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Abstract: There is a lack of consensus on the most appropriate methodological framework for studies of regulation and due process in order to provide robust outcomes and predictive potential. In addition to this diversity of approaches, research typically adopts a "single-event focus" to an examination of due process and regulatory efficiency. The objective of this research is to examine the advantages and issues arising when methodologies offering a multi-event approach are adopted specifically the utility of game theory methodology in accounting lobbying research. The applications of game theory in previous studies in accounting research are summarised (the application to FASB voting rules, auditor-client interaction, and accounting disclosure choices relevant to wage bargaining) and the theoretical basis for studies of lobbying behaviour is also reviewed. The standard model as currently utilised in research on lobbying activities is described, and an alternative dynamic model proposed. Four core issues arise in the application of such a dynamic model: identification of the master game and sub-games, gradual or punctuated equilibrium, agency issues, and reputation effects. It is apparent from the application of game theory in other areas of accounting research that evolutionary game theory offers a more comprehensive and dynamic model of real-world events, based on multi-period or sequential events. The proposed utility of a game theoretic model in accounting research on due process and regulation justifies further developments in this area.
game theory, standard setting, New Zealand, accounting
Abstract: The continuation of accounting research utilising Hofstede's cultural indices suggests an absence of sufficient consideration for the reasons behind the rejection of such a universalist approach in anthropology and sociology. These reasons include the assumption of equating nation with culture and the difficulty, and limitations on an understanding of culture by means of numeric indices and matrices. Alternative approaches for research on national differences in accounting are suggested.
Hofstede, International accounting, universalism, anthropology, sociology
Abstract: In the last fifteen years, many national standard setters have introduced differential reporting for small and medium enterprises (SMEs). Internationally, SMEs are a diverse and dynamic group which are described under broad characteristics in different countries. Acceptance and imposition of International Accounting Standards (IASs) has reignited the debate on differential reporting, especially since the International Accounting Standards Board (IASB) issued a discussion document in June 2004 on SME reporting. The prevalence of an unsubstantiated view that SMEs are 'small entities on the way to becoming large entities' overshadows the argument on whether and how SMEs should be offered relief from highly technical IAS. Unique SME factors, including close-knit agency relationships, and a tendency to aim for survival and stability over profit maximisation and growth suggest a distinctly different focus to the IASB conceptual framework is required. It is the objective of this paper to provide a review of the diversity in jurisdictional approaches to resolve conceptual and standard-setting issues. This research has been motivated by the absence in academic literature of sufficient studies examining the underlying issues fundamental to redefining the balance between the accountability and decision-usefulness functions of general purpose financial reporting. To achieve this objective, this paper considers relevant academic and practitioner literature before undertaking an analysis of the issues this literature raises.
Small GAAP, SMEs, IASB, FRSSE
Abstract: This research explores how an oral history can inform our understanding of accounting partnership income allocation models. Forty oral history interviews of CPA firm partners indicated a widespread impact from unclear and instable role definitions in performance-based compensation arrangements. The oral history interviews suggested partnerships adopted performance-based compensation systems without consideration of the extent to which the success of such systems depended on stable role specificity. This research has implications for corporations where the interests of the entity may be best served when top management undertake diverse or previously unspecified roles and activities, on an ad-hoc or opportunistic basis.
New Zealand, Big 8, Big 4, accounting, income allocation, oral history, role definition, performance-based compensation
Abstract: In 1992, New Zealand adopted a sector neutral approach to standard setting - where the difference in accounting treatment is driven by differences in the nature of transactions and not by ownership or the objectives of the reporting entity. In the process of adopting International Financial Reporting Standards, New Zealand standard setters are currently struggling to maintain sector neutrality in financial reporting because international standards are primarily developed for profit oriented entities. With the possible loss of sector neutral financial reporting, it is appropriate to review the outcome of ten-year experiment. In particular, we focus on the impact that transactions that are common to a number of public benefit entities have on accounting standards that apply to profit orientated entities. The results of this review may be useful to future standard setters and to the joint FASB/IASB convergence project.
