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.

The inherent challenges of knowledge transfer across countries and cultures

Purpose — The purpose of this chapter is to outline the findings of research into knowledge transfer across countries and culture and the implications of the findings for human resource practitioners. Methodology/approach — Use of a qualitative case study methodology approach was employed. Findings — The findings highlight the inherent difficulty of knowledge transfer and the broad range of factors that influence the knowledge transfer process and which are connected together in a complex and non-linear manner. Research implications — The research revealed insight into those managers most likely to be effective at knowledge transfer and what characteristics and experiences had supported this openness to knowledge from outside of their cultural context. The lessons from the research can be incorporated into the selection and development processes for expatriates. Originality value — The study affirmed the critical importance of face-to-face interaction in knowledge transfer. The research also resulted in the development of a practical model and tool, which pulls together the broad range of factors that impact on knowledge transfer.

On IT and business value in developing countries : A complementarities-based approach

Developing economies accommodate more than three quarters of the world's population. This means understanding their growth and well-being is of critical importance. Information technology (IT) is one resource that has had a profound effect in shaping the global economy. IT is also an important resource for driving growth and development in developing economies. Investments in developing economies, however, have focused on the exploitation of labor and natural resources. Unlike in developed economies, focus on IT investment to improve efficiency and effectiveness of business process in developing economies has been sparse, and mechanisms for deriving better IT-related business value is not well understood. This study develops a complementarities-based business value model for developing economies, and tests the relationship between IT investments, IT-related complementarities, and business process performance. It also considers the relationship between business processes performance and firm-level performance. The results suggest that a coordinated investment in IT and IT-related complementarities related favorably to business process performance. Improvements in process-level performance lead to improvements in firm-level performance. The results also suggest that the IT-related complementarities are not only a source of business value on their own, but also enhance the IT resources' ability to contribute to business process performance. This study demonstrates that a coordinated investment approach is required in developing economies. With this approach, their IT resources and IT-related complementaries would help them significantly in improving their business processes, and eventually their firm-level performances.

Understanding successful use of technology in organisations in developing countries : a structurational perspective

Information Technology and its relationship to organisational performance has been a subject of continued interest to researchers and other stakeholders in developing countries. While there is concurrence that IT does contribute to performance, and we are efficiently expanding our knowledge on what factors cause better leveraging of IT resources in organisations, we have done little to understand how these factors interact with technology that results in improved performance. This paper suggests looking that the interaction between organisational resources and technology within the structurational lens, which recognises the recursive interaction between technology and people in the presence of social practices, and the norms that inform their ongoing practices. An ethnographic approach to understanding this interaction between technology and resources, as suggested by the structuration perspective, is suggested, aiming to provide richer insights on the nature of the environment that promotes better use of IT resources in developing countries. Such insights could provide the IT users in developing countries with at least an initial conception of the “IT usage platform” that they could promote in their organisations to leverage the most from their IT resources.

Sourcing and evaluating IT business value in emerging economies : the case of the South Pacific Island Countries

Information Technology (IT) is an important resource that facilitates growth and development in both the developed and emerging economies. The increasing forces of globalization are creating a wider digital divide between the developed and emerging economies. The smaller emerging economies are the most venerable. Intense competition for IT resources means that these emerging economies would need to acquire a deeper understanding of how to source and evaluate their IT-related efforts. This effort would put these economies in a better position to source funding from various stakeholders. This research presents a complementary approach to securing better IT-related business value in organizations in the South Pacific Island countries – a case of emerging economies. Analysis of data collected from six South Pacific Island countries suggests that organizations that invest in IT and related complementaries are able to better their business processes. The data also suggest that improved business processes lead to overall business processes improvements.

