as well as government organizations. The Balanced Scorecard (BSC) is a Strategic Performance Management System (SPMS) that lays a distinct focus on aligning strategic initiatives with non-financial indicators. This case study of a city hall addresses behavioral resistance against SPMS, as well as several technical pitfalls in its implementation. The target audience are experiences students, and the didactic approach is a flipped classroom. Students are being presented with solutions that intuitively make sense, but have severe flaws once they check the consistency of these suggestions with the theoretical concepts and the empirical evidence of the listed sources.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123623042","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the use of incomplete accounting measures as a control practice to align strategy with exploration and exploitation (March, 1991). We examine empirically relationships between Incomplete Measurement Behavior (IMB), Formal Controls, and Organic Innovative Culture for both internal- and market-facing activities. IMB is a control practice that allows managers to mediate the tension between exploration and exploitation using other sources of information. We find evidence suggesting formal completeness acts as a substitute for IMB for market-facing activities. Further organic innovative cultures complement formal controls and indirectly substitute for IMB. Using equifinality as a criterion, we conclude there are indications that market-facing activities use interdependent management control systems (MCS) to mediate between exploitation and exploration strategies. We find indications that a reductionist approach of examining incomplete measures alone, without consideration of control practices, may lead to under specification.
{"title":"The Role of Incomplete Measurement Behavior as a Part of a Package of Control Practices Mediating Between Exploitation and Exploration","authors":"James T. Mackey, F. Deng","doi":"10.2139/ssrn.3521938","DOIUrl":"https://doi.org/10.2139/ssrn.3521938","url":null,"abstract":"This paper examines the use of incomplete accounting measures as a control practice to align strategy with exploration and exploitation (March, 1991). We examine empirically relationships between Incomplete Measurement Behavior (IMB), Formal Controls, and Organic Innovative Culture for both internal- and market-facing activities. IMB is a control practice that allows managers to mediate the tension between exploration and exploitation using other sources of information. We find evidence suggesting formal completeness acts as a substitute for IMB for market-facing activities. Further organic innovative cultures complement formal controls and indirectly substitute for IMB. Using equifinality as a criterion, we conclude there are indications that market-facing activities use interdependent management control systems (MCS) to mediate between exploitation and exploration strategies. We find indications that a reductionist approach of examining incomplete measures alone, without consideration of control practices, may lead to under specification.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124640229","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Technical debt refers to the design, development, and implementation shortcuts taken by firms when deploying accounting information systems. Prior system-level studies have shown that such shortcuts decrease the reliability of systems and increase the long-term system maintenance obligations. On the one hand, technical debt may cause system disruptions that impair firm-level performance. On the other hand, incurring technical debt may aid firms to expedite their systems deployment and to implement idiosyncratic functionalities that may enhance performance. In this firm-level study, we examine the economic implications of technical debt accumulated by 26 firms in their customer relationship management (CRM) systems over an 11-year period. We find that firms operating in industries with higher “clockspeed” and higher competitive threats tend to accumulate more technical debt. After controlling for industry- and firm-level factors, our analysis reveals that technical debt embedded in the CRM systems negatively impacts firms’ performances, measured as gross profit scaled by beginning-of-year total assets (GROA). We estimate that a 10% increase in technical debt reduces GROA by 16% on average. The negative impact of technical debt on GROA increases over the lifecycle of the systems, which significantly reduces the long-term business value of those systems. Highly experienced information technology teams and the presence of a chief information officer in a firm’s top management team, however, serve to mitigate, at least partially, the negative impact of technical debt. We discuss the implications of these findings for research on the business value and governance of accounting information systems and performance evaluation. This paper was accepted by Shiva Rajgopal, accounting.
{"title":"Technical Debt and Firm Performance","authors":"R. Banker, Yi Liang, Narayan Ramasubbu","doi":"10.1287/MNSC.2019.3542","DOIUrl":"https://doi.org/10.1287/MNSC.2019.3542","url":null,"abstract":"Technical debt refers to the design, development, and implementation shortcuts taken by firms when deploying accounting information systems. Prior system-level studies have shown that such shortcuts decrease the reliability of systems and increase the long-term system maintenance obligations. On the one hand, technical debt may cause system disruptions that impair firm-level performance. On the other hand, incurring technical debt may aid firms to expedite their systems deployment and to implement idiosyncratic functionalities that may enhance performance. In this firm-level study, we examine the economic implications of technical debt accumulated by 26 firms in their customer relationship management (CRM) systems over an 11-year period. We find that firms operating in industries with higher “clockspeed” and higher competitive threats tend to accumulate more technical debt. After controlling for industry- and firm-level factors, our analysis reveals that technical debt embedded in the CRM systems negatively impacts firms’ performances, measured as gross profit scaled by beginning-of-year total assets (GROA). We estimate that a 10% increase in technical debt reduces GROA by 16% on average. The negative impact of technical debt on GROA increases over the lifecycle of the systems, which significantly reduces the long-term business value of those systems. Highly experienced information technology teams and the presence of a chief information officer in a firm’s top management team, however, serve to mitigate, at least partially, the negative impact of technical debt. We discuss the implications of these findings for research on the business value and governance of accounting information systems and performance evaluation. This paper was accepted by Shiva Rajgopal, accounting.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-10-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133631937","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
T. Dang, V. Dang, Fariborz Moshirian, Lily H. G. Nguyen, Bohui Zhang
We examine the impact of the media on firms’ leverage adjustments. Using a comprehensive sample of global news across 33 countries, we find that greater news coverage and more positive news sentiment are associated with greater leverage adjustment speeds. This finding is consistent with the argument that media coverage and content help lower the cost of firms’ adjustment toward target leverage. We further find evidence supporting two mechanisms through which the news media affects leverage adjustments: information dissemination and monitoring. Overall, our results are consistent with the dynamic trade-off theory of capital structure.
