Does business model affect accounting choices? An empirical analysis of European listed companies

Financial accounting research increasingly includes business model (BM) constructs, but the ability of financial reporting to capture BM characteristics has not been verified. This study empirically explores the links between BMs and accounting choices by clustering a sample of 103 European listed companies according to an innovative, nonlinear algorithm (self-organizing map) that uses pertinent industrial, strategic, governance, and financial variables to uncover different dimensions of a BM. The authors investigate accounting choices (accounting measurement, accounting treatment, and disclosure level) by companies that belong to the different identified BMs. The analysis of the relations between different company BMs and their accounting choices indicates no significant connections, which offers empirical confirmation of the criticisms regarding the inability of financial reporting to represent (or even consider) a company’s BM. The results suggest further attempt to capture BM in financial reporting, which requires regulators to establish accounting standards that acknowledge the value creation processes of an entity and incentivize managers to represent those processes.     

How do mobile,internet and ICT diffusion affect the banking industry? An empirical analysis

Based on the World Development Indicators data provided by the World Bank, we investigate the effect of information and communication technology (ICT) on the profits and risk of financial distress of the EU 28 banking industry. Specifically, we address the question of whether and how ICT diffusion, adoption and infrastructure (e.g., ATM penetration) affect banking profitability and stability over the period 1995–2015. Our results show that ICT exerts a positive role in improving these performance measures. In addition, we find that overall financial stability in the banking industry is enhanced with the intensive adoption of both IT and financial technologies, which increase the distance to default.     

Impairment or amortization of goodwill? An analysis of CFO perceptions of goodwill accounting

Given the ongoing controversy around the accounting treatment of goodwill and the search by the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) for improvements to goodwill accounting, this study surveys a global sample of 352 chief financial officers (CFOs) to understand their perceptions of adopting a goodwill impairment-only approach compared to an amortization model. More than half of the respondents agree that alternative accounting treatments of impairment testing might provide more useful information. However, almost two thirds still prefer goodwill impairment testing to the amortization process. Theoretically, the study shows that the impairment-only model preference is associated with characteristics on an individual, firm and country level. The results indicate that more expert CFOs and overall CFO perceptions of firms’ economic conditions and the role of external auditors affect preference for the goodwill accounting model. Further, there is evidence that dominant ownership structures and accounting culture affect CFO preferences. The study investigates several areas in which regulators and standard setters can intervene, thereby contributing to the debate on whether to reintroduce the amortization of goodwill.     

Wither or whither London? An application of industry structure analysis

Industry structure analysis provides a tool for managers and leaders to more clearly understand the context in which day-by-day decisions are to be taken. It encourages a systematic analysis of ‘whither an enterprise?’ in the sense of ‘in what direction’ and ‘wither an enterprise?’ in the sense of ‘to what purpose’. Industry structure analysis applied to London reveals those forces which may doom current approaches to the solution to inner city problems to early failure and suggests new areas for the application of effort. As we enter a decade in which economic, political and social upheaval will be the norm, such a tool could be of use in helping managers in other enterprises to chart a surer course through uncertainty.     

Does it pay to be eco? The mediating role of competitive benefits and the effect of ISO14001

Eco-innovation has become an important instrument to help companies reduce their environmental impact and gain a competitive advantage in increasingly competitive environments. Despite recent research conducted in this field, findings concerning the relationship between eco-innovation and firm performance remain conflicting, inconclusive and incomplete. This study aimed to clarify this relationship by incorporating competitive benefits as a mediator between eco-innovation and firm performance. Three core questions are examined: How does eco-innovation influence competitive benefits and firm performance? Do competitive benefits mediate the relationship between eco-innovation and firm performance? How does ISO14001 influence competitive benefits and firm performance? The study finds that competitive benefits mediate and strengthen the relationship between eco-innovation and firm performance. In addition, the results reveal that ISO14001 positively affects competitive benefits and thus leads to greater competitive benefits, while the association between ISO14001 and firm performance is not found to be statistically significant. The paper concludes with a discussion of implications for policy makers and companies, limitations, and future research directions.     

Is outsourcing of intangibles a real source of competitive advantage?

Intangible investments constitute an emerging and important field of management. The objective of this article is to further consider the problem of intangible resource externalization from a theoretical as well as an operational point of view. The first section reviews the problem of defining intangibles; the second section considers the issue of outsourcing intangibles from a theoretical as well as an operational point of view; the third section reviews the practical issues (especially costrelated) of outsourcing, for two main intangible activities: research and development and information technology services (information logistics functions). The fourth section summarizes the main issues and discusses their implications for accounting analysis and practice.     

