Pub Date : 2022-01-01DOI: 10.5267/j.ac.2021.10.003
A. Shalaby, A. A. Al-Harkan
Judicial accounting outputs are reports that guide judges in conflicting parties over financial litigation, supporting judicial cases, and settling and resolving disputes. As a discipline, judicial accounting applies the science and knowledge of accounting, such as finance, taxation and auditing in the form in which the judicial accountant can provide his expert opinion, through the availability of a set of techniques in the field of fraud investigation and support of lawsuits, to investigate the allegations alleged by the relevant parties, especially those allegations related to the existence of fraud, as the objective of the judicial accountant will depend on the purpose of his assignment, including investigating the presence of fraud. The external auditor's reliance on the sampling method when checking financial disclosure and his lack of responsibility for detecting fraud highlights the importance of judicial accounting in detecting fraud by employing a set of techniques, to assist him in detecting fraud. The achievement of its objectives by the judicial accountant also requires set of characteristics such as education, training, diverse experience in the field of accounting, auditing and law, oral and written communication skills, and the ability to work in a team environment. Judicial accounting is based on a range of techniques, for instance, including Benford's law, computer-based audit tools, data mining and analysis to show the role of judicial accounting techniques in the judicial accountant’s awareness of his duties towards the external auditor in detecting fraud and its impact on developing his performance.
{"title":"The awareness of judicial accounting techniques towards the expectations of the external auditor in detecting fraud and its impact on the performance","authors":"A. Shalaby, A. A. Al-Harkan","doi":"10.5267/j.ac.2021.10.003","DOIUrl":"https://doi.org/10.5267/j.ac.2021.10.003","url":null,"abstract":"Judicial accounting outputs are reports that guide judges in conflicting parties over financial litigation, supporting judicial cases, and settling and resolving disputes. As a discipline, judicial accounting applies the science and knowledge of accounting, such as finance, taxation and auditing in the form in which the judicial accountant can provide his expert opinion, through the availability of a set of techniques in the field of fraud investigation and support of lawsuits, to investigate the allegations alleged by the relevant parties, especially those allegations related to the existence of fraud, as the objective of the judicial accountant will depend on the purpose of his assignment, including investigating the presence of fraud. The external auditor's reliance on the sampling method when checking financial disclosure and his lack of responsibility for detecting fraud highlights the importance of judicial accounting in detecting fraud by employing a set of techniques, to assist him in detecting fraud. The achievement of its objectives by the judicial accountant also requires set of characteristics such as education, training, diverse experience in the field of accounting, auditing and law, oral and written communication skills, and the ability to work in a team environment. Judicial accounting is based on a range of techniques, for instance, including Benford's law, computer-based audit tools, data mining and analysis to show the role of judicial accounting techniques in the judicial accountant’s awareness of his duties towards the external auditor in detecting fraud and its impact on developing his performance.","PeriodicalId":7317,"journal":{"name":"Accounting","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70744603","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 : 2022-01-01DOI: 10.5267/j.ac.2021.12.002
K. Oweis
The study explores the effect of management quality of accounting information system outputs on customer satisfaction in Saudi Arabia commercial banks. In the presentation of the data and the theoretical approach, the descriptive approach was adopted in evaluating the findings of the study aimed at knowing the effect of the consistency of the outputs of the accounting information system on the satisfaction of customers in the KSA commercial banks. Clients of commercial banks working in the KSA are the sample population. The research survey was a random sample involving 600 respondents from clients. The findings of the regression analysis revealed a statistically important reliability effect, where the value of (P) 463,384 was less than (0.00) in statistical terms, and this was verified by the (T) test. This means that stability as an aspect of the consistency of the performance of the accounting information system and the degree of customer satisfaction with the operating banks have a positive impact. A crucial research challenge in the consistency of literature on the quality accounting information system (QAIS) relates to the capacity of management accounting systems (MAS) to offer information that lets managers make smarter choices. Many scholars have advocated the use of more modern (QAIS) over the last decades.
