Exploring the moderating role of growth options on the relation between board characteristics and management earnings forecasts

Manuscript Type
Empirical
Research Question/Issue
This study examines whether director independence, reputation, and financial expertise are related to management earnings forecast (MEF) activity. In particular, we examine whether such a relationship is moderated by firms’ growth options.
Research Findings/Insights
Using Australian archival data for 1,928 firm-years between 1999 and 2006, we find several board characteristics have a significant positive relationship with: (1) the likelihood of firms issuing MEFs; (2) their specificity; (3) their accuracy; and (4) a negative relationship with their bias. For (1), (2), and (3) we show that these relationships are accentuated for firms with high growth options.
Theoretical/Academic Implications
While the theory of voluntary disclosure suggests firms will disclose information that is favorable to them or their managers, well-governed firms issue informative MEFs that potentially reduce information asymmetries in capital markets. We extend the prior literature by showing that such a relation is enhanced in the presence of information asymmetry and moral hazard associated with growth options.
Practitioner/Policy Implications
Our results have strategic implications for nomination committees by showing that independent directors and those with strong reputations and financial expertise enhance the governance of high growth firms. We also inform the regulatory debate by showing that good corporate governance enhancing disclosure quality is context-specific – it is not a case of “one size fits all”.

Landscaping on shifting ground: teacher education in a digitally transforming world

For almost three decades, the landscape of teacher education has been modestly shaped by the exploration of practices that made use of what were, at the time, current instances of computing and communication technologies (CCTs). More broadly and importantly however, the deployment of CCTs globally has, over the same time period (1980-2008), supported a reshaping of the planet's social, economic and political circumstances in which all forms of education operate. Despite the enormity of these shifts the focus in teacher education has remained largely at site, reflecting a similar focus in schools. In fact, the patterns of adaption and response in teacher education to each new instance of high-tech product are now quite predictable. Thus, while teacher education's engagement with CCTs can be mapped as a kind of minor landscaping, a process which attends more to appearance than substance, it is landscaping effectively premised upon a stable geography, one that resembles that of thirty years ago. This paper explores the changed and changing geography of a world heavily shaped by the ongoing deployment and use of more and more powerful CCTs. The analysis suggests that if we continue to attend only to landscaping, teacher education will be at risk of being terraformed.

Characterization of nano-scale particles in hot-rolled, high strength low alloy steels (HSLA)

The contribution of nano-scale particles observed using Atom Probe Tomography in an increase of yield strength of conventional and advanced HSLA steels was studied. The advanced HSLA steel showed higher yield strength than conventional HSLA steel. There were two types of carbides, which primarily contribute to an increase in yield strength of conventional HSLA steel: (i) coarse TiC with average size of 25±5nm and (ii) fine TiC with average radius of 3±1.2nm. The presence of two types of carbides was found in the microstructure of advanced HSLA steel: (i)
nano-scale Ti0.98Mo0.02C0.6 carbides with average radius of 2.2±0.5nm, and (ii) C19Cr7Mo24 particles with an average radius of 1.5±0.3nm. The contribution of precipitation hardening in the yield strength of advanced HSLA steel due to the nano-scale particles was 174MPa, while this value in the conventional HSLA steel was 128MPa.

Multiscale particle-in-cell modelling for advanced high strength steels

Advanced High Strength Steels (AHSS) offer outstanding characteristics for efficient and economic use of steel. The unique features of AHSS are direct result of careful heat treatment that creates martensite in the steel microstructure. Martensite and carbon content in the microstructure greatly affects the mechanical properties of AHSS, underlining more importance on microstructural discontinuities and their multiphase characteristics. In this paper, we present the Multiscale Particle-In-Cell (MPIC) method for microstructural modelling of AHSS. A specific particle method [1] usually used in fluid mechanics is adapted and implemented in a parallel multiscale framework. This multiscale method is based on homogenisation theories; with Particle-In-Cell (PIC) method in both micro and macroscale, and offers several advantages in comparison to finite element (FE) based formulation. Application of this method to a benchmark uniaxial tension test is presented and compared with conventional FE solutions.

