The Journal of American Business Review, Cambridge

Vol. 2* Number 1 * December 2013

The Library of Congress, Washington, DC   *   ISSN 2167-0803

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Global Entrepreneurialism: A Comparative Analysis of Entrepreneurial Spirit and Drive around the World

Dr. Ahmad Ahmadian, Professor and Eric Curtiss, Colorado State University-Pueblo, Pueblo, CO



All Cultures include people who are inclined to behave entrepreneurially.  Such entrepreneurs deal with internal forces (attitudes, fears, and inclinations), as well as external forces (cultural norms, legal structures, and infrastructure).  Those societies that embrace and encourage the entrepreneurial spirit and which set appropriate conditions necessary for entrepreneurial development tend to provide most efficiently for their citizens.  This paper considers legal structures and cultural determinants related to entrepreneurship, internal attitudes of current and would-be entrepreneurs, three case studies on entrepreneurialism around the world, and insight on how governments can support entrepreneurial activity in order to expand their economies and better provide for their citizens. Financial disparity across the world is stark and becoming more divergent.  Yet almost anywhere a person visits in the world he or she will find business people starting small businesses and large enterprises… people we describe as entrepreneurs.  Such people start things and improve things, creating livelihoods for themselves and those working for them in the process.  Those who are very successful create wealth for themselves and their investors, many simply create jobs only for themselves, and many fail.  This paper will explore entrepreneurial drive and motivation (“entrepreneurial spirit”) in the western context and around the world.  While some cultures support entrepreneurs better than others, all cultures include individuals who are inclined entrepreneurially and who desire to positively impact their societies by establishing businesses and creating jobs.  Entrepreneurial spirit encompasses four main points: innovation, risk, the possibility for significant wealth creation, and relative speed of wealth creation (Engineered Lifestyles, 2012).  While some researchers argue that starting any small business is an entrepreneurial venture, we will argue that entrepreneurs are those people driven to take risks with an expectation in the near-term of significant financial reward.  We begin by reviewing entrepreneurial spirit across the world and how successfully people start businesses and thereby positively impact communities.  Next, we will consider which government forms are more conducive to encouraging entrepreneurialism and what national and local governments should do to encourage business development.  Finally, we will consider three different entrepreneurial environments as case studies and provide analysis and recommendations to governments which wish to support entrepreneurs. 


Offshore Outsourcing: Can U.S Survive Without It?

Matt Oversby, Dr. Balasundram Maniam, and Dr. Hadley Leavell

Sam Houston State University, Huntsville, TX



Outsourcing and its effects on the U.S economy is a topic among economists, politicians and analysts everywhere in the current financial environment. This paper reviews United States’ multinational corporations (MNC’s) and whether they have the capability to survive and prosper without the use of outsourcing. The viewpoints of executives, politicians and academics will be included in the paper to provide a well-rounded perspective on the key issues. The effects of significant events such as the 2008 financial crisis will be addressed.  The justification for outsourcing will be considered and balanced against the problems inherent in outsourcing.  Offshore outsourcing for the U.S. is the movement of domestic jobs by United States multinationals to international locations to take advantage of the lower cost of resources and labor. Outsourcing is a strategy which has been utilized by firms for some time, but over the past decade outsourcing by U.S. MNC’s   has gained momentum as well as intensified scrutiny. There is a widespread assumption that in order for MNC’s to compete internationally and domestically, they must participate in outsourcing. Opponents however assert that outsourcing has caused a serious loss of domestic jobs in the U.S and has contributed to a fragile U.S economy. The consensus among many U.S citizens is that outsourcing has played a major role behind the slow recovery from the global financial crises. Outsourcing is a strategy that helps major United States companies gain a competitive advantage but in turn leaves the domestic workforce with lower employment. Domestic and offshore outsourcing has been increasing significantly throughout the industrial economies of the world.  Domestic outsourcing is a handing over of accountability and authoritative power for manufacture and administration of a segment of a firm’s business, usually activities for which the business has neither a strategic need or a singular capability, to an outside domestic vendor who can provide better service and potentially higher quality at a lower cost allowing the firm to concentrate resources and investments on basic competencies and high growth areas.  Domestic outsourcing should not be confused with offshoring; outsourcing agreements create continuing relationships between supplier and beneficiary, with a high degree of risk-sharing according to Frajli, Poloski, and Tkalac (2003).  Providers that are outside of the boundaries of the company deliver products or services on behalf of the company. As the globalization of businesses rapidly increases outsourcing and offshoring of services particularly in the information technology (IT), human resources (HR), science and engineering (S&E), and research and development (R&D) departments may exist concurrently within any company and frequently they overlap in their functions. Manning, Massini and Lewin (2008) avowed that for much of the last 50 years outsourcing has steadily increased; just a few of the reasons for this increase are the rapid change and convergence of technology, price competition, skills shortage, finite resources, and a worldwide recession.  The reality that outsourcing is an integral part of the business model in the U.S needs to be understood and analyzed. 


Spillover Effects of the 2008 Financial Crisis in East Asia Stock Markets

Dr. Jae-Kwang Hwang, Virginia State University, Petersburg, VA



This paper examines the nature of stock market integration among the US stock market and three East Asia stock markets using daily stock market returns from January 2006 to March 2009, analyzing before the crisis and during the crisis. The results support the view that the continued strength of growth in China helps its market weather the adverse consequences of the 2008 financial crisis. As a result, the benefits of investment diversification can be still achieved by investors participating in the Chinese stock market. However, the developed stock markets tend to be more integrated during the financial crisis period, resulting in lesser benefits of diversification among them.The collapse of the US housing market and the bursting of the US mortgage bubble in the summer of 2007 triggered a global financial crisis. In the early stages of the crisis, financial reforms in emerging markets made it possible to temporarily insulate themselves from adverse shocks originating from the US until the summer of 2008. However, many financial institutions (e.g., Bear Stearns, Lehman Brothers, and American International Group) rapidly lost most of their market values because of a huge increase in the mortgages delinquencies and foreclosures in the US. A prominent feature of the 2008 financial crisis is that the crisis started in the US financial sector and rapidly spread, spilling over into other sectors of the economy as well as other countries. As a result, there are collapses of the financial institutions, stock market crashes, liquidity problem on the credit market. Furthermore, this crisis affected economies as well as financial markets in the world. The equity prices in the world dropped more than 20% in three months following September 15, 2008.  The Asian equity markets have become attractive to international investors given that they have high prospects for economic growth. The Japanese market is taken into account for its role as the regional market leader in the Asian region. The Korean market has experienced a rapid industrialization with a potential growth of not only the quantity but also the quality of its products, reaching international markets. China, the second largest economy, is also included in the study due to its spectacular growth performance over the last two decades. In addition, these two economies play an increasingly influential role in the global financial system with their rapidly developing financial markets. Fujiwara and Takahashi (2012) ask how Asian financial markets are interlinked and how they are interlinked to markets in developed economies. They present that the US is the main driver of fluctuations, and China’s macroeconomic performance may be correlated with the US shocks. Hwang (2012) shows the significant stock market linkages between Asian markets and the US market. 


Managing Information Security Risks: An Examination of Multiple Risk Perspectives

Dr. Someswar Kesh, Chair, University of Central, MO

Dr. W. Raghupathi, Professor, Fordham University, New York, NY



Information systems have significantly contributed to our quality of life but at the same time added a myriad of security risks.  Because security breaches can have far reaching and significantly disruptive consequences, it is imperative that organizations adopt a comprehensive approach towards managing Information Technology (IT) security risks.  The field of risk management provides a plethora of theories and frameworks that has the potential for improving IT security.  This research critically examines how IT risk management can benefit from multiple ontological perspectives as well as various risk management theories and frameworks to move towards a holistic approach for managing IT security risks. The pervasive and dynamic nature of IT coupled with an explosion of security breaches require organizations to come up with a comprehensive strategy for managing IT security risks.  To date, when it comes to IT security, most organizations have typically relied on a technical approach to risk management.  While the technical approach provides a foundation for managing IT security risks, it is not comprehensive. For example, in a recent attack on Saudi Aramco, the Saudi state owned oil company, a person with privileged access unleashed a virus that erased data on three-quarters of Aramco’s PCs (Information Security Magazine, 2012).  Because someone with privileged access can turn off technical protections like anti-virus software, this case illustrates the need for a socio-technical approach to IT security management.   Most textbooks on IT security also primarily focus on the technical aspects of security, like anti-virus software, encryption etc. Only brief descriptions of social engineering and the organizational aspects of security are covered.   This paper discusses how diverging ontological perspectives like modern positivism and the constructivist paradigm as well as theories based on the psychometric paradigm and cultural theory can provide directions for IT security risk research and embellish the practice of IT security risk management.  The application of an integrative framework; the Social Amplification of Risk (SARF) to IT security risk management is also discussed. In the IT security literature the goals of IT security; confidentiality, integrity, and availability are commonly referred to as the CIA triangle.  Risk management approaches are utilized by organizations to provide confidentiality, integrity, and availability for IT assets.  The literature on risk management provides risk identification, risk assessment and risk control as the three generic steps for risk management.  In risk identification, information assets that are pertinent to the organization are first classified.  A list of threats are also identified and prioritized.  Threat identification is independent of asset identification.  However, in the final stage of risk identification, the identified threats are coupled with assets and the vulnerability of the assets to the identified threats determined.  Not all assets will be vulnerable to all threats in the same degree.  For example, a mainframe is less likely to be stolen than a laptop, though there are instances where a mainframe has been stolen (Cornford, 2003).


