Search results

1 – 10 of over 2000
Article
Publication date: 28 October 1994

Stephen J. Newell, Jerry G. Kreuze and Gale E. Newell

Liabilities associated with environmental matters have become a major concern worldwide. Clearly, environmental impact must be a major element of a corporation’s decision process…

Abstract

Liabilities associated with environmental matters have become a major concern worldwide. Clearly, environmental impact must be a major element of a corporation’s decision process and should be timely reported in its financial statements. The SEC intensely reviews the adequacy of the environmental disclosures of its registrants. This review covers both required environmental disclosures and the adequacy of financial disclosures ingeneral. Despite this scrutiny, SEC Commissioner Roberts believes that accruals of environmental liabilities do not appear in financial statements quickly enough.This study reviewed the annual report environmental disclosures of 645 Forbes 500 firms. The study results revealed that the majority of firms provide no disclosure of environmental issues. The environmental disclosures that are included tend to be limited in terms of their informational content. It is also apparent that certain industries are more likely to include environmental disclosures than are other industries. Given the enormous impact of environmental cleanup costs to companies, the authors suggest that certain environmental issues be disclosed by all firms regardless of industry affiliation.

Details

American Journal of Business, vol. 9 no. 2
Type: Research Article
ISSN: 1935-5181

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Article
Publication date: 21 September 2011

Dalia Marciukaityte and Samuel H. Szewczyk

We examine whether discretionary accruals of firms obtaining substantial external financing can be explained by managerial manipulation or managerial overoptimism. Insider trading…

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Abstract

We examine whether discretionary accruals of firms obtaining substantial external financing can be explained by managerial manipulation or managerial overoptimism. Insider trading patterns and press releases around equity and debt financing suggest that managers are more optimistic about their firms around debt financing. Consistent with earlier studies, we find that discretionary current accruals peak when firms obtain equity financing. However, we also find that discretionary accruals peak when firms obtain debt financing. Moreover, discretionary accruals are higher for firms that rely on debt rather than on equity financing. The results are robust to controlling for firm characteristics, excluding small and distressed firms, and using alternative measures of discretionary accruals. These findings support the hypothesis that managerial overoptimism distorts financial statements of firms obtaining external financing.

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Review of Behavioural Finance, vol. 3 no. 2
Type: Research Article
ISSN: 1940-5979

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Article
Publication date: 8 February 2022

Irwan Trinugroho, Tastaftiyan Risfandy, Mamduh M. Hanafi and Raditya Sukmana

Using the Indonesian setting where the government formally limits the presence of busy commissioners, the authors investigate whether a board containing busy commissioners could…

Abstract

Purpose

Using the Indonesian setting where the government formally limits the presence of busy commissioners, the authors investigate whether a board containing busy commissioners could be beneficial or detrimental for firm performance.

Design/methodology/approach

The authors propose an econometric model focusing on the impact of busy commissioners on the firm's profitability. The authors are also interested in investigating whether the effect is different between small and large firms and between mature and non-mature firms. A sample of 392 Indonesian listed firms from 2014 to 2020 is used in this study.

Findings

The authors find a negative association between busyness and performance and this result is robust across different estimations and econometrics strategies. The authors also document that the negative impact of busy directors diminishes particularly in young and small firms. The authors also find that the impact is more pronounced in state-owned firms.

Practical implications

From a firm point of view, the result suggests that the companies should be aware that appointing busy commissioners in the board structure can detriment market-based performance. The listed firms should also understand that busy commissioners are inefficient, especially if these firms are large, mature and state-owned.

Originality/value

To the best of the authors’ knowledge, this is the first study investigating the relation between busy commissioners and performance by considering age, firm size and state-owned firms as a moderator in a sample of Indonesian listed firms.

Details

International Journal of Emerging Markets, vol. 18 no. 11
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 1 September 1999

Obeua S. Persons

Outlines previous research on the links between R&D expenditure, firm value and executive compensation; and presents a study of the relationship between R&D expenditure and total…

Abstract

Outlines previous research on the links between R&D expenditure, firm value and executive compensation; and presents a study of the relationship between R&D expenditure and total cash executive compensation in the US pharmaceutical and computer/telecommunications industries between 1979 and 1996. Uses pooled cross‐sectional time series regression to find a positive link between compensation, R&D and accounting earnings for both industries over the whole period (although the significance varies for each in different sub‐periods); but mixed results for the relationship with cash flow. Discusses consistency with other research and the implications of the findings.

