Labour rights as human rights : workers' safety at work in Australian-based supply chains

The increase of buyer-driven supply chains, outsourcing and other forms of non-traditional employment has resulted in challenges for labour market regulation. One business model which has created substantial regulatory challenges is supply chains. The supply chain model involves retailers purchasing products from brand corporations who then outsource the manufacturing of the work to traders who contract with factories or outworkers who actually manufacture the clothing and textiles. This business model results in time and cost pressures being pushed down the supply chain which has resulted in sweatshops where workers systematically have their labour rights violated. Literally millions of workers work in dangerous workplaces where thousands are killed or permanently disabled every year. This thesis has analysed possible regulatory responses to provide workers a right to safety and health in supply chains which provide products for Australian retailers. This thesis will use a human rights standard to determine whether Australia is discharging its human rights obligations in its approach to combating domestic and foreign labour abuses. It is beyond this thesis to analyse Occupational Health and Safety (OHS) laws in every jurisdiction. Accordingly, this thesis will focus upon Australian domestic laws and laws in one of Australia’s major trading partners, the Peoples’ Republic of China (China). It is hypothesised that Australia is currently breaching its human rights obligations through failing to adequately regulate employees’ safety at work in Australian-based supply chains. To prove this hypothesis, this thesis will adopt a three- phase approach to analysing Australia’s regulatory responses. Phase 1 will identify the standard by which Australia’s regulatory approach to employees’ health and safety in supply chains can be judged. This phase will focus on analysing how workers’ rights to safety as a human right imposes a moral obligation on Australia to take reasonablely practicable steps regulate Australian-based supply chains. This will form a human rights standard against which Australia’s conduct can be judged. Phase 2 focuses upon the current regulatory environment. If existing regulatory vehicles adequately protect the health and safety of employees, then Australia will have discharged its obligations through simply maintaining the status quo. Australia currently regulates OHS through a combination of ‘hard law’ and ‘soft law’ regulatory vehicles. The first part of phase 2 analyses the effectiveness of traditional OHS laws in Australia and in China. The final part of phase 2 then analyses the effectiveness of the major soft law vehicle ‘Corporate Social Responsibility’ (CSR). The fact that employees are working in unsafe working conditions does not mean Australia is breaching its human rights obligations. Australia is only required to take reasonably practicable steps to ensure human rights are realized. Phase 3 identifies four regulatory vehicles to determine whether they would assist Australia in discharging its human rights obligations. Phase 3 then analyses whether Australia could unilaterally introduce supply chain regulation to regulate domestic and extraterritorial supply chains. Phase 3 also analyses three public international law regulatory vehicles. This chapter considers the ability of the United Nations Global Compact, the ILO’s Better Factory Project and a bilateral agreement to improve the detection and enforcement of workers’ right to safety and health.

How nonprofit boards monitor, judge and influence organisational performance

The law and popular opinion expect boards of directors will actively monitor their organisations. Further, public opinion is that boards should have a positive impact on organisational performance. However, the processes of board monitoring and judgment are poorly understood, and board influence on organisational performance needs to be better understood. This thesis responds to the repeated calls to open the ‘black box’ linking board practices and organisational performance by investigating the processual behaviours of boards. The work of four boards1 of micro and small-sized nonprofit organisations were studied for periods of at least one year, using a processual research approach, drawing on observations of board meetings, interviews with directors, and the documents of the boards. The research shows that director turnover, the difficulty recruiting and engaging directors, and the administration of reporting, had strong impacts upon board monitoring, judging and/or influence. In addition, board monitoring of organisational performance was adversely affected by directors’ limited awareness of their legal responsibilities and directors’ limited financial literacy. Directors on average found all sources of information about their organisation’s work useful. Board judgments about the financial aspects of organisational performance were regulated by the routines of financial reporting. However, there were no comparable routines facilitating judgments about non-financial performance, and such judgments tended to be limited to specific aspects of performance and were ad hoc, largely in response to new information or the repackaging of existing information in a new form. The thesis argues that Weick’s theory of sensemaking offers insight into the way boards went about the task of understanding organisational performance. Board influence on organisational performance was demonstrated in the areas of: compliance; instrumental influence through service and through discussion and decision-making; and by symbolic, legitimating and protective means. The degree of instrumental influence achieved by boards depended on director competency, access to networks of influence, and understandings of board roles, and by the agency demonstrated by directors. The thesis concludes that there is a crowding out effect whereby CEO competence and capability limits board influence. The thesis also suggests that there is a second ‘agency problem’, a problem of director volition. The research potentially has profound implications for the work of nonprofit boards. Rather than purporting to establish a general theory of board governance, the thesis embraces calls to build situation-specific mini-theories about board behaviour.

