Powering innovation through tax concessions : the changing research and development tax incentives

The changing R&D Tax Concession has been touted as the biggest reform to business innovation policy in over a decade. But, is it a changing tax for changing times? This paper addresses this question and further asks ‘what’s tax got to do with it?’. To answer this question, the paper argues that rather than substantive tax reform, the proposed measures simply alter the criteria and means by which companies become eligible for a Federal Government subsidy for qualifying R&D activity. It further argues that when considered as part of the broader innovation agenda, the R&D Tax Concession should be evaluated as a government spending program in the same way as any direct spending on innovation. When this is done, the tax regime is arguably only the administrative policy instrument by which the subsidy is delivered. However, it is proposed that this may not be best practice to distribute those funds fairly, efficiently, and without distortion, while at the same time maintaining adequate government control and accountability. Finally, in answering the question of ‘what’s tax got to do with it?’ the paper concludes that the answer is ‘very little’.

Corporate profit and impression management in developing markets

In this study, we examine how organisations in Fiji communicate or legitimise their profit. We base the need for understanding this phenomenon on the following premise. Organisations are part of a wider society, and in competition for scarce resources. Organisations obtain the rights to consume resources upon conception, but must continually legitimise their rights of existence and the need to access the resources. Legitimacy is the ability to continue to justify one’s authority to exist in a society. Organisations rights to resources are contractual, and have a moral obligation to act in a responsible manner and justify their outcomes, actions, and activities to external stakeholders. Such justifications would be an attempt at legitimizing their existence by some form of impression management. Impression management refers to the process by which individuals attempt to influence the impression of others (Melo et al. 2009). In corporate reporting, impression management occurs when management selects, display, and presents that information in a manner that distorts readers’ perceptions of corporate achievements (Neu 1991; Patten 2002), and is managed best through disclosures (O’Donovan 2002). In developing economies, there is significant Government protection that creates near-monopoly sectors and industries. The rendered protection permits organisations to provide essential services to the community at reasonable costs. Organisations in these sectors and industries have an ominous need to legitimise their position and actions. The bond between the organisations and the society is much stronger, making organisations devote more effort in communicating their activities. Protection permits organisations to make reasonable profits to sustain their operations. Society may not accept abnormal profits from operational efficiencies. Profit is fundamental to the society’s perception of an organisation, amplifying the need for the firm to justify a level of profit. Abnormal profit for organisations construes bad news, and organisations would make relevant disclosures to manage stakeholder impressions on profit (Patten 2002). Organisations can manage impressions by disclosing information in a particular way. That is, organisations would want to put the impression that the abnormal profit is justified and the society will obtain its benefits in future. Such form of impression management requires unambiguous disclosure of information. The readability of corporate disclosures is an important indicator of organisational abnormal profit-related legitimacy efforts in developing economies.

XBRL : the future of financial reporting and a catalyst for capital market development

There has never been a better time to strengthen financial reporting in Fiji. With increased interest shown by prospective companies in capital market participation, the pressing problems in the public sector reporting and accountability and global emphasis on the increasing need to strengthen the corporate governance structure, this is perhaps the opportune time to consider the potential of XBRL.

Creating and evaluating IT-related business value in developing markets : part 1

There is no doubt that information technology (IT) resources are important for organisations in any jurisdiction to manage their processes. Organisations consume considerable financial resources to acquire and manage their IT resources with various IT governance structures. Investment in IT, thus, is a strategic necessity. IT resources, however, do not contribute fully to business value on their own. Business value considers performance impacts of resources at various organisational levels (e.g., processes and firm levels). ITs are biased resources in that they require some form of manipulation to attain their maximum value. While we know that IT resources are important, a deeper understanding on two aspects of use of IT resources in organisations is important. First, is how to leverage the IT resources to attain its maximum value, and second, is where to evaluate IT-related business value in the organisation’s value chain. This understanding is important for organisation to sustain their operations in an ever-changing business environment. We address these issues in two parts. This paper discusses the first aspect of ways in which organisations can create and sustain their IT-related business value.

Creating and evaluating IT-related business value in developing markets - Part 2

A deeper understanding on two aspects of use of IT resources in organisations is important to ensure sustainable investment in these IT resources. The first is how to leverage the IT resources to attain its maximum value. We discussed this aspect of use of IT resources in part 1 of this series. This discussion suggested a complementary approach as a first stage of IT business value creation, and dynamic capabilities approach to secure sustainable IT-related business value from the IT resources. The second important aspect of IT business value is where to evaluate IT-related business value in the organisations value chains. This understanding is important for organisations to ensure appropriate accountability of the investment and management of IT resources. We address this issue in this second part of the two part series.

Accounting at home in developing economies : Current practices and implications for the accounting professional

We determine the extent of accounting at home in developing economies in this research. We then consider the role of the accounting profession may have in promoting accounting values at home. A language of business, accounting today plays a fundamental support role within the business community to evaluate the impact past decisions, and foresees directions for future initiatives. Sound accounting practices are fundamental to ensure symmetrical information dissemination across various stakeholders. Accounting literature has sought to investigate a number of questions that attempt to improve the practice of accounting in the corporate world. Equally, we must obtain adequate understanding of how we use accounting in our everyday life, and how accounting could assist the people most affected by the effects of accounting scandals, economic conditions, and corporate collapses.

