Public Value as Performance: Politicians’ and Managers’ Perspectives on the Importance of Budgetary, Accruals and Non-Financial Information

Purpose
The study contributes to the literature on public value and performance examining politicians’ and managers’ perspectives by investigating the importance they attach to the different facets of performance information (i.e. budgetary, accrual based- and non-financial information (NFI)).

Design/methodology/approach
We survey politicians and managers in all Italian municipalities of at least 80,000 inhabitants.

Findings
Overall, NFI is more appreciated than financial information (FI). Moreover, budgetary accounting is preferred to accrual accounting. Politicians’ and managers’ preferences are generally aligned.

Research limitations/implications
NFI as a measure of public value is not alternative, but rather complementary, to FI. The latter remains a fundamental element of public sector accounting due to its role in resource allocation and control.

Practical implications
The preference for NFI over FI and of budgetary over accruals accounting suggests that the current predominant emphasis on (accrual-based) financial reporting might be misplaced.

Originality/value
Public value and performance are multi-faceted concepts. They can be captured by different types of information and evaluated according to different criteria, which will also depend on the category of stakeholders or users who assesses public performance. So far, most literature has considered the financial and non-financial facets of performance as virtually separate. Similarly, in the practice, financial management tends to be decoupled from non-financial performance management. However, this research shows that only by considering their joint interactions we can achieve an accurate representation of what public value really is.

Uma investigação sobre o impacto dos accruals na variabilidade dos resultados nos diferentes contrastes cross-sectional nas firmas brasileiras de capital aberto

Esta dissertação tem como objetivo principal investigar o impacto dos accruals na variabilidade dos resultados corporativos (EVAR) que influenciam a aplicação prática do income smoothing nas firmas brasileiras de capital aberto. Inicialmente, é demonstrada a importância das demonstrações contábeis que devem ser evidenciadas em cumprimento aos princípios contábeis geralmente aceitos. Sua evidenciação deve representar a realidade econômico-financeira da firma para o processo de tomada de decisão dos acionistas e credores. Porém, em determinados momentos, os gestores se sentem motivados a praticar o gerenciamento dos resultados contábeis na tentativa de reduzir a variabilidade dos lucros por meio da utilização dos accruals. Os accruals correspondem à diferença entre o lucro líquido e o fluxo de caixa operacional. Nesse processo de redução da volatilidade dos resultados, os gestores se utilizam da prática do income smoothing procurando reduzir eventuais distorções no preço das ações da firma. A amostra neste estudo é composta por um grupo de 163 firmas de capital aberto listadas na Bovespa e que apresentaram informações financeiras no intervalo de 2000 a 2007, categorizadas por setores através de dados obtidos na Economática. O modelo estatístico utilizado na pesquisa foi a análise de regressão para explicar os diferentes modelos de cross-sectional. Os resultados desta pesquisa indicam que os accruals são significativos para explicar a variabilidade dos resultados corporativos (EVAR) de empresas brasileiras. Além disso, nossos resultados sugerem que o modelo estrutural de identificação do EVAR nas empresas brasileiras deve ser explicado por variáveis não contábeis diferentes das que são apresentadas pelas firmas norte-americanas.

Estimating the effect of discretionary spending on corruption: evidence from Brazilian municipalities

O presente artigo estuda a relação entre corrupção e discricionariedade do gasto público ao responder a seguinte pergunta: regras de licitação mais rígidas, uma proxy para discricionariedade, resultam em menor prevalência de corrupção nos municípios brasileiros? A estratégia empírica é uma aproximação de regressões em dois estágios (2SLS) estimadas localmente em cada transição de regras de licitação, cuja fonte de dados de corrupção é o Programa de Fiscalização por Sorteio da CGU e os dados sobre discricionariedade são derivados da Lei 8.666/93, responsável por regular os processos de compras e construção civil em todas as esferas de governo. Os resultados mostram, entretanto, que menor discricionariedade está relacionada com maior corrupção para quase todos os cortes impostos pela lei de licitações.

