Shane S. Dikolli, M. M. Frank, Zhe Guo, Luann J. Lynch
We investigate how mutual funds with environmental, social, and governance (ESG) objectives vote on shareholder proposals related to executive compensation. Using a sample of 94,695 votes by 2,354 mutual funds from 2012 to 2021, we find ESG funds are 9.4 percent more likely than non-ESG funds to vote in favor of such proposals, and the likelihood increases to 19.2 percent for proposals aligning executive compensation with environmental and social (ES) objectives. ESG funds are also 14.9 percent more likely to support proposals to improve transparency, but only 7.0 percent more likely to support proposals about redesigning compensation. Our results are consistent with ESG funds perceiving greater net benefits from supporting shareholder compensation proposals, particularly those related to ES objectives and transparency. Additionally, funds committed to ESG objectives in regulatory filings are more likely to support such proposals than fund families that voluntarily signed the United Nations’ Principles of Responsible Investment. JEL Classifications: G23; G30; M12; M14.
{"title":"ESG Mutual Fund Voting on Executive Compensation Shareholder Proposals","authors":"Shane S. Dikolli, M. M. Frank, Zhe Guo, Luann J. Lynch","doi":"10.2308/jmar-2022-036","DOIUrl":"https://doi.org/10.2308/jmar-2022-036","url":null,"abstract":"\u0000 We investigate how mutual funds with environmental, social, and governance (ESG) objectives vote on shareholder proposals related to executive compensation. Using a sample of 94,695 votes by 2,354 mutual funds from 2012 to 2021, we find ESG funds are 9.4 percent more likely than non-ESG funds to vote in favor of such proposals, and the likelihood increases to 19.2 percent for proposals aligning executive compensation with environmental and social (ES) objectives. ESG funds are also 14.9 percent more likely to support proposals to improve transparency, but only 7.0 percent more likely to support proposals about redesigning compensation. Our results are consistent with ESG funds perceiving greater net benefits from supporting shareholder compensation proposals, particularly those related to ES objectives and transparency. Additionally, funds committed to ESG objectives in regulatory filings are more likely to support such proposals than fund families that voluntarily signed the United Nations’ Principles of Responsible Investment.\u0000 JEL Classifications: G23; G30; M12; M14.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2023-07-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44734657","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}
With companies increasingly expected to undertake potentially costly climate-response strategies, we explore the roles of management control systems (MCSs) in how companies simultaneously manage their decarbonization objectives and their financial commitments. Based on research at 19 European chemical, steel, and utility corporations, we extend the concept of “proactive/reactive” response strategies by proposing three additional decarbonization strategies: wholesale green transition, green segmentation, and engagement. Second, we highlight the recursive relationship between MCSs and these strategies. We also postulate a dynamic model of MCSs evolution in the decarbonization context, whereby engagement strategies form the foundation of green segmentation and vice versa. Third, drawing on an integrative model, we propose three antecedents to companies’ response strategies relevant in this context, namely, their framing of decarbonization as an opportunity or a threat, the different perspectives on the availability of green technologies, and the different perspectives on the policy context.
{"title":"Lightening the Carbon Load: Using Management Control Systems to Manage Decarbonization Strategies","authors":"A. Mikes, M. Metzner","doi":"10.2308/jmar-2022-030","DOIUrl":"https://doi.org/10.2308/jmar-2022-030","url":null,"abstract":"\u0000 With companies increasingly expected to undertake potentially costly climate-response strategies, we explore the roles of management control systems (MCSs) in how companies simultaneously manage their decarbonization objectives and their financial commitments. Based on research at 19 European chemical, steel, and utility corporations, we extend the concept of “proactive/reactive” response strategies by proposing three additional decarbonization strategies: wholesale green transition, green segmentation, and engagement. Second, we highlight the recursive relationship between MCSs and these strategies. We also postulate a dynamic model of MCSs evolution in the decarbonization context, whereby engagement strategies form the foundation of green segmentation and vice versa. Third, drawing on an integrative model, we propose three antecedents to companies’ response strategies relevant in this context, namely, their framing of decarbonization as an opportunity or a threat, the different perspectives on the availability of green technologies, and the different perspectives on the policy context.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2023-07-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41858376","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}
Integrated Thinking has been promoted as a way of revolutionizing decision-making to create sustainable value. Our study shows how disclosures made by managers in annual reports can reveal aspects of Integrated Thinking within organizations. We develop a new dictionary-based measure of Integrated Thinking and apply our measure to two samples: 685 reports over a nine-year period from South Africa, where Integrated Reporting is mandatory, and a matched sample of European firms where such reporting is voluntary. We provide evidence that our Integrated Thinking measure is distinct from overall reporting quality and generic ESG and CSR disclosures and is more nuanced and variable over time than Integrated Thinking proxies used in the prior literature. Our new measure is positively and significantly associated with improved return on assets (influenced by real decisions made by managers rather than capital market participants). Our findings will be of interest to reporting bodies, practitioners, and academics. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M12; M14.