{"title":"The effect of management quality of accounting information system outputs on customers satisfaction in Saudi Arabia commercial banks","authors":"K. Oweis","doi":"10.5267/j.ac.2021.12.002","DOIUrl":"https://doi.org/10.5267/j.ac.2021.12.002","url":null,"abstract":"The study explores the effect of management quality of accounting information system outputs on customer satisfaction in Saudi Arabia commercial banks. In the presentation of the data and the theoretical approach, the descriptive approach was adopted in evaluating the findings of the study aimed at knowing the effect of the consistency of the outputs of the accounting information system on the satisfaction of customers in the KSA commercial banks. Clients of commercial banks working in the KSA are the sample population. The research survey was a random sample involving 600 respondents from clients. The findings of the regression analysis revealed a statistically important reliability effect, where the value of (P) 463,384 was less than (0.00) in statistical terms, and this was verified by the (T) test. This means that stability as an aspect of the consistency of the performance of the accounting information system and the degree of customer satisfaction with the operating banks have a positive impact. A crucial research challenge in the consistency of literature on the quality accounting information system (QAIS) relates to the capacity of management accounting systems (MAS) to offer information that lets managers make smarter choices. Many scholars have advocated the use of more modern (QAIS) over the last decades.","PeriodicalId":7317,"journal":{"name":"Accounting","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70745309","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}
Research on the internal audit function is relevant for improving the quality of governance in organizations. The internal auditor is an important element of government management in the context of realizing good governance by providing quality and effective audit results. The aim of this study is to examine the factors influencing (determinants) the effectiveness of the internal audit function in Indonesian local government organizations. The research samples were 137 respondents. This study used primary data in the form of a questionnaire. The hypothesis testing technique used Partial Least Squares-Structural Equation Modelling (PLS-SEM) analysis. The results of statistical tests showed that independence, competence, and management support could increase the effectiveness of the internal audit function. However, this cooperative relationship does not moderate the influence of competence and management support on the effectiveness of internal audit. The practical implication of this study is that in order to increase the effectiveness of internal audit, internal auditors must uphold an attitude of independence, objectivity and freedom from conflicts of interest in carrying out their professional responsibilities. The practical value of this study also shows that to increase the effectiveness of public sector internal audit, internal and external auditors must increase cooperation to improve the effectiveness of internal audit, especially in discussion activities between internal and external auditors, communication between internal and external auditors, and activities to share working papers between internal and external auditors.
{"title":"Effectiveness of internal audit in local governments: The moderating role of internal and external auditors’ relations","authors":"D. Ratmono, D. Darsono","doi":"10.5267/j.ac.2021.7.004","DOIUrl":"https://doi.org/10.5267/j.ac.2021.7.004","url":null,"abstract":"Research on the internal audit function is relevant for improving the quality of governance in organizations. The internal auditor is an important element of government management in the context of realizing good governance by providing quality and effective audit results. The aim of this study is to examine the factors influencing (determinants) the effectiveness of the internal audit function in Indonesian local government organizations. The research samples were 137 respondents. This study used primary data in the form of a questionnaire. The hypothesis testing technique used Partial Least Squares-Structural Equation Modelling (PLS-SEM) analysis. The results of statistical tests showed that independence, competence, and management support could increase the effectiveness of the internal audit function. However, this cooperative relationship does not moderate the influence of competence and management support on the effectiveness of internal audit. The practical implication of this study is that in order to increase the effectiveness of internal audit, internal auditors must uphold an attitude of independence, objectivity and freedom from conflicts of interest in carrying out their professional responsibilities. The practical value of this study also shows that to increase the effectiveness of public sector internal audit, internal and external auditors must increase cooperation to improve the effectiveness of internal audit, especially in discussion activities between internal and external auditors, communication between internal and external auditors, and activities to share working papers between internal and external auditors.","PeriodicalId":7317,"journal":{"name":"Accounting","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70747541","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}
Over the last two decades, the global financial landscape has changed dramatically, including the corporate and political climates, the creation of more market-based economies, and rapid technological advancements. Micro, Small, and Medium Enterprises (MSMEs) is one form of market-based economies created with the most significant business opportunities and very important socially and economically in developing countries for many reasons. However, MSMEs face significant difficulty related to financial reporting standards to evaluate the achievement of business activities. Most MSMEs use a simple form for financial reporting, such as by calculating the difference between inflow and outflow from their business activities. Also, numerous previous studies that focus on Financial Accounting Standards in Indonesia are still limited. Thus, the present study investigates the factors that influence the implementation of Financial Accounting Standards (FAS) of Micro, Small, and Medium Enterprises (MSMEs) in Aceh Province, Indonesia. This quantitative study uses cross-sectional data collected by distributing 200 questionnaires to MSMEs actors that spread North Aceh Regency, namely Lhokseumawe city and Bireuen regency. The data are analyzed using descriptive statistics (e.g., frequency, percentage, mean, standard deviation) and inferential statistic (multiple linear regression) analyses. The study indicated that Perception, Education, Socialization and Incentive factors had significant positive effects on implementing Financial Accounting Standards of Micro, Small, and Medium Enterprises (MSMEs) in Aceh Province, Indonesia. In conclusion, this study has successfully investigated the factors that influence the implementation of Financial Accounting Standards of Micro, Small, and Medium Enterprises (MSMEs) in Aceh Province.