Increasing offensive or defensive efficiency? An analysis of Italian and Spanish football

This paper analyses technical efficiency of Italian and Spanish football during three recent seasons, to shed light on the sport performance of professional football clubs. To achieve this we have used mathematical optimisation methods, particularly DEA models, which enable the calculation of the frontiers of efficient production. Some of the most interesting results are the following. Firstly, the Spanish league is clearly more homogeneous and competitive than the Italian league. Secondly, to obtain a better classification in the Italian league, it is much more important to improve defensive, rather than offensive, efficiency. The popular maxim holds in Italy: the best attack begins with a good defence. Third, in Spain our analysis supports the idea that to improve the ranking in the league, the best-rewarded strategy consists in improving offensive efficiency playing at home ground, followed by increasing offensive efficiency when playing away from home.     

An ounce of prevention?

While preventive health care is intuitively attractive, both from a disease morbidity and cost of care aspect, it is most effective when the natural history of a disease can be precisely predicted and when there is effective therapy to modify the risk factor. In contrast, if the natural history is uncertain, perhaps due to its multifactorial nature and treatment not entirely effective, there will inevitably be inefficiency in preventive treatment. In this complicated balancing act, the inefficiencies of preventive therapy may be buried beneath the surface, due in part to the method of reporting and perhaps to the enthusiasm for preventive medicine in general. Until we are able to identify more predictive risk factors, there will always be inefficiencies in preventive medicine, and many must be treated for one to benefit. However, the absolute risk reduction and the number needed to treat are useful measures to highlight what can actually be achieved with preventive therapy.     

Decades of research on market entry modes: What do we really know about external antecedents of entry mode choice?

The choice of a mode of market entry is a critical component of the internationalization strategy, and numerous empirical studies have focused on this topic. Prior research, however, has provided mixed empirical evidence and thus, is difficult to interpret and review.This study examines the external antecedents of the choice of entry mode by meta-analyzing data from 72 independent primary studies. We focus on the decision between wholly owned subsidiaries and cooperative entry modes. For each variable, hypotheses about the theoretically expected direction of effect are posited and tested.We find a strong positive relationship between power distance as a cultural trait of the firm's home country and the propensity to establish a wholly owned subsidiary. On the other hand, we find a negative association between country risk, legal restrictions, market growth, and market size and the preference for wholly owned subsidiaries. We extensively discuss the implications of the meta-analytical results and investigate moderating effects of industry type and the time of the study. The relationship between income level of the host country and entry mode depends, to some degree, on the industry type. Service companies exhibit a negative relationship between income level and wholly owned subsidiaries, while manufacturing companies show a positive relationship.     

An Examination of Public Private Academic Partnerships: Does Program Success Enhance University Performance Outcomes?

In response to a steady decline in State funding, universities have become heavily involved in a variety of public private academic partnerships (PPAPs) in such areas as medical research, business incubation, technological commercialization, continuing professional education, and intercollegiate athletics. Despite this trend, research which examines if such partnerships actually enhance university funding is rare within the public organization literature. Given this, we focus on university intercollegiate athletics programs, which represent one of the largest PPAPs ever undertaken by universities, to examine whether PPAP success can potentially enhance university performance outcomes leading to increased funding levels. Such programs represent a PPAP because public, private, and academic entities all come together to form an organization (division 1 football at the bowl subdivision level) which seeks to benefit all three entities through sharing resources and responsibilities. Study results showed that athletic success positively influenced a variety of university performance outcome variables such as enrollments and endowments. While results indicate that PPAP success can enhance university funding, we also suggest modifications that should enhance the chances that PPAPs will be successful.     

Transition management—An analysis of strategic considerations for effective implementation

Today, organizations must deal with change on all fronts. The ability to deal with change may become the yardstick by which future managers are judged. But what do good managers need to know about managing the change process? Management literature contains hundreds of sources dealing with various aspects of change management and there are numerous books and case studies which discuss the complete process. After reviewing this material and testing it against interviews conducted with managers of companies that have undergone change programs, the authors have identified six guidelines to facilitate successful change. These six factors are: the need for a catalyst to initiate change; organizational goals must be set which take into account the impact of technical, political, and cultural factors; transition team is required to guide the change; top management must demonstrate commitment to the change as well as to act as change agents; utilizing employee participation and good communication can help overcome employee resistance; and finally, evaluating the change program is extremely important to the success of present and future change programs.     