Catalysts of Consumer Response to Brand Transgressions: Consumer Ethnocentrism and Brand-Country Associations

Dr. Ross B. Steinman, Widener University, Chester, Pennsylvania



This research reports results from two experiments on the individual as well as interactive effects of consumer ethnocentrism, brand-country associations, and brand transgression on consumer choice, attitude, perception, and behavior. Participants were first measured on the personality trait of consumer ethnocentrism using the Consumer Ethnocentrism Scale (CETSCALE) and then randomly assigned to different brand transgression conditions where the brands’ country-of-origin was manipulated. USA brands as well as foreign brands were utilized in this research. In certain conditions, the brand’s county-of-origin was emphasized whereas in other conditions it was de-emphasized. Next, participants were instructed to complete a series of consumer measures. Consistent with previous research on brand norms violations there was evidence that brand transgression had an immediate negative impact on consumer choice and attitude. In addition, it was found that consumer ethnocentrism and brand-country associations had a significant effect on how consumers relate to the brand after a transgression has occurred. This research connects an established literature on consumer ethnocentrism and brand-country associations to an evolving literature on brand transgression. Consumers’ views on ethical business practices suggest that principled behavior is a dynamic aspect of the inestimable business relationship a brand has with its consumers. Perhaps a topic of more interest given the modern business climate is consumer action and reaction to unethical business actions (Alexander, 2002). Can marketing or consumer researchers predict how consumers will respond to unethical brand activities? Also, to what extent do consumers sanction brands for their unethical behavior? There are many factors that might mediate the consumer-brand relationship before, during, and after a brand’s immoral actions. The most severe immoral brand actions are often referred to as brand transgressions. A brand transgression is defined as a violation of consumer-brand relationship-relevant norms. It refers to and is suggestive of the implicit or explicit breaches of rules guiding consumer-brand relationship performance and evaluation (Aaker, Fournier, & Brassel, 2004). Consumer response to brand transgressions is an interesting topic, one that is receiving more interest among quantitative researchers in recent years. In the past, however, case study methodologies have been the primary research technique used to examine the effect of transgressions on consumer perceptions of the brand (Chisolm, 1998). For example, in 2009 Toyota received extensive negative publicity after numerous reports of faulty mechanics in their vehicles.


Distributive Justice in Human Resource Management: A Multisystem Approach

Dr. Douglas H. Flint and Lynn M. Haley, University of New Brunswick, Canada



The purpose of this study is to determine whether employees can discriminate between perceptions of the distributive justice of different human resource systems. A survey of 89 employees in a call center was conducted and employee perceptions of performance appraisal and promotions systems were measured. Factor analysis shows that employees are able to distinguish these two different sources of distributive justice. Perceptions of distributive justice are important to organizations because such perceptions have been linked to a number of important organizational outcomes. In order to counter the effects of poor perceptions of distributive justice, organizations need to be able to determine as many sources of these perceptions as possible. Our research findings suggest that employees can distinguish at least two sources of distributive justice and, therefore, future research should expand the consideration of the number of human resource systems involved and consider different types of organizations that could be affected.  Distributive justice involves perceptions of the fairness of organizational outcomes and derives from Adam’s (1965) equity theory. According to equity theory individuals compare their inputs and their outputs to the inputs and outputs of others in order form perceptions of the fairness of allocation decisions.  As an example consider two employees working at the same job. At the end of the year one employee receives a raise and the other employee does not. In this case receiving a raise is an output. By simply examining the outputs it is difficult to determine if this decision is fair. Equity theory suggests that the outputs will be compared to inputs. In this case inputs would involve what each employee brought to the job and whether any differences in these inputs warranted the difference in the outputs. For example, the employees might be two teachers; if one of the teachers just completed a Master’s degree this might explain that teacher’s raise. In this case the input would be the attainment of educational level. The employees could be salespeople and if one employee made her sales targets and the other did not this might justify the raise. In this case the input would be the amount of sales generated. Most researchers identify effort as an input (i.e., Brashear, Manolis, & Brooks, 2005; Cowherd & Levine, 1992: Major, Bylsma & Cozzarelli, 1989; Tornblom & Vermunt, 2007; Flint, Haley, & McNally, 2012). Other commonly identified inputs include: Skills (i.e., Cowherd & Levine, 1992), education, training (i.e., Tornblom & Vermunt, 2007), required roles and responsibilities (i.e., Brashear, Manolis, & Brooks, 2005), time, and experience (i.e., Flint, Haley, & McNally, 2012).


Transition to IFRS:  What Can We Learn?

Dr. Stephen R. Goldberg and Dennis C. Stovall, Grand Valley State University, Michigan



The Norwalk Agreement was signed by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) in October 2002 with the intention to develop a single set of high quality financial reporting standards. The Securities and Exchange Commission (SEC), which oversees the FASB, in concept supports convergence. Over the last ten years the IASB and the FASB have made great advances towards convergence of International Financial Reporting Standards (IFRS) with U.S. Generally Accepted Accounting Principles (US GAAP) to obtain the single reporting standard goal. Certain elements have become points of contention and thus have delayed the goal of overall convergence between IFRS and US GAAP. These elements include fundamental differences and guidance related to specific industries, transactions lacking guidance, and structural and funding issues (PWC, 2009 and 2013).In 2008, the Securities and Exchange Commission (SEC) issued their proposed roadmap to aid U.S. issuing companies with their transfer to International Financial Reporting Standards (IFRS). The roadmap set forth several milestones that would require US companies to issue their financial reporting under IFRS guidance by 2014. The timeline proposed by the roadmap, which aspired for dual reporting to begin in January 2012 with complete transference to IFRS by December 2014, has not been adopted.  The aspirations set by the SEC have since been delayed as several points of contention were raised before January 2012, preventing convergence between US Generally Accepted Accounting Principles (US GAAP) and IFRS. Fundamental differences in addition to guidance related to specific industries are the main sources of contention between the FASB and the IASB (PWC, 2012). More recently, in July of 2012 the SEC staff issued its latest final report regarding the Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers. This issuance has been a huge step back from IFRS as The Staff report does not include a final policy decision as to whether IFRS should be incorporated into the US financial reporting system, or how such incorporation should occur. The Staff Report also does not provide any insight on whether a transition to IFRS would be in the best interests of US capital markets and US investors, as previously stated. In August of 2012, AICPA chairman of the board of directors, Gregory Anton, said that while the AICPA supports giving US companies the option to use IFRS and supports the issue of one set of standards, the “absolute soonest” IFRS could be adopted in the US is five to six years. As shown in Figure 1.1, the US is the only country currently pursuing convergence while having no plan to actually adopt the standards.


The Influence of People’s Perception Variables on Retirement Planning Strategies in the United States

Dr. Doina Vlad, Seton Hill University, Greensburg, PA



This research paper analyzes the correlations between perception variables (consumer sentiment and inflation expectations) and the growth of retirement assets in United States. The first contribution of this paper shows the need for people to have a good and current financial education/awareness, so they adjust their saving habits for their retirement not only when the economy is struggling and they feel uncertain about the future, but also when the economy is striving and they are able to save even more. The second contribution of this paper is a focus on the implications. When people have neutral attitudes on inflationary expectations on portfolio retirement allocations, they don’t create excess demand in the market, and over-inflate the asset prices. A negative implication is, if inflation does occur in the future, people might find themselves unprepared and unguided on the best inflation-protected asset allocations for their retirement. In the context of the current economic turmoil, today’s reality is one full of uncertainties and many people wonder about the future of their retirement. Are we going to have a retirement, or more precisely, are we going to have the funds we need to be able to retire? How are the continuous changes in the social, economic, and political factors going to affect the retirement asset valuation? Is inflation going to be present at higher levels than the ones we are used to in the future?  Does uncertainty about the future affect people’s behavior when it comes to retirement asset allocation? To analyze this possibility, this paper investigates the roles of additional behavioral factors (consumer sentiment and inflation expectations) on people’s behaviors related to their retirement planning strategies. Motivation for adding the behavioral variables to the existing models lies in fast changing economic environments, and uncertainty’s effects on people’s perception about their future and retirement. The data analysis indicates consumer sentiment (with the coefficient statistically significant at 1% level) was negatively correlated with the growth in retirement assets. The interpretation suggested is that people are investing more in their retirement assets when the times are tough, despite the higher unemployment rates during recessions. They are less concerned with the future, and are saving less for their retirement when they are “bullish”, possibly because they are consuming more when they feel confident about the future.


Illegal Corporate Activities and Their Effect on Financial Statement Disclosures: How Forensic Accountants Can Help

Dr. Michael Ulinski, Dr. Roy J. Girasa, and Anthony L. Fanelli

Pace University, Pleasantville, NY



The researcher examined recent sanctions and legal actions taken against multi-national corporations in emerging markets by the Securities and Exchange Commission (SEC) and other non-US regulatory agencies to develop an exploratory study to determine the effects of illegal activity on financial statement disclosures.  In addition, the researchers proposed that Forensic Accountants can help the independent auditor and those in charge with corporate governance, to properly determine if an illegal act that has occurred should be disclosed.  The Foreign Corrupt Act and international security agencies efforts to help signatory members enforce security laws is used as the prism for determining whether an illegal activity has occurred and if any financial statement disclosure is required.  Conclusions are drawn and recommendations for further studies are recommended. Illegal corporate activities including corruption and bribery have increased as a result of the global economy expansion especially in emerging markets. China, Russia and other BRIC nations have young and newly prosperous populations that multi-national corporations are desirous to tap into their consumer needs and to expand their presents for lower cost labor and perceived reduced regulations costs.  The Organization for Economic Co-operation and Development in a recent study indicated 14 of the signatory countries have sanctioned 221 individuals and 90 entities under criminal proceedings for foreign bribery. (ECD Data, June 2013)  In a recent Wall Street Journal front page article, they reported that $489 million in bribes were used by GlaxoSmith-Kline PLC to government officials, hospitals and doctors in order to sell more drugs at higher prices. (Wall Street Journal, July 2013)  US Auditing standards have clarified and expanded requirements on disclosure of illegal corporate activities effects on financial statement disclosure.  The PCAOB in its Release No. 2012-004 effective for audits beginning after December 15, 2012, expands on AU Sec. 317.08 by providing the following guidance:  “Normally an audit in accordance with generally accepted auditing standards does not include audit procedures specifically designed to detect illegal acts.  However, procedures applied for the purpose of forming as opinion on the financial statements may bring possible illegal acts to the auditor’s attention.  For example, such procedures including reading; inquiring of the client’s management and legal counsel concerning litigation, claims, and assessments; performing substantive tests of details of transactions or balances.  The auditor should make inquiries of management and the audit committee concerning the client compliance with laws and regulations and knowledge of violation or possible violations of laws or regulations.”(PCAOB, December, 2012)  


The Grand Green Marketing Strategy Boom or Bust?

