Constitutive Regulation of the Firm: occupational health and safety, dismissal, discrimination and sexual harassment

As many other chapters in this book have noted, until recently labour lawyers have tended not to draaw on regulatory scholarship. In this chapter we look at certain areas of labour law through a particular kind of regulatory lens - regulation that requires firms to reconstitute their management processes and procedures, perhaps even their organisational cultures. In particular, we examine the kinds of regulatory demands made on firms by legal rules in four areas of labour law: (i) occupational health and safety (OHS)regulation; unfair dismissal law; equal opportunity (EO) and (iv) sexual harassment law.

Audit reports in Australia : 2005-2013: Preliminary Findings

This paper provides a preliminary summary of audit reports for Australian listed public companies for the period 2005 to 2013, focusing on auditor reporting in the most recent period 2011 to 2013. Prior research has shown that audit reports modified for uncertainty relating to the going concern assumption increased following the shock of the Global Financial Crisis (GFC) in late 2007. This occurred in Australia from 2008 where Xu et al. (2011) find that reports modified for going concern uncertainty increase from 12% in 2005 to 2007 to 18% in 2008 and 22% in 2009. Similar trends are observable for the United States as shown by an increase from 14% in 2003 to 21% in 2008 (Cheffers et al. 2010, Geiger et al. 2014). The aim of this report is to examine the frequency of the various types of audit reports issued in Australia during the period 2011 to 2013, with a focus on reports emphasizing significant uncertainty in regard to the going concern assumption.

Consumer misbehavior: a concurrent look at the impact that the size of the victim and size of the loss have on opinions regarding the acceptance or unacceptance of 12 questionable consumer actions

This study examines the role that the size of a victimised organisation and the size of the victim’s loss have on attitudes regarding the acceptance or unacceptance of 12 questionable consumer actions. A sample of 815 American adults rated each scenario on a scale anchored by very acceptable and very unacceptable. It was shown that the size of the victimised organisation tends to influence consumers’ opinions with more disdain directed towards consumers who take advantage of smaller businesses. Similarly, the respondents tended to be more critical of these actions when the loss incurred by the victimised organisation was large. A 2x2 matrix concurrently delineated the nature of the extent to which opinions regarding the 12 actions differed depending upon the mediating variable under scrutiny.

When size matters: exploring perceptions and justifications of deviant consumer behavior

Deterrence strategies for deviant consumer behavior are criticised for their ‘one size fits all’ approach. In two studies, this paper examines how the size of harm and size of victim influences consumer perceptions of deviant consumer behavior. Deterrence strategies are recommended that overcome the differences in consumer perceptions of deviance.

Mind the insolvency gap : lessons to be learned from audit expectations gap theory

There is a general perception that public confidence in the insolvency profession is low as the result of the recent unethical practices of a few high profile liquidators. As a result, the effectiveness of the current regulatory mechanisms has been questioned, leading to a review of the performance of insolvency practitioners and subsequent regulation proposals. The challenge for the insolvency profession is balancing the expectations of the general public whilst ensuring that the obligations and duties imposed upon them are performed to acceptable and realistic standards. It is difficult (if not impossible) for the profession to meet this challenge in the absence of a cohesive framework which identifies those issues that require further regulation as opposed to those that relate to general education on the insolvency process. This paper will examine the audit expectations gap theory in the context of insolvency practitioners and suggests that a model based on this theory provides an effective framework for evaluating the regulation of the insolvency industry.

Causes of rigidity in SMEs' export commencement decision

Today, small-medium sized enterprises (SMEs) collectively contribute to the largest percentage of job creation in OECD countries. SMEs have become increasingly international since the turn of the century despite being smaller in size in comparison to large multinational firms, and notably, exporting is the most favoured mode of international market entry utilised by SMEs in their internationalisation strategy. Governments around the world have acknowledged the importance of export promotion and have employed policies that are targeted at increasing the export activity of SMEs. However, in many countries, the involvement of SMEs in export operations remains rather low. Within Australia, for example, only about one-third of local SMEs are exporting and this raises an important question as to why there is such a huge percentage of non-exporters. Much scholarly research that focuses on this problem has concentrated on the broad concept of 'export barriers' that act as obstacles to a firm's export development. This paper takes a different approach to previous studies and proposes that a firm's resistance to commence exporting can be better understood through an analysis of the behavioural decision process during its pre-export state. Using a sample of Australian SMEs, the factors that are important in preventing a firm’s initial export commencement decision are categorised and discussed through the use of factor analysis.