sector-neutral,sector bending, public sector, New Zealand, accounting standard setting, IFRS hamonisation
Abstract: The objective of this report is to assist those undertaking an accounting oral history project for the first time by reporting on two recent oral history projects. While restricting discussion to the 'nuts and bolts' of undertaking recording oral history interviews, this is provided in sufficient detail, with reflection on past experiences, to benefit a researcher starting their first project.
oral history, accounting
Abstract: There has been a problem of timeliness in the debate concerning the methodological and theoretical foundations for Hofstede's 'Cultures Consequences'. This research note was prepared with the objective of updating the debate regarding the validity of Hofstede's dimensions of culture. There are three major criticisms and a new edition to consider. The critique by Hofstede of Baskerville (2003) alluded to such a problem, but it was a problem shared by Hofstede's critics in other disciplines, such as Myers & Tan in Information Systems literature, and McSweeney's critique in the Human Resource literature. Three critiques of Hofstede's dimension of culture, which have been published, are summarised; it is suggested the second edition of 'Cultures Consequences' has not made sufficient changes to allay the concerns of such researchers.
International accounting, Hofstede, culture
Abstract: A brief history of studies of standard setting and constituency lobbying is summarised, and a description of standard setting in New Zealand is provided. Historically, levels of responses to exposure drafts in New Zealand indicate there is no clear existing body of theory to clarify the factors contributing to the pattern in responses to exposure drafts in the last twenty years. The historic longitudinal data from New Zealand exposure drafts exhibited a pattern which could be described as consistently low with two major fluctuations. An alternative approach (expectancy theory) is explored. It is proposed that the response level in New Zealand was generally low over time because there is not a sufficient belief by stakeholders that the Board will change the resulting standard sufficiently to ensure making a submission is cost-benefit efficient. It is suggested that the fluctuations represent periods when there were changes in expectancy by participants of their potential influence on due process.
standard setting,constituency lobbying,Vroom, New Zealand, FRSB, SSAPs, FRSs
Abstract: Superannuation (pension, retirement) schemes (plans) are required to report their earnings on a fair-value basis, reflecting recent shifts toward fair-value reporting in financial reporting. Fair-value earnings of such schemes include realized earnings and unrealized changes in values of assets and liabilities (unrealized earnings). This study examines the relation between components of fair-value earnings (realistic and unrealized) and cash flows of 161 New Zealand defined benefit schemes for the financial year 1998. The findings of the study include that realized earnings are negatively associated with unrealized earnings and positively associated with cash flows from operations, but no association is found between unrealized earnings and cash flows from operations. This suggests that fair-value reporting has reduced the informational disparity between realized earnings and operating cash flows and therefore the reporting of cash flows information may not provide users with different information from reported in realized earnings. However, the results suggest that unrealized earnings provide additional information to users.
Superannuation schemes, pension plans, fair-value earnings, cash flows, New Zealand
Abstract: When Hofstede published the book Culture's Consequences - International Differences in Work-Related Values in 1980, he established indices of culture; culture was to be a measurable variable in international business studies. Hofstede's theoretical basis is traced to a comparative approach established by George Murdock. The lack of use of Hofstede's dimensions in mainstream social sciences is described. This is sourced to the nineteenth-century scholarship of Edward Tylor, and the debate concerning Galton's problem. Murdock took the occasion of the 1971 Huxley Memorial Lecture Anthropology's Mythology to renounce his own adherence to this method, and to plead for a new association between anthropology and psychology. Such a shift was paralleled by Hofstede in 1991. It is suggested that there are other methods which may better advance international comparative accounting research.
Hofstede, accounting, culture, Tylor, Galton
Abstract: Charities are becoming more highly regulated worldwide and yet they are subject to diverse, country-specific, financial reporting standards. New Zealand is a jurisdiction that has treated all sectors alike in its approach to the financial regulation of charities, while the UK has, for some time, separated the regulation of charities from other entities. This article provides a comparison of the histories of the evolution of regulation for charity reporting in the UK and New Zealand. The current process of international harmonization in both jurisdictions is premised on the principle that accounting conceptual frameworks should not be jurisdiction-specific, but charities have proved to be an exception. We suggest in this study that this exception is attributed to different drivers resulting in regulatory distinctions in two otherwise similar jurisdictions. Without persisting in the maintenance of sector-neutrality, the inevitable divergence increases the load on preparers, attesters, and users and may lead to lower levels of accountability and transparency.