{"title":"The effect of the implementation of financial accounting standards on MSMEs","authors":"H. Raza, Jumadil Saputra, Z. Muhammad","doi":"10.5267/j.ac.2021.6.018","DOIUrl":"https://doi.org/10.5267/j.ac.2021.6.018","url":null,"abstract":"Over the last two decades, the global financial landscape has changed dramatically, including the corporate and political climates, the creation of more market-based economies, and rapid technological advancements. Micro, Small, and Medium Enterprises (MSMEs) is one form of market-based economies created with the most significant business opportunities and very important socially and economically in developing countries for many reasons. However, MSMEs face significant difficulty related to financial reporting standards to evaluate the achievement of business activities. Most MSMEs use a simple form for financial reporting, such as by calculating the difference between inflow and outflow from their business activities. Also, numerous previous studies that focus on Financial Accounting Standards in Indonesia are still limited. Thus, the present study investigates the factors that influence the implementation of Financial Accounting Standards (FAS) of Micro, Small, and Medium Enterprises (MSMEs) in Aceh Province, Indonesia. This quantitative study uses cross-sectional data collected by distributing 200 questionnaires to MSMEs actors that spread North Aceh Regency, namely Lhokseumawe city and Bireuen regency. The data are analyzed using descriptive statistics (e.g., frequency, percentage, mean, standard deviation) and inferential statistic (multiple linear regression) analyses. The study indicated that Perception, Education, Socialization and Incentive factors had significant positive effects on implementing Financial Accounting Standards of Micro, Small, and Medium Enterprises (MSMEs) in Aceh Province, Indonesia. In conclusion, this study has successfully investigated the factors that influence the implementation of Financial Accounting Standards of Micro, Small, and Medium Enterprises (MSMEs) in Aceh Province.","PeriodicalId":7317,"journal":{"name":"Accounting","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70747869","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 increasing phenomenon of the shadow economy is progressing dramatically in the absence of State culture among officials, whether legislators or implementers, in the absence or ineffectiveness of an organized production sector. Non-compliance with tax accounting procedures is one of the first problems generated by the shadow economy and most difficult not to include it in national output. The lack of tax commitment in the shadow economy leads to an annual tax gap of billions of dollars, if there is no logical interest on the part of the taxing bodies in developing countries, and if domestic and international tax provisions and legislation are not amended to consider of these important economic developments, and how to keep up with this. The issue of the shadow economy is thorny, and the practical way to raise the revenue needed to finance government spending on the goods and services required by society lies in the local and international tax treatment at the technical and legislative levels. Consequently, the current tax systems and their related regulations must be prepared, whether at the technical or legislative level, especially in light of the flow rate of oil barrels and the alternative if it comes into force. The taxation processes allow time to study the tax accounting and tax and take what suits the Saudi environment from them - lessons for the Kingdom of Saudi Arabia, Critical terms for research/shadow economy, tax regulations and systems, tax gab, tax accounting.