Dr. Richard Murphy, Jacksonville University, FL

Dr. Maja Zelihic, Assistant Professor, Ashford University, College of Business and Professional Studies

Professor Vince Narkiewicz, Jacksonville University, FL



The purpose of this study was to determine if green marketing had an impact on consumer behaviors this long into a recessionary period. The survey selected as the most suitable option for data collection is the methodology used.  This survey used a large number of participants, as well as some worldwide data, which demonstrates how consumers respond to green marketing and comparing country to country. The results indicate while different countries face unique environmental issues, the luster of the correctness of Green Marketing is fading as the costs continue to rise. This study concludes that the length of the recessionary period has had a significant impact on the green movement.  The concept of “green marketing” was officially introduced in 1975. As with any other marketing movements, it lived through its peak stage and weathered many storms. Despite its perceived importance and its “glorious” message, this marketing area is still not out of troubled waters.  One would think that four decades since its creation, the concept of green marketing would not be as widely misunderstood as it is nowadays. Green marketing is not being pursued as the good deed on behalf of the humanity even though companies try to portray that image. It is serving its own purpose through “use the environmental benefits of a product or service to promote sales” (Gopal, 2012, p.1). Green marketing, in its core essence, is simplistic notion of selling a product based on its environmental benefits. Now, the product itself, “may be environmentally friendly in itself or produced and/or packaged in an environmentally friendly way” (Strategic Green Marketing for Survival, 2011, para. 7). More recently, the product itself may be found falsely portraying its “green image” through the lack of knowledge and/or intentional misrepresentation by the “green friendly” companies. The purpose of this paper is to research the origin of green marketing, its prior successes, and touch upon some reasons behind its current failure.  It seems that the 1990s- deemed as a decade of environmental friendly initiatives are long gone replaced by the consumers’ drive to pursue the cheapest products regardless of vast environmental concerns. There is some confusion pertaining to differentiating consumers’ environmental friendly behavior and getting consumers to buy products which are environmentally friendly. Green marketing is not an original idea, its origins can be traced to any attempts to buy and/or sell products which are deemed to be “good” for the environment. Who is to blame for the general failure of green marketing efforts? Makower (2011) indicates, “Companies' marketing efforts have been largely half-hearted, humorless and uninspired. Green products, themselves have been variously underwhelming, overpriced, inconvenient, ineffective or unavailable” (para7). One is left wondering if this marketing arena can overcome numerous challenges facing its core existence.


E-Books Adoption for Business Education

Dr. Lin Zhao and Dr. Raida Abuizam, Purdue University Calumet, Hammond, IN



E-book sales has been over one billion US$ in 2012, and the market share of e-Books has increased sharply from 1.5% to over 16% in the past five years. There is no doubt that the emergence of e-Books is changing the traditional ways of learning in business education due to many technical advantages. Economical benefits are also considered as an important factor to affect the adoption of e-Books among students and educators. This study examines different factors which impact the adoption of e-Books for the executive MBA program and three management courses in a regional university. Our findings imply that it is viable to adopt e-Books as required textbooks, although the behavioral and technical barriers still exist. Traditional paper books have dominated the publishing market for thousands of years. Although the efficiency has been improved continuously in paper production, there are still over 20 million trees consumed each year for printing books in US. With the emergence of Internet and digital technologies, e-Books have become a promising alternative to traditional paper books due to the advantages of convenient access, powerful functions, low costs, and eco-friendly. According to Association of American Publishers (AAP), e-Books sales of 2011 grew 117% from the previous year and generated the revenue of $969.9 million. The newer statistics of May 2012 report record high monthly e-Books sales of $133.7 million, about 4 times of the total sales of the comparable period in 2011 as Figure 1 shows. The market share of e-Books in the second quarter of 2012 has reached 22%, about 8% growth from the comparable period in 2011. As one of the largest bookstores with 27% e-books market share, has been selling e-Books more than traditional books since April 2011, and their CEO claimed “eBooks is now a multi-billion dollar category for the company and was up approximately 70 percent from last year (2011)”. On the contrary, Borders, the nation's second-largest bookstore chain, didn’t adjust their marketing strategies to adapt the growth of e-Books, which became one of the main reasons for their demise. All of these striking marketing data and practices show that although printed books remain the highest market share, there is no doubt that they are gradually losing their superiority to e-Books.


Student perceptions of e-learning Components within a Masters Level Financial Management Module

Dr. Alan Parkinson and Lynsie Chew, University College London, London, UK

Roland Miller, Queen Mary, University of London, London, UK



This paper is located in the arena of Masters-level Financial Management module with ninety one registered students in a UK university. It is concerned with identifying and exploring students’ perceptions of influences, both positive and negative, of three specific e-learning components upon their learning experiences. The components are vote clickers, digital ink applications, and lecturecasts. The findings inform educators and module designers in the pursuit of the development of new blended learning modules, against a backdrop of increasing student expectations, and particularly so in the context of the high level of fees for post-graduate programmes. Students surveyed total ninety one with sixty eight responses (74.7%). Data are collected through an on-line survey. The survey questions are derived from two focus groups using semi-structured interviews, with the interview themes informed from a literature review. The students in the focus groups are also stratified representatively. Data are analyzed and explored using absolute and relative frequencies. The exploration generates findings suggesting the vote clickers and digital ink innovations are perceived as enhancing the learning experience, but with mixed perceptions regarding lecturecasts, with lessons for educators. This study seeks to identify which, if any, of three e-learning innovations contribute positively towards the learning experiences of students studying a Masters-level Financial Management module in a UK university, delivered across a three month period. It also seeks to identify related matters which may have a negative impact upon the learning experiences. The findings will inform educators as they seek to design the curricula of modules in ways which improve learning experiences when incorporating new technologies, particularly in the context of blended learning. This is against a backdrop of increasing student expectations linked to the high fee levels charged. The primary data in this study are collected from sixty eight students, all studying full-time on an MSc in Management, and studying Financial Management as users of financial and management accounting information rather than as practitioners of financial management. That said, a number may consider entering consulting roles within financial institutions. The conventional module design has as central features, on a weekly basis, a three hour lecture, being ‘face to face’. Focus groups have identified concerns students have with i) not fully understanding some aspects of some lectures; ii) forgetting some points made in some lectures; iii) an inability to grasp some key essentials necessary as building blocks for further studies.


A Phenomenological Study of Registered Nurses Exposed to Toxic Leadership Behaviors: What it Means to Health Care Organizations

Dr. Annette B. Roter, Viterbo University

Dr. Janice Spangenburg, Capella University



One of the more subtle elements of leadership concentrates on toxicity. Toxic leadership also referred to as disruptive behaviors in the health care industry is a concern as health care continues to evolve. This evolution within health care provides additional stress, ambiguity and uncertainty for employees and leadership.  All of these elements can provide an environment full of toxicity.  Health care organizations today are facing paramount changes and leaders need to be ready to address these changes along with guiding and leading their teams forward with positive intent.  Any type of volatile or toxic environment will pose additional threats for health care organizations going forward.  This phenomenological study explored perceived toxic leadership styles by assessing and evaluating the lived experiences of registered nurses located in the Chicago Metropolitan area.  The selection process of candidates for the study relied on purposive and snowball sampling.  A pre-study questionnaire was utilized to select participants who indicated they were able to share their experiences with a toxic leader within a hospital setting.  Through sampling, 18 participants were asked to participate in in-depth interviews.  Through analysis of the data four key themes emerged. These themes included (a) the toxic leader’s approach to leading, (b) leader competence and leadership attributes, (c) the organization’s competence related to addressing the toxic behaviors, and (d) the emergence of the phenomenon as it related to the lived experience of register nurses.  Implications of the study showed that toxic leadership behaviors impeded team work, affected communication, and was detrimental to the organization.  Understanding the impact that toxic behaviors have on direct reports, organizations, and ultimately the patient is critical. Robinson and Goudy (2009) pointed out that health care leaders are undergoing enormous changes, including increased use of technology, lean performance initiatives, decreased government funding, and challenges related to an uncertain health care reform initiative.  These changes have placed a strain on health care leaders. This  additional stress may lead to disruptive or toxic behaviors in the workplace.  Swiggard, Dewey, Hickson, Finalyson and Spickard, (2009) stated that health care organizations exhibiting disruptive or toxic tendencies demonstrate an increase in workplace/personal stress, poor work environments, dysfunctional teams, and reductions in the quality of care for patients.  Sukin (2009) wrote that leadership in health care is paramount during these challenging times of health care reform, workforce shortages, and economic uncertainty.  Addressing toxic behaviors in health care is crucial to understanding issues related to job satisfaction. 