High prices for generics in Australia : more competition might help

It is commonly believed that dispensed prices of medicines in Australia are substantially lower than those in other developed countries, particularly the US. This article reports the results of an analysis comparing dispensed prices for the most commonly prescribed and the highest cost items in Australia with dispensed prices in the US. Although a large majority of items are less expensive in Australia than in the US, Australian prices are higher for a substantial number of products, particularly generic drugs. This article examines various policies affecting the pricing of generics in Australia. It is postulated that the main cause for higher prices for a substantial number of generic products is the lack of price competition. This results from government policy which ensures that a price reduction by one company is communicated immediately to all competitors in that market along with an invitation to match the reduced price. The dominant strategy for all suppliers is to only reduce their price in response to a reduction in price by a competitor. The result is a lack of differentiation in pricing across brands of a medicine on the Schedule of Pharmaceutical Benefits. The government could improve the structure of the generics market and encourage greater competition by ceasing to disclose competitor firms’ offers to other competitors. The government could conduct pricing reviews of each generic product relatively infrequently (eg, only once annually or every 18 months). At the time of the pricing review, the government would request confidential offers on price for a generic from all players in the market. Brands should then all be listed under the Pharmaceutical Benefits Scheme (PBS) at the offered price. Prices offered by the individual supplier would apply until the next pricing review. The PBS would continue to subsidise up to the price of the lowest priced brand, with brand premiums applying to all brands priced higher than the benchmark price. Such an approach would provide opportunity for players in the market to capture market share by being thelowest priced brand.

Nature, extent and antecedents of risk managment practices in knowledge-intensive firms

This study provides empirical evidence on the nature and extent of risks faced by Small to Medium-Sized Knowledge Intensive Firms (SMKIFs) and the risk management approaches adopted by them. The study also assesses the effects of selected organisational factors such as industry, entity size and risk governance leadership on the commitment by SMKIFs to using an Enterprise Risk Management (ERM) approach. Data was obtained through a questionnaire survey of SMKIFs in the state of Victoria, Australia which were either in the bio-technology (bio-tech) or the accounting and legal (business services) industry sectors. Based on a total of 104 (13%) useable responses from senior managers in charge of risk management, some of the key findings include the identification of the top three risks faced by SMKIFs being (i) potential damage to firm’s reputation, (ii) inability to recruit and retain workers who have appropriate skills and expertise, and (iii) increase in costs. Interestingly, while 51% of the respondents described their firms as being willing to or keen to take risks, 38% saw their firms as being either preferring not to take risks or refuse to take risks, with the remainder of the firms (11%) viewed as neutral. The data also indicates that more than half of the respondent firms (54%) had established either a complete or a partial ERM system. Further, data analysis based on a binary logit regression model indicates bio-techs, firm size and directors’ support of risk management as key predictors of ERM implementation in SMKIFs.

High performance mg alloy by grain refinement

Mg alloys are one of promising eco-materials. The present paper describes the importance of grain refinement to develop high performance Mg alloys. The fine-grained Mg alloys exhibit not only a good combination of high strength and high ductility at room temperature, but also high formability (superplasticity) at elevated temperatures.

Keeping talents for advancing service firms in Asia

Purpose – Skill shortages worldwide have intensified the need for talent management. Few papers examine the pattern of human resource (HR) and talent management practices that help retain competent employees among service multinational companies (MNCs) in Asia. The purpose of this paper is to map out a number of HR practices used by service companies and to examine the effect of talent retention as perceived by MNC managers on service delivery capacity and business growth.

Design/methodology/approach – A survey data of 281 service MNCs in six Asian countries (namely Indonesia, Malaysia, Philippines, Singapore, Taiwan, and Thailand) are used to compare country and sectoral differences. Standard multiple regression analysis is conducted to test the link between HR practices, employee retention, and service firm performance.

Findings – The results confirm that there are statistically significant linkages between HR practices, talent retention and firm performance. In particular, various skill training and development programs are seen to be significantly associated with capacity to deliver quality service and on firm growth as perceived by managers surveyed. Informal recruitment methods that are used more by Asian-bred firms have contributed to better retention rates. Not all formalised HR practices lead to talent retention; and the degree to which HR is perceived to have impacted on firm performance varies.