{"title":"The role of tax accounting as a tool in light of the problematic shadow economy in the Kingdom of Saudi Arabia","authors":"A. Shalaby","doi":"10.5267/j.ac.2021.9.001","DOIUrl":"https://doi.org/10.5267/j.ac.2021.9.001","url":null,"abstract":"The increasing phenomenon of the shadow economy is progressing dramatically in the absence of State culture among officials, whether legislators or implementers, in the absence or ineffectiveness of an organized production sector. Non-compliance with tax accounting procedures is one of the first problems generated by the shadow economy and most difficult not to include it in national output. The lack of tax commitment in the shadow economy leads to an annual tax gap of billions of dollars, if there is no logical interest on the part of the taxing bodies in developing countries, and if domestic and international tax provisions and legislation are not amended to consider of these important economic developments, and how to keep up with this. The issue of the shadow economy is thorny, and the practical way to raise the revenue needed to finance government spending on the goods and services required by society lies in the local and international tax treatment at the technical and legislative levels. Consequently, the current tax systems and their related regulations must be prepared, whether at the technical or legislative level, especially in light of the flow rate of oil barrels and the alternative if it comes into force. The taxation processes allow time to study the tax accounting and tax and take what suits the Saudi environment from them - lessons for the Kingdom of Saudi Arabia, Critical terms for research/shadow economy, tax regulations and systems, tax gab, tax accounting.","PeriodicalId":7317,"journal":{"name":"Accounting","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70748192","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}
Nguyen La Soa, Doi Thi Thu Trang, Truong Thanh Han
The research is conducted for assessing factors affecting the implementation of Strategic Management Accounting (SMA) of medium - sized enterprises in Vietnam. Data was collected from 235 medium - sized enterprises of Vietnam for the period from 2019 to 2021. Based on quantitative research methods, the implementation of Strategic Management (SMA) and factors affecting this implementation were scrutinized. The results indicate that the implementation of Strategic Management (SMA) of medium - sized enterprises in Vietnam is influenced by factors: Technology level, Quality of accountants, Competitive level, Business strategy, and Business risk. Through findings, some recommendations are given for improving the implementation of SMA of medium – sized to satisfy the demand for information of the stakeholder in the context of integration.
{"title":"Factors affecting the implementation of Strategic Management Accounting (SMA): An Empirical evident from medium - sized enterprises of Vietnam","authors":"Nguyen La Soa, Doi Thi Thu Trang, Truong Thanh Han","doi":"10.5267/j.ac.2022.1.003","DOIUrl":"https://doi.org/10.5267/j.ac.2022.1.003","url":null,"abstract":"The research is conducted for assessing factors affecting the implementation of Strategic Management Accounting (SMA) of medium - sized enterprises in Vietnam. Data was collected from 235 medium - sized enterprises of Vietnam for the period from 2019 to 2021. Based on quantitative research methods, the implementation of Strategic Management (SMA) and factors affecting this implementation were scrutinized. The results indicate that the implementation of Strategic Management (SMA) of medium - sized enterprises in Vietnam is influenced by factors: Technology level, Quality of accountants, Competitive level, Business strategy, and Business risk. Through findings, some recommendations are given for improving the implementation of SMA of medium – sized to satisfy the demand for information of the stakeholder in the context of integration.","PeriodicalId":7317,"journal":{"name":"Accounting","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70748317","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}
On financial markets, information is a highly demanded resource and processing it to (potentially) generate excess returns drives the activities of many market participants. Not surprisingly, this high relevance of information in markets culminates in a high research interest focusing on how information affects traders' behavior and market outcomes. It is, however, challenging to meet this interest with empirical data as it is almost impossible to observe or control, which information traders possess in real markets. Therefore, laboratory environments are a perfect tool to address research questions emerging in this field as they allow researchers to design and control all relevant aspects, in particular, the information structure prevailing in a market. In this paper, we review the experimental finance literature investigating markets with different information structures to better understand how these structures influence trader behavior and market outcomes. By doing so, we provide the interested reader with a comprehensive overview of the main research areas and the respective results.
