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.

Investigative thinking and creativity : an empirical study of police detectives in Norway

This paper makes distinctions among four investigative thinking styles of detectives: method style, challenge style, skill style, and risk style. Based on previous research, this study empirically tested, to what extent there are cumulative relationships among these thinking styles. Furthermore, this research studied relationships between investigative thinking styles and creativity in police investigations. Significant relationships were found between the extent of the challenge and risk styles and the extent of creativity.

Continuum of police crime : an empirical study of court cases

The great majority of police officers are committed to honourable and competent public service and consistently demonstrate integrity and accountability in carrying out the often difficult, complex and sometimes dangerous, activities involved in policing by consent. However, in every police agency there exists an element of dishonesty, lack of professionalism and criminal behaviour. This article is based on archival research of criminal behaviour in the Norwegian police force. A total of 60 police employees were prosecuted in court because of misconduct and crime from 2005 to 2010. Court cases were coded as two potential predictors of court sentence in terms of imprisonment days, ie, type of deviance and level of deviance. Categories of police crime and levels were organised according to a conceptual framework developed for assessing and managing police deviance. Empirical findings support the hypothesis that as the seriousness of police crime increases in breadth and depth so also does the severity of the court sentence as measured by time in prison.

Ethical decision making and health care managers : developing managerial profiles based on ethical frameworks and other influencing factors

Whether the community is looking for “scapegoats” to blame, or seeking more radical and deeper causes, health care managers are in the firing line whenever there are woes in the health care sector. The public has a right to question whether ethics have much influence on the everyday decision making of health care managers. This thesis explores, through a series of published papers, the influence of ethics and other factors on the decision making of health care managers in Australia. Critical review of over 40 years of research on ethical decision making has revealed a large number of influencing factors, but there is a demonstrable lack of a multidimensional approach that measures the combined influences of these factors on managers. This thesis has developed an instrument, the Managerial Ethical Profile (MEP) scale, based on a multidimensional model combining a large number of influencing factors. The MEP scale measures the range of influences on individual managers, and describes the major tendencies by developing a number of empirical profiles derived from a hierarchical cluster analysis. The instrument was developed and refined through a process of pilot studies on academics and students (n=41) and small-business managers (n=41), and then was administered to the larger sample of health care managers (n=441). Results from this study indicate that Australian health care managers draw on a range of ethical frameworks in their everyday decision making, forming the basis of five MEPs (Knights, Guardian Angels, Duty Followers, Defenders, and Chameleons). Results from the study also indicate that the range of individual, organisational, and external factors that influence decision making can be grouped into three major clusters or functions. Cross referencing these functions and other demographic data to the MEPs provides analytical insight into the characteristics of the MEPs. These five profiles summarise existing strengths and weaknesses in managerial ethical decision making. Therefore identifying these profiles not only can contribute to increasing organisational knowledge and self-awareness, but also has clear implications for the design and implementation of ethics education and training in large scale organisations in the health care industry.

Collision warning dissemination in vehicles strings : an empirical measurement

Inter-Vehicular Communications (IVC) are considered a promising technological approach for enhancing transportation safety and improving highway efficiency. Previous theoretical work has demonstrated the benefits of IVC in vehicles strings. Simulations of partially IVC-equipped vehicles strings showed that only a small equipment ratio is sufficient to drastically reduce the number of head on collisions. However, these results are based on the assumptions that IVC exhibit lossless and instantaneous messages transmission. This paper presents the research design of an empirical measurement of a vehicles string, with the goal of highlighting the constraints introduced by the actual characteristics of communication devices. A warning message diffusion system based on IEEE 802.11 wireless technology was developed for an emergency breaking scenario. Preliminary results are presented as well, showing the latencies introduced by using 802.11a and discussing early findings and experimental limitations

Porn and the mediasphere

The history of public discourse (and in many cases, academic publishing) on pornography is, notoriously, largely polemical and polarised. There is perhaps no other media form that has been so relentlessly the centre of what boils down to little more than arguments “for” or “against”; most famously, on the basis of the oppression, dominance or liberation of sexual subjectivities. These polarised debates leave much conceptual space for researchers to explore: discussions of pornography often lack specificity (when speaking of porn, what exactly do we mean? Which genre? Which markets?); assumptions (eg. about exactly how the sexualised “white male body” functions culturally, or what the “uses” of porn actually might be) can be buried; and empirical opportunities (how porn as media industry connects to innovation and the rest of the mediasphere) are missed. In this issue, we have tried to create and populate such a space, not only for the rethinking of some of our core assumptions about pornography, but also for the treatment of pornography as a bona fide, even while contested and problematic, segment of the media and cultural industries, linked economically and symbolically to other media forms.