Charity regulation, financial reporting, New Zealand, Charity Commission
Abstract: The Big 4 accounting firms (previously Big 8, Big 6 and Big 5) have spread around the world and dominate the market for auditing services in most countries. Until relatively recently, this was not the case, and each country's accounting profession was led by local firms. The spread of these partnerships throughout the world is a phenomenon worthy of research, and we examine the spread of these firms to New Zealand. Previous literature on this and related issues is consistent in suggesting that such changes are driven by globalization of business generally; technology; and deregulation. Our evidence finds some support for globalization, and strong support for technology as a factor, but little support for deregulation. We also find that affiliation came at some cost to Big 8 partners in loss of autonomy, but was unavoidable if an audit firm was to remain significant.
Globalization, accounting partnerships, human labour costs, Big 8, Big 4
Abstract: This study of due process in New Zealand draws upon information concerning events from 1993 to 1996 that resulted in the revision of a newly approved financial reporting standard and the withdrawal of requirements for the disclosure of director remuneration. Traditional consultation processes preceding approval of the standard failed to provide the FRSB with an adequate signal of the opposition to come, indicating a failure of due process. Analysis of this case study suggests adoption of a single and sector-neutral Board in New Zealand was undertaken with a poor appreciation of how to manage effective due process in a 'sector-neutral' world
accounting, standard-setting, sector neutral, due process, directors' remuneration, FRS-9
Abstract: Accountability has been described as an institutional social practice to encourage stewardship reflection and as such it is a process that can be observed and reported upon. This paper describes observations of an accountability event, the Annual General Meeting (AGM), which has been largely absent from the literature. The method and results of empirical research as to how accountability was discharged in not-for-profit AGMs is provided.
Accountability, Annual General Meetings, Sensemaking
Abstract: Universities world-wide experiencing reducing government financial support are seeking to satisfy financial shortfalls through alternative funding such as that from private contributors (especially alumni). When private corporations search for new funding streams, they turn to the internet, however the unregulated nature of internet reporting has brought calls for higher standards in internet reporting practices (e.g. IASC, 1999). Little is known about the use or quality of internet financial reporting by universities to attract private contributions or to account for the stewardship to current contributors.
The present research examined universities' current reporting practices, in order to understand more fully how contextual factors in the tertiary sector impact the availability and quality of universities' internet reporting. The research shows that the ease of accessibility of financial information on universities' websites is related to generic characteristics, such as the age and the financial status of universities. As well, quality of this unregulated internet financial varies widely.
The research expands on the relevant issues emerging from this unregulated environment and highlights gaps that exist between stakeholder's expectations and current internet practice. This study recommends improvements in the standard and quality of reporting in order for universities to discharge their accountability.
Accountability, universities, tertiary sector internet financial reporting
Abstract: The expansion of manufacturing and retail activities in Auckland, New Zealand, in the years following World War II was accompanied by development and growth of accounting partnerships in a manner distinctive from legal, medical or other professional service firms. Accounting partnerships more closely mimicked characteristics of their clients than other professional service firms, growing from local offices to nation-wide groupings, and then adopting international affiliations. In particular, the last forty years in the history of accounting partnerships in Auckland has shown a loss of local identifiers, the adoption of international firm names, and then partners having to fight to survive in partnerships with dwindling partner numbers and rationalization of branches. During this period, partnerships have also shifted from organizations based on principles of collectivism and collegiality to firms that have all the characteristics of corporations, usually described as managed professional bureaucracies. In this chapter from the book 'City of Enterprise: Perspectives on Auckland Business History' the focus is on accounting firms in Auckland, which moved from the traditional professional partnership to a global corporate professional network. To illustrate this transformation, two particular case studies are provided. The first was the merger between the Auckland firms of Clark Menzies and McCulloch Butler and Spence; the second, when the Auckland partners in the firm of Lawrence Anderson Buddle joined Deloittes. These two cases illustrate the fierce competition between accounting partnerships to gain dominance and reputation in the Auckland business sphere whilst at the same time strengthening international affiliations with naming rights. One outcome from the adoption of international names was that firms in New Zealand were then subject to mergers dictated by their transatlantic offices. These mergers were a major cost to New Zealand partners, both in business clients and the personal costs of partnership redundancies. It is not a claim of this study that accounting partnerships demonstrated any fundamental characteristics unique to Auckland. However, Auckland business history has seen the rise of the service industries and retail sectors, relative to the manufacturing and primary industries, as an important contributor to its growth and development, and accounting firms are one of these service industries.