Enabling access to research data in developing countries : designing a policy and practice framework for Malaysia’s Public Research Universities

Members of the World Trade Organisation (WTO) are obliged to implement the Agreement on Trade-related Intellectual Property Rights 1994 (TRIPS) which establishes minimum standards for the protection and enforcement of intellectual property rights. Almost two decades after TRIPS was adopted at the conclusion of the Uruguay Round of trade negotiations, it is widely accepted that intellectual property systems in developing and least-developed countries must be consistent with, and serve, their development needs and objectives. In adopting the Development Agenda in 2007, the World Intellectual Property Organisation (WIPO) emphasised the importance to developing and least-developed countries of being able to obtain access to knowledge and technology and to participate in collaborations and exchanges with research and scientific institutions in other countries. Access to knowledge, information and technology is crucial if creativity and innovation is to be fostered in developing and least-developed countries. It is particularly important that developing and least-developed countries give effect to their TRIPS obligations by implementing intellectual property systems and adopting intellectual property management practices that enable them to benefit from knowledge flows and support their engagement in international research and science collaborations. However, developing and least-developed countries did not participate in the deliberations leading to the adoption in 2004 by Organisation for Economic Co-operation and Development (OECD) member countries of the Ministerial Declaration on Access to Research Data from Public Funding, nor have they formulated policies on access to publicly funded research outputs such as those developed by the National Institutes of Health in the United States, the United Kingdom Research Councils or the Australian National Health and Medical Research Council. These issues are considered from the viewpoint of Malaysia, a developing country whose economy has grown strongly in recent years. Lacking an established policy covering access to the outputs of publicly funded research, data sharing and licensing practices continue to be fragmented. Obtaining access to research data requires arrangements to be negotiated with individual data owners and custodians. Given the potential for restrictions on access to impact negatively on scientific progress and development in Malaysia, measures are required to ensure that access to knowledge and research results is facilitated. This paper proposes a policy framework for Malaysia‘s public research universities that recognises intellectual property rights while enabling the open access to research data that is essential for innovation and development. It also considers how intellectual property rights in research data can be managed in order to give effect to the policy‘s open access objectives.

Learning processes in creative industries initiatives in developing countries : an examination of policy and practice

What does a dance group in Benin that mixes contemporary and ethnic dancing have in common with Mongolian felt producers that want to enter the design market in Europe? These are both examples of learning processes in Creative Industries initiatives in developing countries. Following the concept of sustainable development, I argue that the challenge for developing countries in contemporary society is to meet the very real need of people for economic development and opportunities for income generation, while at the same time avoiding unintended and unwanted consequences of economic development and globalisation. The concept of the Creative Industries may be a way to promote a development that is sustainable and avoids social exclusion of groups-at-risk. In line with this, I argue that the Creative Industries sector could, in fact, link economic development and the continuation and evolution of local traditions and cultural heritage. A pressing question then is: how can education and learning contribute to creating a context in which talent can flourish? This study aims to provide a comprehensive analysis of the research problem of this thesis: what elements are conducive for individual learning processes in creative development initiatives? In this, I argue that it is crucial to determine what ingredients and characteristics contribute to making these initiatives successful, that is, to meet their specific goals, in a developing context. This is explored through a staged analysis: an overview of quantitative data, an inventory and comparative case studies and, finally, the description and analysis of two in-depth case studies – felt design in Mongolia (Asia) and dance in Benin (Africa), in which I was an observer of the action phase of the local interventions. The analysis culminates in practice-related outcomes related to the operation of creative development initiatives, as well as the contribution to the academic debate on issues like the cultural gap between developed and developing countries, transformative learning and the connection of learning spaces.

A six-year descriptive analysis of hospitalisations for ambulatory care sensitive conditions among people born in refugee-source countries