{"title":"Asset Market Experiments with Diverse Information","authors":"Dominik Schmidt, Thomas Stöckl","doi":"10.2139/ssrn.3947626","DOIUrl":"https://doi.org/10.2139/ssrn.3947626","url":null,"abstract":"On financial markets, information is a highly demanded resource and processing it to (potentially) generate excess returns drives the activities of many market participants. Not surprisingly, this high relevance of information in markets culminates in a high research interest focusing on how information affects traders' behavior and market outcomes. It is, however, challenging to meet this interest with empirical data as it is almost impossible to observe or control, which information traders possess in real markets. Therefore, laboratory environments are a perfect tool to address research questions emerging in this field as they allow researchers to design and control all relevant aspects, in particular, the information structure prevailing in a market. In this paper, we review the experimental finance literature investigating markets with different information structures to better understand how these structures influence trader behavior and market outcomes. By doing so, we provide the interested reader with a comprehensive overview of the main research areas and the respective results.","PeriodicalId":7317,"journal":{"name":"Accounting","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2021-10-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44137700","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}
Despite the momentum of research on the impact of informal institutions on corporate behavior in recent years, few studies probe the effect of an “awe culture” on corporate behavior. Thus, this study explores the economic consequences of the awe culture. It proxies awe culture with regionally induced abortion rates and examines its influence on corporate tax avoidance in China. We document that higher induced abortion rates associate with a higher degree of corporate tax avoidance, confirming that “reverence for life is reverence for rules.” Further, awe culture influences corporate tax avoidance via management opportunism and risk-appetite channels. The conclusions remained intact after an array of robustness tests. Further analysis suggests that the awe culture effect on corporate tax avoidance is insignificant when senior executives or directors have overseas backgrounds or the proportion of female board members is high. However, the effect is more pronounced when firms have high financial constraints, poor internal governance, or weak taxation enforcement. Notably, given that awe culture shapes corporate behavior, listed firms should fully consider and use awe culture in their economic practices.
{"title":"Is Reverence for Life Reverence for Rule? Abortion Rate and Corporate Tax Avoidance in China","authors":"Kam C. Chan, Jiaxin Wang, Zhi Wang, Chao Yan","doi":"10.2139/ssrn.3947020","DOIUrl":"https://doi.org/10.2139/ssrn.3947020","url":null,"abstract":"Despite the momentum of research on the impact of informal institutions on corporate behavior in recent years, few studies probe the effect of an “awe culture” on corporate behavior. Thus, this study explores the economic consequences of the awe culture. It proxies awe culture with regionally induced abortion rates and examines its influence on corporate tax avoidance in China. We document that higher induced abortion rates associate with a higher degree of corporate tax avoidance, confirming that “reverence for life is reverence for rules.” Further, awe culture influences corporate tax avoidance via management opportunism and risk-appetite channels. The conclusions remained intact after an array of robustness tests. Further analysis suggests that the awe culture effect on corporate tax avoidance is insignificant when senior executives or directors have overseas backgrounds or the proportion of female board members is high. However, the effect is more pronounced when firms have high financial constraints, poor internal governance, or weak taxation enforcement. Notably, given that awe culture shapes corporate behavior, listed firms should fully consider and use awe culture in their economic practices.","PeriodicalId":7317,"journal":{"name":"Accounting","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2021-10-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45969076","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}
Behind Henry Ford’s business decisions that led to the widely taught, famous-in-law-school Dodge v. Ford shareholder primacy decision were three relevant industrial organization structures that put Ford in a difficult business position. First, Ford Motor had a highly profitable monopoly and was starting a major expansion—Ford’s River Rouge facility was reported to be the world’s largest factory when completed. Second, to stymie union organizers and to motivate his new assembly line workers, Henry Ford raised worker pay greatly; Ford could not maintain his monopoly without sufficient worker acquiescence. And, third, if Ford pursued monopoly profit in an explicit way, the Ford brand would have been damaged with both his workforce and the company’s consumers. The transactions underlying Dodge v. Ford should be reconceptualized as Ford Motor Company and its auto workers splitting the “monopoly rectangle” that Ford Motor’s assembly-line produced, with Ford’s business requiring tremendous cash expenditures to keep and expand that monopoly. Hence, a common interpretation of the litigation setting—that Ford let slip his charitable purpose when he could have won with a business judgment defense—should be reconsidered. Ford had a true business purpose—spending on labor and a vertically-integrated factory to solidify his monopoly profit and splitting that profit with labor—but he would have jeopardized the strategy’s effectiveness by articulating it. The existing main interpretations of the corporate law decision and its realpolitik remain relevant—such as Ford seeking to squeeze out the Dodge brothers to deny the Dodge brothers cash for their own car company. But they must take a second-tier, as none fully encompasses the industrial setting—of monopoly, incipient union-organizing, and a restless workforce. Without accounting for Ford Motor’s monopoly, the River Rouge expansion, and the related labor tensions, we cannot fully understand the Dodge v. Ford controversy. Stakeholder pressure can more readily succeed in a firm having significant economic rents, a setting that seems common today and was true for Ford Motor Company in the 1910s.
