Corporate governance mechanisms and earnings management in transitional countries – evidence from Chinese listed firms

The objective of this thesis is to investigate whether the corporate governance practices adopted by Chinese listed firms are associated with the quality of earnings information. Based on a review of agency and institutional theory, this study develops hypotheses that predict the monitoring effectiveness of the board and the audit committee. Using a combination of univariate and multivariate analyses, the association between corporate governance mechanisms and earnings management are tested from 2004 to 2008. Through analysing the empirical results, a number of findings are summarised as below. First, board independence is weakened by the introduction of government officials as independent directors on the boards. Government officials acting as independent directors, claim that they meet the definition of independent director set by the regulation. However, they have some connection with the State, which is the controlling shareholder in listed SOEs affiliated companies. Consequently, the effect of the independent director’s expertise in constraining earnings management is mitigated as demonstrated by an insignificant association between board expertise and earnings management. An alternative explanation for the inefficiency of board independence may point to the pre-selection of independent directors by the powerful CEO. It is argued that a CEO can manipulate the board composition and choose the "desirable" independent directors to monitor themselves. Second, a number of internal mechanisms, such as board size, board activities, and the separation of the roles of the CEO and chair are found to be significantly associated with discretionary accruals. This result suggests that there are advantages in having a large and active board in the Chinese setting. This can offset the disadvantages associated with large boards, such as increased bureaucracy, and hence, increase the constraining effects of a large and resourceful board. Third, factor analysis identifies two factors: CEO power and board power. CEO power is the factor which consists of CEO duality and turnover, and board power is composed of board size and board activity. The results of CEO power show that if a Chinese listed company has CEO duality and turnover at the same time, it is more likely to have a high level of earnings management. The significant and negative relationship between board power and accruals indicate that large boards with frequent meetings can be associated with low level of earnings management. Overall, the factor analysis suggests that certain governance mechanisms complement each other to become more efficient monitors of opportunistic earnings management. A combination of board characteristics can increase the negative association with earnings management. Fourth, the insignificant results between audit committees and earnings management in Chinese listed firms suggests that the Chinese regulator should strengthen the audit committee functions. This thesis calls for listed firms to disclose more information on audit committee composition and activities, which can facilitate future research on the Chinese audit committee’s monitoring role. Fifth, the interactive results between State ownership and board characteristics show that dominant State ownership has a moderating effect on board monitoring power as the State totally controls 42% of the issued shares. The high percentage of State ownership makes it difficult for the non-controlling institutional shareholders to challenge the State’s dominant status. As a result, the association between non-controlling institutional ownership and earnings management is insignificant in most situations. Lastly, firms audited by the international Big4 have lower abnormal accruals than firms audited by domestic Chinese audit firms. In addition, the inverse U-shape relationship between audit tenure and earnings quality demonstrates the changing effects of audit quality after a certain period of appointment. Furthermore, this thesis finds that listing in Hong Kong Stock Exchanges can be an alternative governance mechanism to discipline Chinese firms to follow strict Hong Kong listing requirements. Management of Hong Kong listed companies are exposed to the scrutiny of international investors and Hong Kong regulators. This in turn reduces their chances of conducting self-interested earnings manipulation. This study is designed to fill the gap in governance literature in China that is related to earnings management. Previous research on corporate governance mechanisms and earnings management in China is not conclusive. The current research builds on previous literature and provides some meaningful implications for practitioners, regulators, academic, and international investors who have investment interests in a transitional country. The findings of this study contribute to corporate governance and earnings management literature in the context of the transitional economy of China. The use of alternative measures for earnings management yields similar results compared with the accruals models and produces additional findings.

What determines real-world meal size? Evidence for pre-meal planning

The customary approach to the study of meal size suggests that ‘events’ occurring during a meal lead to its termination. Recent research, however, suggests that a number of decisions are made before eating commences that may affect meal size. The present study sought to address three key research questions around meal size: the extent to which plate cleaning occurs; prevalence of pre-meal planning and its influence on meal size; and the effect of within-meal experiences, notably the development of satiation. To address these, a large-cohort internet-based questionnaire was developed. Results showed that plate cleaning occurred at 91% of meals, and was planned from the outset in 92% of these cases. A significant relationship between plate cleaning and meal planning was observed. Pre meal plans were resistant to modification over the course of the meal: only 18% of participants reported consumption that deviated from expected. By contrast, 28% reported continuing eating beyond satiation, and 57% stated that they could have eaten more at the end of the meal. Logistic regression confirmed pre-meal planning as the most important predictor of consumption. Together, our findings demonstrate the importance of meal planning as a key determinant of meal size and energy intake.

