The corporate governance effects of audit committees

Arguments associated with the promotion of audit committees in many countries are premised on their potential for alleviating weaknesses in corporate governance. This paper provides a synthesis and evaluation of empirical research on the governance effects associated with audit committees. Given recent policy recommendations in several countries aimed at strengthening these committees, it is important to establish what research evidence demonstrates about their existing governance contribution. A framework for analyzing the impact of audit committees is described, identifying potential perceived effects which may have led to their adoption and documented effects on aspects of the audit function, on financial reporting quality and on corporate performance. It is argued that there is only limited and mixed evidence of effects to support claims and perceptions about the value of audit committees for these elements of governance. It is also shown that most of the existing research has focused on factors associated with audit committee existence, characteristics and measures of activity and there is very little evidence on the processes associated with the operation of audit committees and the manner in which they influence organizational behaviour. It is clear that there is no automatic relationship between the adoption of audit committee structures or characteristics and the achievement of particular governance effects, and caution may be needed over expectations that greater codification around factors such as audit committee members’ independence and expertise as the means of ‘‘correcting’’ past weaknesses in the arrangements for audit committees. The most fundamental question concerning what difference audit committees make in practice continues to be an important area for research development. For future research we suggest: (i) greater consideration of the organizational and institutional contexts in which audit committees operate; (ii) explicit theorization of the processes associated with audit committee operation; (iii) complementing extant research methods with field studie, and; (iv) investigation of unintended (behavioural) as well as expected consequences of audit committees.

Institutional investors, political connections and analyst following in Malaysia

We examine the association between institutional ownership, political connections, and analyst following in Malaysia from 1999 to 2009. Based on 940 firm-year observations, we document a positive relation between institutional ownership, particularly by Employees Provident Fund (EPF), and analyst following, thus supporting the governance role that institutional investors play in promoting corporate transparency. However, there is no evidence that political connections matter to analyst following. The monitoring role of institutional investors, including EPF, does not appear to be any different between politically connected and non-connected firms.

Institutional investors, risk/return and corporate governance : practical lessons from the Global Financial Crisis

The global grown in institutional investors means that firms can no longer ignore their influence in capital markets. However, not all institutional investors have the same motives to influence the firms they invest in. Institution investors' ability to influence management depends on the size of their investment and whether they have any business relations with the firm. Using a sample of Australian firms from 2006 to 2008, our empirical results show that the proportion of a company's shares held by institutional investors is positively associated with firm governance ratings, risk and profitability. This study shows that a positive association between risk and return is associated with large active institutional ownership, which we interpret as shareholders with sufficient power to pressure management to increase short-term profits.

Power and paradigms : the Dutch response to pressures for shareholder value

In recent years, research aimed at identifying and relating the antecedents and consequences of diffusing organizational practices/ideas has turned its attention to debating the international adoption and implementation of the Anglo-American model of corporate governance, i.e., a shareholder-value-orientation (SVO). While financial economists characterize the adoption of an SVO as necessary and performance-enhancing, behavioral scientists have disputed such claims, invoking institutional contingencies in the appropriateness of an SVO. Our study seeks to provide some resolution to the debate by developing an overarching socio-political perspective that links the antecedents and consequences of the adoption of the contested practice of SVO. We test our framework using extensive longitudinal data from 1992-2006 from the largest listed corporations in the Netherlands, and we find a negative relationship between SVO adoption and subsequent firm performance, although this effect is attenuated when accompanied by greater SVO-alignment among major owners and a firm’s visible commitment to an SVO. This study extends prior research on the diffusion of contested organizational practices that has taken a socio-political perspective by offering an original contingency perspective that addresses how and why the misaligned preferences of corporate owners will affect (i) a company’s inclination to espouse an SVO, and (ii) the performance consequences of such misalignment.This study suggests when board members are considering the adoption of new ideas/practices (e.g., SVO), they should consider the contextual fitness of the idea/practice with the firm’s owners and their interests.

Managing impressions during institutional change – The role of organisational accounts in legitimation

Public relations literature has only recently drawn on institutional theory to provide insights into legitimacy that go beyond strategic organisational level processes. Many of the existing crisis management studies are approached from a strategic perspective, which have limitations in terms of how organizations manage their legitimacy in relation to broader and often changing social agendas. This study focuses on how impression management is used to deal with legitimacy gaps between organizations and public expectations that draw on an institutional theory perspective. This qualitative study examines the use of organizational accounts through a lens that marries institutional theory and impression management in order to understand how organizations manage their legitimacy. This study of accounts around legitimacy concerns of corporate social responsibility matters shows that organizations relied on their own tangible technical attributes rather than shared norms of what is considered responsible when there are no hard or institutionalised laws and regulations in place around corporate social responsibility concerns. This study offers insights into public relations concerns around impression management during institutional change and in doing so extends existing public relations approaches to crisis management.