Os efeitos da auditoria independente (externa) sobre a manipulação da informação contábil por parte das OPS brasileiras

A presente pesquisa busca investigar se a auditoria externa (independente) minimiza a propensão à manipulação das informações contábeis - MIC (medidas pelas acumulações discricionárias correntes) por parte das operadoras de plano privado de assistência à saúde, no que tange às informações econômico-financeiras divulgadas à Agência Nacional de Saúde Suplementar. Após revisão bibliográfica sobre qualidade da informação contábil, auditoria e mercado de saúde suplementar, promoveu-se uma pesquisa empírica com informações prestadas à ANS pelas OPS relativas ao período de 2004 a 2006. Para verificar se há diferença significativa no nível de acumulações discricionárias correntes, medidas pelo modelo AWCA e Jones Modificado (1995), entre as informações auditadas (quarto trimestre de cada ano) e as informações nãoauditadas (três primeiros trimestres de cada ano) para as mesmas empresas foi aplicado o teste não-paramétrico de Mann-Whitney. Os resultados indicam que não existem diferenças estatísticas significativas na propensão à manipulação entre as informações contábeis auditadas e não-auditadas, pelo menos no que tange às informações de 2004 a 2006 prestadas pelas OPS à ANS. Adicionalmente, também foram testadas as influências do tipo de modalidade, porte da firma e situação apresentada do patrimônio líquido sobre as acumulações discricionárias correntes. Observou-se que essas três variáveis influenciam em maior ou menor grau na manipulação da informação contábil gerada pelas OPS à ANS. Neste contexto, as seguintes características sobre a maior propensão a MIC foram diagnosticadas: Cooperativa Odontológica e a Medicina de Grupo (Modalidade); Pequeno (Porte da Firma); e Passivo a Descoberto ou PL Próximo de Zero (Situação do Patrimônio Líquido). Ao passo que as características relacionadas à menor propensão de MIC foram: Cooperativa Médica e Filantropia (Modalidade); Médio e Grande (Porte da Firma); Patrimônio Líquido Favorável (Situação do Patrimônio Líquido).

Discretionary-based disclosure: evidence from the Brazilian market

The primary objective of this paper is to identify the factors that explain Brazilian companies level of voluntary disclosure. Underpinning this work is the Discretionary-based Disclosure theory. The sample is composed of the top 100 largest non-financial companies listed in the Bolsa de Valores de São Paulo (Brazilian Securities, Commodities, and Futures exchange - BOVESPA). Information was gathered from Financial Statements for the years ending in 2006, 2007, and 2008, with the use of content analysis. A disclosure framework based on 27 studies from these years was created, with a total of 92 voluntary items divided into two dimensions: economic (43) and socio-environmental (49). Based on the existing literature, a total of 12 hypotheses were elaborated and tested using a panel data approach. Results evidence that: (a) Sector and Origin of Control are statistically significant in all three models tested: economic, socio-environmental, and total; (b) Profitability is relevant in the economic model and in the total model; (c) Tobin s Q is relevant in the socio-environmental model and in the total disclosure model; (d) Leverage and Auditing Firm are only relevant in the economic disclosure model; (e) Size, Governance, Stock Issuing, Growth Opportunities and Concentration of Control are not statistically significant in any of the three models.

Discretionary medical reporting of potentially unfit drivers: a questionnaire-based survey in Southeast Switzerland

In Switzerland, every physician has the right to report a patient that is potentially unfit to drive to the licensing authority without violating medical confidentiality. Verified information regarding physicians' attitudes concerning this discretionary reporting and the frequency of such reports are not available. In order to answer these questions, 635 resident physicians were sent a questionnaire. The response rate was 52%. On average, the responding physicians--for all specialties--reported 0.31 patients (SD 0.64, 95% CI 0.24-0.38) in the year before the survey and 1.00 patient (SD 1.74, 95% CI 0.81-1.20) in the past 5 years. Seventy-nine percent of the responding physicians indicated knowing the current legal requirements for driving in Switzerland. In applied logistic regression analysis, only two factors correlate significantly with reporting: male sex (odds ratio 5.4) and the specialty "general medicine" (odds ratio 3.4). Ninety-seven percent of the physicians were against abolishing medical discretionary reporting and 29% were in favor of introducing mandatory reporting. The great majority of the questioned physicians supported the discretionary reporting of drivers that are potentially unfit to drive as currently practiced in Switzerland. The importance and the necessity of a regular traffic medicine-related continuing education for medical professionals are shown by the low number of reports per physician.