{"title":"How Integrated Thinking Can Be Detected in Management Disclosures in Annual Reports: Insights from a Large-Scale Text-Analysis Approach","authors":"Ruth Dimes, C. de Villiers, Li Chen","doi":"10.2308/jmar-2022-082","DOIUrl":"https://doi.org/10.2308/jmar-2022-082","url":null,"abstract":"\u0000 Integrated Thinking has been promoted as a way of revolutionizing decision-making to create sustainable value. Our study shows how disclosures made by managers in annual reports can reveal aspects of Integrated Thinking within organizations. We develop a new dictionary-based measure of Integrated Thinking and apply our measure to two samples: 685 reports over a nine-year period from South Africa, where Integrated Reporting is mandatory, and a matched sample of European firms where such reporting is voluntary. We provide evidence that our Integrated Thinking measure is distinct from overall reporting quality and generic ESG and CSR disclosures and is more nuanced and variable over time than Integrated Thinking proxies used in the prior literature. Our new measure is positively and significantly associated with improved return on assets (influenced by real decisions made by managers rather than capital market participants). Our findings will be of interest to reporting bodies, practitioners, and academics.\u0000 Data Availability: Data are available from the public sources cited in the text.\u0000 JEL Classifications: M12; M14.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2023-07-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43405250","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}
ABSTRACT In the past three years, companies across the globe have witnessed significant supply chain disruptions due to the COVID-19 pandemic, which highlights the importance of managing supply risk. Supply risk has increased in the last three decades due to an increasing prevalence of concentrated supplier bases. We predict that firms with high supplier-base concentration will choose a more elastic cost structure in response to the increased supply risk. Using a unique dataset of 4,530 firm-year observations hand-collected from supplier information disclosed by Chinese-listed firms, we document a positive association between supplier-base concentration and cost elasticity. Furthermore, results from five cross-sectional tests are consistent with supply risk driving the association between supplier-base concentration and cost elasticity. Our study provides important practical implications to managers. To the extent that supplier-base concentration poses a supply risk, our study suggests that managers can respond by making the cost structure more flexible. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: L23; M41.
{"title":"Supplier-Base Concentration and Cost Structure","authors":"Clara Xiaoling Chen, Lulu Di, Wei Jiang, Wei Li","doi":"10.2308/jmar-2022-009","DOIUrl":"https://doi.org/10.2308/jmar-2022-009","url":null,"abstract":"ABSTRACT In the past three years, companies across the globe have witnessed significant supply chain disruptions due to the COVID-19 pandemic, which highlights the importance of managing supply risk. Supply risk has increased in the last three decades due to an increasing prevalence of concentrated supplier bases. We predict that firms with high supplier-base concentration will choose a more elastic cost structure in response to the increased supply risk. Using a unique dataset of 4,530 firm-year observations hand-collected from supplier information disclosed by Chinese-listed firms, we document a positive association between supplier-base concentration and cost elasticity. Furthermore, results from five cross-sectional tests are consistent with supply risk driving the association between supplier-base concentration and cost elasticity. Our study provides important practical implications to managers. To the extent that supplier-base concentration poses a supply risk, our study suggests that managers can respond by making the cost structure more flexible. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: L23; M41.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135265603","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}
ABSTRACT In this commentary, I offer some observations about the state of experimental management accounting research. I discuss the scope of management accounting research, the current focus of experimental management accounting research, and the need for management accounting research to take into account the distinctive features of the accounting setting. I also make a call for attention to be paid to task, participant, and environmental characteristics in identifying and designing management accounting experiments.