Investigating relationships between relationship quality, customer loyalty and cooperation : an empirical study of convenience stores' franchise chain systems

Small business has been shown to contribute significantly to a nation’s economic development. Small business owners typically confront challenges, uncertainty, and risks while operating new businesses. Franchising has become a way to minimize the risks of small business management (Chiou et al., 2004); however, a franchise system is not a guarantee of business success (Lee and Karkovista, 2001). A poor franchising relationship between franchisors and franchisees can result in franchise failure, such as termination and closure, or franchisee exit (Frazer and Winzar, 2005).

Developing a framework for Six Sigma in financial service institutions : empirical evidence from expert interviews

Six Sigma is considered to be an important management philosophy to obtain satisfied customers. But financial service organisations have been slow to adopt Six Sigma issues so far. Despite the extensive effort that has been invested and benefits that can be obtained, the systematic implementation of Six Sigma in financial service organisations is limited. As a company wide implementation framework is missing so far, this paper tries to fill this gap. Based on theory, a conceptual framework is developed and evaluated by experts from financial institutions. The results show that it is very important to link Six Sigma with the strategic as well as the operations level. Furthermore, although Six Sigma is a very important method for improving quality of processes others such as Lean Management are also used This requires a superior project portfolio management to coordinate resources and projects of Six Sigma with the other methods used. Beside the theoretical contribution, the framework can be used by financial service companies to evaluate their Six Sigma activities. Thus, the framework grounded through literature and empirical data will be a useful guide for sustainable and successful implementation of a Six Sigma initiative in financial service organisations.

Event-related brain potentials dissociate the developmental time-course of automatic numerical magnitude analysis and cognitive control functions during the first three years of primary school

In this study we set out to dissociate the developmental time course of automatic symbolic number processing and cognitive control functions in grade 1-3 British primary school children. Event-related potential (ERP) and behavioral data were collected in a physical size discrimination numerical Stroop task. Task-irrelevant numerical information was processed automatically already in grade 1. Weakening interference and strengthening facilitation indicated the parallel development of general cognitive control and automatic number processing. Relationships among ERP and behavioral effects suggest that control functions play a larger role in younger children and that automaticity of number processing increases from grade 1 to 3.

Utilizing industry-led innovation capacity to enhance supply chain performance : an empirical study

A fundamental principle of the resource-based (RBV) of the firm is that the basis for a competitive advantage lies primarily in the application of bundles of valuable strategic capabilities and resources at a firm’s or supply chain’s disposal. These capabilities enact research activities and outputs produced by industry funded R&D bodies. Such industry lead innovations are seen as strategic industry resources, because effective utilization of industry innovation capacity by sectors such as the Australian beef industry are critical, if productivity levels are to increase. Academics and practitioners often maintain that dynamic supply chains and innovation capacity are the mechanisms most likely to deliver performance improvements in national industries.. Yet many industries are still failing to capitalise on these strategic resources. In this research, we draw on the resource-based view (RBV) and embryonic research into strategic supply chain capabilities. We investigate how two strategic supply chain capabilities (supply chain performance differential capability and supply chain dynamic capability) influence industry-led innovation capacity utilization and provide superior performance enhancements to the supply chain. In addition, we examine the influence of size of the supply chain operative as a control variable. Results indicate that both small and large supply chain operatives in this industry believe these strategic capabilities influence and function as second-order latent variables of this strategic supply chain resource. Additionally respondents acknowledge size does impacts both the amount of influence these strategic capabilities have and the level of performance enhancement expected by supply chain operatives from utilizing industry-led innovation capacity. Results however also indicate contradiction in this industry and in relation to existing literature when it comes to utilizing such e-resources.

Learning or legitimacy? an exploration of business planning amongst Australian social enterprises

In recent years, the value of business planning for new business ventures and small firms has been the subject of debate amongst entrepreneurship researchers (Brinckmann et al 2010: 24). Drawing on institutional theory, a number of writers suggest that business planning is primarily used to confer symbolic legitimacy on businesses seeking investment and engagement from external stakeholders ( Karlsson & Honig 2009; Zimmerman & Zeitz 2002; Delmar & Shane 2004). In this sense, business planning may not have any significant effects on firm learning, but may be used as evidence of good business operations in order to attract external resources. Meta-evaluation of the available empirical literature contests this proposition, finding that both the symbolic and organisational learning effects of business planning influence small firm performance (Brinckmann et al 2010: 36) While social enterprise – which we define as organisations that exist for a public or community benefit and trade to fulfill their mission - the study of social enterprise is a nascent and pre-paradigmatic area of inquiry (Nicholls 2010). As a consequence, there has been relatively little empirical analysis of the nature or effects of business planning amongst social enterprises (for two exceptions, see exploratory studies by Hynes 2009 and Bull & Crompton 2006). In this paper, we examine business planning practices amongst Australian social enterprises. Drawing on a survey of 365 social enterprises conducted in 2010 and in-depth interviews with 11 social entrepreneurs and managers from eight social enterprises, we find that social enterprises report being more actively engaged in business planning activities than their mainstream business counterparts. Our exploratory research suggests that both legitimacy and learning drive business planning amongst social enterprises, although legitimacy is the stronger driver. Our results also suggest that, as multi-stakeholder businesses led by mission, business planning can serve unique communicative and relational functions for this business type.