Research limitations/implications – The paper focuses on examining the perceptual impacts of human resource management (HRM) practices on firm performance, rather than actual HRM impacts. The interpretation of results should be taken with caution.

Originality/value – Talent management is influenced by country specific variables. This paper shows how important it is for service firms to focus on strategic selection of both formal and informal HR practices in order to deliver high quality service and to drive service firm growth.

Effect of manufacturing process on the final properties of advanced high strength steels for automotive applications

The performance of multiphase steels with high strength and improved toughness or ductility, such as intercritically annealed dual-phase (DP) and transformation-induced plasticity (TRIP) steels, is of key importance to the automotive industry. In this work we have considered the entire manufacturing process and the effects of this on the final product performance. These steels are formed to produce the required final shape and then the car is paint baked. In this work we also consider the effect of cold working and bake hardening on the fatigue life of the components.

Nano-scale analysis of nano-bainite formed in advanced high strength steels

The effect of composition and processing schedule on the microstructure of C-Mn-Si-Mo-(Al)-(Nb) steels containing nano-bainite was studied using transmission electron microscopy (TEM) and atom probe tomography (APT). The major phase formed in all steels was nano-bainite. However, the steels with lower carbon and alloying addition content subjected to TMP had better mechanical properties than high alloyed steel after isothermal treatment. The presence of ferrite in the microstructure can improve not only ductility but lead to the formation of retained austenite with optimum chemical stability.

Knowledge management culture, strategy and process in Malaysian firms

Malaysia is one of the leading countries in Asia that are at the forefront in the development of a knowledge-based economy (KBE). The Malaysian government has been making substantial investments in both physical and technological infrastructure to facilitate knowledge-intensive economic activities. Foreign and local firms in Malaysia are encouraged to take advantage of the opportunities brought by the emerging KBE. However, little is known as to how firms in Malaysia respond to this new trajectory of economic development. In particular, there is paucity in the literature as to how Malaysian firms manage knowledge in their organizations as they strive to achieve sustainable competitive performance. Little is known as to how and why firms in Malaysia develop and manage their intangible and knowledge-based resources as they operate and respond to the modern knowledge-based competitive economic arena. This paper examines a type of organizational culture that supports and promotes knowledge management (KM) within firms in Malaysia. The paper argues that KM-oriented culture shapes the overall KM strategy of firms, which consequently shapes the organizational process required to manage the firm's knowledge-based resources. The study uses survey data from a sample of 153 firms from Malaysia. Structural equation modelling was used to develop and test the measurement model of KM-oriented culture, KM strategy and KM process of the sample firms, as well as the structural model of their hypothesized relationships. The results show that firms with high level of KM-oriented culture demonstrated well-defined KM strategies. Firms that implemented well-defined KM strategies also reported that they have better KM processes in place. Building a KM-oriented culture within the organization is a pre-requisite to the implementation of any KM systems in Malaysian firms. Successful implementation of KM strategies, processes and the supporting technological infrastructure depends on whether organizational members consider KM as a norm within the firm. The study's focus on the linkages between KM-oriented culture, strategy and process in the context of Malaysian firms contributes to a more nuanced understanding of KM among firms in the Asian context in general, and in the Malaysian context in particular.

Explaining the levels of innovation and R&D in New Zealand's small and medium-sized enterprises : too many small firms?

This paper is concerned with explaining the levels of innovative activity in New Zealand's SMEs. It is arguable that New Zealand provides a special case where innovation and R&D levels are comparatively low in SMEs, yet, paradoxically, it is also a nation of high rates of entrepreneurial activity. This paper seeks to examine the factors that affect innovation levels in New Zealand SMEs from an analysis of panel data set of 1500 SMEs. We test research propositions based on existing theory and literature on innovation levels in SMEs and discuss our findings. Firm size is found to be significant; we argue that New Zealand has too few growth firms rather than too many small firms and we suggest that barriers to innovation, such as access to finance, remain an issue which should be a focus for government support.