Essays on Corporate Governance and the Quality of Disclosed Earnings: Across Transitional Europe

A growing body of empirical research examines the structure and effectiveness of corporate governance systems around the world. An important insight from this literature is that corporate governance mechanisms address the excessive use of managerial discretionary powers to get private benefits by expropriating the value of shareholders. One possible way of expropriation is to reduce the quality of disclosed earnings by manipulating the financial statements. This lower quality of earnings should then be reflected by the stock price of firm according to value relevance theorem. Hence, instead of testing the direct effect of corporate governance on the firm’s market value, it is important to understand the causes of the lower quality of accounting earnings. This thesis contributes to the literature by increasing knowledge about the extent of the earnings management – measured as the extent of discretionary accruals in total disclosed earnings - and its determinants across the Transitional European countries. The thesis comprises of three essays of empirical analysis of which first two utilize the data of Russian listed firms whereas the third essay uses data from 10 European economies. More specifically, the first essay adds to existing research connecting earnings management to corporate governance. It testifies the impact of the Russian corporate governance reforms of 2002 on the quality of disclosed earnings in all publicly listed firms. This essay provides empirical evidence of the fact that the desired impact of reforms is not fully substantiated in Russia without proper enforcement. Instead, firm-level factors such as long-term capital investments and compliance with International financial reporting standards (IFRS) determine the quality of the earnings. The result presented in the essay support the notion proposed by Leuz et al. (2003) that the reforms aimed to bring transparency do not correspond to desired results in economies where investor protection is lower and legal enforcement is weak. The second essay focuses on the relationship between the internal-control mechanism such as the types and levels of ownership and the quality of disclosed earnings in Russia. The empirical analysis shows that the controlling shareholders in Russia use their powers to manipulate the reported performance in order to get private benefits of control. Comparatively, firms owned by the State have significantly better quality of disclosed earnings than other controllers such as oligarchs and foreign corporations. Interestingly, market performance of firms controlled by either State or oligarchs is better than widely held firms. The third essay provides useful evidence on the fact that both ownership structures and economic characteristics are important factors in determining the quality of disclosed earnings in three groups of countries in Europe. Evidence suggests that ownership structure is a more important determinant in developed and transparent countries, while economic determinants are important determinants in developing and transitional countries.

The Interplays of Histories, Economies and Cultures in Human Adaptation and Settlement Patterns : The Cases of the Faroe Islands and Greenland

The Arctic peoples are currently faced with the challenge of adapting to climate change. Adaptive strategies have been central for the survival of the Northern communities also in the past. This doctoral dissertation is a comparative study of how two Northern societies, the Faroe Islands and Greenland, have responded to challenges caused by the interplay of environmental, political and socio-economic changes. Its main objective is to describe the characteristics of respective adaptive strategies developed in the two societies and to show which connections exist between adaptation and the development of the settlement patterns. This study is based on document analysis, supported by an analysis of demographic and economic statistics. For the field work, the empirical method of landscape-reading was applied. A narrative approach was used to explain interrelations between adaptive strategies and societal developments in the Faroe Islands and Greenland. Maps illustrating development and changes in settlement patterns in different time periods are central for this study because they illustrate the impacts of adaptation on settlement development. The results of this dissertation show that people in the Faroe Islands and Greenland have consciously developed their settlements and used this as an adaptive strategy: different types of settlements were established depending on which kind of resource base was available. Strong dependency on a single resource is likely to increase the probability that settlement development was impacted by it. The interrelation of natural resource use and settlement pattern development has weakened in the Faroe Islands and Greenland from the mid-1900s. Since then, the importance of the government settlement policies has become pronounced and the existing settlement pattern, including settlements without prospects for genuine economic viability, has been preserved. Currently, the Northern communities are increasingly dependent on worldwide developments. In the light of this study, the communities can respond to challenges of globalization and climate change and develop new kind of adaptive strategies, such as diversification of their economic activities. This dissertation shows that it is important to extend studies about community adaptation in the High North to consider the overall development of the Northern settlement patterns.

Consent Practices and Biomedical Knowledge Production in Tissue Economies

The use of human tissue sample collections has become an important tool in biomedical research. The collection, use and distribution of human tissue samples, which include blood and diagnostic tissue samples, from which DNA can be extracted and analyzed has also become a major bio-political preoccupation, not only in national contexts, but also at the transnational level. The foundation of medical research rests on the relationship between the doctor and the research subject. This relationship is a social one, in that it is based on informed consent, privacy and autonomy, where research subjects are made aware of what they are getting involved in and are then able to make an informed decision as to whether or not to participate. Within the post-genomic era, however, our understanding of what constitutes informed consent, privacy and autonomy is changing in relation to the needs of researchers, but also as a reflection of policy aspirations. This reflects a change in the power relations between the rights of the individual in relation to the interests of science and society. Using the notions of tissue economies and biovalue (Waldby, 2002) this research explores the changing relationship between sources and users of samples in biomedical research by examining the contexts under which human tissue samples and the information that is extracted from them are acquired, circulated and exchanged in Finland. The research examines how individual rights, particularly informed consent, are being configured in relation to the production of scientific knowledge in tissue economies in Finland from the 1990s to the present. The research examines the production of biovalue through the organization of scientific knowledge production by examining the policy context of knowledge production as well as three case studies (Tampere Research Tissue Bank, Hereditary Non-polyposis Colorectal Cancer and the Finnish Genome Information Center) in which tissues are acquired, circulated and exchanged in Finland. The research shows how interpretations of informed consent have become divergent and the elements and processes that have contributed to these differences. This inquiry shows how the relationship between the interests of individuals is re-configured in relation to the interests of science and society. It indicates how the boundary between interpretations of informed consent, on the one hand, and social and scientific interests, on the other, are being re-drawn and that this process is underscored, in part, by the economic, commercial and preventive potential that research using tissue samples are believed to produce. This can be said to fundamentally challenge the western notion that the rights of the individual are absolute and inalienable within biomedical legislation.