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This paper explores the relationship between foreign direct investments and financial reporting changes via financial development in 12 Latin American countries during the period from 1997 to 2010.

In order to control the possible endogeneity problem, the Generalized Method of Moments (GMM) estimation technique has been conducted using country-level panel data obtained from the World Development Indicators website.

The empirical analyses provide evidence that international accounting standards have a significant effect on foreign direct investments. However, financial development associated with such standards reduces this positive effect. This is an important finding, suggesting that investors are likely to prefer portfolio to direct investments in Latin American financial markets that require or permit the use of international accounting standards.

The conclusions that have been drawn from this study are important for investors, creditors, and regulators. Although international accounting standards appear to affect foreign investments, there could be a lack of adaptation of these standards to specific economic environments due to cultural, educational, and economic factors. Therefore, firms, regulators, professional organizations, and accounting firms should make necessary arrangements so that the benefits of using these standards increase their costs.

The study contributes to the international accounting literature by examining the effects of international accounting standards and financial development on foreign direct investments in Latin America.

Purpose – This study examines the relationship between Big Four audit firm country-level market shares and audit fees across a sample of nine emerging economies: Argentina, Brazil, Chile, Hong Kong, Israel, Korea, Mexico, South Africa, and Taiwan.

Design/methodology/approach – First, auditor market share is calculated as a percentage of client sales based on all publicly traded companies in each of the sample countries during the period 2002–2005. Next, Audit Analytics is used to obtain audit fee data for a set of foreign companies listed on a primary U.S. exchange. A final sample of 483 client-year observations is included in the audit fee regression analysis.

Findings – After controlling for other factors related to audit pricing, Big Four auditors with dominant country-level market shares earn a fee premium of approximately 27% over competitor firms.

Originality/value – These results suggest that individual Big Four firm reputations, as measured by fee premiums, are not homogeneous across countries. Rather, it appears the largest audit firms are associated with quality-differentiated services and thus earn higher fees. Although accounting research tends to classify large international accounting firms into a pool of the “Big Four,” these findings indicate that it is important to consider each firm's market share in specific geographic locations when examining questions related to auditor reputation and pricing.

This study focuses on a survey of chief financial officers (CFOs) in public firms in Japan concerning the following six points: the importance of the definition earnings quality; higher quality earnings; the determinants of earnings quality; prevalence, magnitude, and motivation of earnings management; accounting that influences earnings quality; and misrepresenting of earnings. The results are following: first, Japanese CFOs define earnings quality as earnings accurately reflecting economic reality, earnings accurately reflecting the results of operations, and earnings backed by cash flows, earnings sustainability, recurring, and consistent, and earnings reflecting long-term trend importance. Second, Japanese firms consider earnings that reflect consistent reporting choices over time as higher quality. They do not consider that earnings having accruals that are eventually realized as cash flow as higher earnings quality. Third, Japanese CFOs indicate that 30% of earnings quality is impacted by firm characteristics such as firm’s business model, industry, and macroeconomic conditions. Surprisingly, the influence of the board of directors is greater than the impact of their internal controls. Fourth, as for the determinants of earnings quality, CFOs consider that more than 70% of Japanese CFOs do not allow the discretion and that accounting standards limit their ability to report higher earning quality. Fifth, Japanese CFOs consider that higher earnings are influenced by accounting principles such as policies that match expenses with revenues and policies that rely on fair value accounting as much as possible. Sixth, CFOs themselves predict that 50% of Japanese firms use discretions and that they use 20% of earnings per share (EPS). Since there is inside and outside pressure to hit earnings benchmarks, Japanese firms possess the motivation to use earnings to misrepresent economic performance, Japanese managers see a red flag when generally accepted accounting principle’s earnings do not correlate with cash flow from operations.

The study this chapter reports focuses on how network theory contributes to the understanding of the internationalization process of SMEs and measures the effect of network capability on performance in international trade and has three research objectives.

The first objective of the study relates to providing new insights into the international market development activities through the application of a network perspective. The chapter reviews the international business literature to ascertain the development of thought, the research gaps, and the shortcomings. This review shows that the network perspective is a useful and popular theoretical domain that researchers can use to understand international activities, particularly of small, high technology, resource-constrained firms.

The second research objective is to gain a deeper understanding of network capability. This chapter presents a model for the impact of network capability on international performance by building on the emerging literature on the dynamic capabilities view of the firm. The model conceptualizes network capability in terms of network characteristics, network operation, and network resources. Network characteristics comprise strong and weak ties (operationalized as foreign-market entry modes), relational capability, and the level of trust between partners. Network operation focuses on network initiation, network coordination, and network learning capabilities. Network resources comprise network human-capital resources, synergy-sensitive resources (resource combinations within the network), and information sharing within the network.

The third research objective is to determine the impact of networking capability on the international performance of SMEs. The study analyzes 11 hypotheses through structural equations modeling using LISREL. The hypotheses relate to strong and weak ties, the relative strength of strong ties over weak ties, and each of the eight remaining constructs of networking capability in the study. The research conducts a cross-sectional study by using a sample of SMEs drawn from the telecommunications industry in Ireland.

The study supports the hypothesis that strong ties are more influential on international performance than weak ties. Similarly, network coordination and human-capital resources have a positive and significant association with international performance. Strong ties, weak ties, trust, network initiation, synergy-sensitive resources, relational capability, network learning, and information sharing do not have a significant association with international performance. The results of this study are strong (R2=0.63 for performance as the outcome) and provide a number of interesting insights into the relations between collaboration or networking capability and performance.

This study provides managers and policy makers with an improved understanding of the contingent effects of networks to highlight situations where networks might have limited, zero, or even negative effects on business outcomes. The study cautions against the tendency to interpret networks as universally beneficial to business development and performance outcomes.

Accumulating evidence suggests that Team-member exchange (TMX) influences employee work attitudes and behaviours separately from the effects of leader-member exchange (LMX). In particular, little is known of the effect of LMX differentiation (in-group versus out-group) as a process of social exchange that can, in turn, affect TMX quality. To explore this phenomenon, this chapter presents a multi-level model of TMX in organizations, which incorporates LMX differentiation, team identification, team member affect at the individual level, and fairness of LMX differentiation and affective climate at the group-level. We conclude with a discussion of the implications of our model for theory, research, and practice.

This article begins with a brief reading of the state of the practice of empirical social science research on measurement before proceeding to the discussion of an exemplary instance of this researcher's ethnographic effort to improve indicators of social capital formation. Given the central role measurement plays in social science research, it is appropriate, that a volume on methodological innovations in ethnography would contain a chapter about the relationship of ethnography to measure development. However, it is worth acknowledging that the line of argumentation advanced in this chapter is unconventional. The central tenant of this chapter – that ethnography has much to offer to the field of measurement and that ethnographers ought to take the contribution that they have the potential to make to the field of measurement seriously – at present might be thought to have little agreement either among those researchers whose primary focus is measurement or among ethnographers. This chapter contends that the features and strengths of ethnography specifically, and qualitative research more generally, makes it uniquely suited to contribute to the development of new indicators and the improvement of existing indicators. This chapter modestly hopes to encourage discussion of this contention and illustrate how this author sees his own ethnographic research into indicators of social capital formation as an attempt to address a pressing methodological dilemma within the field, more general of social scientific measure development.