Does the change of accounting regulation on employee share options give rise to greater scope for earnings management?

Purpose – The purpose of this paper is to address the concern about the impact of accounting regulatory change pertaining to employee share options (ESOs) on earnings management. Following Australia’s adoption of International Financial Reporting Standards (IFRS) in 2005, companies are required to recognise the fair value of ESOs as expenses. Due to inherent imprecision in the estimate of ESO’s fair value, the regulatory change from disclosure to recognition was widely claimed to potentially give rise to an alternative mechanism to manage earnings. This study provides empirical evidence on whether the regulatory change leads to earnings management problems.

Design/methodology/approach – This study uses the regulatory change in accounting for ESOs to provide a direct test of earnings management between disclosed versus recognised regimes for the same sample of firms. The sample consists of Australian firms from S&P/ASX300 for the period from 2003 to 2006.

Findings – The results show that, although the accounting regulatory change from disclosure to recognition may provide an alternative earnings management vehicle, there is no evidence of this occurring. There could be several reasons for this finding. First, the statistical tests lack power. Second, there are stricter audit tests on recognised amounts than on disclosed amounts. Third, given the concern of excessive pay and the close scrutiny of compensation, managers may have already understated ESO values in the disclosure regime. Finally, managers have limited time and resources and the effort involved in the adoption of IFRS in 2005 could have restricted the time available to manage earnings via the ESO reporting channel.

Originality/value – This study adds to the limited research on whether a change in accounting regulation for employee share options from disclosure to recognition gives rise to greater scope for earnings management. One reason for the lack of empirical evidence in the research is due to the problem of designing a test. Bernard and Schipper suggest that within-firm studies have limitations for comparing the effects of recognition versus disclosure when the change is driven by an estimate becoming more reliable. A cross-sectional study is also problematic due to self-selection bias if firms can choose between disclosure versus recognition. This study circumvents potential design problems raised by Bernard and Schipper by setting a test using regulatory change which allows the test to be compared directly using the same company.

Book review : Ethics and organizational practice : questioning the moral foundations of management

The arena of ethics and business is a colossus: thousands of books, multiple dedicated journals, de rigueur organizational ethics policies and CSR initiatives - most of which we can be fairly confident would receive poor reviews by the editors and authors of Ethics and organizational practice: Questioning the moral foundations of management. This edited collection is a self-identified ‘critical’ take on business ethics, one that according to the editors’ introduction wishes to ‘expose business ethics to its crises’ and ‘critically investigate(s) what ethics means’. The ‘critical’ which Muhr, Sørensen and Vallentin invoke is one that would be familiar to authors and readers of Critical Management Studies – that is, to use Fournier and Grey’s (2000) oft-referenced depiction, the study of management and organization that is non-performative with regards to managerialist concerns of efficiency and profitability, that seeks to denaturalize taken-for-granted legitimations, and the normalization of current organizational practices and ideologies, and one which demonstrates significant reflexivity with regard to the philosophies and methodologies it deploys. To the above, we may also add pluralism, and indeed some playfulness, with a wide diversity of conceptual, theoretical, historical and popular sources mined for their potential to help us reconsider the organizational present.

Social intelligence and top management team: an exploratory study of external knowledge acquisition for strategic change in global IT service providers in India

This paper focuses on the processes by which firms, particularly knowledge intensive firms, can augment their overall knowledge stock by tapping into external sources of knowledge. It is argued that Top Management Teams' (TMTs') social intelligence is a critical learning capability in acquiring external knowledge that leads to strategic change. Social intelligence involves social awareness, social understanding and social skills. The study draws from the experience of 11 of the largest Information Technology Service Providers (ITSPs) in India and based on in-depth interviews. The findings show that TMTs' learning capability in the context of social intelligence to interact with external stakeholders is important to ITSPs in facilitating external knowledge acquisition and allowing new knowledge emerge within and across networks. The findings provide significant insights into ITSPs emerging in other developing countries such as in China. Research limitation and future research direction are also provided.

Seabird and marine mammal management options in the face of climate change

Climate change is already impacting Australia’s oceans. Responses by marine life to both climate variability and change have been documented for low trophic levels, however, responses for Australia’s iconic higher trophic level marine taxa are poorly understood, including for many conservation-dependent seabirds and marine mammals. We report initial results from a national study evaluating impacts an adaptation options. Individual time series and combined analyses show consistent responses to historical climate signals, however, improved monitoring protocols are needed to maximize detection of any climate-related demographic signals. Despite difference in sampling , the development of regional multi-species-indices of environmental change provides robust climate indicators over large regions.

Towards a diversity justice management model : integrating organizational justice and diversity management

Purpose – Contemporary organizations are increasingly paying attention to incorporate diversity management practices into their systems in order to promote socially responsible actions and equitable employment outcomes for minority groups. The aim of this paper is to seek to address a major oversight in diversity management literature, the integration of organizational justice principles.

Design/methodology/approach – Drawing upon the existing literature on workforce diversity and organizational justice, the authors develop a model based on normative principles of organizational justice for justice-based diversity management processes and outcomes.