New Evidence for Structured Telephone Support in the Management of Patients with Heart Failure [Letter to Editor]

Letter to the Editor of New England Journal of Medicine on behalf of the Cochrane Systematic Review team.

Falls in Parkinson’s disease : evidence for altered stepping strategies on compliant surfaces

Background: Real-world environments comprise surfaces of different textures, densities and gradients, which can threaten postural stability and increase falls risk. However, there has been limited research that has examined how walking on compliant surfaces influences gait and postural stability in older people and PD patients. Methods: PD patients (n = 49) and age-matched controls (n = 32) were assessed using three dimensional motion analysis during self-paced walking on both firm and foam walkways. Falls were recorded prospectively over 12 months using daily falls calendars. Results: Walking on a foam surface influenced the temporospatial characteristics for all groups, but PD fallers adopted very different joint kinematics compared with controls. PD fallers also demonstrated reduced toe clearance and had increased mediolateral head motion(relative to walking velocity) compared with control participants. Conclusions: Postural control deficits in PD fallers may impair their capacity to attenuate surface-related perturbations and control head motion. The risk of falling for PD patients may be increased on less stable surfaces.

The collaborative push : pushing beyond rhetoric and gaining evidence

Collaboration has been enacted as a core strategy by both the government and nongovernment sectors to address many of the intractable issues confronting contemporary society. The cult of collaboration has become so pervasive that it is now an elastic term referring generally to any form of ‘working together’. The lack of specificity about collaboration and its practice means that it risks being reduced to mere rhetoric without sustained practice or action. Drawing on an extensive data set (qualitative, quantitative) of broadly collaborative endeavours gathered over ten years in Queensland, Australia, this paper aims to fill out the black box of collaboration. Specifically it examines the drivers for collaboration, dominant structures and mechanisms adopted, what has worked and unintended consequences. In particular it investigates the skills and competencies required in an embeded collaborative endeavour within and across organisations. Social network analysis is applied to isolate the structural properties of collaborations over other forms of integration as well as highlighting key roles and tasks. Collaboration is found to be a distinctive form of working together, characterised by intense and interdependent relationships and exchanges, higher levels of cohesion (density) and requiring new ways of behaving, working, managing and leading. These elements are configured into a practice framework. Developing an empirical evidence base for collaboration structure, practice and strategy provides a useful foundation for theory extension. The paper concludes that for collaboration, to be successfully employed as a management strategy it must move beyond rhetoric and develop a coherent model for action.

Evidence-based practice

This chapter traces the history of evidence-based practice (EBP) from its roots in evidence-based medicine to contemporary thinking about the usefulness of such an approach to public health practice. It defines EBP and differentiates it from terms such as evidence-based medicine, evidence-based policy and evidence-based health care. As EBP is concerned with identifying ‘good evidence’, this chapter will briefly describe the nature and production of knowledge, as it is important to understand the subjective nature of knowledge and the research process. This chapter considers the necessary skills for EBP, and discusses the processes of attaining the necessary evidence and its limitations. We examine the barriers and facilitators to identifying and implementing ‘best practice’, and when EBP is appropriate to use. There is a discussion about the limitations of EBP and the potential use of other sources of information to guide practice, and concluding information about the application of evidence to guide policy and practice.

Unintended consequences of regulatory reporting requirements for small and medium size construction entities : Australian evidence

The Queensland Building Services Authority (QBSA) regulates the construction industry in Queensland, Australia, with licensing requirements creating differential financial reporting obligations, depending on firm size. Economic theories of regulation and behaviour provide a framework for investigating effects of the financial constraints and financial reporting requirements imposed by QBSA licensing. Data are analysed for all small and medium construction entities operating in Queensland between 2001 and 2006. Findings suggesting that construction licensees are categorizing themselves as smaller to avoid the more onerous and costly financial reporting of higher licensee categories are consistent with US findings from the 2002 Sarbanes-Oxley (SOX) regulation which created incentives for small firms to stay small to avoid the costs of compliance with more onerous financial reporting requirements. Such behaviour can have the undesirable economic consequences of adversely affecting employment, investment, wealth creation and financial stability. Insights and implications from the analysed QBSA processes are important for future policy reform and design, and useful to be considered where similar regulatory approaches are planned.