Store Choice in the International Context:The Influence of Different External Reference Prices

Dr. Jane Dunnett, University of New Brunswick, New Brunswick, Canada



When consumers in neighboring countries travel across the border for shopping or vacationing, they often encounter the same goods offered at different price points. In some situations, the goods are available in both countries showing the two prices clearly marked on the item. This practice may be justified when the exchange rate is significantly different between the two countries, but becomes more of a concern to consumers as the divide between the currencies reduces. This paper considers the impact of pricing on consumer choice decisions for identical goods available in neighboring countries at different price points when the foreign exchange rate has reached a general level of parity between the two currencies.  Using the example of Canada and the United States, where the Canadian dollar has taken a dramatic increase in value against its American counterpart over the past few years, many consumer goods have traditionally been labeled at different price points for the two countries. Canadian consumers were surveyed about the importance of retailers adjusting their prices to reflect this changing exchange rate. The same consumers were also asked to rate the importance to them of such a pricing policy in their store choice decisions.  With larger numbers of consumers travelling, and consumers in neighboring countries travelling across the shared border for shopping or vacationing, they use many different cues to familiarize themselves with the retailers and goods they encounter, and to help with their shopping decisions. Perhaps the store name is familiar to them from television advertising or from other stores in the same chain located in their home market. Brand names are often recognized across borders as many companies expand across continents and around the world in their attempts to win larger markets. However, companies do not always offer the same products at the same price, for consumers who are located in different geographic regions or countries.  These travelling consumers frequently encounter the identical goods that were available at their home retailers when they shop at other retailers or stores in the same retail chain in other locations, and find the identical goods offered at different price points. Recently, CBC News reported that Canadian consumers were unhappy with Target’s March 2013 move into Canada, finding a customer satisfaction rating of only 2.7 after five months, where the industry average is 3.2 (CBC News, August 2013).  Disappointment with pricing was a key factor in the low retailer rating, with one customer quoted as saying, “Canadians shop across the border, we know what you charge, what you stock, how the store is. Don't expect us to want less than what you offer in the US” (CBC News 2013).  In some situations, the goods are available in both countries showing the two prices clearly marked on the item (figure 1). This practice may be justified when the exchange rate is significantly different between the two countries, but becomes more of a concern to consumers as the divide between the currencies reduces.


Fast Growing Pet Ownership in Mexico:  A Preliminary Field Study

Dr. Hyun Sook Lee, National Autonomous University of Mexico, Mexico City



In Mexico, there is a fast growing trend favoring pet ownership, similar to the trends world-wide.  For this preliminary study, some hypotheses were tested that they were adopting pets looking for affections (Holbrook et al, 2001, p.1), and ready to afford pet care costs without concern for their income level, which supports Staats and Horner (1999, pp. 541-552) who mentioned that those with low incomes partitioned their time more equally between family, friends, pets.  Members of larger families tended to adopt pets, although it was expected that members of smaller families would do so based on Staats and Horner (Ibíd). During 2007, humanization was the #1 trend fueling growth in the $43 billion global pet food market, according to Global Pet Food Industry Outlook, a new report from Packaged Facts and Petfood Industry magazine. Outpacing all other trends by at least 10 percentage points,,treating pets like family outranked packaging convenience and special ingredient foods which are also heavily impacting the market (´Humanization´ …, 2007). Despite renewed economic uncertainty, the global pet care market continued to grow in 2012, with retail values approaching US$94 billion. Sales should continue to grow between 2012 and 2017, thanks to the strength of pet humanisation and emerging markets (Pet Care Forecast Revisit 2012: …, 2012).  Industry insiders attribute the growing world pet market to the global humanization of pets, whereby more and more cultures now regard companion animals as beloved family members (Wolf, 2013). Worldwide London-based market research firm Euromonitor International has been monitoring world pet markets with growing interest, and reports that the trend has increased exponentially within the last five years (Wolf, 2013). One of the main drivers in the pet market is the increase in pet ownership worldwide. The recent increase in urban population has led to an increase in consumer spending on pet foods, which has contributed to the growth of the global pet food market (Research and Markets …, 2013).  The author’s  intention is  to study  the trend of pet markets in some countries such as the U.S.A., Europe, Asia and Latin America, especially in Mexico, and to review the  literatures for factors influencing the adoption of pets, in order to understand related social and psychological phenomena.  For the same purpose, the author conducted a preliminary field survey in order to understand Mexican´s fast growing pet ownership trend.


The Decision-Making Dimension of the Systems Approach to Management

James Kennedy Turkson and Rosemary Boateng Coffie,

Kwame Nkrumah University of Science and Technology, Kumasi, Ghana



Theoretically, a system is anything made up of various parts. These parts are known as subsystems.  At every point in time, these parts should work in harmony so that objectives could be achieved successfully. A system could be inanimate or animate item. Examples of inanimate systems include vehicles, households, computer and institution.  Examples of animate systems are human beings, animals and insects. Both inanimate and animate systems are made up of various subsystems.  Such subsystems are required to co-operate, collaborate and work together so that set objectives could be achieved successfully.  From practical, organizational and managerial point of view, business organizations are equally systems made up of subsystems which may take the form of departments, sections and/or units. There is supposed to be collaborations among the managers and the other members in these departments, sections and/or units so that organizational objectives could be achieved successfully. All the managers in the various departments, sections and/or units are required to work together as a team to make the system coherent and closely-knit to make disintegration impossible.  Closely related to the systems approach to management is managerial decision-making.  Decision-making is a very important function of every manager’s job. The success and failure stories of many organizations are the result of the quality of decisions made.  Many organizations have survived turbulent conditions. Others have also collapsed in spite of favourable conditions. These varying conditions are the result of the quality of decisions that managers at positions of authority and responsibility made. The systems approach to management therefore enjoins top managers in particular to be very circumspect and cautious in certain decision-making activities. This is because, the quality of decision a manager makes can go a long way to determine the success or failure story of an organization as exemplified in the case study in this paper. ‘And the two shall become one and inseparable until death separates them’.  This statement is often heard at wedding ceremonies when the officiating minister has to consummate the marriage by making both the groom and the bridegroom aware that they are no longer individuals but a ‘combined and unified whole’. This is the biblical position of Genesis 2:18 which states: The Lord God said, ‘It is not good for the man to be alone. I will make a helper suitable for him’. This is supported by Genesis 2:24 which also states: ‘For this reason a man will leave his father and mother and be united to his wife, and they will become one flesh’. This is the core biblical implication of the word ‘system’ since the creation of the heavens and the earth by God. When the marriage is blessed with children, they also become inseparable part of the wholeness of the groom and the bridegroom.  However, if the family engages a maidservant or a house help, even though she is part of the household, she is not part of the inseparable system of the nuclear family being referred to. This is because, the maidservant or the house help is not part of the strong bond of relationship that exists between the spouses and the children.  This is the key underlying principle of a ‘system’.


The Role of Advertising Expenditure in Measuring Indonesia’s Money Demand Function
Lee-Chea Hiew and Dr. Chin-Hong Puah, Universiti Malaysia Sarawak
Dr. Muzafar Shah Habibullah, Universiti Putra Malaysia



Using the consumer theory approach as suggested by Habibullah (2009), this study aims to shed new light on monetary authority by incorporating advertising expenditure, a variable that has been neglected in the past, into study of the money demand function in Indonesia. In addition, different measurements of monetary aggregates (simple-sum and Divisia money) have been used in the estimation to provide better insight into the selection of a suitable monetary policy variable for the case of Indonesia. Empirical findings from the error-correction model (ECM) indicate that the advertising expenditure variable has a significant impact on the demand for money. Furthermore, as compared to simple-sum money, the model that used Divisia monetary aggregates rendered more plausible estimation results in the estimation of money demand function. Over the centuries, numerous crises have shaken the world’s economies and financial systems, including those of Indonesia. Compared with neighboring countries that have also endured crises, the recovery evolution in Indonesia has been slightly sluggish. A famous economist, Benjamin Higgins, depicted Indonesia as “the number one failure among the major undeveloped countries.” To escape from the journey of crisis, economic reforms connected to economic policy as well as political stability are important. Moreover, the revolution from economic crisis to economic reform required the injection of money into all economic activities. Indisputably, the sustainability and development of a nation’s economy will be dampened without a sufficient money supply. In contrast, overabundance of money supply will create inflationary pressure whereby it possibly will undervalue the value of money. Therefore, central banks need to know the amount of money demanded by the economy before making any decision on how much of the money supply it will channel into the market. As stated by Puah et al. (2010), changes in money supply will impinge on liquidity in the market. Thus, a well-balanced amount of money in a nation is critical to ensuring market liquidity and it may perhaps stimulate economic growth. However, it is imperative to highlight that the rapid financial reforms influenced the stability of the money demand function.


An Improved Optimization Algorithm for Managing the Maintenance Scheduling of a Family of Machines

Dr. Jia-Yen Huang, National Chin-Yi University of Technology, Taichung City, Taiwan

Dr. Ming-Jong Yao, National Chiao Tung University, Hsinchu City, Taiwan




The maintenance cost could be very crucial in many real world situations since the maintenance work is subcontract or repairmen have to make a special trip from some central place to carry out the work. In this study, to optimally coordinate the maintenance schedule of machines so as to save the maintenance cost incurred, we propose an improved Lipschitz optimization algorithm to secure an ε-optimal solution for the Maintenance Scheduling Problem for a Family of Machines (MSPFM). By utilizing the theoretical results, an efficient search algorithm that solves the optimal solution for this problem is proposed. This analysis employs a fine-tune procedure based on slope-checking and step-size comparison mechanisms to reduce the number of search steps. Based on our numerical experiments, we conclude that our proposed algorithm significantly outperforms the others existing approach in the literature.  It is well-known that the maintenance cost of machines is one of the major operating costs for most of the enterprises; therefore, it is crucial to determine an optimal maintenance schedule for the machines. An appropriate maintenance schedule can not only bring down the total operating costs, but also keep a satisfactory utilization rate for a family of machines; In the literature, such a problem is named as “the Maintenance Scheduling Problem for a Family of Machines ”, which is abbreviated as the MSPFM. In the MSPFM, the decision maker needs to determine T (i.e., a basic planning period) and {k1,k2,…,km} (i.e., the frequency of maintenance for machines) so as to minimize the total costs incurred per unit time.  Some researchers have been dealt with the determination of economic maintenance scheduling in the fields of management science/operations research/industrial engineering (see Goyal and Kusy, 1985). Some studies which focus on the transportation fleet maintenance scheduling problem have been presented, including Yao and Huang (2006), Huang and Yao(2007, 2008). Recently, many researchers have been addressing their efforts to the studies on the maintenance scheduling problem of the aircraft fleet, for example, Sriram and Haghani (2003), Moudani and Mora-Camino (2000), and Papadakos (2009). However, limited studies pay attention to the problem of determining the operating and maintenance schedules for a family of machines, and the objective functions in these studies are significantly different in their theoretical properties from that for the MSPFM. The mathematical model for the MSPFM was first presented in Goyal and Kusy’s paper (1985), and which presented the only model that used a nonlinear function for the cost of operating a machine when studying the periodic maintenance scheduling problems. Dekker, et al. (1997) provided an excellent review for the periodic maintenance scheduling problems, including the machine repair models, the group replacement models, the inspection models in the multi-component, and maintenance problems.


