Essays on Corporate Governance and the Quality of Disclosed Earnings: Across Transitional Europe

A growing body of empirical research examines the structure and effectiveness of corporate governance systems around the world. An important insight from this literature is that corporate governance mechanisms address the excessive use of managerial discretionary powers to get private benefits by expropriating the value of shareholders. One possible way of expropriation is to reduce the quality of disclosed earnings by manipulating the financial statements. This lower quality of earnings should then be reflected by the stock price of firm according to value relevance theorem. Hence, instead of testing the direct effect of corporate governance on the firm’s market value, it is important to understand the causes of the lower quality of accounting earnings. This thesis contributes to the literature by increasing knowledge about the extent of the earnings management – measured as the extent of discretionary accruals in total disclosed earnings - and its determinants across the Transitional European countries. The thesis comprises of three essays of empirical analysis of which first two utilize the data of Russian listed firms whereas the third essay uses data from 10 European economies. More specifically, the first essay adds to existing research connecting earnings management to corporate governance. It testifies the impact of the Russian corporate governance reforms of 2002 on the quality of disclosed earnings in all publicly listed firms. This essay provides empirical evidence of the fact that the desired impact of reforms is not fully substantiated in Russia without proper enforcement. Instead, firm-level factors such as long-term capital investments and compliance with International financial reporting standards (IFRS) determine the quality of the earnings. The result presented in the essay support the notion proposed by Leuz et al. (2003) that the reforms aimed to bring transparency do not correspond to desired results in economies where investor protection is lower and legal enforcement is weak. The second essay focuses on the relationship between the internal-control mechanism such as the types and levels of ownership and the quality of disclosed earnings in Russia. The empirical analysis shows that the controlling shareholders in Russia use their powers to manipulate the reported performance in order to get private benefits of control. Comparatively, firms owned by the State have significantly better quality of disclosed earnings than other controllers such as oligarchs and foreign corporations. Interestingly, market performance of firms controlled by either State or oligarchs is better than widely held firms. The third essay provides useful evidence on the fact that both ownership structures and economic characteristics are important factors in determining the quality of disclosed earnings in three groups of countries in Europe. Evidence suggests that ownership structure is a more important determinant in developed and transparent countries, while economic determinants are important determinants in developing and transitional countries.

Case study: Mastering the governance of technology

Case study on how the Heart of Worcestershire College is leading a project with four other colleges to support college governors in making confident, effective and well-informed decisions on the investment, innovation and development of technology use to support learning.

Corporate document mining for technology intelligence: An analysis of needs, utilization and possibilities

This paper focuses on document data, one of the most significant sources for technology intelligence. To help organisations use their knowledge in documents effectively, this research aims to identify what organizations really want from documents and what might be possible to obtain from them. The research involves a literature review, a series of in-depth/on-site interviews and a descriptive analysis of document mining applications. The output of the research includes: a document mining framework; an analysis of the current condition of document mining in technology-based organisations together with their future requirements; and guidelines for introducing document mining into an organisation along with a discussion on the practical issues that are faced by users. Copyright © 2011 Inderscience Enterprises Ltd.

History repeats itself: The failure of rational choice models in corporate governance

Marnet, Oliver, 'History repeats itself: The failure of rational choice models in corporate governance', Critical Perspectives on Accounting (2005) 18(2) pp.191-210 RAE2008

Initial losses, corporate governance and earnings management

This thesis examines the relationship between initial loss events and the corporate governance and earnings management behaviour of these firms. This is done using four years of corporate governance information spanning the report of an initial loss for companies listed on the UK Stock Exchange. An industry- and sizematched control sample is used in a difference-in-difference analysis to isolate the impact of the initial loss event during the period. It is reported that, in general, an initial loss motivates an improvement in corporate governance in those loss firms where a relative weakness existed prior to the loss and that these changes mainly occur before the initial loss is announced. Firms with stronger (i.e. better quality) corporate governance have less need to alter it in response to the loss. It is also reported that initial loss firms use positive abnormal accruals in the year before the loss in an attempt to defer/avoid the loss — the weaker corporate governance the more likely is it that loss firms manage earnings in this manner. Abnormal accruals are also found to be predictive of an initial loss and when used as a conditioning variable, the quality of corporate governance is an important mitigating factor in this regard. Once the loss is reported, loss firms unwind these abnormal accruals although no evidence of big-bath behaviour is found. The extent to which these abnormal accruals are subsequently unwound are also found to be a function of both the quality of corporate governance as well as the severity of the initial loss.

Making sense of health information technology implementation: A qualitative study protocol.

BACKGROUND: Implementing new practices, such as health information technology (HIT), is often difficult due to the disruption of the highly coordinated, interdependent processes (e.g., information exchange, communication, relationships) of providing care in hospitals. Thus, HIT implementation may occur slowly as staff members observe and make sense of unexpected disruptions in care. As a critical organizational function, sensemaking, defined as the social process of searching for answers and meaning which drive action, leads to unified understanding, learning, and effective problem solving -- strategies that studies have linked to successful change. Project teamwork is a change strategy increasingly used by hospitals that facilitates sensemaking by providing a formal mechanism for team members to share ideas, construct the meaning of events, and take next actions. METHODS: In this longitudinal case study, we aim to examine project teams' sensemaking and action as the team prepares to implement new information technology in a tiertiary care hospital. Based on management and healthcare literature on HIT implementation and project teamwork, we chose sensemaking as an alternative to traditional models for understanding organizational change and teamwork. Our methods choices are derived from this conceptual framework. Data on project team interactions will be prospectively collected through direct observation and organizational document review. Through qualitative methods, we will identify sensemaking patterns and explore variation in sensemaking across teams. Participant demographics will be used to explore variation in sensemaking patterns. DISCUSSION: Outcomes of this research will be new knowledge about sensemaking patterns of project teams, such as: the antecedents and consequences of the ongoing, evolutionary, social process of implementing HIT; the internal and external factors that influence the project team, including team composition, team member interaction, and interaction between the project team and the larger organization; the ways in which internal and external factors influence project team processes; and the ways in which project team processes facilitate team task accomplishment. These findings will lead to new methods of implementing HIT in hospitals.