Auditor's engagement risk and audit fees:the role of the audit firm alumni

This study explores the effect of the association of audit firm alumni with their alma mater on audit prices. The tests indicate that there is a moderate reduction of up to 21% in the level of audit fee when alumni (i.e., former employees) of the incumbent audit firm sit on the client board of directors which is consistent with the engagement risk theory. This suggests that there is an 'alumni effect' in the market for audit services. The findings hold only in the large company segment of the market. The results are robust to different model specifications and alternative samples. The sample comprises all executive and non-executive directors who run the UK quoted companies and are simultaneously ICAEW qualified chartered accountants. The study's implications for the accounting profession and the regulators are also discussed. © 2007 The Author Journal compilation © 2007 Blackwell Publishing Ltd.

Risk homeostasis theory in simulated environments

This thesis has two aims. First, it sets out to develop an alternative methodology for the investigation of risk homeostasis theory (RHT). It is argued that the current methodologies of the pseudo-experimental design and post hoc analysis of road-traffic accident data both have their limitations, and that the newer 'game' type simulation exercises are also, but for different reasons, incapable of testing RHT predictions. The alternative methodology described here is based on the simulation of physical risk with intrinsic reward rather than a 'points pay-off'. The second aim of the thesis is to examine a number of predictions made by RHT through the use of this alternative methodology. Since the pseudo-experimental design and post hoc analysis of road-traffic data are both ill-suited to the investigation of that part of RHT which deals with the role of utility in determining risk-taking behaviour in response to a change in environmental risk, and since the concept of utility is critical to RHT, the methodology reported here is applied to the specific investigation of utility. Attention too is given to the question of which behavioural pathways carry the homeostasis effect, and whether those pathways are 'local' to the nature of the change in environmental risk. It is suggested that investigating RHT through this new methodology holds a number of advantages and should be developed further in an attempt to answer the RHT question. It is suggested too that the methodology allows RHT to be seen in a psychological context, rather than the statistical context that has so far characterised its investigation. The experimental findings reported here are in support of hypotheses derived from RHT and would therefore seem to argue for the importance of the individual and collective target level of risk, as opposed to the level of environmental risk, as the major determinant of accident loss.

A contingency theory perspective on the risk management control system within Birmingham City Council

In recent years the topic of risk management has moved up the agenda of both government and industry, and private sector initiatives to improve risk and internal control systems have been mirrored by similar promptings for change in the public sector. Both regulators and practitioners now view risk management as an integral part of the process of corporate governance, and an aid to the achievement of strategic objectives. The paper uses case study material on the risk management control system at Birmingham City Council to extend existing theory by developing a contingency theory for the public sector. The case demonstrates that whilst the structure of the control system fits a generic model, the operational details indicate that controls are contingent upon three core variables—central government policies, information and communication technology and organisational size. All three contingent variables are suitable for testing the theory across the broader public sector arena.

Forecasting and risk analysis applied to management planning and control

The aim of this research was to improve the quantitative support to project planning and control principally through the use of more accurate forecasting for which new techniques were developed. This study arose from the observation that in most cases construction project forecasts were based on a methodology (c.1980) which relied on the DHSS cumulative cubic cost model and network based risk analysis (PERT). The former of these, in particular, imposes severe limitations which this study overcomes. Three areas of study were identified, namely growth curve forecasting, risk analysis and the interface of these quantitative techniques with project management. These fields have been used as a basis for the research programme. In order to give a sound basis for the research, industrial support was sought. This resulted in both the acquisition of cost profiles for a large number of projects and the opportunity to validate practical implementation. The outcome of this research project was deemed successful both in theory and practice. The new forecasting theory was shown to give major reductions in projection errors. The integration of the new predictive and risk analysis technologies with management principles, allowed the development of a viable software management aid which fills an acknowledged gap in current technology.

Real options and multinational investments : an empirical study of risk, performance and organisational awareness