Iterated Variable Neighborhood Search Algorithm for Solving Total Weighted Tardiness Problems of Single Machine Scheduling with Sequence-Dependent Setup Times

Dr. Chun-Lung Chen, Takming University of Science and Technology, Taiwan (R.O.C.)




This paper investigates the problems of single machine scheduling with sequence-dependent setup times with the objective of minimizing the total weighted tardiness of jobs.  An iterated variable neighborhood search algorithm is proposed to solve the single machine scheduling problems.  A series of neighborhood structures, which is based on random moves of a subsequence, is constructed to improve the performance of the proposed algorithm.  To verify the performance of the proposed algorithm, computational experiments are conducted on a set of benchmark problems available in literature.  The experimental results show that the proposed algorithm is very effective. In this study, we consider the problem of single machine scheduling with sequence-dependent setup times (SMSDST) in order to minimize the total weighted tardiness of jobs.  SMSDST with performance criteria involving due dates, such as total weighted tardiness or total number of tardy jobs, is a reference problem in the industrial context (Anghinolfi and Paolucci, 2009).  The problem considered in this study is a NP-hard problem, and developing a heuristic to solve such a problem is acceptable.In recent years, several researches have applied heuristics to solve SMSDST problems.  Cicirello and Smith (2005) developed four different heuristics, namely, limited discrepancy search (LDS), heuristic-biased stochastic sampling (HBSS), value-biased stochastic sampling (VBSS), and hill-climbing using VBSS (VBSS–HC), to minimize the total weighted tardiness of SMSDST.  They used these improvement heuristics and the simulated annealing (SA) heuristic to obtain solutions for a set of 120 benchmark problems with 60 jobs each.  Since then, several algorithms have been proposed to solve SMSDST problems, and the benchmark problem instances proposed by Cicirello and Smith (2005) have been used to assess the performance of these algorithms.  These algorithms can be categorized into three groups, namely, evolution-based, truncated branch-and-bound-based, and neighborhood-based algorithms.  The evolution-based algorithms for solving candidate problems include the genetic algorithms (GA) devised by Lin and Ying (2007); the ant colony optimization (ACO) algorithms proposed by Liao and Juan (2007), Anghinolfi and Paolucci (2008), and Ahmadizar and Hosseini (2011); the discrete particle swarm optimization (DPSO) algorithms proposed by Anghinolfi and Paolucci (2009); and the discrete differential evolution (DDE) algorithm developed by Tasgetiren et al. (2009).  The truncated branch-and-bound-based algorithms include the beam search (BS) proposed by Valente and Alves (2008) to solve candidate problems.  Finally, the neighborhood-based local search algorithms for solving the same problem instances (2005) include the SA and tabu search (TS) algorithms developed by Lin and Ying (2007), the hybrid metaheuristic, SA–TS, proposed by Lin and Ying (2008), and the iterated greedy (IG) heuristic proposed by Ying et al. (2009).


Tax System Factors and Individual Tax Compliance Behaviour in Nigeria: Does the Effect of the Taxpayer’s Risk Preference Matter?

Dr. James O. Alabede, Federal Polytechnic Bauchi, Nigeria

Dr. Zaimah Bt. Ariffin and Prof. Dr. Idris Md Kami, College of Business, Universiti Utara Malaysia




Tax system structure factors are considered to be the primary determinants of tax compliance behaviour. The influence that these factors exert on tax compliance behaviour depends on the efficiency of tax administration. In some developing countries, the administration of income tax is characterized by inefficiency and this raise doubt about the effectiveness of the tax system factors in influencing the tax compliance behaviour .This study determines the relationship between tax system factors and tax compliance behaviour in the presence of the interacting effect of taxpayers’ risk preference using empirical evidence of individual taxpayers from Nigeria. The data collected for the study were statistically treated using OLS-MMR technique. The results indicate that high tax audit probability increase tax compliance behaviour. Furthermore, it provides evidence to show that taxpayers’ risk preference negatively interacted with tax sanction to influence tax compliance.  The dripping financial resource of government in the light of increasing social responsibility has encouraged policy makers and researchers to pay great attention to the problem of tax noncompliance in last few decades. Substantial efforts had been committed in researching into the problem aimed at identifying factors responsible for the phenomenon (Alabede Zaimah & Idris, 2011; Roth et al, 1989; Wenzel, 2001). The first major work on the subject matter was done by Allingham and Sandmo (1972) and the authors came up with a model to explain factors affecting taxpayers’ compliance behaviour. This model which applied deterrence theory recognizes tax audit probability and penalty as the factors affecting tax compliance behaviour.  The main assumption of the deterrence theory is that an increase in either the probability of detection of crime or punishment of crime or both will decrease the economic rewards of the criminal activity. Therefore, as the probability of detection is high and/or punishment of the criminal is high then this would deter individuals from committing crimes. In relationship of tax compliance, the theory suggests that taxpayers will be willing to pay tax only because of the fear of sanction; therefore as tax fine or tax audit rates increase more taxes will be paid.  However, findings from a number of studies have suggested that the tax compliance behaviour is not only influenced by these factors but social and psychological factors also play significant role (Slemrod, 2009; Torgler & Schaffner, 2007). Nevertheless, the impact of sanction and tax audit probability on tax compliance behaviour cannot be underestimated particularly in developing countries where taxpayers have poor attitude towards complying with tax rules and regulations (Alabede et al., 2011; Fjeldstad & Semboja, 2001).


Joint Determinations of Growth, Inflation and Inequality

Dr. Ho-Chuan (River) Huang, Department of Banking and Finance, Tamkang University

Dr. Chih-Chuan Yeh, Overseas Chinese University and National Taiwan University



Motivated by the theoretical study of Jin (2009), this paper empirically estimates the causal interrelationships among growth, inflation and inequality in a unified simultaneous equations system. By applying the identification through heteroskedasticity of Rigobon (2003) to a large panel data up to 37 countries, we find that inflation exerts a significant, negative (positive) and causal influence on growth (inequality), confirming the theoretical prediction of Jin (2009). Moreover, there is also strong evidence indicating that faster growth is associated with lower inequality, and lower inequality is accompanied with higher inflation.  This project plans to empirically explore the inter-relationships among inflation, income inequality, and economic growth in a unified framework.  In the current literature, these important macroeconomic variables are often analyzed in pairs, which include the inflation- inequality, inequality-growth, and inflation-growth linkages. As such, our main focus is to jointly estimate the interactions among inflation, inequality and growth using a simultaneous equations system. In contrast to conventional instrumental variables approaches, which mainly rely upon the exclusion restrictions for identification, we consider a novel different estimation strategy which, instead, depends on the heteroskedasticity-based identification approaches of Rigobon (2003). In the following, we provide brief overviews on the theoretical predictions and empirical evidences on the relationships among (pairs of) inflation, inequality and growth. Theoretically, there are many studies indicating that higher inflation is associated with higher income inequality. For instance, in a shopping-time model where consumers have access to alternative transacting technologies, Cysne, Maldonado and Monteiro (2005) demonstrate that there is a positive relation between inflation and inequality. In particular, provided that the productivity of the interest-bearing asset in the transacting technology is sufficiently large, an increase in inflation rate definitely results in worsened distribution of income, i.e., higher income inequality. In addition, Boel and Camera (2009) consider a monetary economy in which ex ante heterogeneous agents keep money to insure against consumption risk. They show that, if money is the only asset and unequally distributed in equilibrium, then higher inflation is likely to benefit low-consumption agents via redistributing monetary wealth from wealthier to poorer agents (thus, lower income inequality). However, if there exist alternative assets which can provide consumption insurance, the path of redistribution can switch due to the fact that richer people might prefer to hold less money than poorer people. In the latter case, higher inflation is accompanied with larger, rather than lower, income inequality. Therefore, ex ante, inflation exerts ambiguous influences on inequality. Empirically, Easterly and Fischer (2001) investigate whether inflation is more of a problem for the poor than for the rich, and the effects of inflation on indicators of inequality and poverty.  Their results support the notion that inflation is indeed more problematic for the poor than for the wealthy. Moreover, they also find that higher inflation tends to reduce the relative income of the poor and, thus, results in larger income inequality. Furthermore, Bul´ıˇr (2001) extends the conventional Kuznets model by investigating, particularly, the role of price stability (or, inflation) along with other standard determinants of inequality.