Findings – The paper proposes that effective diversity management results from a decision-making process that meets the normative principles of organizational justice (i.e. interactional, procedural and distributive justice). The diversity justice management model introduced in this article provides important theoretical and practical implications for establishing more moral and just workplaces.

Research limitations/implications – The authors have not tested the conceptual framework of the diversity justice management model, and recommend future research to take up the challenge. The payoff for doing so is to enable the establishment of socially responsible workplaces where individuals, regardless of their background, are given an equal opportunity to flourish in their assigned jobs.

Practical implications – The diversity justice management model introduced in this paper provides organizational justice (OJ)-based guidelines for managers to ensure that OJ can be objectively benchmarked and discussed amongst diversity stakeholders to continuously improve actual and perceived OJ outcomes.

Social implications – The social implication of this conceptual paper is reduction of workforce marginalization and establishment of socially responsible organizations whereby those marginalized (e.g. people with disabilities) can effectively work in their organizations.

Originality/value – This is the first attempt to establish a diveristy justice management model, which incorporates normative principles of organizational justice into diversity management processes and outcomes.

Concept definition in knowledge management : the development of an organizational memory scale

Theorists and researchers in the field of Knowledge Management are frequently frustrated by issues with concept definition, as illustrated by the following comment "there remains disagreement on methodologies, definitions and processes" from the summary article "Issues Raised at ECKM, 2008". How can we clearly define constructs of interest? How can we further research and understanding in the field if we are speaking with different vocabularies? This paper illustrates some of these issues by describing the concept definition process involved in the development of an organizational memory scale. The example being used to illustrate these issues was a self-report scale of organizational memory developed to survey experienced workers' attitudes to mentoring others to pass on their knowledge. The current research sought to differentiate between the types of organizational knowledge that experienced workers have and the possible relationships these have with attitudes pertaining to knowledge transfer via mentoring. Defining the construct to be measured is the vital first ingredient in scale development. Many researchers lament that the concept of organizational memory is a "rather loosely defined and under-developed concept" (e.g. Johnson & Paper, 1998, p.504), and this hints at the challenges that concept definition can entail. Furthermore, in the early stages of this particular project it became clear that the organizational memory scale had similar aims, and was able to borrow from, an existing sale of organizational socialization (Chao, O'Leary-Kelly, Woolf, Klein & Gardner, 1994). This paper describes the concept definition process involved in the development of the scale along with results from the exploratory factor analysis. There is a discussion of the relative contribution that the organizational memory scale makes alongside the existing measure of socialization (Chao et al., 1994), along with goals for further development.

A study protocol to investigate the management of depression and challenging behaviors associated with dementia in aged care settings

Background: 

Making strategic change: a critical discourse analysis

Purpose – The purpose of this paper is to present the findings from a discourse model that was developed for an empirical study of a strategic change program.Design/methodology/approach – The perspective informing the discourse model is that discursive processes are central to strategic change in organizations, and that strategic change works by constructing a particular organizational reality in which the possibilities for change are preconditioned. This perspective offers a discursive understanding of how strategic change is formed, articulated, engaged, and contested by managers and employees.Findings – The paper reports the findings from a study in which the discourse model was applied to a strategic change program in a Bank. The findings demonstrate the inter-discursive nature of strategic change in showing how different levels of discourse, from the grand to the local, were intertwined in an organizational and situated context.Research limitations/implications – This paper builds on the small but growing body of empirical work that studies organizational strategy as a discourse. In this paper it has been argued that discursive processes are central to strategic change in organizations - central to the understanding and the practice of how strategic change is formed, articulated, and engaged by managers and employees. This argument was informed by a post-structuralist definition and articulation of language and an understanding of language as discourse in organizations.Practical implications – The paper demonstrates the central role of language and discourse in the formation of a strategic change program. The findings reported in the paper show the importance of strategy discourse in providing a framework for strategic change, for mobilizing change in an organization, and for legitimizing the change imperative.Social implications – A critique of the management of emotional intelligence is set out. The centrality of employee identity and subject position to the processes of change is illustrated. Originality/value – The discourse model made possible an investigation of how a program of strategic change was formed through the discursive framing of organizational reality.

The impact of socially responsible human resource management on employees' organizational citizenship behaviour: the mediating role of organizational identification

Based on insights from social exchange and social identity theories, this paper examines the influence of three dimensions of socially responsible human resource management (SR-HRM), namely legal compliance HRM, employee-oriented HRM and general CSR facilitation HRM, on employees' organizational citizenship behaviour (OCB). Structural equation modelling of dyadic data collected from Chinese employees and their direct supervisors in three phases revealed that whilst organizational identification fully mediated the relationship between employee-oriented HRM and employee OCB, general CSR facilitation HRM had a direct effect on employee OCB. In contrast, legal compliance HRM neither influenced employee OCB directly, nor indirectly through organizational identification. The findings highlight the important but complex role played by SR-HRM in eliciting positive employee work outcomes, and contribute to our knowledge of the mechanisms underlying this relationship.