亨利·福特的商业决策导致了广为流传、在法学院闻名的道奇诉福特股东至上案，其背后是三种相关的产业组织结构，这些结构使福特陷入了艰难的商业境地。首先，福特汽车公司拥有高利润的垄断地位，并开始大规模扩张——据报道，福特的胭脂河工厂建成后将成为世界上最大的工厂。其次，为了阻止工会组织者，并激励他的新装配线工人，亨利·福特大幅提高了工人的工资;没有足够的工人默许，福特就无法维持他的垄断地位。第三，如果福特以一种明确的方式追求垄断利润，那么福特的品牌将在他的员工和公司的消费者中受到损害。道奇诉福特案背后的交易应该被重新定义为福特汽车公司及其汽车工人瓜分了福特汽车装配线生产的“垄断矩形”，而福特的业务需要巨额现金支出来保持和扩大这种垄断。因此，对诉讼背景的一种常见解释——福特本可以通过商业判断辩护获胜，但却疏忽了他的慈善目的——应该重新考虑。福特有一个真正的商业目的——在劳动力和垂直整合的工厂上花钱，以巩固他的垄断利润，并与劳动力分享利润——但如果他明确表达了这一点，就会危及战略的有效性。现有的对公司法判决的主要解释及其现实政治仍然是相关的——比如福特试图排挤道奇兄弟，以阻止道奇兄弟为自己的汽车公司融资。但他们必须采取第二梯队，因为没有一个能完全涵盖工业环境——垄断、早期的工会组织和不安分的劳动力。如果不考虑福特汽车的垄断、Rouge河的扩张以及相关的劳资关系紧张，我们无法完全理解道奇与福特的争议。在一家拥有巨大经济租金的公司，利益相关者的压力更容易取得成功，这种情况在今天似乎很常见，上世纪10年代的福特汽车公司(Ford Motor Company)就是如此。
{"title":"Dodge v. Ford: What Happened and Why?","authors":"M. Roe","doi":"10.2139/ssrn.3943559","DOIUrl":"https://doi.org/10.2139/ssrn.3943559","url":null,"abstract":"Behind Henry Ford’s business decisions that led to the widely taught, famous-in-law-school Dodge v. Ford shareholder primacy decision were three relevant industrial organization structures that put Ford in a difficult business position. First, Ford Motor had a highly profitable monopoly and was starting a major expansion—Ford’s River Rouge facility was reported to be the world’s largest factory when completed. Second, to stymie union organizers and to motivate his new assembly line workers, Henry Ford raised worker pay greatly; Ford could not maintain his monopoly without sufficient worker acquiescence. And, third, if Ford pursued monopoly profit in an explicit way, the Ford brand would have been damaged with both his workforce and the company’s consumers. The transactions underlying Dodge v. Ford should be reconceptualized as Ford Motor Company and its auto workers splitting the “monopoly rectangle” that Ford Motor’s assembly-line produced, with Ford’s business requiring tremendous cash expenditures to keep and expand that monopoly. Hence, a common interpretation of the litigation setting—that Ford let slip his charitable purpose when he could have won with a business judgment defense—should be reconsidered. Ford had a true business purpose—spending on labor and a vertically-integrated factory to solidify his monopoly profit and splitting that profit with labor—but he would have jeopardized the strategy’s effectiveness by articulating it. The existing main interpretations of the corporate law decision and its realpolitik remain relevant—such as Ford seeking to squeeze out the Dodge brothers to deny the Dodge brothers cash for their own car company. But they must take a second-tier, as none fully encompasses the industrial setting—of monopoly, incipient union-organizing, and a restless workforce. Without accounting for Ford Motor’s monopoly, the River Rouge expansion, and the related labor tensions, we cannot fully understand the Dodge v. Ford controversy. Stakeholder pressure can more readily succeed in a firm having significant economic rents, a setting that seems common today and was true for Ford Motor Company in the 1910s.","PeriodicalId":7317,"journal":{"name":"Accounting","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2021-10-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47030710","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}