Background: Hospitalisation for ambulatory care sensitive conditions (ACSHs) has become a recognised tool to measure access to primary care. Timely and effective outpatient care is highly relevant to refugee populations given the past exposure to torture and trauma, and poor access to adequate health care in their countries of origin and during flight. Little is known about ACSHs among resettled refugee populations. With the aim of examining the hypothesis that people from refugee backgrounds have higher ACSHs than people born in the country of hospitalisation, this study analysed a six-year state-wide hospital discharge dataset to estimate ACSH rates for residents born in refugee-source countries and compared them with the Australia-born population. Methods: Hospital discharge data between 1 July 1998 and 30 June 2004 from the Victorian Admitted Episodes Dataset were used to assess ACSH rates among residents born in eight refugee-source countries, and compare them with the Australia-born average. Rate ratios and 95% confidence levels were used to illustrate these comparisons. Four categories of ambulatory care sensitive conditions were measured: total, acute, chronic and vaccine-preventable. Country of birth was used as a proxy indicator of refugee status. Results: When compared with the Australia-born population, hospitalisations for total and acute ambulatory care sensitive conditions were lower among refugee-born persons over the six-year period. Chronic and vaccine-preventable ACSHs were largely similar between the two population groups. Conclusion: Contrary to our hypothesis, preventable hospitalisation rates among people born in refugee-source countries were no higher than Australia-born population averages. More research is needed to elucidate whether low rates of preventable hospitalisation indicate better health status, appropriate health habits, timely and effective care-seeking behaviour and outpatient care, or overall low levels of health care-seeking due to other more pressing needs during the initial period of resettlement. It is important to unpack dimensions of health status and health care access in refugee populations through ad-hoc surveys as the refugee population is not a homogenous group despite sharing a common experience of forced displacement and violence-related trauma.

Hospital utilisation among people born in refugee-source countries : an analysis of hospital admissions, Victoria, 1998–2004

Objective: To investigate whether hospital utilisation and health outcomes in Victoria differ between people born in refugee-source countries and those born in Australia. Design and setting: Analysis of a statewide hospital discharge dataset for the 6 financial years from 1 July 1998 to 30 June 2004. Hospital admissions of people born in eight countries for which the majority of entrants to Australia arrived as refugees were included in the analysis. Main outcome measures: Age-standardised rates and rate ratios for: total hospital admissions; emergency admissions; surgical admissions; total days in hospital; discharge at own risk; hospital deaths; admissions due to infectious and parasitic diseases; and admissions due to mental and behavioural disorders. Results: In 2003–04, compared with the Australia-born Victorian population, people born in refugee-source countries had lower rates of surgical admission (rate ratio [RR], 0.85; 95% CI, 0.81–0.88), total days in hospital (RR, 0.74; 95% CI, 0.73–0.75), and admission due to mental and behavioural disorders (RR, 0.70; 95% CI, 0.65–0.76). Over the 6-year period, rates of total days in hospital and rates of admission due to mental and behavioural disorders for people born in refugee-source countries increased towards Australian-born averages, while rates of total admissions, emergency admissions, and admissions due to infectious and parasitic diseases increased above the Australian-born averages. Conclusions: Use of hospital services among people born in refugee-source countries is not higher than that of the Australian-born population and shows a trend towards Australian-born averages. Our findings indicate that the Refugee and Humanitarian Program does not currently place a burden on the Australian hospital system.

Experience of overseas-trained health professionals in rural and remote areas of destination countries: A literature review

This study aimed to review and synthesise existing literature that investigated the experience of overseastrained health professionals (OTHPs) in rural and remote areas of destination countries. A systematic literature review was conducted using electronic databases and manual search of studies published from January 2004 to February 2011. Data were analysed from the final 17 original report articles that met the inclusion criteria. The reviewed research studies were conducted in Australia, Canada, New Zealand, the UK and the USA. Overseas-trained medical practitioners were the most frequently researched (n = 14); two studies involved nurses and one study included several health professionals. Three main themes emerged from the review and these were: (i) expectations; (ii) cultural diversity; and (iii) orientation and integration to rural and remote health work environment. The OTHPs were expected to possess the appropriate professional and cultural skills while they themselves expected recognition of their previous experiences and adequate organisational orientation and support. A welcoming and accepting community coupled with a relaxed rural lifestyle and the joy of continued patient care resulted in successful integration and contributed to increased staff retention rates. Recognition of expectations and cultural diversity by all parties and comprehensive orientation with sufficient organisational support are important elements in the integration of OTHPs and subsequent delivery of quality health care to people living in rural and remote areas.