How individuals judge the fairness of pay

International survey data and case studies explore how individuals come to regard some ways of deciding pay as fair and others as unfair. Individuals, motivated by material and psychological self interest, but limited by social reality, interpret pay to maximise perceptions of entitlement while maintaining a positive and coherent self concept.

2001 Volvo Award winner in clinical studies : effects of a media campaign on back pain beliefs and its potential influence on management of low back pain in general practice

Study Design. Quasi-experimental, nonrandomized, nonequivalent, parallel group-controlled study involving before and after telephone surveys of the general population and postal surveys of general practitioners was conducted, with an adjacent state used as a control group.


Objectives. To evaluate the effectiveness of a population-based intervention designed to alter beliefs about back pain, influence medical management, and reduce disability and workers’ compensation–related costs.


Summary of Background Data. A multimedia campaign begun during 1997 in Victoria, Australia, positively advised patients with back pain to stay active and exercise, not to rest for prolonged periods, and to remain at work.


Methods. The campaign’s impact on population beliefs about back pain and fear-avoidance beliefs was measured in telephone surveys, and the effect of the campaign on the potential management of low back pain by general practitioners was assessed by eliciting their likely approach to two hypothetical scenarios in mailed surveys. Demographically identical population groups in Victoria and the control state, New South Wales, were surveyed at three times: before, during, and after intervention in Victoria.


Results. The studies were completed by 4730 individuals in the general population and 2556 general practitioners. There were large statistically significant improvements in back pain beliefs over time in Victoria (mean scores on the Back Beliefs Questionnaire, 26.5, 28.4, and 29.7), but not in New South Wales (26.3, 26.2, and 26.3, respectively). Among those who reported back pain during the previous year, fear-avoidance beliefs about physical activity improved significantly in Victoria (mean scores on the Fear-Avoidance Beliefs Questionnaire for physical activity, 14, 12.5, and 11.6), but not in New South Wales (13.3, 13.6, and 12.7, respectively). General practitioners in Victoria reported significant improvements over time in beliefs about back pain management, as compared with their interstate colleagues. There were statistically significant interactions between state and time for 7 of 10 responses on management of acute low back pain, and for 6 of 10 responses on management of subacute low back pain.


Conclusion. A population-based strategy of providing positive messages about back pain improves the beliefs of the general population and general practitioners about back pain and appears to influence medical management.

Executive compensation and corporate governance with special reference to Bangladesh; some emerging issues

This discussion paper considers corporate governance issues associated with executive compensation arrangements. An historical perspective is used to demonstrate the absence of a sound empirically-based understanding of good corporate governance practices in relation to share-based payment arrangements. The paper provides an overview of issues including the potential earnings dilution and volatility effects of the introduction of regulations affecting executive remuneration. Potential future research questions have been framed addressing each of the major issues identified in this paper. We conclude that corporate regulators should ensure they are familiar with and consider best practice models for corporate governance when developing new, or revising existing business regulation. It is proposed that further research to remedy this deficiency would enable a more accurate assessment of the impact of management on accounting regulation and the better design and implementation of regulation.

Optimal management of a goose flyway : migrant management at minimum cost

1. We adopt a ‘whole flyway’ approach to modelling scenarios for protecting migratory birds, aiming at efficient and cost-effective conservation of flyway habitat.

2. We developed a model to minimize flyway management costs while safeguarding a migrating bird population. The model assumes that the intensity of the birds’ use of sites can be manipulated by varying management regimes (with concomitant costs) and that the birds make optimal use of the conditions created along their flyway.

3. We used dynamic programming to find the sequence of migratory decisions that maximizes the fitness of the migrants given a range of management scenarios, followed by a management cost estimate of all these scenarios and selection of those scenarios yielding an optimal solution from both an economic and the migrants’ perspective.

4. Using the population of pink-footed geese Anser brachyrhynchus that breed in Svalbard as an example, we calculated that the cheapest management scenario given current compensation payment rates at the various goose stopover sites yielded a 35% cost saving over current management. This cheapest scenario provides a migration itinerary that is very similar to the current itinerary used by the geese. This is fortuitous since changing environmental conditions may put the migrants at risk.

5. Synthesis and application. Given the global threats to migratory birds, developing a framework for efficient and effective conservation of flyway habitat is an urgent need. Such a framework may likewise be used to assist in controlling migrants causing conflict with agriculture, such as several goose species, in an economic and responsible fashion. Our suggested exemplified framework identified large unexplainable differences in management costs between regions. Differences in management costs between staging sites for birds make big differences to the optimal management of a flyway. Hence, to achieve efficient and effective management of migratory birds, we firstly need an objective assessment of the cost of management in different locations, followed by a modelling approach as here advocated, and followed up by a collaborative action of managers along the entire flyway.

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.

How do cross-border mergers and acquisitions affect firms’ management and stakeholders? Part 2

The effect of mergers and acquisitions (M&A) on different stakeholders is dependent on a number of factors. These factors can include but are not limited to: the type of M&A; each firm's reasons for the M&A; the offer amount; the product market of both the acquirer and target firms; the political environment; the economic environment; and the current situation of each firm. Employees play a significant role in businesses in which employee satisfaction affects the quality and quantity of business output. Firms interested in embarking on cross-border mergers have new employees to manage and must determine an appropriate wage to match the level of productivity of target employees. Wages may need to be altered as a result of employee relocation; employee compensation can be a complex matter, as the cost of living in each area varies greatly.