Accounting partnerships, Auckland, Clark Menzies, McCulloch Butler and Spence, Lawrence Anderson Buddle, Deloittes
Abstract: Oral history reports are replete with discovery, an unexpected depth of emotion associated with recall, and the benefit of reflection some time after an event by those most intimately involved. A recent research project interviewing forty older partners in large accounting firms in New Zealand threw up some unexpected outcomes. The objective of this study is to isolate one such unexpected outcome, providing an angle on the working lives of young New Zealanders: that of the OE (overseas experience). It is likely this illustrates a common experience for oral histories: that the life experiences revealed in interviews do far more than provide personal narratives of familiar historical events. The project used both a survey and interviews to record reflections by partners in all of the 'Big 8' concerning their experiences as young employees in such firms. While talking through the required bibliographic detail, a number of accountants recalled trips to London or the USA. Considering the continuing popularity of OE, perhaps it should not have been so unexpected, and their obvious enjoyment of these reminiscences is reflected in this study.
Big 8, OE, New Zealand, accountants, travelling scholarships, IIANZ, NZSA
Abstract: In a recent article Birkin et al.(1997) proposed that Changed Rules Theory should provide the appropriate inner logic to drive accounting, in lieu of Social Darwinism. In this comment I take issue with the dichotomy between Darwinism and Changed Rules Theory. I show that both of Changed Rules Theory and Darwinism, when correctly presented, lead to the perspectives the authors recommend.
Social Darwinism, Changed rules theory, Darwinism, S.J.Gould
Abstract: This research reviews the manner in which accountability may be better constructed in the Charities Sector with detailed stakeholder analysis. This combines the adoption of Hayes' (1996) four types of accountability by charities with a hegemonic application of the Mitchell, Agle, and Wood (1997) model of stakeholder salience. In applying these tools to a particular transgression event, it is demonstrated that the lower salience of beneficiaries of a charitable activity in crisis is due to their lack of coercive power through a lack of knowledge. This study illustrates the dynamic, myriad and heterogeneous nature of stakeholders in the notforprofit sector.
charity reporting, stakeholder salience, accountability
Abstract: Paul David's 1986 exposition on the QWERTY keyboard configuration gave rise not only to Stan Leibowitz and Stephen Margolis's "Fable of the Keys", but also to a consideration by Stephen J. Gould of the characteristics, and correct attribution, of Lamarckian versus Darwinian mechanisms of evolutionary change. This study draws attention to the following issues from this debate: is it correct to attribute the operation of forces of change in evolutionary economics as being Darwinian in nature? How did evolutionary dynamics in economics come to be described utilising concepts and nomenclature typical of organic or biological evolution? It is suggested that it was the extension of Veblen's advocacy of Darwinism as a "scientific methodology" which led to the adoption of Darwinism as an icon of evolutionary mechanisms, and gave rise to the invocation of Darwinian evolutionary mechanisms in economic theories. The basis for such invocation is re-examined and it is suggested the Lamarckian theory provides the more appropriate mechanism for evolutionary success or fitness in economic studies.
Paul David, Fable of the Keys, Margolis, Leibowitz, Stephen J. Gould, Qwerty, evolutionary economics
Abstract: The current invocation of Darwin in accounting research is not matched to the earliest invocations of Darwinism in accounting and economics. The study has two objectives: firstly, to document the change from Darwinism meaning 'the scientific method' (as used by Veblen and Stamp) to Darwinism meaning "survival of the fittest". Secondly, to describe Lamarckism as the more correct descriptor of cultural evolution than Darwinism. Veblen and Stamp were not concerned with Lamarckian or Darwinian processes; "Darwinism" equated with a "scientific" method based on extensive observation of data and an appreciation of the merits of a qualitative approach. It is an objective of this paper to draw attention to the distinction between these two modus operandi, that the casual invocation of Darwinism rampant in research addressing issues in evolutionary economics and accounting might be lessened. Lamarckism deserves to be better recognized as providing the correct understanding of the evolutionary drivers to selective, purposive, adaptive, and deterministic evolution by our markets, institutions, or firms.