DUE TO COPYRIGHT RESTRICTIONS ONLY AVAILABLE FOR CONSULTATION AT ASTON UNIVERSITY LIBRARY AND INFORMATION SERVICES WITH PRIOR ARRANGEMENT This thesis is a cross-disciplinary study of the empirical impact of real options theory in the fields of decision sciences and performance management. Borrowing from the economics, strategy and operations research literature, the research examines the risk and performance implications of real options in firms’ strategic investments and multinational operations. An emphasis is placed on the flexibility potential and competitive advantage of multinational corporations to explore the extent to which real options analysis can be classified as best practice in management research. Using a combination of qualitative and quantitative techniques the evidence suggests that, if real options are explored and exploited appropriately, real options management can result in superior performance for multinational companies. The qualitative findings give an overview of the practical advantages and disadvantages of real options and the statistical results reveal that firms which have developed a high awareness of their real options are, as predicted by the theory, able to reduce their downside risk and increase profits through flexibility, organisational slack and multinationality. Although real options awareness does not systematically guarantee higher returns from operations, supplementary findings indicate that firms with evidence of significant investments in the acquisition of real options knowledge tend to outperform competitors which are unaware of their real options. There are three contributions of this research. First, it extends the real options and capacity planning literature to path-dependent contingent-claims analysis to underline the benefits of average type options in capacity allocation. Second, it is thought to be the first to explicitly examine the performance effects of real options on a sample of firms which have developed partial capabilities in real options analysis suggesting that real options diffusion can be key to value creation. Third, it builds a new decision-aiding framework to facilitate the use of real options in projects appraisal and strategic planning.

Perception of risk, feelings of vulnerability and effects on driving behaviour in women drivers across the lifespan.

Sustained driving in older age has implications for quality of life and mental health. Studies have shown that despite the recognised importance of driving in maintaining health and social engagement, many women give up driving prematurely or adopt self-imposed restrictive driving practices. Emotional responses to driving have been implicated in these decisions. This research examined the effect of risk perception and feelings of vulnerability on women’s driving behaviour across the lifespan. It also developed and tested a modified theory of planned behaviour intervention to positively affect driving habits. The first two studies (N=395) used quantitative analysis to model driving behaviours affected by risk perception and feelings of vulnerability, and established that feelings of vulnerability do indeed affect women’s driving behaviour, specifically resulting in increases in driving avoidance and the adoption of maladaptive driving styles. Further, that self-regulation, conceptualised as avoidance, is used by drivers across the lifespan. Qualitative analysis of focus group data (N=48) in the third study provided a deeper understanding of the variations in coping behaviours adopted by sub-groups of drivers and extended the definition of self-regulation to incorporate adaptive coping strategies. The next study (N=64) reported the construction and preliminary validation of the novel self-regulation index (SRI) to measure wider self-regulation behaviours using an objective measure of driving behaviour, a simulated driving task. The understanding gained from the formative research was used in the final study, an extended theory of planned behaviour intervention to promote wider self-regulation behaviour, measured using the previously validated self-regulation index. The intervention achieved moderate success with changes in affective attitude and normative beliefs as well as self-reported behaviour. The results offer promise for self-regulation, incorporating a spectrum of planning and coping behaviours, to be used as a mechanism to assist drivers in achieving their personal mobility goals whilst promoting safe driving.

An overview of psychological and neurobiological mechanisms by which early negative experiences increase risk of mood disorders

Objective: Early life experiences are associated with severe and long-lasting effects on behavioural and emotional functioning, which in turn are thought to increase the risk for unipolar depression and other disorders of affect regulation. The neurobiological and psychological mechanisms through which adverse early life experiences confer risk are poorly understood. Method: Alterations in brain structure and function in limbic and prefrontal cortical regions have been linked to early negative experiences and to mood disorders. Results: There are a number of psychological domains that may be dysfunctional in people with mood disorders, and which, if the dysfunction occurs prior to onset of mood symptoms, may signify a risk factor for depression. Cognitive dysfunction has been examined in patients with mood disorders, with some suggestion that changes in cognitive function may antedate the onset of mood symptoms, and may be exacerbated in those who experienced early negative trauma. Social cognition, including emotion comprehension, theory of mind and empathy, represent under-studied domains of psychological function that may be negatively influenced by early adverse experience. Temperament and personality factors may also leave people vulnerable to mood instability. Conclusion: This review summarizes the evidence for dysfunction in each of these domains for people with mood disorders.

Developing the practice of educational psychologists through theory and research

Recent research in literacy acquisition has generated detailed programs for teaching phonological awareness. The current paper will address three issues that follow from this research. Firstly, much of the past research has been conducted under conditions that are divorced from the classroom. As a result, it is not known whether the suggested teaching strategies will lead to an increase in children’s attainments when integrated into a broad reading curriculum implemented by teachers in mainstream classrooms. Secondly, these phonological interventions have been designed either to prevent the occurrence of reading difficulties or to meet the needs of failing readers. Therefore, it is not known whether the same methods would advantage all children. Thirdly, teaching children to read takes a minimum of two to three academic years. We herefore need to develop a reading curriculum that can provide the progression and differentiation to meet a wide range of needs over several academic years. We report two studies that have addressed these issues through monitoring the impact of a reading curriculum, implemented by teachers, which integrated children’s acquisition of phonological skills with broader aspects of teaching reading over three academic years. The attainments of children at all levels of ability in the experimental group were raised relative to controls, and importantly, these gains were maintained after the intervention was withdrawn. These results demonstrate that phonological awareness training can be successfully integrated into real classroom contexts and that the same methods raised the attainments of normally developing children, as well as those at risk of reading failure.