Audit committee effectiveness : informal processes and behavioural effects

Purpose This paper seeks to investigate the conditions and processes affecting the operation and potential effectiveness of audit committees (ACs), with particular focus on the interaction between the AC, individuals from financial reporting and internal audit functions and the external auditors. Design/methodology/approach A case study approach is employed, based on direct engagement with participants in AC activities, including the AC chair, external auditors, internal auditors, and senior management. Findings The authors find that informal networks between AC participants condition the impact of the AC and that the most significant effects of the AC on governance outcomes occur outside the formal structures and processes. An AC has pervasive behavioural effects within the organization and may be used as a threat, an ally and an arbiter in bringing solutions to issues and conflicts. ACs are used in organizational politics, communication processes and power plays and also affect interpretations of events and cultural values. Research limitations/implications Further research on AC and governance processes is needed to develop better understanding of effectiveness. Longitudinal studies, focusing on the organizational and institutional context of AC operations, can examine how historical events in an organization and significant changes in the regulatory environment affect current structures and processes. Originality/value The case analysis highlights a number of significant factors which are not fully recognised either in theorizing the governance role of ACs or in the development of policy and regulations concerning ACs but which impinge on their governance contribution. They include the importance of informal processes around the AC; its influence on power relations between organizational participants; the relevance of the historical development of governance in an organization; and the possibility that the AC’s impact on governance may be greatest in non-routine situations.

Regulating audit quality : restoring trust and legitimacy

The global financial crsis, corporate failures and scandals in amny countries raise significant questions audit quality. In the UK, the FRC took the unprecedented step of codifying audit quality in its ‘Audit Quality Framework’. We analyze the extent to which audit firms, professional bodies, and investors considered the FRC proposals sufficient for addressing concerns about audit quality. Using impression management and legitimacy as a framework to analyze stakeholder responses we go beyond audit quality drivers identified by the FRC. In contrast to the drivers identified by the FRC, our focus on transparency, expertise, professionalism and commercialization of the audit shows that FRC, audit firms and professional bodies have mainly focused on issues which possibly do not pose a threat to the commercial interest of audit firms. Overall, our analysis shows that regulatory and professional bodies engaged in image management and the promotion of audit quality in an attempt to remedy tarnished image and augment their legitimacy and standing. In attempting to restore trust and legitimacy regulatory bodies, such as the FRC, have to reconcile complex often contradictory stakeholder demands.

A study of the informal interactions between audit committees and internal auditors in Australia

This paper finds evidence for the growing importance of informal interactions between the internal audit function and the audit committee (AC) in Australia – a relatively unexplored topic in the literature – using a survey of Chief Audit Executives (CAEs). It also describes the nature of these informal interactions. The most innovative elements of this paper are the findings that certain personal characteristics of CAEs, the specific knowledge and expertise of the AC chair, as well as some of the AC chair’s personal characteristics are associated with the existence (and increase) of informal interactions.

Influences of luminance and accommodation stimuli on pupil size and pupil center location

PURPOSE. To investigate effects of luminance and accommodation stimuli on pupil size and pupil center location and their implications for progressive addition lens wear. METHODS. Participants were young and older adult groups (n=20, 22±2 years, age range 18-25 years; n=19, 49±4 years, 45-58 years). A wave aberrometer included a relay system to allow a 12.5°x11° background for the internal fixation target. Participants viewed the target under a matrix of conditions with luminance levels 0.01, 3.7, 120 and 6100 cd/m² and with accommodation stimuli up to 6 diopters in 2 diopter steps. Pupil sizes and their centers, relative to limbus centers, were determined from anterior eye images. RESULTS. With luminance increase, reduction in pupil size was accentuated by increase in accommodation stimulus in the young, but not in the older, group. As luminance increased, pupil center location altered. This was nasally in both groups with an average shift of approximately 0.12mm. Relative to the lowest stimulus condition, the mean of the maximum absolute pupil center shifts was 0.26±0.08mm for both groups with individual shifts up to 0.5mm, findings consistent with previous studies. There was no significant effect of accommodation on pupil center locations for either age group, or evidence that location was influenced by the combination of luminance and accommodation stimulus that resulted in any particular pupil size. CONCLUSIONS. Variations in luminance and accommodation influence pupil size, but only the former affects pupil center location significantly. Pupil center shifts are too small to be of concern in fitting progressive addition lenses.