Introduction to the First International Workshop on Empirical Research in Business Process Management (ER-BPM 2009)

Providing effective IT support for business processes has become crucial for enterprises to stay competitive. In response to this need numerous process support paradigms (e.g., workflow management, service flow management, case handling), process specification standards (e.g., WS-BPEL, BPML, BPMN), process tools (e.g., ARIS Toolset, Tibco Staffware, FLOWer), and supporting methods have emerged in recent years. Summarized under the term “Business Process Management” (BPM), these paradigms, standards, tools, and methods have become a success-critical instrument for improving process performance.

Some empirical results for neo-Piagetian reasoning in novice programmers and the relationship to code explanation questions

Recent research on novice programmers has suggested that they pass through neo-Piagetian stages: sensorimotor, preoperational, and concrete operational stages, before eventually reaching programming competence at the formal operational stage. This paper presents empirical results in support of this neo-Piagetian perspective. The major novel contributions of this paper are empirical results for some exam questions aimed at testing novices for the concrete operational abilities to reason with quantities that are conserved, processes that are reversible, and properties that hold under transitive inference. While the questions we used had been proposed earlier by Lister, he did not present any data for how students performed on these questions. Our empirical results demonstrate that many students struggle to answer these problems, despite the apparent simplicity of these problems. We then compare student performance on these questions with their performance on six explain in plain English questions.

Fuzzy methods for analysis of microarrays and networks

Bioinformatics involves analyses of biological data such as DNA sequences, microarrays and protein-protein interaction (PPI) networks. Its two main objectives are the identification of genes or proteins and the prediction of their functions. Biological data often contain uncertain and imprecise information. Fuzzy theory provides useful tools to deal with this type of information, hence has played an important role in analyses of biological data. In this thesis, we aim to develop some new fuzzy techniques and apply them on DNA microarrays and PPI networks. We will focus on three problems: (1) clustering of microarrays; (2) identification of disease-associated genes in microarrays; and (3) identification of protein complexes in PPI networks. The first part of the thesis aims to detect, by the fuzzy C-means (FCM) method, clustering structures in DNA microarrays corrupted by noise. Because of the presence of noise, some clustering structures found in random data may not have any biological significance. In this part, we propose to combine the FCM with the empirical mode decomposition (EMD) for clustering microarray data. The purpose of EMD is to reduce, preferably to remove, the effect of noise, resulting in what is known as denoised data. We call this method the fuzzy C-means method with empirical mode decomposition (FCM-EMD). We applied this method on yeast and serum microarrays, and the silhouette values are used for assessment of the quality of clustering. The results indicate that the clustering structures of denoised data are more reasonable, implying that genes have tighter association with their clusters. Furthermore we found that the estimation of the fuzzy parameter m, which is a difficult step, can be avoided to some extent by analysing denoised microarray data. The second part aims to identify disease-associated genes from DNA microarray data which are generated under different conditions, e.g., patients and normal people. We developed a type-2 fuzzy membership (FM) function for identification of diseaseassociated genes. This approach is applied to diabetes and lung cancer data, and a comparison with the original FM test was carried out. Among the ten best-ranked genes of diabetes identified by the type-2 FM test, seven genes have been confirmed as diabetes-associated genes according to gene description information in Gene Bank and the published literature. An additional gene is further identified. Among the ten best-ranked genes identified in lung cancer data, seven are confirmed that they are associated with lung cancer or its treatment. The type-2 FM-d values are significantly different, which makes the identifications more convincing than the original FM test. The third part of the thesis aims to identify protein complexes in large interaction networks. Identification of protein complexes is crucial to understand the principles of cellular organisation and to predict protein functions. In this part, we proposed a novel method which combines the fuzzy clustering method and interaction probability to identify the overlapping and non-overlapping community structures in PPI networks, then to detect protein complexes in these sub-networks. Our method is based on both the fuzzy relation model and the graph model. We applied the method on several PPI networks and compared with a popular protein complex identification method, the clique percolation method. For the same data, we detected more protein complexes. We also applied our method on two social networks. The results showed our method works well for detecting sub-networks and give a reasonable understanding of these communities.