Details

Managerial Finance, vol. 25 no. 9
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 1 December 2002

Hubert Ooghe and Tine De Langhe

Compares two corporate governance models: the Anglo‐American and the Continental European model. These corporate governance models differ strongly, and the differences are mainly…

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Abstract

Compares two corporate governance models: the Anglo‐American and the Continental European model. These corporate governance models differ strongly, and the differences are mainly due to differences in the business context. The problems arising from separation of ownership from control will thus have to be solved through different mechanisms. One important mechanism is the board of directors. The board composition of 122 companies has been analyzed in a Belgian empirical study. From the tests, finds a significant positive relationship between the number of directors in the board and a range of other factors. Shareholder structure does not seem to have an effect on the size of the board. A second variable concerning the composition of the board, is the percentage of external directors. Finds that the number of external directors differs significantly between companies with a different nationality and between companies that are listed or not. Size, shareholder structure and industry were not related to the percentage of external directors in a company.

Details

European Business Review, vol. 14 no. 6
Type: Research Article
ISSN: 0955-534X

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Article
Publication date: 1 May 1997

Rajiv D. Banker and Alex Thevaranjan

The impact of accounting earnings based compensation contracts an effort allocation is analyzed using an agency‐theoretic model. In this model, the CEO of a publicly traded firm

Abstract

The impact of accounting earnings based compensation contracts an effort allocation is analyzed using an agency‐theoretic model. In this model, the CEO of a publicly traded firm expends effort on operational short‐run activities and strategic long‐run activities. The shareholders desire the CEO to expend more effort in the strategic long‐run activities because the return to shareholders depends more on long‐run than short‐run activities. More specifically, they desire the effort to be allocated between these two activities on the proportion of the sensitivity of stock returns to these two activities. Compensating the CEO based on the stock returns performance measure is shown to induce the CEO to exert the desired proportion of effort in the long‐run activities. Unlike stock returns, accounting earnings are believed to focus more on the short‐run performance of the firm and not reflect the full impact of a CEO's long‐run effort. Compensating the CEO based on accounting earnings, in addition to stock returns, is shown to induce the CEO to expend less than the desired proportion of effort in long‐run activities. As the emphasis placed on accounting earnings relative to stock returns increases, the CEO decreases the proportion of effort expended in long‐run activities. On the positive side, including accounting earnings in the contract increases the total effort that the CEO exerts in short‐run and long‐run activities. The benefit accruing from the increase in total effort more than offsets the dysfunctionality caused by the short‐run focus. More specifically, adding accounting earnings to the incentive contract is shown to increase the expected return to the shareholders. In summary, while accounting earnings cause the CEO to be short‐run focused, their use in the incentive contract improves the firm's performance by motivating the CEO to work harder overall.

Details

Managerial Finance, vol. 23 no. 5
Type: Research Article
ISSN: 0307-4358

Article
Publication date: 2 November 2023

Yeut Hong Tham

This study comprehensively reviews the global literature on busy boards and audit committees.

Abstract

Purpose

This study comprehensively reviews the global literature on busy boards and audit committees.

Design/methodology/approach

Six eight articles on busy boards and audit committees from prominent accounting journals are reviewed and analyzed under the “reputation” and “busyness” premise.

Findings

Most studies advocating the “reputation” hypothesis have the consensus that busy directors have their benefits (knowledge spillovers), particularly regarding sharing their in-depth knowledge, experiences and expertise. This phenomenon is pronounced for younger and IPO firms, which have high advising and financing needs. From the “busyness” perspective, busy directors are too overboard in carrying out their duty effectively and responsibly.

Practical implications

This study identifies future research avenues on busy boards/audit committees and suggests that policymakers and regulators should limit the number of board appointments.

Originality/value

This is the first study to extensively amalgamate research on busy directors and audit committees. It reveals the various proxies used to measure the busyness of board and audit committee members and the consequences of busyness.