Separation of Ownership from Control and Discretionary Managerial Behaviour in a Transition Economy

This study was the final stage of a four-year study of managerial behaviour and company performance in Bulgaria and examined the influence of changing ownership and control structures of companies on managerial behaviour and initiative. It provides a theoretical summary of the specific types of ownership, control, governance structures and managerial strategies in the Bulgarian transitional economy during 1992-1996. It combines two theoretical approaches, the property-rights approach to show concentrated property-rights structure and private and majority types of control as determinants of efficient enterprise risk bearing and constrained managerial discretion, and the agency theory approach to reveal the efficient role of direct non-market governance mechanisms over managers. Mr. Peev also used empirical information collected from the Central Statistical office in Bulgaria, three different enterprise investigations of corporatised state-owned enterprises between 1992 and 1994, and his own data base of privatised and private de novo industrial companies in 1996-1996. The project gives a detailed description of the main property-rights structures in Bulgaria at the present time and of the various control structures related to these. It found that there is a strong owner type of control in private and privatised firms, although, contrary to expectations, 100% state -owned enterprises tended to be characterised by a separation of ownership from control, leaving scope for managerial discretion. Mr. Peev predicts that after the forthcoming mass privatisation, many companies will acquire a dispersed ownership structure and there will be a greater separation of ownership from control and potential or inefficient managerial behaviour. The next aspect considered in detail was governance structures and the influence of the generally unstable macroeconomic environment in the country during the period in question. In examining managerial strategies, Mr. Peev divided the years since 1990 into 3 periods. Even in the first period (1990-1992) there were some signs of a more efficient role for managers and between 1992 and 1994 the picture of control structures and different managerial behaviour in state-owned companies became more diversified. Managerial strategies identified included managerial initiatives for privatisation, where managers took initiative in resolving problems of property rights and introducing restructuring measures and privatisation proposals, managerial initiatives for restructuring without privatisation, and passive adjustment and passive management, where managers seek outside services for marketing, finance management, etc. in order to adjust to the new environment. During 1995-1996 some similarities and differences between the managerial behaviour of privatised and state-owned firms emerged. Firstly, the former have undergone many changes in investment and technology, while managers of state-owned companies have changed little in this field, indicating that the private property-rights structure is more efficient for the long-term adaptation of enterprises. In the area of strategies relating to product quality, marketing, and pricing policy there was little difference between managers of private, privatised and state-owned firms. The most passive managerial behaviour was found in non-incorporated state-owned firms, although these have only an insignificant stake in the economy.

Evidências internacionais dos efeitos da atuação de investidores institucionais na anomalia dos accruals

Os investidores institucionais, tais como os fundos de pensão, são entidades que administram recursos de numerosos grupos de pessoas, e que, por isso, tendem a gerir grandes carteiras de investimento e a ter incentivos para se tornar bem informados. Por isso, espera-se que eles sejam bons representantes da classe de investidores sofisticados, ou bem informados, e que o aumento de sua presença no mercado de capitais melhore a velocidade do ajuste do preço, contribuindo para evitar ineficiências do mercado, como, por exemplo, a anomalia dos accruals (Sloan, 1996), que é um atraso na revisão dos preços diante da informação sobre a magnitude dos accruals do lucro. Assim, o objetivo deste estudo é analisar, em diversos países, o impacto da participação de investidores institucionais sobre a anomalia dos accruals. São formuladas quatro hipóteses: (i) a proporção de informações sobre o desempenho futuro da empresa refletida no preço de sua ação é positivamente relacionada com o percentual de participação societária dos investidores institucionais; (ii) quanto maior for o percentual da participação societária de investidores institucionais, maior será a qualidade do lucro; (iii) quanto maior for a value relevance do lucro, maior será a anomalia dos accruals; e (iv) quanto maior for a participação societária dos investidores institucionais, menor será a anomalia dos accruals. Para se atingir os objetivos, a bibliografia sobre investidores institucionais, investidores sofisticados e anomalia dos accruals é analisada e cotejada com a literatura sobre value relevance e qualidade do lucro, em especial com o de Dechow e Dichev (2002). A pesquisa empírica utiliza dados de empresas não financeiras listadas nas bolsas de valores da Alemanha, do Brasil, da Espanha, dos Estados Unidos, da França, da Holanda, da Itália, do Reino Unido e da Suíça, e cobre o período de 2004 a 2013. A amostra contempla entre 2.314 e 4.076 empresas, totalizando entre 15.902 e 20.174 observações, a depender do modelo estimado. São realizadas regressões com dados em painel, uma abordagem de equações aparentemente não relacionadas (Seemingly Unrelated Regression - SUR) e a aplicação do teste de Mishkin (1983). Constata-se que nos Estados Unidos e na Itália os investidores institucionais são mais bem informados que os demais, e que na Alemanha, nos Estados Unidos, na França e no Reino Unido eles exercem um papel de monitoramento, pressionando por lucros de qualidade superior. Não se constata, porém, relação positiva entre value relevance do lucro e anomalia dos accruals, nem entre participação de investidores institucionais e esta anomalia. O estudo enriquece a discussão sobre o mercado ser eficiente a longo prazo, mas apresentar anomalias no curto prazo; enfatiza a importância de o investidor ser capaz de converter informações em previsão e avaliação; discute o vínculo entre o papel de monitoramento dos investidores institucionais e a qualidade do lucro; e avalia a relação entre a atuação destes investidores e o prices lead earnings.