Impact of Female Executives on the Conservatism: Evidence from China Stock Market

Dr. Meiqun Yin, Beijing International Studies University, P.R. China

Dr. Wang Huacheng, Renmin University, Beijing, P.R. China

Jiang Haixia, Beijing International Studies University, P.R. China



With the economic development and progresses of feministic ideological consciousness, women's status has been significantly improved. More female executives are also playing roles in decision-making and management of the company increasingly. Numerous researches have shown that there are many differences in personality, logic, ways of problems solving, risk appetite between males and females.  Using 2007-2012 financial data of listed companies in Chinese Stock Marketswe conducted empirical analysis of the issue. The results show that the presence of female executives in the executive team will significantly improve the accounting conservatism, female CEO, as well as female CFO also lead the company’s accounting conservatism to meaningfully improving. Dramatically, in those enterprises which have the CEO and CFO both for females, the accounting conservatism has not changed distinctly.As we all know, because of innate gender differences, even with the same educational background and life experiences, men and women have many differences in personality, way of thinking and handling problems. These differences are reflected in all aspects, especially in risk preferences, self-confidence and achievement needs.The studies of Zuckerman (1994), Hersch (1996), Slovic (1996) have shown that when facing uncertainty, women's behavior will be more cautious. Stinerock etc. (1991) found that women's risk appetite was lower than men’s. In financial decision-making, they tended to consult experts and were far more anxiety and caution. By using personal trading data provided by a large U.S. broker, Barber and Odean (2001) found that compared with female investors trading volume, male investors’ was higher than 45%. However, excessive trading reduced males’ earnings. The empirical studies of Tan Songtao and Wang Yaping (2006) have found that the over-trading by male investors was significantly higher than female investors’. This result indicates that the, women are more cautious and conservative when making investment decisions, while men tend to overconfidence. There is a lot of research about the impact of female executives (especially women directors) on business performance. Using a sample of 215 companies in Top 500 selected by "Fortune" magazine's which data are from 1980 to 1998, Adler (2001) studied the return on sales, return on assets and the return on shareholders' equity as a measure of corporate performance. Adler found that companies with more females in their administrative departments often earned more profit. Carter, Simpkins and Simpson (2003) did the research on impact of board diversity on firm value. The results showed that the proportion of female directors had a significant positive impact on corporate value. Meanwhile, Kramer, Konrad and Erkutd (2006) the interviewed a number of women directors and male directors who had female director colleagues, they found that the number of women in the boardroom strongly influenced their performance on the board,  thus impacted the boards’ process, decisions and their supervision. Wang Mingjie, etc. (2010) found that the proportion of female directors and the firm performance showed a significant negative correlation. The product of the proportion of female directors and their average educational level showed a significant positive correlation with ROE, EPS and Tobin'Q, which meaned that female directors had a negative impact on firm performance, but the educational level of women directors could weaken this negative impact.


Corporate Social Responsibility and Firm Performance

Dr. Roger C. Y. Chen, Professor, National Kaohsiung First University of Science and Technology, Taiwan

Dr. Hui-Wen Tang, Tamkang University, Taiwan

Shih-Wei Hung, National Kaohsiung First University of Science and Technology, Taiwan



With the increasing importance of corporate social responsibility (CSR), stockholders are more concerned about the impact of firms’ CSR on operating performance. Using the inductance of 24 CSR rules, we construct a “Corporate Social Responsibility Index” as a proxy to measure the CSR performance at about 738 listed firms during the 2010 in Taiwan. A hedge portfolio that bought firms in the highest portfolio of the index (best CSR) and sold firms in the lowest portfolio of index (worst CSR) would have earned abnormal returns. We find that lower CSR performance firms have lower stock returns, worse operating performance, lower values and higher operating expenses.  Confucius once said, “All people desire riches and wealth, but if they cannot be obtained in the proper manner, they should not be pursued.” In other words, corporations must consider the morality of their profit-seeking behavior when pursuing profits to determine whether it violates the interests of others. Business behavior which conflicts with morality and jeopardizes stakeholder interests should be avoided. Such a concept stresses the importance of corporate social responsibility (CSR) in sustainable firms. In essence, CSR is a type of morality. In the past, corporate responsibility was generally perceived as the responsibility to maximize the wealth of shareholders (Friedman, 1970). However, this ideal in firms’ continuously downing costs to increase shareholder profit, which produce numerous social problems, such as child labor, environmental pollution and climate change etc. Consequently, many international organizations and government have proposed regulations and evaluation criteria for CSR (1).  Previous studies differ on whether corporate investment in CSR is beneficial for increasing corporate value. Certain scholars have indicated that CSR investment requires firms to expend greater resources. These increases in operating costs cause declines in operating performance and profitability, thereby decreasing competitiveness (Aupperle, Carroll and Hatfield, 1985; Bragdon and Marlin, 1972; Ullmann, 1985; Vance, 1975). Anginer, Fisher, and Statman (2008) consider that firms with superior CSR ratings have a correspondingly lower stock price performance. However, Preston and O’Bannon (1997) find that firms that continue engaging CSR activities when firms have poor financial performance; they propose a managerial opportunism hypothesis to explain this situation.  Researchers propose that firms adopting CSR are more likely to gain public attention (Benabou and Tirole, 2010; Spence, 1973), which increases their social resources (Cochran and Wood, 1984; Waddock and Graves, 1997) and attracts higher quality employees (Turban and Greening, 1997; Greening and Turban, 2000), enabling an effective enhancement in product and services sales quality (Moskowitz, 1972). CSR, as a new competitive strategy raises corporate operating performance, thereby effectively reducing idiosyncratic risk, decreases accidents, and increases corporate ability to process and control these accidents (Jiao, 2010; Porter and Kramer, 2006; Richardson, Welker and Hutchinson, 1999). Thus, CSR investment ensures ideal corporate image and business performance (Peloza, 2006; Werther and Chadler, 2005) and can provide social identity (Hawn, Chatterji and Mitchell, 2011). In addition, Jo and Harjoto (2011) argued that CSR can effectively enhance firm values.


Investor Sentiment and Exchange-Traded Fund Premiums: Evidence from an Emerging Market

Dr. Jung-Chu Lin, Takming University of Science and Technology, Taipei, Taiwan, R.O.C.



Previous studies tend to depict closed-end fund (CEF) discounts as a measure of individual investor sentiment. While exchange-traded funds (ETFs) are traded by institutional investors by a much higher proportion than CEFs, this paper aims to examine the proposition that premiums or discounts of ETFs are driven by a combined sentiment of institutional and individual investors and hence can act as a proxy for a broader investor sentiment. The proposition implies that premiums or discounts on various ETFs move together, are correlated with prices of other securities which are affected by the same investor sentiment, and can forecast stock returns better. We employ correlation analysis, regression analysis, vector autoregressive analysis, and Granger causality test and evidence ETF premiums not only a more comprehensive sentiment indicator but also a prophetic indicator compared to CEF discounts. ETF premiums as a sentiment indicator can forecast future returns on various-cap stock portfolios which cannot be attained by CEF discounts. The levels of ETF premiums Granger cause the levels of CEF premiums whereas changes in CEF premiums Granger cause changes in ETF premiums The classical financial theory of efficient markets holds that investors are rational. The theory does not believe that investor sentiment can affect the security prices and returns. Rather, it assumes that competition between rational investors will be continued until the security prices reach equilibrium. Even if some investors are irrational (noise traders), their operations would be offset by arbitragers. This means that irrational investors would not have a significant impact on the price of securities. As a result, research on projected stock returns in the early stages does not consider the psychological state and sentiments of investors until Kahneman and Tversky (1979) first explored the impact of investor psychology on investment decisions and thus on stock returns in their research.  Many studies examined the relationship between investor sentiment and stock returns. Since investor sentiments are rather abstract, the key to this issue is to find out a proper variable or indicator that can represent investor sentiment, and then create a connection between investor sentiment and stock returns that can be concretely investigated. The reference value of such investigation depends closely on how highly the variable or indicator represents the investor sentiment. Therefore, the related research between the investor sentiment and stock returns has two issues that are worth looking into: First, whether the proxy variable or indicator that is used can truly represent the investor sentiment. That is, between the presence of their connection as well as the degree of relatedness. Secondly, can the investor sentiment affect or be used to forecast the stock return.  Investors are not all alike, and neither are their sentiments. Investors are usually divided into two groups: individual and institutional investors. Some research represents individual investor sentiment by the sole indicator. The most commonly used is "the closed-end fund discounts" (hereafter "the CEF discounts"), such as Lee et al. (1991), Leonard and Shull (1996), Elton et al. (1998), Doukas and Milonas (2004), Canbas and Kandir (2006), Güner and önder (2009). Others utilize multiple targets to represent the investor sentiment together, such as Neal and Wheatley (1998), Fisher and Stateman (2000), Brown and Cliff (2004), Baker and Wurgler (2006), Canbas and Kandir (2009).


The Effect of Fairness-Based Relationship Quality on Relationship Performance and the Moderating Role of Dependence

Flt. Lt. Suriya Soucksakit, Thammasat University, Bangkok, Thailand



This study examines, in buyer-supplier context, the effects of fairness perceptions (distributive, procedural, and interactional) on relationship performance through the mediating role of relationship quality in an environment where a small number of suppliers dominates the industry and where buyers and suppliers are fundamentally independent of one another.  Using Thailand chemical fertilizer industry as the study context with face-to-face questionnaire survey method, the total of 237 authorized dealers’ sample is obtained and analyzed through the use of structural equation modelling technique.  The study finds that distributive fairness perception significantly and directly influences relationship performance while procedural and interactional fairness perceptions indirectly influence relationship performance through the mediating role of relationship quality.  Furthermore, by incorporating dependence structure as a moderator and using multi-group moderation analysis, the study finds that dependence perception weakens the impact of procedural and interactional fairness perceptions on relationship quality. When an industry has only a limited number of large suppliers, these few companies are, to certain extent, able to control the market.  As the products they supply are often almost identical, the actions of one producer, for example in effecting a price cut, will directly affect the remaining suppliers.  This implies that supplying companies, within a given oligopolistic market structure, do compete with one another, to certain degree, on cost basis.  Therefore, reducing transaction costs would result in higher yield of return.  Transaction Cost theory describes the costs as being created to three criteria: asset specificity, frequency, and uncertainty.  Higher levels of these criteria lead to higher transaction costs (Williamson 1979, 1981).  As Morgan and Hunt (1994) suggested that trust lead to reduction of uncertainty among members within a supply chain, therefore, trusting relationship would enable firms to reduce their transaction costs.  However, in oligopolistic market environment where the market structure is characterized by number and size distribution of firms, entry condition, and the extent of differentiation that may give rise to several opportunistic behaviors, what are the factors that would lead firms in supply network to have trusting and long-term relationship.  Specifically, how buyer-supply relationship, in minimizing transaction costs, be developed given the apparent market characteristics that prevail within the industry.A review of literature has revealed a limited number of studies (Kumar et al., 1995; Griffith et al., 2006; Liu et al., 2012) on the development of buyer-supplier relationship employing fairness perceptions.  Meanwhile, previous studies have typically investigated fairness perceptions based on the assumption of buyer-supplier power equality. However, in oligopolistic market structure, where only small number of suppliers dealing with a large number of buyers and where suppliers and buyers are fundamentally independent of one another, asymmetrical power do, and still, exist. 


