British Accounting Review最新文献

We explore the significance of climate theory concerning managerial decisions in cross-border mergers. We report that temperature offers a good familiarity proxy showing that country pairs that experience little (large) distance in temperature experience relatively more (less) acquisitions. A one-unit decrease in the difference of the temperature in a country pair is linked with an increase in the number of cross-border mergers by 1.09%. We then highlight the significance of relatively warm temperatures on managerial decisions: We find that (i) the relationship is driven by the Summer months; during June–August for country pairs in the Northern hemisphere and December–February for pairs in the Southern hemisphere, (ii) relatively more cross-border mergers occur towards countries with modestly warmer temperatures showing evidence of managerial affinity towards warmer places, and (iii) country pairs with relatively high temperatures exhibit more acquisitions. Overall, this study highlights a new perspective in the field of climate finance.

Regulators are increasingly seeking ways to incentivize firms to improve corporate social responsibility (CSR) while minimizing criticism of direct interventions in firm behavior. This study takes advantage of two exogenous regulatory shocks initiated by the Consumer Financial Protection Bureau (CFPB) in the US. In 2011, the CFPB enabled the private filing of consumer complaints against financial firms, and in 2013, these complaints were publicly disclosed. Our findings reveal a positive association between consumer complaints and subsequent CSR performance of the targeted financial firms (referred to as focal firms). Notably, this association becomes significant only after the public disclosure of complaints. Furthermore, we observe a spillover effect on the CSR performance of non-focal firms operating in the same area as the focal firms. Collectively, these findings suggest that mandatory disclosure of consumer complaints is one effective regulatory strategy to motivate both focal and non-focal firms to enhance their CSR performance.

Research considers that the increase in corporate environmental reporting over the past decades has been a response to stakeholder demand and pressure within and beyond the boundaries of business operations. Recent empirical studies have begun to extrapolate the stakeholder concept and rationale into developing countries when explaining their growing reporting practices. However, how this global trend is played out in the particular institutional developing country context remains unanswered. This research addresses the issue by employing a case study of a leading mining company in China. The study finds that corporate managers do understand the importance of stakeholder communication and engagement. Such importance has been framed into national social obligations within the socialist ideology long embedded and more recently reinforced in the minds of managers. It reveals an imprinting process of ideological prioritisation through which imprinted socialist philosophies and values are entrenched in perceived stakeholder salience and responsibility for environmental reporting. This process is decoupled from delivering procedural compliance via accountability reporting because of the dominance of State power and national collective interests over individual rights. This study suggests that socially and politically embedded philosophies and ideology ingrained in a country can create another layer of criteria when managers interpret and determine the salience of individual stakeholders and make reporting decisions. It highlights that the extent to which the salience of stakeholders is understood and responded to in the environmental reporting process is conditioned by the structure and operation of a country's political and social system.

This study examines a disability services funding reform which produced calculative (accounting) practices to frame non-governmental organizations' (NGOs') performance and accountability, and the role of digitalization, as a form of marketization, in reframing that performance and accountability. Drawing on insights from Callon's (1998) concepts of framing and overflowing, this study analyses one NGO's pursuit of performance and accountability via calculative and digitalized forms. Through a qualitative interpretive case study approach, the study traces how new calculative practices inspired by a disability services funding reform and an online service platform act to (re)frame the NGO's accounts of performance. Analysis of this (re)framing work finds that NGO accountability is reduced by a performance object – cost management – which is supported by digitalization. Further, we find that the performativity of calculative practices constructed new forms of marketization for NGO realities, thoughts and actions, reducing the NGO services for disabled persons to economic exchanges. Our study offers insights into the counter-productive dangers of calculative practices when they generate digitalization for cost management performance objectives. In addition to marketization reframing NGO performance and accountability, concepts of framing and overflowing enable us to better understand the impact of calculations and digitalization on NGOs' service performance.