{"title":"News Media Coverage and Corporate Leverage Adjustments","authors":"T. Dang, V. Dang, Fariborz Moshirian, Lily H. G. Nguyen, Bohui Zhang","doi":"10.2139/ssrn.3109477","DOIUrl":"https://doi.org/10.2139/ssrn.3109477","url":null,"abstract":"We examine the impact of the media on firms’ leverage adjustments. Using a comprehensive sample of global news across 33 countries, we find that greater news coverage and more positive news sentiment are associated with greater leverage adjustment speeds. This finding is consistent with the argument that media coverage and content help lower the cost of firms’ adjustment toward target leverage. We further find evidence supporting two mechanisms through which the news media affects leverage adjustments: information dissemination and monitoring. Overall, our results are consistent with the dynamic trade-off theory of capital structure.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-10-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114731355","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-09-16DOI: 10.18488/journal.62.2019.64.232.247
J. Ugoani
This study investigated the relationship between activity cost management and its effect on enterprise productivity using the exploratory research design. It focused on critical factors that lead to cost-effectiveness. A sample of 113 respondents participated in the study, and data collected from secondary and primary sources were analyzed through descriptive and regression statistical techniques. The result showed that activity cost management has significant positive effect on enterprise productivity. The new result is important because an enterprise is effective when it attains its goals, but productive only when such goals are achieved efficiently. Through the exploration and result, the study clearly highlighted that factors such as activity-based cost management, cost-benefit-analysis, internal control, ratio analysis, zero-base budgeting,internal accountability, and transparency, as well as cost leadership form the basis for enterprise productivity. An effective board of directors is imperative in any enterprise to provide necessary cost leadership for cost effectiveness and enterprise productivity. The study was limited by insufficient current academic literature, therefore, further study could examine the relationship between activity cost management and enterprise failure. Based on the result, it was recommended that activity cost management practices must be intensified in public enterprises as a measure to reduce the heap of fraud prevalent in such enterprises.
{"title":"Activity Cost Management and Its Effect on Enterprise Productivity","authors":"J. Ugoani","doi":"10.18488/journal.62.2019.64.232.247","DOIUrl":"https://doi.org/10.18488/journal.62.2019.64.232.247","url":null,"abstract":"This study investigated the relationship between activity cost management and its effect on enterprise productivity using the exploratory research design. It focused on critical factors that lead to cost-effectiveness. A sample of 113 respondents participated in the study, and data collected from secondary and primary sources were analyzed through descriptive and regression statistical techniques. The result showed that activity cost management has significant positive effect on enterprise productivity. The new result is important because an enterprise is effective when it attains its goals, but productive only when such goals are achieved efficiently. Through the exploration and result, the study clearly highlighted that factors such as activity-based cost management, cost-benefit-analysis, internal control, ratio analysis, zero-base budgeting,internal accountability, and transparency, as well as cost leadership form the basis for enterprise productivity. An effective board of directors is imperative in any enterprise to provide necessary cost leadership for cost effectiveness and enterprise productivity. The study was limited by insufficient current academic literature, therefore, further study could examine the relationship between activity cost management and enterprise failure. Based on the result, it was recommended that activity cost management practices must be intensified in public enterprises as a measure to reduce the heap of fraud prevalent in such enterprises.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128026219","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Sticky costs materialize when costs increase more with rising an activity than they decrease with falling of the very same amount of the activity. Over time a silent diffusion of sticky costs can be observed in the HoReCa (HOtel/REstaurant/CAtering) industry. In sticky costs literature the cost behaviour is evaluated by correlating the current growth in Selling, General and Administrative costs – often referred to overhead - with current revenue growth. Recently, research identified several attributes affecting the hysteresis (Greek: remaining even if the cause is no longer there) of cost. Managerial oversight, external regulatory conditions and company culture are an example of such attributes. First insights indicate that the dependence of a system on its history is the driving force to determine the severance of cost stickiness. It depends for different sizes of corporations on the corporate governance model and on the successful variabilization of costs. This paper presents the most important attributes affecting sticky cost. Further, the various implementations in real managerial decision-making processes in the HoReCa industry are described on the example of the region of Opatija, Croatia. A qualitative research using ATLAS.ti as Computer Assisted Qualitative Data Analysis Software (CAQDAS) is the chosen approach for unveiling the desired findings.