Darwinism, Veblen, Stamp, Lamarkism
Abstract: The objective of this study is to review the manner in which oral histories address the 'problem' of memory, and to use an example from a 2002 oral history project concerning accounting partnerships in New Zealand to illustrate aspects of this problem. Many of the interviewees in 2002 recalled anti-nepotism clauses in accounting partnership deeds and acknowledged these clauses had been triggered by an event. There was a diversity of recollection as to the detail of this event, and various rationales, justifications, or explanations were provided. Together, these suggested anti-nepotism clauses retained considerable traction in partnership deeds without a shared understanding of their cause. This led to the question: why should the memory of a significant event be lacking when the consequences of the event remained structurally embedded? It is suggested that the traction of such anti-nepotism rules continue, because the underlying principle resonates with archetypal partnership codes.
nepotism, accounting partnerships, anti-nepotism, Big 8
Abstract: The metaphor of Darwinism has been extensively researched and analysed in other research disciplines. The usage of the biological metaphor of Darwinism in IT related headlines is documented and reviewed. The use of the Darwinian metaphor in business studies has changed from its usage by Veblen and Stamp as a descriptor for the scientific method. More recently its meaning has been transformed to synonymy with the struggle for existence. The use of this metaphor in IT carries with it a reassurance, which can endanger consumer requirements for performance and accountability.
Metaphor, Darwinism, IT survival of the fittest, Veblen, Stamp
Abstract: New Zealand long enjoyed a situation where there was a tradition of well-exercised supervision of defined benefit schemes by the Government Actuary. Because superannuation schemes open to new members were deemed issuers by virtue of the 1997 amendments to the Financial Reporting Act, such schemes had to file their financial statements at the Companies Office, making it is easier to evaluate reporting by such entities. Most of the work examining the schemes' reports in this study was undertaken in January 2000, and only one year of each scheme's reports was examined. 164 superannuation schemes filed their financial statements when this study was undertaken. This report was prepared to provide information on compliance with FRS 32 (NZ) and other issues pertaining to the financial reporting by defined benefit schemes in New Zealand.
pension funds, superannuation, FRS 32, standard setting, New Zealand, accounting
Abstract: This study examines how professional associations respond to crisis situations. The theoretical concepts presented in a model of stakeholder saliency, developed by Mitchell et al. (1997), are applied in examining how the New Zealand Society of Accountants responded to a significant transgression situation. The embezzlement by John Graham, a chartered accountant, gave rise to significant pressure being brought to bear on the profession by various stakeholder groups. The Graham scandal is described using landmark transgression analysis (Nichols 1997). The stakeholder model is applied in identifying salient stakeholder groups, in describing their activities, and in analyzing the profession's response. The analysis identifies an unprecedented level of activity among the professional body's stakeholder groups and provides a framework useful in making sense of the New Zealand Society's actions as it attempted both to protect its reputation of acting in the public interest as well as serving the interests of its members.
NZSA, transgression analysis, Mitchel Agle and Wood stakeholder model, accounting profession, Nichols 1997, John Graham
Abstract: This study of due process in New Zealand draws upon information concerning events from 1993 to 1996 that resulted in the revision of a newly approved financial reporting standard and the withdrawal of requirements for the disclosure of director remuneration. Traditional consultation processes preceding approval of the standard failed to provide the FRSB with an adequate signal of the opposition to come, indicating a failure of due process. Analysis of this case study suggests adoption of a single and sector-neutral Board in New Zealand was undertaken with a poor appreciation of how to manage effective due process in a 'sector-neutral' world.
Abstract: This study offers an examination of the decision and implementation in New Zealand of a personal property security regime based in North American Article 9 Models, with specific focus on the approach in force in Saskatchewan at that time. Subsequent to the New Zealand Personal Property Securities Act 1999 coming into force in 2002, a number of cases have considered the conflicting nature of creditor interests in personal property. The research question underlying this study is "Has the new personal property security in New Zealand achieved what it set out to do?" The paper considers this developing jurisprudence and any implications of these decisions for financial reporting when the going concern assumption is under question.
