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The purpose of this paper is to examine the relationship between firms' value drivers and their intellectual capital (IC).

The health care sector (GICS 35) firms listed in the S&P500 were used to build a research censoring Tobit model by adopting financial data to determine value drivers.

The results of the study show that innovation capital, customer capital and human capital are significant positive drive factors for firms to create more IC and hence more intangible value. Process capital exerts moderating effects on IC; organizations with greater process capital must raise customer capital to enhance intellectual value.

This is the first empirical study that uses a censoring Tobit model and tests of the association between competitive advantage and the value drivers of firms. This research successfully combines management perspectives with financial data to describe the value drivers of firms.

On the health care industry, the paper aims to study the effects of intellectual capital, identify using an input‐process‐output concept of human, customer, innovative and process capitals, on company performances.

From a resource‐based and intellectual capital perspective, the structural path model is applied to financial data to analyze the six‐value creation relationships among the four components of intellectual capital, as well as the causal effects of intellectual capital on company performance.

Empirical findings suggest a significant relationship between intellectual capital and company performance. These results also suggest that innovative capacity and process reformation shall be considered first, and through the human value‐added of human capital, firms can improve their company's performance.

There have been many arguments as to whether intellectual capital is quantitatively measurable. This paper provides a tangible means of quantifying intellectual capital.

Using belief functions, this paper develops a model of the situation of a management team trying to decide if a cost process is in control, or out of control and, thus, in need of investigation. Belief functions allow accounting for uncertainty and information about the cost processes, extending traditional probability theory approaches. The purpose of this paper is to build and investigate the ramifications of that model. In addition, an example is used to illustrate the process.

The purpose of this study is to determine if an earnings forecasting model based on factors hypothesised to result in differential profits across firms (industries) reduces model error relative to the model developed by Ou (1990). Initial research attempting to forecast earnings found that the random walk model, where current year's earnings are the prediction for next year, provides the best forecast of annual earnings (Ball and Watts 1972; Foster 1973; Beaver, Kettler, and Scholes 1970; Albrecht, Lookabill, and McKeown 1977; Brealey 1969). Ou (1990) developed an earnings forecasting model using financial statement information beyond prior years' earnings as the explanatory variables that outperformed the random walk model in predicting annual earnings.

This paper describes the design and implementation of an activity‐based costing (ABC) system for a textile company in Taiwan.

An in‐depth field investigation by collecting and analyzing 39 months of field data, gathering information from files and archives, direct observation, interviews, and statistical analyses was conducted.

First, the company's existing cost system adopted a volume‐based cost driver to allocate overhead costs to products. While the company devised an “equivalent factor” to take production‐complexity into account, the weakness of the metric led to product cost distortions. Second, the existing volume‐based cost system ignores the impact of rework processes on product costs. Third, adding complexity‐related cost drivers to the volume‐based cost driver increases the ability to explain variations in overhead costs. Fourth, the newly designed ABC system incorporates both volume‐based and non‐volume based drivers, which considers the effect of rework on product costs. Fifth, the existing volume‐based cost system overestimates the costs of high‐volume products and underestimates the costs of products with high production‐complexity. Finally, the company still stays at the analysis phase of the ABC system implementation, possibly due to revision of strategy, no linkage to incentives, lack of MIS support, and inadequate inventory control.

The above findings have implications for companies attempting to implement ABC.

This paper extends prior research in the following. First, it reports on the entire process of ABC implementation for a given company, as well as facilitators/impediments in the process. Second, while most prior research tends to focus on success cases, our study presents a failure case, which has implications for practitioners trying to avoid the same mistakes.

Banks are the major suppliers of external funds for companies in China. The purpose of this paper is to examine whether Chinese banks exercise effective monitoring over borrowers in two lending decisions, including loan interest rates and loan renewals.

Using a sample of Chinese public industrial firms from 2000 to 2005, the authors perform multivariate regression analysis to investigate whether banks adjust their loan interest rates and consider loan renewal decisions in response to borrowers financial performance. The authors also examine these bank lending decisions before and after 2003, when the major banking reforms started to take place in China.

A negative relation was found between the loan interest rate spread and the financial performance of borrowers. However, a negative relation was found between loan renewals and the financial performance of borrowers, consistent with firms in financial difficulties being in need of more funding and hence more likely to get its bank loans renewed. Additionally, it was found that the factors banks consider when making loan decisions vary before and after 2003.

The authors' findings suggest that Chinese banks play a limited role in monitoring and disciplining borrowers through adjustments of loan interest rates, and that their loan renewal decisions for firms with poor financial performance highlight banks' financing, instead of monitoring role in this transition economy. These findings provide empirical evidence on bank governance in a transition economy dominated by state‐owned enterprises. The paper contributes to the literature by constructing an alternative loan renewal measure using financial statement information.

This study investigates the time‐series properties of operating cash flows per share and earnings per share for all manufacturing firms on the Compustat Quarterly Industrial tape for which sufficient data are available. Both individually‐identified and “premier” models are compared on the basis of their relative fit and forecasting accuracy. The empirical results suggest that for both accounting variables the individually‐identified models outperform the premier models, although this advantage is larger for earnings, and for forecast horizons beyond one quarter ahead. A major conclusion of the study is that the time‐series properties of cash flows are quite different than those of earnings. In particular, the cash flow series are considerably less predictable, as shown by their relatively high incidence of white‐noise series and relatively large forecast errors.

Accounting studies have attempted to forecast future attributes of firms' financial statements, primarily earnings. These studies typically adopt a cross‐sectional approach in estimating forecasting models, combining firms from different industries in the same model. This cross‐sectional approach implicitly assumes the relations between earnings and the explanatory variables are consistent across industries.

China has hitherto followed the US model of corporate governance, but recent crises suggest that that might not be the model to follow. This paper aims to consider that proposition.

This is a comparative study of US and Chinese systems of corporate governance.

Corporate governance is an alien concept for China. The establishment of the China company law system came later than western nations' corporate law system. Since 1992, China has made substantial progress in several areas of corporate governance. It is well known that for nearly a hundred years the American‐style corporate governance mechanism has been the model of the countries in the world. And China also follows the example of American corporate governance. Against the background of the global financial crisis, it is time to reflect upon the model of corporate governance in China.

The paper invites reflection on existing paths towards good corporate governance in China.