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.

Variation in tracheid cross-sectional dimensions and wood viscoelasticity extent and control methods

Printing papers have been the main product of the Finnish paper industry. To improve properties and economy of printing papers, controlling of tracheid cross-sectional dimensions and wood viscoelasticity are examined in this study. Controlling is understood as any procedure which yields raw material classes with distinct properties and small internal variation. Tracheid cross-sectional dimensions, i.e., cell wall thickness and radial and tangential diameters can be controlled with methods such as sorting wood into pulpwood and sawmill chips, sorting of logs according to tree social status and fractionation of fibres. These control methods were analysed in this study with simulations, which were based on measured tracheid cross-sectional dimensions. A SilviScan device was used to measure the data set from five Norway spruce (Picea abies) and five Scots pine (Pinus sylvestris) trunks. The simulation results indicate that the sawmill chips and top pulpwood assortments have quite similar cross-sectional dimensions. Norway spruce and Scots pine are on average also relatively similar in their cross-sectional dimensions. The distributions of these species are somewhat different, but from a practical point of view, the differences are probably of minor importance. The controlling of tracheid cross-sectional dimensions can be done most efficiently with methods that can separate fibres into earlywood and latewood. Sorting of logs or partitioning of logs into juvenile and mature wood were markedly less efficient control methods than fractionation of fibres. Wood viscoelasticity affects energy consumption in mechanical pulping, and is thus an interesting control target when improving energy efficiency of the process. A literature study was made to evaluate the possibility of using viscoelasticity in controlling. The study indicates that there is considerable variation in viscoelastic properties within tree species, but unfortunately, the viscoelastic properties of important raw material lots such as top pulpwood or sawmill chips are not known. Viscoelastic properties of wood depend mainly on lignin, but also on microfibrillar angle, width of cellulose crystals and tracheid cross-sectional dimensions.

Long-term results of operative treatment for Hirschsprung's disease and internal anal sphincter achalasia

The aim of the study was to evaluate long-term results of operative treatment for Hirschsprung's disease(HD) and internal anal sphincter achalasia. Fecal continence and quality of life were evaluated by a questionnaire in 100 adult patients who had undergone surgery for HD, during 1950-75. Fecal continence was evaluated using a numerical scoring described by Holschneider. Fifty-four of the 100 patients underwent clinical examination, rigid sigmoidoscopy and manometric evaluation. In anorectal manometry basal resting pressure(BRP)and maximal squeeze pressure(MSP) were measured and voluntary sphincter force(VSF) was calculated by subtracting the BRP from MSP. The results of operative treatment for adult HD were compared with the results of the patients operated in childhood. In adult HD the symptoms are such mild that the patients attain adolescence or even adulthood. The patients with HD and cartilage-hair-hypoplasia were specifically evaluated. The outcome of the patients with internal anal sphincter achalasia operated on by myectomy was evaluated by a questionnaire and continence was evaluated using a numerical scoring described by Holschneider. Of the 100 patients operated on for HD 38 patients had completely normal bowel habits. A normal or good continence score was found in 91 our of 100 patients. Nine patients had fair continence. One of the patients with fair continence had Down's syndrome and two were mentally retarded for other reasons. Only one patient suffered from constipation. In anorectal manometry the difference in BRP between patients with normal and good continence was statistically significant, whereas the difference between good and fair continence groups was not statistically significant. The differences on MSP and VSF between patient groups with different continence outcome were not statistically significant. The differences between patient groups and normal controls were statistically significant in BRP and MSP. In VSF there was not statistically significant difference between the patients and the normal controls. The VSF reflects the working power of the muscles including external sphincter, levator ani and gluteal muscles. The patients operated at adult age had as good continence as patients operated in childhood. The patients with HD and cartilage-hair-hypoplasia had much more morbidity and mortality than non-cartilage-hair-hypoplasia HD patients. The mortality was as high as 38%. In patients with internal anal sphincter achalasia the constipation was cured or alleviated by myectomy whereas a significant number suffered from soiling-related social problems.