North America Article 9 Models, race horses, stallions, leasehold property, Saskatchewan, New Zealand, Personal Property Securities Act 1999
Abstract: Robert Muldoon was Prime Minister of New Zealand for nine years from 1975, including those made turbulent by high inflation in the late 1970s. He was, by profession, an accountant. This study considers aspects of Muldoon's career and the accounting firm in which he worked, aspects of his life only sparsely otherwise documented, and reviews the extent to which he promoted the particular interests of the New Zealand Society of Accountants for legislative reform, and support for inflation accounting. His formative years as an accountant are reflected during his premiership in his vision for economic development. This study offers a more favourable understanding of his accounting background and its influence on his contribution as Prime Minister than other biographies and historical analysis since the end of his premiership in 1984.
Muldoon, NZSA, New Zealand Prime Minister
Abstract: Closure events impacting on class mobility may include mechanisms initiated by bodies other than the professional body. The research examines if the introduction of full-time study requirements at universities for aspiring accountants effectively introduced a closure mechanism in the accounting profession. Data was derived from an Oral History study of partners in large firms. The younger partners (born after the Second World War) completed full-time degree study at university, but did not provide evidence of class mobility into the profession. The older cohort, born between 1928 and 1946, completed part-time studies only, few completed a degree, and, in contrast to the younger cohort, shows a perceptible upward movement from lower socio-economic classes into the professional class. This suggests that changing the preferred educational routes for new accountants entering the large chartered accounting firms compromised the "stepping stone" function of accounting as a portal into the professional class.
accounting profession, class mobility, closure, education, full-time study
Abstract: The Council for the Organisation of Relief Services Overseas (CORSO), established in 1944, was dedicated to the relief of poverty overseas. It was a New Zealand organisation which acted to co-ordinate the activities of different national bodies; all of whom shared a vision of working towards such relief of the poverty. CORSO's primary vision for such relief being organised "under one umbrella" attracted 50 member organisations by 1967. Legitimacy theory provides an undemanding theoretical frame for early CORSO. It also explains the period of crisis in relation to reduced legitimacy when, in the 1960s, CORSO began to focus increasingly on development to build foundations for impoverished peoples overseas to gain greater self-reliance. This change in strategic direction was insufficiently communicated to the general public, though it was generally accepted within the organisation.
From the 1970s the increased politicisation of society impacted on CORSO's membership, and Maori radicals became prominent in CORSO along with "leftist" individuals and groups. The early strong coalition was progressively replaced with divisiveness from the mid-1970s amid growing public mistrust of CORSO; as it changed from an apolitical body to one increasingly focused on issues from an anti-capitalist stance. Polarisation and the subsequent consequences are similar to other not-for-profit coalitions.
Deterioration in budgeting was concomitant with CORSO's declining Appeal proceeds. Without suggesting a central role for accounting in CORSO's decline, the correlation of robust or deficient accounting processes respectively with economic good and poor health appears positive. Until the late 1960s, evidence indicates a robust accounting process which subsequently deteriorated, from the 1975 Treasurer's Report onwards. In examining CORSO's decline from 1970, until its "functional death" in 1991, the causes of this decline provide a valuable illustration of the importance of political independence and integrity for charitable organisations' survival.
The data for this study is derived from primary and secondary sources including newspaper articles, annual reports, correspondence and opinion surveys. This research also analyses accounting data, evidencing a correlation of robust or deficient accounting processes respectively with economic excellent or poor health. To this extent the accounting data provides a "bio-marker" of organisational health.
Key to CORSO's demise was a change in strategic direction brokered by governing members which resulted in a philosophical shift unsupported by many of its core orthodox member bodies, with 'fatal' consequences. CORSO from 1990 was not a broad-based coalition, but survives as a persistent, yet impaired, brand name employed by a small coalition of socialists and Maori radicals. CORSO failed to erect barriers to capture, or to recognise it. This historic perspective on the demise of such a giant in New Zealand charities provides a clear illustration of a failure to sense and adapt sufficiently to its dynamic political landscape, and illustrates how the not-for-profit sector is more dependant than other sectors on continuing legitimisation processes in its implicit contract with the society to which it offers its vision.