Do Big-Four affilitates earn audit fee premiums in emerging markets?

The paper investigates whether Big-Four affiliated (B4A) firms earn audit premiums in an emerging economy context, using Bangladesh as a case. The joint determination of audit and non-audit service fees is also examined using a sample of 122 companies listed in the Dhaka Stock Exchange. Our findings reveal that although the B4A firms do not generally earn a fee premiumin Bangladesh, they charge higher audit fees for clients not purchasing non-audit services. This suggests that the B4A firms may actually lower audit fees to attract non-audit services, and cross subsidizes audit fees through non-audit-services fees. The lack of a B4A premium implies that there is lack of quality audit in emerging markets. We also document that audit and non-audit service fees are jointly determined in Bangladesh. Thus, we provide evidence of joint determination of audit and non-audit service fees in an emerging economy context.

Informal interactions between audit committees and internal audit functions : exploratory evidence and directions for future research

Purpose – This paper aims to recognise the importance of informal processes within corporate governance and complement existing research in this area by investigating factors associated with the existence of informal interactions between audit committees and internal audit functions and in providing directions for future research. Design/methodology/approach – To examine the existence and drivers of informal interactions between audit committees and internal audit functions, this paper relies on a questionnaire survey of chief audit executives (CAEs) in the UK from listed and non-listed, as well as financial and non-financial, companies. While prior qualitative research suggests that informal interactions do take place, most of the evidence is based on particular organisational setting or on a very small range of interviews. The use of a questionnaire enabled the examination of the existence of internal interactions across a relatively larger number of entities. Findings – The paper finds evidence of audit committees and internal audit functions engaging in informal interactions in addition to formal pre-scheduled regular meetings. Informal interactions complement formal meetings with the audit committee and as such represent additional opportunities for the audit committees to monitor internal audit functions. Audit committees’ informal interactions are significantly and positively associated with audit committee independence, audit chair’s knowledge and experience, and internal audit quality. Originality/value – The results demonstrate the importance of the background of the audit committee chair for the effectiveness of the governance process. This is possibly the first paper to examine the relationship between audit committee quality and internal audit, on the existence and driver of informal interactions. Policy makers should recognize that in addition to formal mechanisms, informal processes, such as communication outside of formal pre-scheduled meetings, play a significant role in corporate governance.

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.

Job embeddedness and the importance of retaining small firm employees

Small firms identify retention of staff as a significant problem. Voluntary turnover of talented staff can be costly, especially in small firms where there are few slack resources. However, there is scant research on retention in small firms. We use the concept of Job Embeddedness to understand why small firm employees stay. The concept refers to the totality of forces that embed employees in their jobs and it consists of three dimensions: fit, links, and sacrifice. Seven propositions are outlined comparing the ways fit, links and sacrifice might play out for small and large firm employees. Through testing these propositions small firm owner-managers may have a better understanding of what can be done to retain employees and maintain firm performance.

Bat colony size reduction coincides with clear-fell harvest operations and high rates of roost loss in plantation forest

Clear-fell harvest of forest concerns many wildlife biologists because of loss of vital resources such as roosts or nests, and effects on population viability. However, actual impact has not been quantified. Using New Zealand long-tailed bats (Chalinolobus tuberculatus) as a model species we investigated impacts of clear-fell logging on bats in plantation forest. C. tuberculatus roost within the oldest stands in plantation forest so it was likely roost availability would decrease as harvest operations occurred. We predicted that post-harvest: (1) roosting range sizes would be smaller, (2) fewer roosts would be used, and (3) colony size would be smaller. We captured and radiotracked C. tuberculatus to day-roosts in Kinleith Forest, an exotic plantation forest, over three southern hemisphere summers (Season 1 October 2006–March 2007; Season 2 November 2007–March 2008; and Season 3 November 2008–March 2009). Individual roosting ranges (100% MCPs) post harvest were smaller than those in areas that had not been harvested, and declined in area during the 3 years. Following harvest, bats used fewer roosts than those in areas that had not been harvested. Over 3 years 20.7% of known roosts were lost: 14.5% due to forestry operations and 6.2% due to natural tree fall. Median colony size was 4.0 bats (IQR = 2.0–8.0) and declined during the study, probably because of locally high levels of roost loss. Post harvest colonies were smaller than colonies in areas that had not been harvested. Together, these results suggest the impact of clear-fell harvest on long-tailed bat populations is negative.