{"title":"The Silent Diffusion of Sticky Costs in the HoReCa Industry","authors":"Wolfram Irsa","doi":"10.2139/ssrn.3490167","DOIUrl":"https://doi.org/10.2139/ssrn.3490167","url":null,"abstract":"Sticky costs materialize when costs increase more with rising an activity than they decrease with falling of the very same amount of the activity. Over time a silent diffusion of sticky costs can be observed in the HoReCa (HOtel/REstaurant/CAtering) industry. In sticky costs literature the cost behaviour is evaluated by correlating the current growth in Selling, General and Administrative costs – often referred to overhead - with current revenue growth. Recently, research identified several attributes affecting the hysteresis (Greek: remaining even if the cause is no longer there) of cost. Managerial oversight, external regulatory conditions and company culture are an example of such attributes. First insights indicate that the dependence of a system on its history is the driving force to determine the severance of cost stickiness. It depends for different sizes of corporations on the corporate governance model and on the successful variabilization of costs. This paper presents the most important attributes affecting sticky cost. Further, the various implementations in real managerial decision-making processes in the HoReCa industry are described on the example of the region of Opatija, Croatia. A qualitative research using ATLAS.ti as Computer Assisted Qualitative Data Analysis Software (CAQDAS) is the chosen approach for unveiling the desired findings.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-09-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124634790","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A firm’s stock price may reveal information that the firm itself might not want to share. In particular, stock price may reveal information about future demand, which when learned by a rival undercuts the firm’s competitive position. This paper establishes that when a firm discloses cost information it can confound decision-relevant demand information embedded in the stock price that a rival can otherwise extract. With stock price valuing firm profit (not cost and revenue separately), a disconnect is introduced between the firm’s actions and its intent – it discloses more on one dimension when its intent is to conceal on another. Consequently, a firm’s disclosure must be made strategically accounting for both direct communication as well as indirect information transmission via its stock price. From the firm’s perspective, the “competitive upside” from disclosing to keep the rival in the dark about market demand is evaluated against the “valuation downside” from disclosing more unfavorable cost information.
{"title":"Disclosing to Conceal: Impeding Competitor Learning from the Stock Market","authors":"Anil Arya, Ramachandran Ramanan","doi":"10.2139/ssrn.3449544","DOIUrl":"https://doi.org/10.2139/ssrn.3449544","url":null,"abstract":"A firm’s stock price may reveal information that the firm itself might not want to share. In particular, stock price may reveal information about future demand, which when learned by a rival undercuts the firm’s competitive position. This paper establishes that when a firm discloses cost information it can confound decision-relevant demand information embedded in the stock price that a rival can otherwise extract. With stock price valuing firm profit (not cost and revenue separately), a disconnect is introduced between the firm’s actions and its intent – it discloses more on one dimension when its intent is to conceal on another. Consequently, a firm’s disclosure must be made strategically accounting for both direct communication as well as indirect information transmission via its stock price. From the firm’s perspective, the “competitive upside” from disclosing to keep the rival in the dark about market demand is evaluated against the “valuation downside” from disclosing more unfavorable cost information.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-09-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116308896","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study examines the managerial sensemaking process around business models. Drawing on fieldwork, this study introduces a model to describe how managerial sensemaking occurs around business model development and use. This study shows that managerial sensemaking around business models occurs through a mutually co‐constituted process, a separate yet shared process, or a combination of them resulting from an interplay between sensemaking and sensegiving activities. To facilitate their sensemaking around business models, managers draw on several schemas. Over time, some schemas underlying business models remain unchanged, while others change in varying degrees.
{"title":"Business Models and the Managerial Sensemaking Process","authors":"Syrus M. Islam","doi":"10.1111/acfi.12459","DOIUrl":"https://doi.org/10.1111/acfi.12459","url":null,"abstract":"This study examines the managerial sensemaking process around business models. Drawing on fieldwork, this study introduces a model to describe how managerial sensemaking occurs around business model development and use. This study shows that managerial sensemaking around business models occurs through a mutually co‐constituted process, a separate yet shared process, or a combination of them resulting from an interplay between sensemaking and sensegiving activities. To facilitate their sensemaking around business models, managers draw on several schemas. Over time, some schemas underlying business models remain unchanged, while others change in varying degrees.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125392460","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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