Compliance with international financial reporting standards (IFRS) and the value relevance of accounting information in emerging stock markets : evidence from Kuwait

Since the 1960s, the value relevance of accounting information has been an important topic in accounting research. The value relevance research provides evidence as to whether accounting numbers relate to corporate value in a predicted manner (Beaver, 2002). Such research is not only important for investors but also provides useful insights into accounting reporting effectiveness for standard setters and other users. Both the quality of accounting standards used and the effectiveness associated with implementing these standards are fundamental prerequisites for high value relevance (Hellstrom, 2006). However, while the literature comprehensively documents the value relevance of accounting information in developed markets, little attention has been given to emerging markets where the quality of accounting standards and their enforcement are questionable. Moreover, there is currently no known research that explores the association between level of compliance with International Financial Reporting Standards (IFRS) and the value relevance of accounting information. Motivated by the lack of research on the value relevance of accounting information in emerging markets and the unique institutional setting in Kuwait, this study has three objectives. First, it investigates the extent of compliance with IFRS with respect to firms listed on the Kuwait Stock Exchange (KSE). Second, it examines the value relevance of accounting information produced by KSE-listed firms over the 1995 to 2006 period. The third objective links the first two and explores the association between the level of compliance with IFRS and the value relevance of accounting information to market participants. Since it is among the first countries to adopt IFRS, Kuwait provides an ideal setting in which to explore these objectives. In addition, the Kuwaiti accounting environment provides an interesting regulatory context in which each KSE-listed firm is required to appoint at least two external auditors from separate auditing firms. Based on the research objectives, five research questions (RQs) are addressed. RQ1 and RQ2 aim to determine the extent to which KSE-listed firms comply with IFRS and factors contributing to variations in compliance levels. These factors include firm attributes (firm age, leverage, size, profitability, liquidity), the number of brand name (Big-4) auditing firms auditing a firm’s financial statements, and industry categorization. RQ3 and RQ4 address the value relevance of IFRS-based financial statements to investors. RQ5 addresses whether the level of compliance with IFRS contributes to the value relevance of accounting information provided to investors. Based on the potential improvement in value relevance from adopting and complying with IFRS, it is predicted that the higher the level of compliance with IFRS, the greater the value relevance of book values and earnings. The research design of the study consists of two parts. First, in accordance with prior disclosure research, the level of compliance with mandatory IFRS is examined using a disclosure index. Second, the value relevance of financial statement information, specifically, earnings and book value, is examined empirically using two valuation models: price and returns models. The combined empirical evidence that results from the application of both models provides comprehensive insights into value relevance of accounting information in an emerging market setting. Consistent with expectations, the results show the average level of compliance with IFRS mandatory disclosures for all KSE-listed firms in 2006 was 72.6 percent; thus, indicating KSE-listed firms generally did not fully comply with all requirements. Significant variations in the extent of compliance are observed among firms and across accounting standards. As predicted, older, highly leveraged, larger, and profitable KSE-listed firms are more likely to comply with IFRS required disclosures. Interestingly, significant differences in the level of compliance are observed across the three possible auditor combinations of two Big-4, two non-Big 4, and mixed audit firm types. The results for the price and returns models provide evidence that earnings and book values are significant factors in the valuation of KSE-listed firms during the 1995 to 2006 period. However, the results show that the value relevance of earnings and book values decreased significantly during that period, suggesting that investors rely less on financial statements, possibly due to the increase in the available non-financial statement sources. Notwithstanding this decline, a significant association is observed between the level of compliance with IFRS and the value relevance of earnings and book value to KSE investors. The findings make several important contributions. First, they raise concerns about the effectiveness of the regulatory body that oversees compliance with IFRS in Kuwait. Second, they challenge the effectiveness of the two-auditor requirement in promoting compliance with regulations as well as the associated cost-benefit of this requirement for firms. Third, they provide the first known empirical evidence linking the level of IFRS compliance with the value relevance of financial statement information. Finally, the findings are relevant for standard setters and for their current review of KSE regulations. In particular, they highlight the importance of establishing and maintaining adequate monitoring and enforcement mechanisms to ensure compliance with accounting standards. In addition, the finding that stricter compliance with IFRS improves the value relevance of accounting information highlights the importance of full compliance with IFRS and not just mere adoption.