This study examines whether and how a strong corporate culture influences stakeholder violations. Using a longitudinal sample of monetary penalties imposed on US-listed firms for stakeholder violations, I find evidence that a strong corporate culture is significantly and negatively associated with such violations. This outcome remains robust to a series of robustness and endogeneity tests, including the application of the generalized method of moments (GMM), entropy balancing, and propensity score matching (PSM) estimation. The channel analysis evidence implies that information asymmetry is a possible mechanism through which a strong corporate culture is associated with stakeholder violations. A cross-sectional analysis demonstrates that the documented association between strong corporate culture and stakeholder violations is stronger for companies with weak external monitoring. Additionally, the negative association between strong corporate culture and stakeholder violations varies across violation types and cultural dimensions. This study contributes to the ongoing discourse on the role of informal corporate governance mechanisms (corporate culture) in mitigating corporate stakeholder violations. Finally, it has important implications for stakeholders, including policymakers, regulators, and practitioners, intending to promote responsible business practices.

This study investigates the impact of real earnings smoothing on labour investment efficiency. Our results show that real earnings smoothing is significantly associated with higher labour investment efficiency, supporting the private information signalling view of earnings smoothing. We also fine information asymmetry as a plausible channel through which real earnings smoothing improves labour investment efficiency. Further analyses find that the positive impact of real earnings smoothing on labour investment efficiency is primarily driven by the informational component rather than the garbling component of earnings smoothness, and is more pronounced for financially constrained firms with equity-based financing incentives and loss-making firms. Our paper advances the understanding of corporate labour investment and the benefits of real earnings smoothing.

By using unique hand-collected project-level investment data on Chinese private investments in public equity (PIPE) issuances, we show that the length of the regulatory approval process for equity issuance is positively related to the probability of subsequent changes in equity-financed projects and a deterioration in project returns. The effects are more pronounced for firms in a highly competitive industry and with a comparative disadvantage. Furthermore, we show that this relationship is causal by exploiting the exogenous shock to approval delay caused by changes in the Chairman of the China Securities Regulation Commission. In response, equity issuers mitigate the delay impact by temporarily increasing debt financing.

From the perspective of internal capital markets, we investigate the causes of zombie firms and propose possible governance measures. Based on Chinese A-share listed firms, we find that internal capital market subsidies promote the zombification of firms. This impact is stronger when the liquidity of the external capital market is higher or when there is a finance firm in the internal capital market. Additionally, there is a “pecking order” of the subsidies that contribute to the zombification of firms: government subsidies take the lead, followed by internal capital market subsidies, and then bank loans. The motivations for internal capital markets to subsidize zombie firms include avoiding risk contagion, avoiding losing control rights, being socially responsible, and maintaining rent-seeking opportunities for managers. The sources of internal capital market subsidies are mainly parent firms and brother firms. Constraining agency problems and engaging in related major asset restructuring play important role in the governance of zombie firms. Overall, our study reveals internal capital markets to be a “blood transfusion” channel and it provides guidance for tackling the problem of zombie firms.

This study examines how the equity market responds to the mandated disclosures made under the Canadian Extractive Sector Transparency Measures Act (ESTMA). We studied a sample of 1,559 company-year-country disclosures from 937 extractive firms listed, or conducting business, in Canada between 2016 and 2018, and controlled for corruption perception and bribe indices in the host country. We found that ESTMA disclosures are associated with a negative market reaction, implying that the market perceives a net loss to firms as a result of the costs of compliance and risks associated with ESTMA. It appears that the reaction is stronger and more negative for ESTMA reports that provide more information, as well as for firms that report higher payments than expected. Furthermore, we have found that the ESTMA disclosures garner a stronger market reaction for firms that are more prone to corruption or have weak governance. This study contributes to the important discussion regarding the use of transparency measures to address the issues related to human rights in the business environment. Our results confirm that transparency is costly for shareholders, and it is, therefore, important for policymakers to consider the costs, benefits, and potential unintended consequences of their measures.

Lowball guidance is the practice of firm managers issuing overly cautious guidance that is later exceeded by a large margin upon earnings announcement. In this study, we examine this practice at the episode level, where a firm engages in it over multiple consecutive quarters. Using a control sample of firms that exhibited episodes of meet or small beats, we draw inferences specific to lowball guidance episodes. We assess their prevalence in a broad sample of firms and provide evidence related to two explanations of lowball guidance episodes: firms' earnings uncertainty, and to a lesser extent, firms’ attempt to appease sell-side analysts and institutional investors. Stock return tests suggest that there are short-term capital market benefits to lowball guidance episodes, but the benefits dissipate eventually. Our results indicate that episodes of lowball guidance likely appeal to certain types of market participants in the short term, but they are not sustainable.