M40, H40, L29
Abstract: This comment intends to draw the argument away from assumptions that handedness is the major cause of asymmetry in upper limbs, suggesting possible explanations of forelimb asymmetry could derive from asymmetry in the main trunk or differential influence of male sex hormones on development around the shoulder region.
Directional Asymmetry, Rhesus Macaque, ulna, humerus, forearm, male sex hormones, handedness
Abstract: This article examines the outcomes of accounting firm mergers using data about the frequency of audit switches, the numbers of partners in the respective firms, and perceptions revealed in interviews with partners. Evidence from client switches does not show any evidence that the mergers were followed by cost reductions, or of collusion to force prices up. The effects of the mergers appear to have been elsewhere - the merging firms reduced partner numbers substantially, increasing partner leverage so that individual remaining partners were better off. Data from interviews confirm these findings, and show that the culture of individual firms had a significant effect on determining which group of partners controlled the merged firm.
Abstract: This survey was phase one of a two-phase project, the overall aim of which is to provide an understanding of the processes of successful development, expansion or adaptation by professional services firms by surveying and interviewing partners in the "Big 8" chartered accounting firms in the 1980s. Studies of the drivers to success and the causes of the disintegration of a sector of professional service firms such as chartered accounting firms are rare. Yet it is by studying both success narratives and "extinctions" that we can understand "Why did the survivors survive"? This project is to utilise a multi-disciplinary research approach, resulting in outcomes of particular interest to organisational theorists and accounting historians. This survey gave some insights from 108 partners in the Big 8,and was followed later in 2002 with 40 oral history interveiws which informed eight research papers on this SSRN site.
Big 8, differential survival of partnership organisation, partnership organization
Abstract: This study examines how tribes are invoked in organisational studies as the epitome of a ‘natural’ society. As Western society moved past kin-based systems, neither patrilineal nor matrilineal systems for kin organisation and wealth redistributions are functionally operational. The overarching question of this review is: “if modern corporates are viewed as tribes, concomitant with an understanding of the significance of the difference between Big Men and Chiefs in tribal organisations, does this better inform our understanding of the operations of the agency relationships and economic activities (wealth distributions) in corporates?” This research question is answered through a review of three areas: the utility of metaphor in research, and how the particular metaphor of tribalism has been invoked in organisational studies; a consideration of non-industrial tribes, and the five differences between non-industrial tribes and the modern corporate organisation; and a comparison of Big Man and Chiefly systems. This examination of descriptors of organizations as having tribal characteristics shows this invocation accommodates the BigMan/ Chief distinction, but also carries deeply entrenched gender constructions. Its utility is questioned.
Big Men, metaphor, Chiefly systems, tribe
Abstract: This response to Rosenberg 1988 reviews five key issues to assist in a clearer understanding of the drivers to Neandertal pelvic morphology. These are the relationship between maternal height/size and neonate size, neonate and maternal dimensions, selection on the pelvic aperture, what happens when this is too small, and sex determination from Neandertal remains.
Neandertal, Neaderthal, pubic bone length, maternal and neonate size, allometry
Abstract: In 1992, New Zealand adopted a sector-neutral approach to standard setting – where the difference in accounting treatment is driven by differences in the nature of transactions and not by ownership or the objectives of the reporting entity. This study reviews the impact of adaptations of International Financial Reporting Standards (IFRS) to ensure their successful application in a sector-neural environment. A fundamental question of the move to IFRS is whether the public benefit entity amendments in NZ IFRS have contaminated the IFRS for profit-orientated entities or diluted the available guidance for public benefit entities. This suggests that it is worthwhile for Australia and New Zealand to monitor and reconsider their sector-neutral approach to adopting IFRS.
sector neutral, public sector, IFRS
Abstract: The degree of managerial discretion permitted to a senior corporate manager is at the heart of the trust and control continuum in agency relationships, and thus has significant implications for a better understanding of the mechanisms for effective governance and exemplary accounting. There has been little progress since Hambrick and Abrahamson noted in 1995: “Managerial discretion is a concept of great potential significance, both in its own right and in its potential to improve understanding of other organizational phenomena…. Discretion is a multi-faceted, highly abstract concept that, by its very nature, cannot be directly observed. If empirical research in discretion is to proceed, progress must be made on its measurement”.