High-quality polar UV measurements : scientific analyses and transfer of the irradiance scale

The Earth's ecosystems are protected from the dangerous part of the solar ultraviolet (UV) radiation by stratospheric ozone, which absorbs most of the harmful UV wavelengths. Severe depletion of stratospheric ozone has been observed in the Antarctic region, and to a lesser extent in the Arctic and midlatitudes. Concern about the effects of increasing UV radiation on human beings and the natural environment has led to ground based monitoring of UV radiation. In order to achieve high-quality UV time series for scientific analyses, proper quality control (QC) and quality assurance (QA) procedures have to be followed. In this work, practices of QC and QA are developed for Brewer spectroradiometers and NILU-UV multifilter radiometers, which measure in the Arctic and Antarctic regions, respectively. These practices are applicable to other UV instruments as well. The spectral features and the effect of different factors affecting UV radiation were studied for the spectral UV time series at Sodankylä. The QA of the Finnish Meteorological Institute's (FMI) two Brewer spectroradiometers included daily maintenance, laboratory characterizations, the calculation of long-term spectral responsivity, data processing and quality assessment. New methods for the cosine correction, the temperature correction and the calculation of long-term changes of spectral responsivity were developed. Reconstructed UV irradiances were used as a QA tool for spectroradiometer data. The actual cosine correction factor was found to vary between 1.08-1.12 and 1.08-1.13. The temperature characterization showed a linear temperature dependence between the instrument's internal temperature and the photon counts per cycle. Both Brewers have participated in international spectroradiometer comparisons and have shown good stability. The differences between the Brewers and the portable reference spectroradiometer QASUME have been within 5% during 2002-2010. The features of the spectral UV radiation time series at Sodankylä were analysed for the time period 1990-2001. No statistically significant long-term changes in UV irradiances were found, and the results were strongly dependent on the time period studied. Ozone was the dominant factor affecting UV radiation during the springtime, whereas clouds played a more important role during the summertime. During this work, the Antarctic NILU-UV multifilter radiometer network was established by the Instituto Nacional de Meteorogía (INM) as a joint Spanish-Argentinian-Finnish cooperation project. As part of this work, the QC/QA practices of the network were developed. They included training of the operators, daily maintenance, regular lamp tests and solar comparisons with the travelling reference instrument. Drifts of up to 35% in the sensitivity of the channels of the NILU-UV multifilter radiometers were found during the first four years of operation. This work emphasized the importance of proper QC/QA, including regular lamp tests, for the multifilter radiometers also. The effect of the drifts were corrected by a method scaling the site NILU-UV channels to those of the travelling reference NILU-UV. After correction, the mean ratios of erythemally-weighted UV dose rates measured during solar comparisons between the reference NILU-UV and the site NILU-UVs were 1.007±0.011 and 1.012±0.012 for Ushuaia and Marambio, respectively, when the solar zenith angle varied up to 80°. Solar comparisons between the NILU-UVs and spectroradiometers showed a ±5% difference near local noon time, which can be seen as proof of successful QC/QA procedures and transfer of irradiance scales. This work also showed that UV measurements made in the Arctic and Antarctic can be comparable with each other.

Knowledge Transfer within Western Multinationals' Subsidiary Units in China and Finland - The Impact of Headquarter Control Mechanisms, Subsidiary Location and Social Capital (summary section only)

It is suggested that the ability and practices of how the multinational corporation (MNC) manages knowledge transfer among its geographically dispersed subsidiary units are crucial for the building and development of firm competitive advantage. However, cross-border transfer of valuable organizational knowledge is likely to be problematic and laborious, especially within diversified and differentiated MNCs. Using data collected from 164 western multinational companies’ subsidiary units located in China and Finland, this study aims to investigate cross-border knowledge transfer within the MNC. It explores a number of factors that influence the transfer of knowledge among units in the differentiated MNC. The study consists of five individual papers. Paper 1 investigates a range of organizational mechanisms that may positively influence a subsidiary’s propensity to undertake knowledge transfers to other parts of the corporation. Paper 2 explores the impact of subsidiary location on the motivational dispositions of knowledge receiving units to value and accept knowledge from subsidiaries located in economically less advanced countries. Paper 3 examines the influence of social capital variables on knowledge transfer in dyadic relationships between foreign-owned subsidiaries and their sister and patent units. Paper 4 provides some initial insights into potentially different effects of trust and shared vision in intra-organizational vs. inter-organizational relationships. Using a case study setting, Paper 5 explores means and mechanisms used in transferring human resource management practices to Western MNCs’ business units in China from a cultural perspective. The results of the study show that MNC management through choices regarding organizational controls can encourage and enhance corporate-internal knowledge transfer. It also finds evidence that more knowledge is transferred from subsidiaries located in an industrialized country (e.g., Finland) than subsidiaries located in a developing country (e.g., China). While the study has highlighted the importance of social capital in promoting knowledge transfer, it has also uncovered some new findings that the effect of trust and shared vision may be contingent upon different contexts. Finally, in Paper 5, a number of mechanisms used in transferring selected HRM practices and competences to the Chinese business units have been identified. The findings suggest that cultural differences should be taken into consideration in the choice and use of different transfer mechanisms.