Evidence for CRHR1 in multiple sclerosis using supervised machine learning and meta-analysis in 12 566 individuals

The primary genetic risk factor in multiple sclerosis (MS) is the HLA-DRB1*1501 allele; however, much of the remaining genetic contribution to MS has yet to be elucidated. Several lines of evidence support a role for neuroendocrine system involvement in autoimmunity which may, in part, be genetically determined. Here, we comprehensively investigated variation within eight candidate hypothalamic-pituitary-adrenal (HPA) axis genes and susceptibility to MS. A total of 326 SNPs were investigated in a discovery dataset of 1343 MS cases and 1379 healthy controls of European ancestry using a multi-analytical strategy. Random Forests, a supervised machine-learning algorithm, identified eight intronic SNPs within the corticotrophin-releasing hormone receptor 1 or CRHR1 locus on 17q21.31 as important predictors of MS. On the basis of univariate analyses, six CRHR1 variants were associated with decreased risk for disease following a conservative correction for multiple tests. Independent replication was observed for CRHR1 in a large meta-analysis comprising 2624 MS cases and 7220 healthy controls of European ancestry. Results from a combined meta-analysis of all 3967 MS cases and 8599 controls provide strong evidence for the involvement of CRHR1 in MS. The strongest association was observed for rs242936 (OR = 0.82, 95% CI = 0.74-0.90, P = 9.7 × 10-5). Replicated CRHR1 variants appear to exist on a single associated haplotype. Further investigation of mechanisms involved in HPA axis regulation and response to stress in MS pathogenesis is warranted. © The Author 2010. Published by Oxford University Press. All rights reserved.

Developing a framework for Six Sigma in financial service institutions : empirical evidence from expert interviews

Six Sigma is considered to be an important management philosophy to obtain satisfied customers. But financial service organisations have been slow to adopt Six Sigma issues so far. Despite the extensive effort that has been invested and benefits that can be obtained, the systematic implementation of Six Sigma in financial service organisations is limited. As a company wide implementation framework is missing so far, this paper tries to fill this gap. Based on theory, a conceptual framework is developed and evaluated by experts from financial institutions. The results show that it is very important to link Six Sigma with the strategic as well as the operations level. Furthermore, although Six Sigma is a very important method for improving quality of processes others such as Lean Management are also used This requires a superior project portfolio management to coordinate resources and projects of Six Sigma with the other methods used. Beside the theoretical contribution, the framework can be used by financial service companies to evaluate their Six Sigma activities. Thus, the framework grounded through literature and empirical data will be a useful guide for sustainable and successful implementation of a Six Sigma initiative in financial service organisations.

Managing specialised knowledge in technopreneurial firms : evidence from Australian SMEs

This paper analyses particularities of the knowledge management process in technopreneurial firms with particular focus on knowledge identification, acquisition, utilisation and integration. Using a qualitative investigation from a sample of Australian SMEs, a number of key observations are derived which show the challenges of managing knowledge and how important knowledge management is as a management tool for R&D and innovation process in technology-oriented SMEs. Findings suggest that knowledge management and integration processes in these firms are very much project focused and mainly based on ad hoc and informal processes and not embedded within the overall organisational routines.

Exercise for breast cancer survivors: bridging the gap between evidence and practice

Evidence supporting the benefits of exercise following the diagnosis of breast cancer is overwhelming and compelling. Exercise reduces the severity and number of treatment-related side effects, optimizes quality of life during and following treatment, and may optimize survival. Yet, exercise does not uniformly form part of the standards of care provided to women following a breast cancer diagnosis. This commentary summarizes the evidence in support of exercise as a form of adjuvant treatment and identifies and discusses potential issues preventing the formal integration of exercise into breast cancer care. Proposed within the commentary is a model of breast cancer care that incorporates exercise prescription as a key component but also integrates the need for surveillance and management for common breast cancer treatment-related morbidities, as well as education. While future research evaluating the potential cost savings through implementation of such amodel is required, a committed, collaborative approach by clinicians, allied health professionals, and researchers will be instrumental in bridging the gap between research and practice.

Trends in policies, programs and practices in the Australasian First Year Experience literature 2000-2010. The First Year in Higher Education Research Series on Evidence-based Practice. Number 1

This publication is the first in a series of scholarly reports on research-based practice related to the First Year Experience in Higher Education. This report synthesises evidence about practice-based initiatives and pragmatic approaches in Aotearoa (New Zealand) and Australia that aim to enhance the experience of commencing students in the higher education sector. Trends in policies, programs and practices ... examines the first year experience literature from 2000-2010. It acknowledges the uniqueness of the Australasian socio-political context and its influence on the interests and output of researchers. The review surveyed almost 400 empirical reports and conceptual discussions produced over the decade that dealt with the stakeholders, institutions and the higher education sector in Australasia. The literature is examined through two theoretical constructs or “lenses”: first, a set of first year curriculum design principles and second, the generational approach to describing the maturation of initiatives. These outcomes and suggested directions for further research provide the challenges and the opportunities for FYE adherents, both scholars and practitioners, to grapple with in the next decade.