Martin Walker

Abstract This paper argues that the optimal design of accounting standards may depend on the institutional characteristics of the political and economic system. There are several varieties of capitalism, and it is not obvious which of these varieties is best. Moreover, the existence of different varieties of capitalism... [view more]

Abstract

This paper argues that the optimal design of accounting standards may depend on the institutional characteristics of the political and economic system. There are several varieties of capitalism, and it is not obvious which of these varieties is best. Moreover, the existence of different varieties of capitalism arguably promotes economic progress. This being the case the paper urges a cautious approach to the imposition of a single set of global accounting standards for all companies. The forced adoption of single form of accounting runs the risk of severely restricting the different forms of capitalism that can develop. It also privileges one particular way of doing business over alternative forms that currently exist or, more importantly, may exist in the future. In effect the forced adoption of a single form of accounting can be viewed as a form of restrictive practice that prevents alternative and superior ways of doing business from taking shape. International accounting standards optimised for stock market based capitalism are not necessarily optimal for other forms of capitalism and, since stock market capitalism has lost credibility as a way of doing business, the world may be better served by encouraging alternative forms of capitalism to develop with accounting standards tailored to their needs.

John O.S. Wilson; Barbara Casu; Claudia Girardone; Philip Molyneux

Abstract This paper presents a review of the recent banking literature centred on the core themes of performance, risk and governance of financial institutions. We write this review against the backdrop of the recent financial crisis and the major changes it caused to banking sectors in many countries. ... [view more]

Abstract

This paper presents a review of the recent banking literature centred on the core themes of performance, risk and governance of financial institutions. We write this review against the backdrop of the recent financial crisis and the major changes it caused to banking sectors in many countries. Several themes emerge, but the overarching issue relates to the need to better understand bank risk-taking incentives and the implications for systemic stability. Specifically, there is a need for more work on: the role of safety net subsidies and how these relate to systemic risk; financial innovation and the adoption of new products and processes; and how innovative behaviour links to risk-taking, market returns and contagion. Future research could also be directed to provide a better understanding of the inter-connections between competition, capital, profitability, liquidity and risk.

Mahmoud Al-Akra; Ian A. Eddie; Muhammad Jahangir Ali

Abstract This paper examines the influence of accounting disclosure regulation, governance reforms and ownership changes, resulting from privatisation, on mandatory disclosure compliance of a sample of 80 non-financial, listed Jordanian companies for the years 1996 and 2004. Employing two checklists based on the International Financial Reporting ... [view more]

Abstract

This paper examines the influence of accounting disclosure regulation, governance reforms and ownership changes, resulting from privatisation, on mandatory disclosure compliance of a sample of 80 non-financial, listed Jordanian companies for the years 1996 and 2004. Employing two checklists based on the International Financial Reporting Standards (IFRS) extant in the years 1996 and 2004, we find that disclosure compliance with the IFRS is significantly higher in 2004 than that in 1996. Our multiple regression results indicate that disclosure regulation reforms produced the most significant influence on mandatory disclosure compliance. Further, governance reforms through the mandate of audit committees emerged as a significant determinant of compliance with mandatory disclosure requirements.

Shamharir Abidin; Vivien Beattie; Alan Goodacre

Abstract This paper presents evidence on audit market concentration and auditor fee levels in the UK market in the crucial period of structural change following the PricewaterhouseCoopers’ (PwC) merger and encompassing Andersen’s demise (1998–2003). Given the current interest in auditor choice, analysis is also ... [view more]

Abstract

This paper presents evidence on audit market concentration and auditor fee levels in the UK market in the crucial period of structural change following the PricewaterhouseCoopers’ (PwC) merger and encompassing Andersen’s demise (1998–2003). Given the current interest in auditor choice, analysis is also undertaken at the individual audit firm level and by industry sector. There is evidence of significant upward pressure on audit fees since 2001 but only for smaller auditees. Audit fee income for top tier auditors (Big 5/4) did not change significantly while the number of auditees fell significantly, consistent with a move towards larger, less risky, clients. A decomposition analysis of the aggregate Big 5/4 concentration ratio changes over the period identifies the impact of four distinct consumer-based reasons for change: leavers; net joiners; non-par auditor switches; and (only for the audit fees measure) audit fee changes. Andersen’s demise markedly reduced the level of inequality among the top tier firms but PwC retained its position as a ‘dominant firm’. On switching to the new auditor, former Andersen clients experienced an initial audit fee rise broadly in line with inflation, with no evidence of fee premia or discounting. They also reported significantly lower NAS fees, consistent with audit firms and auditees responding to public concerns about perceptions of auditor independence. There is no general evidence of knowledge spillover effects or cross-subsidisation of the audit fee by NAS. The combined findings provide no evidence to indicate that recent structural changes have resulted in anticompetitive pricing; the key concerns remain the lack of audit firm choice and issues concerning the governance and accountability of audit firms.

A. Cornelia Beck; David Campbell; Philip J. Shrives

Abstract A number of previous studies have utilised content analysis as a method for analysing environmental reporting. In this study, a method, devised by the authors and capable of both mechanistic and interpretative narrative interrogation is presented. By adopting a matrix approach to environmental narratives, multiple information ... [view more]

Abstract

A number of previous studies have utilised content analysis as a method for analysing environmental reporting. In this study, a method, devised by the authors and capable of both mechanistic and interpretative narrative interrogation is presented. By adopting a matrix approach to environmental narratives, multiple information characteristics can be taken into account when analysing disclosures. The method developed in this paper (termed CONI or consolidated narrative interrogation) provides a measure of information diversity, information content and volume. The content analysis instrument facilitates data capture inaccessible to less penetrating research instruments.

The joint objectives of this paper are to report on the development of CONI and to demonstrate its capacity to extend the capability of content analysis methods. In particular, the paper demonstrates the utility of CONI through the application to a matched sample of 14 pairs of companies from the United Kingdom and Germany over a period of five years. Findings include the observation that information diversity has broadened over time. The study also notes the dominance of narrative over numerical content with little disclosure containing comparative or contextualised numerical information. There were few significant differences in environmental reporting between the two countries. The paper concludes with suggested opportunities for future research using the CONI research instrument.

Ataur Belal; Stuart Cooper; Robin Roberts