The Corporate Governance Effects of Audit Committee

This chapter provides a synthesis and evaluation of empirical research on the governance effects associated with audit committees. Given recent policy recommendations in several countries aimed at strengthening these committees, it is important to establish what research evidence demonstrates about their existing governance contribution. A framework for analyzing the impact of audit committees is described, identifying potential perceived effects which may have led to their adoption and documented effects on aspects of the audit function, on financial reporting quality and on corporate performance. It is also shown that most of the existing research has focused on factors associated with audit committee existence, characteristics, and measures of activity and there is very little evidence on the processes associated with the operation of audit committees and the manner in which they influence organizational behavior. It is clear that there is no automatic relationship between the adoption of audit committee structures or characteristics and the achievement of particular governance effects, and caution may be needed over expectations that greater codification around factors such as audit committee members’ independence and expertise as the means of ‘‘correcting’’ past weaknesses in the arrangements for audit committees. The most fundamental question concerning what difference audit committees make in practice continues to be an important area for research development. For future research we suggest: (1) greater consideration of the organizational and institutional contexts in which audit committees operate; (2) explicit theorization of the processes associated with audit committee operation; (3) complementing extant research methods with field studies; and (4) investigation of unintended as well as expected consequences of audit committees.

Do e-learning applications click with students globally? A study of the development and adoption of WriteCite.com

This paper traces the process of invention of adoption of WriteCite.com which is an internet based learning tool used by students to format citation lists. A number of theoretical issues relating to development and deployment of online learning tools are addressed in this paper. A significant finding in this paper is that adoption rate of new technologies amongst students, in this case for WriteCite.com, is not immediately global in nature despite the internet's ubiquity and the existence of internationally accepted bibliographic styles. Rather, and in contrast to neo theories of technology internationalisation, early-stage adoption tends to be geo-centric and concentrated in the US. In the case of WriteCite.com, which has not been sponsored by an academic institution, the findings reflect voluntary rates of globa adoption. From an applied perspective, the process of identifying globally contestable markets is relevant to developers of online learning tools.

Institutional investors, risk/performance and corporate governance

Modern portfolio theory suggests that investors minimize risk for a given level of expected return by carefully choosing the proportions of various assets. This study sets out to determine the role of the institutional investor in monitoring risk and firm performance. Using a sample of Australian firms from 2006 to 2008, our empirical study shows a positive association between firm-specific risk, risk-management policy, and performance for firms with increasing institutional shareholdings. The study also finds that the significance of this association depends on the institutional investor's ability to influence management, which in turn depends on the size of ownership and whether the investee firm does not have potential business dealings with the investor. We also find that when firms are financially distressed, institutional investors engage in promoting short-term performance or exit rather than support long-term value creation. The results are robust while controlling the potential for endogeneity and using sensitivity tests to control for variants of performance and risk. These findings add to the growing body of literature examining institutional ownership and the importance of understanding the role of risk-management in the risk and return relation.

The applicability of the Precaution Adoption Process Model for understanding self-regulatory driving behaviour among older drivers

1. Introduction The success of self-regulation, in terms of enhancing older drivers’ safety and maintaining their mobility, depends largely upon older drivers’ awareness of the declines in their driving abilities. Therefore, interventions targeted at increasing older drivers’ safety should aim to enhance their awareness of their physical, sensory and cognitive limitations. Moreover, previous research suggests that driving behaviour change may occur through stages and that interventions and feedback may be perceived differently at each stage. 2. Study aims To further understand the process of driving self-regulation among older adults by exploring their perceptions and experiences of self-regulation, using the PAPM as a framework. To investigate the possible impact of feedback on their driving on their decision making process. 3. Methodology Research tool: Qualitative focus groups (n=5 sessions) Recruitment: Posters, media, newspaper advertisement and emails Inclusion criteria: Aged 70 or more, English-speaking, current drivers Participants: Convenience sample of 27 men and women aged 74 to 90 in the Sunshine Coast and Brisbane city, Queensland, Australia. 4. Analysis Thematic analysis was conducted following the process outlined by Braun and Clarke (2006) to identify, analyse and report themes within the data. Four main themes were identified.

Technology adoption as a multi-stage process

This study proposes that technology adoption be considered as a multi-stage process constituting several distinct stages. Using the Theory of Planned Behaviour (TPB), Ettlie’s adoption stages and by employing data gathered from 162 owners of Small and Medium-sized Enterprises (SMEs), our findings show that the determinants of the intention to adopt packaged software fluctuate significantly across adoption stages.

"Social Stuff" and institutional micro-processes: Alcohol use by students in Australian university residential colleges

The literature on alcohol consumption among university and residential college students in Australia and comparable countries shows a high incidence of heavy and/or frequent drinking. In this article, we report the findings from a study on alcohol consumption among undergraduate university students living in residential colleges in Australia. The aim of the study was to examine residents’ alcohol use as part of a broader set of institutional practices in higher education that are constructed as central to the student experience. The data were collected through in-depth semistructured interviews with 29 students from seven residential colleges. We found that inclusion of alcohol in many students’ social and extracurricular activities while residing in college is associated with heavy and/or frequent drinking. We suggest that the use of alcohol among students is shaped by the colleges’ institutional micro-processes, leading to a tension between college managements’ aim to foster alcohol citizenship and students’ liberty to engage in frequent and/or heavy drinking.

Efficiency or technology adoption: A case study in waste-treatment technology

Improvements in the effectiveness and efficiency of supply-side waste management are necessary in many countries. In Japan, municipalities with limited budgets have delayed the introduction of new waste-management technologies. Thus, the central government has used subsidies to encourage municipalities to adopt certain new technologies to improve waste-management efficiency. In this study, we measure the efficiency of waste management and explore how technology is related to technical efficiency. We find that municipalities are likely to adopt less-efficient technologies and that the central government's policies are likely to promote inefficient technology adoption by local governments.