Impact of Mandatory Job Rotation on Ethical Tendencies of Financial Stuffs

Dr. Shu-Cheng Lin, ChungYu Institute of Technology, Keelunng, Taiwan



Audit researches showed that mandatory job rotation is an effective tool to prevent abuse (Carolyn, 1986), and a limit terms for holding same position provides better chance to reveal unethical issues. However, for most Asian family enterprises, financial stuffs often gain the trust and attention of business owners, and thus have longer terms in same position. Despite the few provisions on mandatory job rotation that apply to these people, they remain highly loyal to their organization. As the ethical tendencies of these financial stuffs remains of the utmost importance as far as organizational security is concerned, henceforth the purpose of this study is to clarify the impact of mandatory job rotation on ethical tendencies of financial stuffs. Targeting financial stuffs from 41 companies in Taiwan, a total of 420 questionnaire copies were distributed, of which 358 copies (85.2%) of valid questionnaires were retrieved. The results show that the organizational commitment of financial stuffs under mandatory job rotation was significantly lower compared to financial stuffs not under mandatory rotation. Furthermore, the ethical tendencies of the employees under mandatory rotation were significantly poorer as well. The results show that as far as the organizational norms formed under the system are concerned, in addition to the behavioral constraints formed on the surface of the system that have to be taken into account, the impact of the system on the mentality of employees also has to be given focus. This study highlights the inadequacies of the system and the psychological impact on employees, which shall serve as a reference when establishing management systems in the future.  Research showed that mandatory job rotation is an effective tool for preventing abuse (Carolyn, 1986), financial systems in countries around the world often set a maximum term for holding the same position. Through job rotation, it is hoped that abuse of power arising as a result of extended terms in office can be prevented or exposed (U.S. General Accounting Office, 2004; U.K. Coordinating Group on Accounting and Auditing Issues, 2003). However, in many Asian family enterprises, financial stuffs often have the trust and attention of business owners, thus explaining their longer terms in office. Despite the fewer provisions on mandatory job rotation that apply to these people, they remain highly loyal with excellent ethical tendencies. On the other hand, a comparative study of mandatory and non-mandatory rotation of external auditors (Barbadillo et. al., 2009) showed that external auditing with mandatory rotation provisions did not achieve better independence compared to external auditing without. In other words, higher professional ethics were not evident. The above phenomenon shows that even though mandatory job rotation is regarded as an important tool for preventing abuse by employees, as far as the ethical tendencies of employees are concerned, the mandatory job rotation system fails to form better ethical attitudes among employees, thus raising the question of whether or not it can effectively prevent employees from engaging in unethical behavior.  The main reason mandatory job rotation can be used as a tool for inhibiting abusive behavior in employees is that it serves the purpose of deterrence. That is, any abuses by predecessors are likely to be exposed by the officer that takes over the post. As such, any unethical behavioral tendencies of employees may be inhibited due to the supervisory nature of the mandatory system. However, Fairwether (1999) pointed out that excessive monitoring of employees’ private behavior may trigger unethical behavior due to negative emotions that build up, and, when one's moral self-concept is threatened. He or she may seek to engage in future unethical acts (Harkrider, 2013).  Whether or not mandatory job rotation contribute to ethical behavior via perceived supervision, or negative emotions that arise from supervision diminish ethical behavior, has yet to be clarified.


Firm Efficiency Across Sectors: The Case of Public-Listed Firms in Malaysia

Zalila Othman, Dr. Sallahuddin Hassan, Dr. Mohd. Zaini Abdul Karim, Dr. Mukaramah Harun,

Universiti Utara Malaysia, Sintok Kedah, Malaysia



The objective of this study is to determine the variation in firm efficiency across sectors of firms listed on the Main Board of the Malaysian Bourse (formerly known as the Kuala Lumpur Stock Exchange).  A sample of 156 firms listed at the bourse was selected using the stratified random sampling method.  Data Envelopment Analysis (DEA) under the assumptions of constant returns to scale (CRS) and variable returns to scale (VRS) was employed to estimate firms’ efficiency scores.  Our findings have shown that firm efficiency scores vary across sectors.  However, there is no significant difference in the mean efficiency among all sectors. Public-listed firms in Malaysia are important in terms of providing productive employment and earning opportunities.  Thus, public-listed firms, which are the main component of the business sector, have to operate efficiently lest this will hinder the business sector’s performance and consequently jeopardized the development of the country.  Moreover, technological advancements and globalization have also added significant pressure on the firms to increase their efficiency so as to survive and remain competitive in the market.  Despite their enormous influence on the overall economic well-being of the country, large gaps remain in our knowledge about the public-listed firms in Malaysia in terms of their efficiency.    Therefore, this paper focuses on the efficiency of public-listed firms, how this varies across different sectors and the subsequent implications for industrial policies in Malaysia.  This study derives firm-level estimates of technical efficiency and compares the mean of technical efficiency across sectors.  These analyses allow us to address the issue of variation of efficiency of firms in different sectors.  Our analyses have shown that firm efficiency do vary across sectors.  Firms in the industrial products sector are most efficient, followed by firms in the construction and consumer products sector, while firms in the trading/services industry have the lowest efficiency.  However, our pooled variance t-test results show that the there is no significant difference in mean efficiency among sectors. Past studies on firm efficiency in Malaysia have focused on various industries such as the financial institutions and banks (i.e. Tahir et al., 2009; Abu Mansor and Radam, 2000; Kamaruddin et al., 2008; Batchelor and Wadud, 2004; Sufian, 2004, 2006, 2007; and Karim, 2001; Katib and Matthews, 2000), water supply (i.e. Munisamy, 2009), and food manufacturing (i.e. Kalirajan and Tse, 1989). 


An Analysis of Poverty, Vulnerability and Risk Management Among Rural Household in Peninsular Malaysia

Dr. Ahmad Zafarullah Abdul Jalil and Dr. Mukaramah Harun, Universiti Utara Malaysia



Malaysia has been recognized as one of the countries that has successfully reduced the problem of poverty among its population. In 1970, the poverty level stood at 49.3 percent of the total population. However, the recent trend in the literature that moved towards the re-conceptualisation of poverty in terms of insecurity or vulnerability, have brought out another issue of how poverty should be tackled in Malaysia. In this study, we examined how rural households in Malaysia behaved when faced with a risk and how this would affect their livelihood and therefore the level of vulnerability to poverty. Our findings show that rural households in Malaysia faced a variety of risks and they have employed several strategies in order to cope with the risks. However, not all these strategies are effective in dealing with the risk and this has resulted in a negative impact on the livelihood of the households. Our study also found that income and savings level are the main factors that will determine the odds for a household to recover from a crisis. The findings of this study imply that there is room for the government or any other relevant authorities to intervene to improve the availability and effectiveness of risk coping strategies of rural households in Malaysia.  During the last few decades, Asian economies have experienced tremendous economic growth. According to Balisacan and Fuwa (2007), Asia’s gross domestic product (GDP) growth has consistently outpaced those of other regions of the world in the past thirty years. The region’s economic growth rate averaged about 4.0 per cent per year, while the corresponding figures for developed countries and the world were about 2.6 per cent and 2.7 per cent, respectively. In these emerging market economies including Malaysia, the relatively strong economic growth experienced during the last few decades have led to a considerable decrease in actual poverty rates.  Malaysia has indeed been recognized as one of the countries that has successfully reduced the problem of poverty among its population. In 1970, the poverty level stood at 49.3 percent of the total population. The rate was later reduced to 8.1 percent in 1999 before reaching 3.7 percent in 2011 (Department of Statistics Malaysia, 2011). Another measure of poverty, the hardcore poverty rate has also declined significantly from 1.2 percent in 2004 to 0.7 percent in 2009 (Department of Statistics Malaysia, 2011). The substantial decline in poverty incidence in Malaysia is primarily due to consistent and continuous efforts undertaken by the government in combating the problem through the implementation of various programs and measures.  However, the recent trend in the literature that moved towards the re-conceptualisation of poverty in terms of insecurity or vulnerability, have brought out another issue of how poverty should be tackled in Malaysia.


Government’s Policy, Poverty and Income Distribution in Malaysia

Dr. Mukaramah-Harun, Universiti Utara Malaysia

Dr. Ahmad Zafarullah Abdul Jalil, Universiti Utara Malaysia



The paper aims to highlight the link between government policies represented by the government expenditure policies with the change in poverty and income inequality in Malaysian economy throughout the years. Using a detailed Social Accounting Matrix (SAM) framework for Malaysia and a multiplier model, this paper shows that there is a link between various government policies towards poverty and income distribution with the change in poverty and income inequality throughout the years. The paper also found that the government policies have benefited all household groups by increasing their incomes in all Malaysia Plans.  The SAM constructed in this paper is useful and interesting data. The SAM is more disaggregated, the income mappings are more detailed and the effects on poverty and income distribution are therefore more sensitive to the change of government policy.  The role of the government in economic growth, poverty eradication and income distribution could be executed by its expenditure and taxes. Since taxes compliance in Malaysia is relatively low compared to developed countries, poverty and redistributive policy are more effective through government expenditure. The government can reduce poverty and shape directly the income distribution through its component expenditure design and pattern. Therefore, in all adjustment policies for poverty and income distributions, the government expenditure adjustments could play a key role and hence have received much attention. The primary concern is on the efforts towards ensuring government efficiency in poverty and income distribution that requires measures to increase high-priority related programs and to reduce expenditures on low-priority related programs. This is to ensure that the government expenditure for achieving the objective of low poverty and income equality is utilized efficiently.  There was a remarkable success in reducing poverty of almost all Malaysian. Incidence of poverty decreased tremendously from 52.4 percent of population in 1970 to 3.6 percent of population in 2007. While for income inequality, the Gini Coefficient has slightly reduced to 0.441 in 2009 from 0.506 in 1970. In 1970 poverty was markedly higher among the Malay than other communities. Approximately two-thirds of Malay households were living below the poverty line. Poverty rates among Chinese and Indian households were 27.5 percent and 40.2 percent respectively. As a result of policies adopted by Malaysia, there have been tremendous poverty declines among each of the ethnic groups, such as by 2004 the poverty rates were 7.3 percent, 1.5 percent, and 1.9 percent for the Malay, Chinese, and Indian respectively(1). Ethnic income differences generally narrowed over the years, but poverty is still a phenomenon for the Malay. Presently, the Malay mean household income remains about two times lower than the Chinese and one times lower than the Indian. Furthermore, the urban mean household income is about two times higher than the rural. 