Before and after modelling:risk knowledge management is required

Risk and knowledge are two concepts and components of business management which have so far been studied almost independently. This is especially true where risk management is conceived mainly in financial terms, as, for example, in the banking sector. The banking sector has sophisticated methodologies for managing risk, such as mathematical risk modeling. However. the methodologies for analyzing risk do not explicitly include knowledge management for risk knowledge creation and risk knowledge transfer. Banks are affected by internal and external changes with the consequent accommodation to new business models new regulations and the competition of big players around the world. Thus, banks have different levels of risk appetite and policies in risk management. This paper takes into consideration that business models are changing and that management is looking across the organization to identify the influence of strategic planning, information systems theory, risk management and knowledge management. These disciplines can handle the risks affecting banking that arise from different areas, but only if they work together. This creates a need to view them in an integrated way. This article sees enterprise risk management as a specific application of knowledge in order to control deviation from strategic objectives, shareholders' values and stakeholders' relationships. Before and after a modeling process it necessary to find insights into how the application of knowledge management processes can improve the understanding of risk and the implementation of enterprise risk management. The article presents a propose methodology to contribute to providing a guide for developing risk modeling knowledge and a reduction of knowledge silos, in order to improve the quality and quantity of solutions related to risk inquiries across the organization.

Understanding supply chain disruption risk with the aid of social networks and information flows analysis

Supply Chain Risk Management (SCRM) has become a popular area of research and study in recent years. This can be highlighted by the number of peer reviewed articles that have appeared in academic literature. This coupled with the realisation by companies that SCRM strategies are required to mitigate the risks that they face, makes for challenging research questions in the field of risk management. The challenge that companies face today is not only to identify the types of risks that they face, but also to assess the indicators of risk that face them. This will allow them to mitigate that risk before any disruption to the supply chain occurs. The use of social network theory can aid in the identification of disruption risk. This thesis proposes the combination of social networks, behavioural risk indicators and information management, to uniquely identify disruption risk. The propositions that were developed from the literature review and exploratory case study in the aerospace OEM, in this thesis are:- By improving information flows, through the use of social networks, we can identify supply chain disruption risk. - The management of information to identify supply chain disruption risk can be explored using push and pull concepts. The propositions were further explored through four focus group sessions, two within the OEM and two within an academic setting. The literature review conducted by the researcher did not find any studies that have evaluated supply chain disruption risk management in terms of social network analysis or information management studies. The evaluation of SCRM using these methods is thought to be a unique way of understanding the issues in SCRM that practitioners face today in the aerospace industry.

A comparison of the local authority adoption of risk management in England and Australia

This paper analyses the context and use of risk management in local authorities in England and Australia. The basic structures of risk management were found to be common across all four local authorities in both countries. However, substantial differences were found in the national context in which risk management was used. The national context in each country was compared, and a large and small local authority in each country was used for illustrative purposes. The research findings were tested against institutional, contingency, resource dependence, and political perspectives. The research finding is that each theory was necessary but not sufficient and a pluralist approach was formulated to explain the similarities and differences in risk management in local authorities across two countries.

Planning for project control through risk analysis:a case of petroleum pipeline laying

Projects that are exposed to uncertain environments can be effectively controlled with the application of risk analysis during the planning stage. The Analytic Hierarchy Process, a multiattribute decision-making technique, can be used to analyse and assess project risks which are objective or subjective in nature. Among other advantages, the process logically integrates the various elements in the planning process. The results from risk analysis and activity analysis are then used to develop a logical contingency allowance for the project through the application of probability theory. The contingency allowance is created in two parts: (a) a technical contingency, and (b) a management contingency. This provides a basis for decision making in a changing project environment. Effective control of the project is made possible by the limitation of the changes within the monetary contingency allowance for the work package concerned, and the utilization of the contingency through proper appropriation. The whole methodology is applied to a pipeline-laying project in India, and its effectiveness in project control is demonstrated.