The forgotten CGT events: Are asset revaluation reserve distributions by trustees of discretionary trusts capital gains?

It is the present practice that asset revaluation reserve distributions by trustees of discretionary trusts are not taxed in Australia. Are such distributions not meant to be taxed, or have relevant sections in the Income Tax Assessment Acts been overlooked? This article will review how trustees of discretionary trusts perform asset revaluation reserve distributions. It then challenges the current accepted view that they can be distributed tax-free to discretionary beneficiaries by analysing relevant CGT events, which the authors regard as forgotten events. It will be submitted that a discretionary beneficiary in receipt of an asset revaluation reserve distribution may have a capital gain which is required to be included in its assessable income. This liability for tax is regardless of the government's recent introduction of s 109XA to address the practice of asset revaluation reserve distributions bypassing the operation of Div 7A of the ITAA 1936 with such distributions.

The discretionary role of the line manager in inspiring work engagement and innovative behaviour:a study of social exchange and job resources in the public sector

This thesis is about the discretionary role of the line manager in inspiring the work engagement of staff and their resulting innovative behaviour examined through the lens of Social Exchange Theory (Blau, 1964) and the Job Demands-Resources theory (Bakker, Demerouti, Nachreiner & Schaufeli, 2001). The study is focused on a large British Public Sector organisation undergoing a major organisational shift in the way in which they operate as part of the public sector. It is often claimed that people do not leave organisations; they leave line managers (Kozlowski & Doherty, 1989). Regardless of the knowledge in the literature concerning the importance of the line manager in organisations (Purcell, 2003), the engagement literature in particular is lacking in the consideration of such a fundamental figure in organisational life. Further, the understanding of the black box of managerial discretion and its relationship to employee and organisation related outcomes would benefit from greater exploration (Purcell, 2003; Gerhart, 2005; Scott, et al, 2009). The purpose of this research is to address these gaps with relation to the innovative behaviour of employees in the public sector – an area that is not typically associated with the public sector (Bhatta, 2003; McGuire, Stoner & Mylona, 2008; Hughes, Moore & Kataria, 2011). The study is a CASE Award PhD thesis, requiring academic and practical elements to the research. The study is of one case organisation, focusing on one service characterised by a high level of adoption of Strategic Human Resource Management activities and operating in a rather unique manner for the public sector, having private sector competition for work. The study involved a mixed methods approach to data collection. Preliminary focus groups with 45 participants were conducted, followed by an ethnographic period of five months embedded into the service conducting interviews and observations. This culminated in a quantitative survey delivered within the wider directorate to approximately 500 staff members. The study used aspects of the Grounded Theory (Glaser & Strauss, 1967) approach to analyse the data and developed results that highlight the importance of the line manager in an area characterised by SHRM and organisational change for engaging employees and encouraging innovative behaviour. This survey was completed on behalf of the organisation and the findings of this are presented in appendix 1, in order to keep the focus of the PhD on theory development. Implications for theory and practice are discussed alongside the core finding. Line managers’ discretion surrounding the provision of job resources (in particular trust, autonomy and implementation and interpretation of combined bundles of SHRM policies and procedures) influenced the exchange process by which employees responded with work engagement and innovative behaviour. Limitations to the research are the limitations commonly attributed to cross-sectional data collection methods and those surrounding generalisability of the qualitative findings outside of the contextual factors characterising the service area. Suggestions for future research involve addressing these limitations and further exploration of the discretionary role with regards to extending our understanding of line manager discretion.