If the potential for Caremark liability hangs like the sword of Damocles over corporate directors of Delaware corporations, then that sword has been considerably more secure than that of the original myth. For decades, Chancellor Allen’s description of a Caremark claim as “possibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment” held true. Caremark claims that survived a motion to dismiss were for decades few and far between. That changed in 2019. In the space of little over a year, Delaware courts have allowed five Caremark claims to survive in the corporation context and one claim to survive in the limited partnership context. The thread holding that sword is beginning to look more like the single horse hair of myth. The scope and likelihood of Caremark liability are matters of considerable interest and concern for directors. Under most circumstances, a board simply doing its job poorly is relevant only to the directors’ duty of care and protected by the business judgment rule, exculpatory provisions under Section 102(b)(7), and advancement and indemnification. Failure to monitor under Caremark, however, is a breach of the duty of loyalty. A breach of the duty of loyalty is not protected by the business judgment rule. It cannot be exculpated. And it cannot be covered by indemnification. 2019 marked an abrupt shift in Caremark in application, if not in theory. In June of that year the Supreme Court of Delaware (“Delaware Supreme Court”) reversed a decision by the Delaware Court of Chancery (“Chancery Court”) dismissing a claim against the directors of Blue Bell Creameries, Inc. (“Blue Bell”) under Caremark. Within a little over a year, the Chancery Court would sustain Caremark claims in four cases. In Clovis, the Chancery Court sustained a Caremark claim against directors of a pharmaceutical company who allowed the company to misrepresent the clinical trial success of one of its three drugs. In Hughes, the Chancery Court sustained a Caremark claim against directors of a Chinese company incorporated in Delaware that suffered from severe and pervasive accounting issues. In Teamsters Local, the Chancery Court sustained a Caremark claim against directors of a large pharmaceutical company who allowed an indirect subsidiary to essentially operate a criminal enterprise. And in Boeing, the Chancery Court sustained a Caremark claim against directors of an airplane manufacturer who did not pay attention to safety issues. Cybersecurity has become just such a mission critical risk for large corporations. This Article makes four key arguments. Black letter Caremark doctrine has not changed, but it is newly reinvigorated and the risks of Caremark liability for directors is greater than just a few years ago. Future Caremark liability will be centered on failure to provide board-level oversight of mission critical risks. Cybersecurity is mission critical to effectively all large companies today. The risk of Care
如果Caremark的潜在责任就像悬在特拉华州公司董事头上的达摩克利斯之剑，那么这把剑比最初的神话要安全得多。几十年来，大法官艾伦对Caremark索赔的描述“可能是公司法中最难的理论，原告可能希望在此基础上赢得判决”，这是正确的。在驳回动议中幸存下来的Caremark索赔在几十年里寥寥无几。这种情况在2019年发生了变化。在一年多一点的时间里，特拉华州法院已经允许五项Caremark的索赔在公司背景下继续存在，一项在有限合伙背景下继续存在。握着那把剑的线开始看起来更像神话中的单根马毛。Caremark责任的范围和可能性是董事们非常感兴趣和关注的问题。在大多数情况下，董事会仅仅是糟糕地完成了自己的工作，这只与董事的注意义务有关，并受到商业判断规则、第102(b)(7)条下的免责条款以及晋升和赔偿的保护。然而，未能在Caremark下进行监控是对忠诚义务的违反。违反忠诚义务不受商业判断规则的保护。这是不能开脱的。而且不包括在赔偿中。2019年标志着Caremark在应用上的突然转变，如果不是在理论上的话。同年6月，特拉华州最高法院(“特拉华州最高法院”)撤销了特拉华州衡平法院(“衡平法院”)驳回Blue Bell Creameries, Inc.(“Blue Bell”)董事在Caremark项下提出的索赔的决定。在一年多一点的时间里，衡平法院在四起案件中支持了Caremark的索赔。在Clovis案中，衡平法院支持了Caremark对一家制药公司董事的索赔，该公司允许该公司歪曲其三种药物之一的临床试验成功。在休斯案中，衡平法院支持Caremark对一家在特拉华州注册的中国公司董事的索赔，该公司存在严重而普遍的会计问题。在Teamsters Local一案中，衡平法院支持了Caremark对一家大型制药公司董事的索赔，该公司允许间接子公司实质上经营一家犯罪企业。在波音公司一案中，衡平法院支持了Caremark对一家飞机制造商董事的索赔，因为他们没有注意到安全问题。网络安全已经成为大公司的关键任务风险。本文提出了四个关键论点。黑色字母的Caremark原则没有改变，但它最近重新焕发了活力，董事们承担Caremark责任的风险比几年前更大。Caremark未来的责任将集中在未能对关键任务风险提供董事会层面的监督上。如今，网络安全对所有大公司来说都是至关重要的任务。通过采取一些简单的步骤来确保董事会正在解决网络安全问题，可以减轻Caremark承担责任的风险。这篇文章是第一个把这些论点放在一起的，也是第一个做最后论证的。