Profit and organisational legitimacy in an emerging market

While there is common acknowledgement that the main aim of organisations is to maximise shareholder wealth, firms also have the obligation to manage the needs of a broader group of stakeholders as these firms are a product of social creation. In this study, we test the notion that the concept, profit, is fundamental to society’s perception of the firm in an emerging market, and the need for a firm to legitimise a level of profit. We evaluate the relationship between the readability of various components of corporate annual reports and the level of profit, and we also take into account the nature of disclosure (mandatory and non-mandatory), the size of the firm and the nature of setup (public enterprises and publicly listed companies). Our findings suggest that, as with developed markets, in emerging markets profit is indeed an important determinant of the nature of operations of a firm, and that firms consider readability of their disclosures in attempting to legitimise a level of profit.

Business research in virtual worlds : possibilities and practicalities

Purpose – It is predicted that virtual business and related research possibilities will expand significantly. In this context, the aim of this paper is to use insights from a virtual research project to present a theoretically-informed toolbox of practical suggestions to guide the conduct of virtual world business research. Design/methodology/approach – Archival evidence is presented, and data from a study conducted in Second Lifew in 2007 is interpreted through Llewellyn’s framework (physical, structural, agential, cultural and mental dimensions). Findings – With the burgeoning of virtual business applications, appropriate systems that encompass the dynamics of both the real and the virtual will need to be developed by and for accountants, auditors and business professionals. Researchers of virtual business activities will need to adapt to the physical, structural, agential, cultural and mental dimensions unique to virtual worlds. Research limitations/implications – While based on reflections from a single study in Second Life, this paper identifies possibilities for future virtual research on issues of accountability and accounting relating to virtual worlds. Practical implications – The practical toolbox will assist virtual researchers to deal with the possibilities and practicalities of conducting research in virtual worlds. Originality/value – Despite the proliferation of virtual worlds, predictions of virtual business applications, and consequent accountability and accounting implications, there is a paucity of academic literature on conducting business research in virtual settings. This prescient paper develops a conceptual framework to guide the conduct of research in virtual worlds, and identifies the unique opportunities and challenges they present.

Who's asking for what? Fundraising and leadership in Australian nonprofits

The nonprofit funding landscape is in flux. Many organisations are having to think differently and develop fresh skills either to enter the fundraising market or to cope better with rising competition for community and corporate support. This new reality affects boards, CEOs and fundraisers alike. Against this backdrop, our exploratory study aimed to build an evidence base and spark more discussion about: - the role Australian nonprofit CEOs and boards play in supporting fundraising/development; - current engagement levels; and - perceptions of leadership in fundraising from two possibly contrasting perspectives: NP leaders (board members and CEOs); and fundraisers. This research has been supported by the Perpetual Foundation, the EF and SL Gluyas Trust and the Edward Corbould Charitable Trust under the management of Perpetual Trustee Company Ltd.

Securities market regulators’ use of the ‘please explain’ queries sanction and its power of compliance

The aim of this study is to investigate the compliance impact of price queries issued by a securities market operator to its participating firms. Market operators in Australia and New Zealand, such as the Australian Securities Exchange and the New Zealand Securities Exchange, have the regulatory power in their rules to issue queries to its market participants to explain unusual fluctuations in trading price or volume in the market. The operator will issue a price query where it believes that the market has not been fully informed as to price relevant information. Responsive regulation has informed much of the regulatory debate in securities laws in our region. We posit that price queries are one strategy that a market operator can use in communicating its enforcement expectations to its stakeholder. However, whilst responsive regulation informs regulatory choices, an alternate view seeks to explain why participants respond to these regulatory strategies, and we use disclosure behaviour after price queries to test compliance behaviour

Corporate governance and risk management : the role of risk management and compensation committees

This paper examines the role of compensation and risk committees in managing and monitoring the risk behaviour of Australian financial firms in the period leading up to the global financial crisis (2006–2008). This empirical study of 711 observations of financial sector firms demonstrates how the coordination of risk management and compensation committees reduces information asymmetry. The study shows that the composition of the risk and compensation committees is positively associated with risk, which, in turn, is associated with firm performance. More importantly, information asymmetry is reduced when a director is a member of both the risk and compensation committees which moderate the negative association between risk and firm performance for firms with high risk.

Gender-diverse boards and properties of analyst earnings forecasts

Using a sample of 2,200 US listed firm year observations (2001-2007)this study shows a positive (negative) relation between female participation in corporate boards and analysts' earnings forecast accuracy (dispersion), after controlling for earnings quality, corporate governance, audit quality, stock price informativeness and potential endogeneity. Our findings are important as they suggest that board diversity adds to the transparency and accuracy of financial reports such that earnings expectations are likely to be more accurate for these firms.