Does state ownership really matter? The dynamic alignment of China's resource environment and firm internationalization strategies

Recent research suggests that unequal access to home country institutional resources affects firm internationalization strategies. We add to this debate, based on an analysis of state-owned (SOEs) and non-state-owned (NSOEs) Chinese mining firms, by developing a more dynamic and multi-layered understanding of this interplay. We find that home institutional support can be ownership-based or performance-based, whereby the former benefits SOEs and the latter favors high-performing NSOEs. Combined, these support structures serve as institutional control mechanisms in promoting competition, performance and loyalty to national policies. In addition, they establish a permanent link between firm- and home country-specific assets and incentivize firms to develop dynamic resource access capabilities at home and abroad. Our findings inform our understanding of the firms-institutions nexus and Chinese foreign direct investment dynamics, especially in industries of strategic importance to the state.     

Does Uncertainty of Firing Costs Reduce Hirings?

This paper examines hiring decision under uncertainty of firing costs. We extend the labor demand problem of the firm to account for a random shock that hits the firing cost function. We also consider recursive preferences for the employer in order to separate risk aversion from intertemporal substitution. We find that a rise of the variance of the shock decreases hiring investment if and only if the intertemporal elasticity of substitution is greater than one. The risk aversion parameter does not determine the sign of the uncertainty effect but only its magnitude.     

Does the internet change how we die and mourn? Overview and analysis

The article outlines the issues that the internet presents to death studies. Part 1 describes a range of online practices that may affect dying, the funeral, grief and memorialization, inheritance and archaeology; it also summarizes the kinds of research that have been done in these fields. Part 2 argues that these new online practices have implications for, and may be illuminated by, key concepts in death studies: the sequestration (or separation from everyday life) of death and dying, disenfranchisement of grief, private grief, social death, illness and grief narratives, continuing bonds with the dead, and the presence of the dead in society. In particular, social network sites can bring dying and grieving out of both the private and public realms and into the everyday life of social networks beyond the immediate family, and provide an audience for once private communications with the dead.     

An executive hierarchy analysis of stock options: Does gender matter<Emphasis Type="Italic">?</Emphasis>

This study takes a step forward in addressing the influence of stock options on executive risk-taking behavior, examining the moderating role of the executive hierarchy—CEOs versus non-CEO executives—and the gender effect within these corporate positions. Panel data analysis for matched samples of S&P 1500 listed firms between 2006 and 2011 confirms both hierarchical and gender differences in the relationship between executive stock options (ESOs) and risk taking. The maximum wealth at risk at which risk-increasing behavior changes to risk-reducing behavior—in the inverted U-shaped relationship—is higher for CEOs than for non-CEO executives, while gender differences in the ESO risk-taking effect are stronger at the level of CEOs. Thus, our evidence shows the importance of considering executive’s decision-making freedom (by means of hierarchy) in order to predict risk preferences according to executive gender.     

Does a Supplier's Operational Competence Translate into Financial Performance? An Empirical Analysis of Supplier–Customer Relationships

We conduct an empirical investigation of how a supplier's operational competence, as reflected by outcomes in the areas of quality, cost, delivery, flexibility, and new product development, translates into financial gains from a key customer. In contrast to previous research directed at the firm level, this study focuses on the supplier–customer relationship level. Using survey data from 158 suppliers in the manufacturing industry, we perform structural equation modeling to map out the paths from operational competence to financial performance—via dependencies and cooperative behaviors between suppliers and their customers. This study is the first scholarly attempt to examine the link between suppliers’ operational competencies and financial performance in interorganizational relationships. It is also an early investigation into operational competence as a source of bi‐lateral dependence. Our findings show that the supplier's operational competences increase its customer's dependence by enhancing the value of its products/services. However, the resulting increase in the supplier's power is not leveraged to shape relationship behaviors or capture value from its customer. In contrast, the customer's existing power as a major buyer plays an important role in shaping cooperative behaviors and affecting the supplier's financial performance from the customer relationship.     

Use and misuse of levels of analysis in leadership research: An illustrative review of leader–member exchange

Prior reviews have focused on if leadership literature pays homage to levels of analysis; our purpose is to take stock of how well and in what ways levels issues are implemented in theory and hypotheses formulation, construct conceptualization, measurement, and data analysis. To illustrate these notions, we provide an in-depth review of 163 multi-level empirical leader–member exchange (LMX) and vertical dyad linkage (VDL) studies published between 1972 and 2012. Our findings indicate that the volume of multi-level studies in LMX has drastically increased recently and the majority of these studies cast theory and hypotheses at the same level. With regard to alignment of levels of theory/hypotheses with measurement and with data analyses, however, roughly one out of two published studies suffers from misalignment of levels. Most of this misalignment occurs in studies where the dyad level of analysis, a key component of LMX, is an explicit or implicit focus. We conclude with a discussion of the implications for the LMX literature, and present recommendations to guide multi-level leadership research.