Discussion concerning how we understand and ‘measure’ managerial discretion appears in diverse academic scholarship reflecting the latitude managers, and in particular CEOs, are able to exercise without recourse to the BoD for prior approval for their actions. This study adopts a multi-disciplinary perspective, suggesting there are twelve diverse propositions in which managerial discretion is invoked, as a variable, or as an underlying controlling or causal mechanism. In particular, there is a wealth of accounting research into discretionary accruals, abnormal accruals, and earnings management, and in this research managerial discretion is proxied for by discretionary accruals. This study contributes to developing a clearer understanding of the diverse causes and drivers to different levels of such discretion.
managerial discretion, interdisciplinary, discretionary accruals
Abstract: The expansion of manufacturing, and retail activities in Auckland, New Zealand, was accompanied by the development and growth of accounting partnerships in a manner distinctive from legal, medical or other professional service firms. Accounting partnerships mimicked characteristics of their clients more closely than did other professional service firms, growing from local offices to nationwide groupings, and then adopting international affiliations.
In particular, the past forty years in the history of accounting partnerships in Auckland have shown a loss of local identifiers, the adoption of international firm names, and partners having to fight to survive in partnerships with dwindling partner numbers and rationalisation of branches. During this period, partnerships have also shifted from organisations based on principles of collectivism and collegiality to firms that have all the characteristics of corporations, usually described as managed professional bureaucracies.
The more recent study by Brock, Powell and Hinings further divides partnerships into three co-existing archetypes: the traditional professional partnership, the global corporate professional network (typified by the Big 8), and the intermediate form, the ‘Star’ form, with stable size and specialisation in particular types of accounting services. In this chapter, the focus is on accounting firms in Auckland which moved from the traditional professional partnership to a global corporate professional network.
To illustrate this transformation, two particular case studies are provided. The first is the merger between the Auckland firms of Clark Menzies with McCulloch Butler and Spence; the second, when the Auckland partners in the firm of Lawrence Anderson Buddle joined Deloittes. These two cases illustrate the fierce competition between accounting partnerships to gain dominance and reputation in the Auckland business sphere while at the same time strengthening international affiliations with naming rights. However, an outcome from the adoption of international names was that firms in New Zealand were then subject to mergers dictated by their transatlantic offices. These mergers were a major cost to New Zealand partners, both in business clients and in the personal costs of partnership redundancies.
Auckland, accounting firms, business history
Abstract: This study examines whether profit-sharing arrangements within accounting firms are associated with the riskiness of their client portfolios. Our results use unique data about the profit-sharing arrangements of the Big 8 firms during the period 1985 to 1994. We investigate whether there is a correlation between profit-sharing and risky clients. Firms consist of the financially integrated firms, i.e., those that share their profits across a large pool of partners across the country and the financially independent firms that share their profits in a small pool on a local office basis. The large-pool firms provide more incentive for partners to cooperate to audit high-risk clients than the small-pool firms. Our results show that the large-pool firms are associated with riskier client portfolios; this is indicated by a higher proportion of fees from clients that later suffer from bankruptcies. In contrast, a smaller proportion of the clients of the small-pool firms go bankrupt. Tests using financial distress as alternative measures of client risk confirm this result.
client portfolio risk, profit-sharing, accounting, Big 8, Big 4, partnerships
Abstract: This report present results of research on the failure of the inflation accounting standard in New Zealand in the early 1980s. Presentation of the results in three narratives highlight that any such research is a series of interlocking and overlapping events, and that narrative is a direct and efficient means of communicating both causal and transactional components which contributed towards the outcomes. In particular, this report examine the reasons provided by companies for non-compliance with the inflation accounting standard, compared with the views of standard setters as to why compliance was so low. The standard was later withdrawn. Isolation of the three narratives was chosen to demonstrate that it is not useful to extol an explanatory or interpretative paradigm for accounting history if it is advocated at the expense of sequential accounts of events.
New Zealand, inflation accounting, oral history, current cost accounting
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