{"title":"Mission Critical: Caremark, Blue Bell, and Director Responsibility for Cybersecurity Governance","authors":"H. Pace, L. Trautman","doi":"10.2139/ssrn.3938128","DOIUrl":"https://doi.org/10.2139/ssrn.3938128","url":null,"abstract":"If the potential for Caremark liability hangs like the sword of Damocles over corporate directors of Delaware corporations, then that sword has been considerably more secure than that of the original myth. For decades, Chancellor Allen’s description of a Caremark claim as “possibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment” held true. Caremark claims that survived a motion to dismiss were for decades few and far between. That changed in 2019. In the space of little over a year, Delaware courts have allowed five Caremark claims to survive in the corporation context and one claim to survive in the limited partnership context. The thread holding that sword is beginning to look more like the single horse hair of myth. The scope and likelihood of Caremark liability are matters of considerable interest and concern for directors. Under most circumstances, a board simply doing its job poorly is relevant only to the directors’ duty of care and protected by the business judgment rule, exculpatory provisions under Section 102(b)(7), and advancement and indemnification. Failure to monitor under Caremark, however, is a breach of the duty of loyalty. A breach of the duty of loyalty is not protected by the business judgment rule. It cannot be exculpated. And it cannot be covered by indemnification. 2019 marked an abrupt shift in Caremark in application, if not in theory. In June of that year the Supreme Court of Delaware (“Delaware Supreme Court”) reversed a decision by the Delaware Court of Chancery (“Chancery Court”) dismissing a claim against the directors of Blue Bell Creameries, Inc. (“Blue Bell”) under Caremark. Within a little over a year, the Chancery Court would sustain Caremark claims in four cases. In Clovis, the Chancery Court sustained a Caremark claim against directors of a pharmaceutical company who allowed the company to misrepresent the clinical trial success of one of its three drugs. In Hughes, the Chancery Court sustained a Caremark claim against directors of a Chinese company incorporated in Delaware that suffered from severe and pervasive accounting issues. In Teamsters Local, the Chancery Court sustained a Caremark claim against directors of a large pharmaceutical company who allowed an indirect subsidiary to essentially operate a criminal enterprise. And in Boeing, the Chancery Court sustained a Caremark claim against directors of an airplane manufacturer who did not pay attention to safety issues. Cybersecurity has become just such a mission critical risk for large corporations. This Article makes four key arguments. Black letter Caremark doctrine has not changed, but it is newly reinvigorated and the risks of Caremark liability for directors is greater than just a few years ago. Future Caremark liability will be centered on failure to provide board-level oversight of mission critical risks. Cybersecurity is mission critical to effectively all large companies today. The risk of Care","PeriodicalId":7317,"journal":{"name":"Accounting","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2021-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45150757","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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