How well does the theory of planned behaviour predict alcohol consumption? A systematic review and meta-analysis

This study aimed to quantify correlations between theory of planned behaviour (TPB) variables and (i) intentions to consume alcohol and (ii) alcohol consumption. Systematic literature searches identified 40 eligible studies that were meta-analysed. Three moderator analyses were conducted: pattern of consumption, gender of participants and age of participants. Across studies, intentions had the strongest relationship with attitudes (r+ = .62), followed by subjective norms (r+ = .47) and perceived behavioural control (PBC; r+ = .31). Self-efficacy (SE) had a stronger relationship with intentions (r+ = .48) compared with perceived control (PC; r+ = −.10). Intention had the strongest relationship with alcohol consumption (r+ = .54), followed by SE (r+ = .41). In contrast, PBC and PC had negative relationships with alcohol consumption (r+ = −.05 and −.13, respectively). All moderators affected TPB relationships. Patterns of consumption with clear definitions had stronger TPB relations, females reported stronger attitude–intention relations than males, and adults reported stronger attitude–intention and SE–intention relations than adolescents. Recommendations for future research include targeting attitudes and intentions in interventions to reduce alcohol consumption, using clear definitions of alcohol consumption in TPB items to improve prediction and assessing SE when investigating risk behaviours.

An intervention encouraging planned self-regulation and goal setting in drivers across the lifespan:testing an extended theory of planned behaviour

Previous work has demonstrated that planning behaviours may be more adaptive than avoidance strategies in driving self-regulation, but ways of encouraging planning have not been investigated. The efficacy of an extended theory of planned behaviour (TPB) plus implementation intention based intervention to promote planning self-regulation in drivers across the lifespan was tested. An age stratified group of participants (N=81, aged 18-83 years) was randomly assigned to an experimental or control condition. The intervention prompted specific goal setting with action planning and barrier identification. Goal setting was carried out using an agreed behavioural contract. Baseline and follow-up measures of TPB variables, self-reported, driving self-regulation behaviours (avoidance and planning) and mobility goal achievements were collected using postal questionnaires. Like many previous efforts to change planned behaviour by changing its predictors using models of planned behaviour such as the TPB, results showed that the intervention did not significantly change any of the model components. However, more than 90% of participants achieved their primary driving goal, and self-regulation planning as measured on a self-regulation inventory was marginally improved. The study demonstrates the role of pre-decisional, or motivational components as contrasted with post-decisional goal enactment, and offers promise for the role of self-regulation planning and implementation intentions in assisting drivers in achieving their mobility goals and promoting safer driving across the lifespan, even in the context of unchanging beliefs such as perceived risk or driver anxiety.

The complements towards developing a new risk management framework and Its applicability to the Nigerian power sector

The availability of regular supply has been identified as one of the major stimulants for the growth and development of any nation and is thus important for the economic well-being of a nation. The problems of the Nigerian power sector stems from a lot of factors culminating in her slow developmental growth and inability to meet the power demands of her citizens regardless of the abundance of human and natural resources prevalent in the nation. The research therefore had the main aim of investigating the importance and contributions of risk management to the success of projects specific to the power sector. To achieve this aim it was pertinent to examine the efficacy of risk management process in practice and elucidate the various risks typically associated with projects (Construction, Contractual, Political, Financial, Design, Human resource and Environmental risk factors) in the power sector as well as determine the current situation of risk management practice in Nigeria. To address this factors inhibiting the proficiency of the overarching and prevailing issue which have only been subject to limited in-depth academic research, a rigorous mixed research method was adopted (quantitative and qualitative data analysis). A review of the Nigeria power sector was also carried out as a precursor to the data collection stage. Using purposive sampling technique, respondents were identified and a questionnaire survey was administered. The research hypotheses were tested using inferential statistics (Pearson correlation, Chi-square test, t-test and ANOVA technique) and the findings revealed the need for the development of a new risk management implementation Framework. The proposed Framework was tested within a company project, for interpreting the dynamism and essential benefits of risk management with the aim of improving the project performances (time), reducing the level of fragmentation (quality) and improving profitability (cost) within the Nigerian power sector in order to bridge a gap between theory and practice. It was concluded that Nigeria’s poor risk management practices have prevented it from experiencing strong growth and development. The study however, concludes that the successful implementation of the developed risk management framework may help it to attain this status by enabling it to become more prepared and flexible, to face challenges that previously led to project failures, and thus contributing to its prosperity. The research study provides an original contribution theoretically, methodologically and practically which adds to the project risk management body of knowledge and to the Nigerian power sector.