{"title":"Through the Looking Glass: Observations on Experimental Management Accounting Research","authors":"Hun-Tong Tan","doi":"10.2308/jmar-2023-013","DOIUrl":"https://doi.org/10.2308/jmar-2023-013","url":null,"abstract":"ABSTRACT In this commentary, I offer some observations about the state of experimental management accounting research. I discuss the scope of management accounting research, the current focus of experimental management accounting research, and the need for management accounting research to take into account the distinctive features of the accounting setting. I also make a call for attention to be paid to task, participant, and environmental characteristics in identifying and designing management accounting experiments.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135061384","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 how several determinants of industry product market competition—product substitutability, market size, and entry costs—affect managers’ strategic disclosure of industrial segment-level information. I find evidence of an inverted U-shaped relation between competition and managerial disclosure of segment-level research and development expenditure. Competition is insignificantly (negatively) related to the likelihood of managers disclosing segment-level number of employees at low (high) competition levels. Competition is insignificantly related to disclosure of the segment-level number of employees. The study also finds that a firm’s market share interacts with competition in the industry to influence managerial disclosure. When a firm’s market share increases, managerial disclosure of segment-level information also increases, with this relation becoming stronger at higher competition levels. This study contributes to the literature by showing that the nature of product market competition and a firm’s competitive position in an industry are important determinants of industrial segment-level disclosure. JEL Classifications: D4; L1; M40; M41.
{"title":"Product Market Competition and Strategic Disclosure of Industrial Segment-Level Information","authors":"C. Karuna","doi":"10.2308/jmar-2020-078","DOIUrl":"https://doi.org/10.2308/jmar-2020-078","url":null,"abstract":"\u0000 This study examines how several determinants of industry product market competition—product substitutability, market size, and entry costs—affect managers’ strategic disclosure of industrial segment-level information. I find evidence of an inverted U-shaped relation between competition and managerial disclosure of segment-level research and development expenditure. Competition is insignificantly (negatively) related to the likelihood of managers disclosing segment-level number of employees at low (high) competition levels. Competition is insignificantly related to disclosure of the segment-level number of employees. The study also finds that a firm’s market share interacts with competition in the industry to influence managerial disclosure. When a firm’s market share increases, managerial disclosure of segment-level information also increases, with this relation becoming stronger at higher competition levels. This study contributes to the literature by showing that the nature of product market competition and a firm’s competitive position in an industry are important determinants of industrial segment-level disclosure.\u0000 JEL Classifications: D4; L1; M40; M41.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2023-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42596756","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 : 2023-07-01DOI: 10.2308/1049-2127-35.2.i
{"title":"Covers and Front Matter","authors":"","doi":"10.2308/1049-2127-35.2.i","DOIUrl":"https://doi.org/10.2308/1049-2127-35.2.i","url":null,"abstract":"","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135568844","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}
Performance goals are used pervasively by organizations to motivate individual effort, and feedback about goal progress is often available on a highly frequent basis. While feedback can be beneficial, there is evidence that frequent unfavorable feedback can be demotivating. We use expectancy theory to predict that compared to infrequent feedback, frequent unfavorable feedback about goal progress will reduce effort by negatively impacting individuals’ expectancy of goal attainment. We also predict that these negative effects will be mitigated when accompanied by a goal attainability reminder that bolsters the expectancy of goal attainment. Results from two experiments support both predictions and also show that a goal attainability reminder does not reduce the effort when early frequent feedback is favorable. These findings have practical implications as we demonstrate that a simple and readily implementable reminder about the attainability of assigned goals can mitigate the negative motivational effects of frequent unfavorable performance feedback.
{"title":"Mitigating the Demotivating Effects of Frequent Unfavorable Feedback about Goal Progress","authors":"Vic Anand, Alan Webb, Christopher Wong","doi":"10.2308/jmar-2021-044","DOIUrl":"https://doi.org/10.2308/jmar-2021-044","url":null,"abstract":"\u0000 Performance goals are used pervasively by organizations to motivate individual effort, and feedback about goal progress is often available on a highly frequent basis. While feedback can be beneficial, there is evidence that frequent unfavorable feedback can be demotivating. We use expectancy theory to predict that compared to infrequent feedback, frequent unfavorable feedback about goal progress will reduce effort by negatively impacting individuals’ expectancy of goal attainment. We also predict that these negative effects will be mitigated when accompanied by a goal attainability reminder that bolsters the expectancy of goal attainment. Results from two experiments support both predictions and also show that a goal attainability reminder does not reduce the effort when early frequent feedback is favorable. These findings have practical implications as we demonstrate that a simple and readily implementable reminder about the attainability of assigned goals can mitigate the negative motivational effects of frequent unfavorable performance feedback.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2023-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42683871","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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