Details

Asian Review of Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1321-7348

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Article
Publication date: 1 February 1995

Richard H. Fosberg and Joe F. James

Jensen and Murphy (1990) and others have found a small but statistically significant relationship between firm performance (as measured by change in shareholder wealth or firm

Abstract

Jensen and Murphy (1990) and others have found a small but statistically significant relationship between firm performance (as measured by change in shareholder wealth or firm profits) and executive compensation. In this study we investigate the pay‐ performance relationship further by considering the relationship between an outside measure of firm performance (changes in the firm's bond rating) and the contemporaneous change in the compensation of the firm's CEO. We find that when a firm's bond rating is down‐graded, CEO total compensation declines by a relatively small amount ($165,500) and when a firm's bond rating is upgraded, CEO total compensation increases markedly ($3,202,900). Thus, while a positive pay‐performance relationship exists, the relationship is not symmetric. CEO compensation changes (increases) much more when firm performance improves than it changes (decreases) when firm performance declines. Further, most of the change in CEO compensation occurs in the stock gains (profits from the exercise of stock options) category for both firms experiencing bond rating upgrades and down‐grades.

Details

Managerial Finance, vol. 21 no. 2
Type: Research Article
ISSN: 0307-4358

Article
Publication date: 3 April 2019

Neetu Yadav and Vineet Sehgal

The purpose of this paper is to analyze the content of mission statements of India’s Super 50 companies, selected from Forbes India magazine, on multiple aspects such as…

Abstract

Purpose

The purpose of this paper is to analyze the content of mission statements of India’s Super 50 companies, selected from Forbes India magazine, on multiple aspects such as components, stakeholders’ inclusion, content readability and strategic orientation.

Design/methodology/approach

A total sample of 29 companies was chosen for the study, whose mission statement details were available on their official websites. These firms’ mission statement was rated on the basis of nine selected components of what constitutes a “good mission statement.” Further, industry-level analysis was also carried out to measure significant differences between manufacturing and service industries. Data were analyzed using frequency analysis, average and t-statistics. Gunning Fog index was also calculated to measure content readability.

Findings

The results show that Indian firms largely focus on their customers as major stakeholders while defining their mission and emphasize upon values and philosophy, products or services offered, and integration of technology in production or processes. There is no statistically significant difference identified between the average mean value of components for sample manufacturing and service firms.

Research limitations/implications

The study is cross-sectional in nature; however, a few firms redesign their mission according to need; therefore, a detailed longitudinal study of a few firms could open up new paradigms. The findings are based on sample firms selected from Forbes India, so generalization needs to be done with complete caution.

Originality/value

The study looks ahead of the most popular of David’s (1989) nine crucial components of mission statements, taking into account major shifts in the business environment. It also attempts to fill a contextual research gap by analyzing the mission statements of top Indian firms. Three crucial elements – “strategic decision,” “stakeholder concerns” and “critical success factors” – have been identified for Indian firms that define their mission statement.

Details

Journal of Strategy and Management, vol. 12 no. 2
Type: Research Article
ISSN: 1755-425X

Keywords

Open Access
Article
Publication date: 5 March 2020

Sabine A. Einwiller and Craig E. Carroll

This study aims to reveal the quantity, quality and cultural differences of negative corporate social performance (CSP) disclosures in large firms' corporate social responsibility…

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Abstract

Purpose

This study aims to reveal the quantity, quality and cultural differences of negative corporate social performance (CSP) disclosures in large firms' corporate social responsibility (CSR) reports. Firms are expected to be transparent about the impacts and outcomes of their CSP. A central aspect of transparency is balance, which means disclosing both positive and negative CSP.

Design/methodology/approach

Content analysis was applied to 75 CSR reports of large firms chosen from the Forbes Top 500 list. The firms belong to three cultural clusters: Anglo, Confucian Asia and Germanic/Nordic Europe.

Findings

Firms made few negative CSP disclosures, yet the quantity of negative CSP disclosures varied among cultural clusters. Reports from Germanic/Nordic Europe showed the highest number of negative CSP disclosures, reports from Confucian Asia showed the lowest number and the Anglo cluster's number fell in between. The Asian firms communicated corrective actions more often than firms from the other clusters.

Research limitations/implications

This study focused on negative CSP disclosures in the CSR reports – not omitting negative CSP. The practice of self-laudatory CSR communication decreases the likelihood that relevant stakeholders will believe what firms report about.

Originality/value

Studies on the quality and quantity of negative disclosures are rare; by examining cultural differences, this study contributes to the limited body of knowledge.

Details

Corporate Communications: An International Journal, vol. 25 no. 2
Type: Research Article
ISSN: 1356-3289

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1 – 10 of over 2000