The Impact of Country of Origin on Consumers' Purchasing Intentions

Merve Coskun and Sebnem Burnaz, Istanbul Technical University, Turkey



Although consumers are mostly affected by the brand image, quality, and price information of the product while making purchasing decisions, they also consider the “made in” label that gives the information of the manufacturing country or brand country. Consumers give importance to the knowledge of country of origin (COO) of a product when deciding to purchase since country image related to brand or product might have positive or negative associations in consumers' mind and affect their perceptions. The main objective of this study is to investigate the impact of country of origin as brand country and manufacturing country, brand name, price and product material on purchasing decision. Data were gathered via a questionnaire and mainly conjoint analysis method was used to analyze the data. The sample of the study covered 204 female consumers over 18 years old in Istanbul, Turkey. Leather shoe was selected as the product category and imaginary brands were created for the purpose of the study. The study explores about the importance degree that consumers give to the factors affecting purchasing decision of a leather shoe brand new to the participants. Findings show that female respondents prefer local brands made in home country and price is the most important factor affecting their purchase intention. Also consumer ethnocentrism level of respondents was measured in the context of this study and it is revealed that consumers exhibited upper-middle level of ethnocentrism. It is expected that the results of this study can help leather retailers and manufacturing firms in designing their marketing strategies and managing their brands.  With the increasing impact of globalization, the physical borders between countries begin to lose meaning. In addition, a good produced anywhere in the world is now offered to the consumers all around the world at the same time depending on the rapidly developing technologies. In today's world, the survival of retailers and manufacturing companies is dependent upon target consumers' perceptions about their products. Therefore it is important to analyze how consumers’ purchase intentions are formed as response to the international marketing activities of the firms which want to have global success. The essential way of being competitive for a company is to analyze which criteria are important for consumers in their selection among local and foreign brands and which factors are influential to their decisions and to design marketing strategies based on these analyses.  Products have two different types of properties in terms of consumer preference. One of them is called "intrinsic" related to product's performance and physical properties and the other one is called "extrinsic" related to product's brand name, price, country of origin, packaging etc. Consumers use extrinsic cues if it is the first trial of the product or if they have little information about intrinsic cues of the product. Especially, COO, as one of the extrinsic cues, is used in purchase decision process when the brand is unfamiliar to consumers (Klein et al., 1998; Verlegh and Steenkamp, 1999).


The Distribution of the MNEs Group Tax Bases Between the EU Member States: The Situation in the Czech Republic

Dr. Danuse Nerudova and Dr. Veronika Solilova, Mendel University, Brno, Czech Republic



At present, enterprises belonging to the MNEs group are mostly taxed as separate entities in the state of their residence without the possibility of the consolidation for tax purposes. However, under CCCTB system MNEs group would be able to create one group for taxation purposes and to consolidate its profits and losses. The consolidated tax base of the MNEs group would be shared among the Member States according the allocation formula, taking into account the location of assets, labor force and sales of the enterprise. Member States will impose the tax rate on the tax bases, which will be different from the current situation when separate entity approach is applied. Based on that, the Member States will also raise different tax revenues. The aim of the paper is to draw the map of the division of the MNEs group taxes base between the individual member States in current situation – i.e. when applying separate entity approach, based on the empirical analysis of the data available from the Amadeus database.   European Commission has worked for more than 10 years on the possible model of common system of corporate taxation in the European Union. Its effort resulted into a publication of CCCTB directive proposal on 16th March 2011. The CCCTB proposal represents a unique system. Its aim is to achieve the reduction of compliance costs of taxation, elimination of internal transfer pricing and to establish the possibility of internal cross-border off-setting of losses and profits.  It is considered that under CCCTB system, fair tax competition should be established. CCCTB system aims to harmonize the rules for corporate tax base construction and to provide the possibility of full consolidation of group profits within the European Union while leaving tax rates at the discretion of EU member States. Therefore, the nominal corporate tax should become transparent for the enterprises, because it should reflect real tax burden. In fact, nominal corporate tax base will become comparable due to the application of the unified rules for the tax base construction.  As was already mentioned in the beginning, the introduction of CCCTB system will also help to remove the obstacles to international mergers and acquisitions, resulting from the lack of coordination of capital profit taxation. The problem with transfer pricing should be eliminated as well, which results in to the compliance costs of taxation decrease, not only on the side of the taxpayers but also on the side of the tax authorities. The compliance costs of taxation will be also decreased by the fact, that the companies will no longer face 27 different systems of taxation on the internal market. Last advantage of CCCTB system for MNEs groups represents the fact that it enables the cross-border loss compensation and consolidation.


Insider/Outsider Succession in Russian Nonprofit Organizations:  Views from the Field

Dr. Joseph C. Santora, International School of Management, Paris, France

Dr. James C. Sarros, Monash University, Caulfield, Victoria, Australia

Anna Kalugina, Deputy Financial Director, Open Health Institute, Moscow, Russia

Dr. Mark Esposito, Grenoble Ecole de Management, Grenoble, France & University of Cambridge-CPSL,UK



The aim of this study was to determine the nature of insider vs. outsider succession in nonprofit Russian organizations.  Twenty-nine Russian nonprofit executive directors completed a questionnaire on executive succession and related issues.  Unlike other research findings, the data indicated most executive directors believed insiders were the most likely successors.  Who these successors are, however, remains unclear, and may be as much a feature of the nonprofit sector as it is a feature of the Russian ideology.  More research is needed to clarify this assertion.  This paper attempts to answer some questions about executive succession issues in Russian nonprofit organizations. It focuses on 1) the degree to which Russian nonprofits plan for executive succession, and 2) the selection of insiders/outsiders to replace departing executive directors. As with many events that occur in Russia, the inner workings of its nonprofit sector organizations have often been veiled in secrecy.  This paper peeks into that secrecy by using data collected on succession issues in this sector. Learning about Russian nonprofit succession planning and who is preferred to replace departing Russian nonprofit executive directors could make a meaningful contribution to further our understanding of the nonprofit world in another cultural context. This research not only fills an existing international research gap in the literature, but it also serves as a benchmark for future nonprofit research in the field. Further, it becomes part of the emerging international research on nonprofit succession (e.g., Comini & Fischer, 2009 [Brazil]; Comini, Paolino, & Feitosa, forthcoming [Brazil]; Bassi, forthcoming [Italy]; Bozer & Kuna, forthcoming [Israel]; Godói-de-Sousa & Fischer, 2012 [Brazil], Santora, Sarros, & Cooper, 2011 [Australia and the US]). We begin our article by presenting a brief discussion of the challenges in nonprofit succession. We then introduce the recent literature on insider-outsider selections in nonprofits. Next, we describe the research methods used to collect the data. Then, we present demographic data on the organizations and executives in the study. These data are followed by survey findings and a discussion. Finally, we acknowledge the limitations of the study and conclude with recommendations for future studies.  Tierney (2006) made some dire predictions about the state of nonprofit executive departures. He estimated that more than 600,000 executive departures would occur within the next five years and, in 2016, some 80,000. If Tierney is even remotely correct in his estimates, to what extent are nonprofits prepared to handle such massive departures? To what degree have they planned for these departures? What is impact of the selection process on these organizations? These and other questions need serious thought and answers if the nonprofits are to survive. 


The Relationship Among Firm Size and Firms’ e-business Efficiency

Dr. Bozidar Jakovic, Dr. Lovorka Galetic, Dr. Ivana Nacinovic Braje,

Faculty of Economics and Business, University of Zagreb, Croatia



E-business is a contemporary business organization form which is based upon the intensive application of information, internet and communication technologies in managing current business activities. It helps companies to achieve the competitive advantage on the global market. This paper explores the relationship among the firm size and company’s e-business efficiency. The analysis is performed by using secondary data on the application of the e-business in the companies in 29 European countries, as well as on the primary data obtained by a survey on 252 Croatian companies. A relevant empiric research was conducted which gives up-to-date information on the relationship among firm size on e-business efficiency. The hypothesis that firm size measured as the number of employees affects the e-business efficiency is accepted.  Electronic business (e-business) encompasses the electronic information exchange within the organization, as well as between the organization and all other subjects. New ways for doing business are developed through the innovative usage of information and communication and internet technologies. It helps companies to achieve the competitive advantage on the global market (Jaković, 2012). Furthermore e-business does not consist only of internet companies or sales and purchases on the web, e-business is a much broader concept which includes also the internet related technologies so as to integrate and reorganize the internal company activities, business processes and external linkages (Li, 2006). E-business evolves rapidly and its significance grows, but also the factors that affect it change daily (Chaffey, 2007). Understanding the effective adoption of technological innovations, such as e-business, is arguably one of the key challenges facing organizations (Voola et. al., 2012).  In today's dynamic and uncertain economic and business environment, companies and organizations try to find new ways in order to achieve their strategic goals, and ensure their long-term success. E-business can help organizations gain competitive advantages through connection and automation of processes with their partners, customers, and suppliers, the reduction of processing latencies, the development of new capabilities which would improve service levels while reducing costs, the growth of their assets and their markets, and the facilitation of information and knowledge sharing and exchange (Katsanakis & Kossyva, 2012). Although most countries fully realize the importance of the need to implement the computerized e-business into the vast majority of their businesses, somehow, the large-scaled enterprises during the economic development of a country, often take the lead, and as a result the needs of SME for wanting to be technologically competitive could often be ignored. How to implement computerized e-business into the entire small and medium enterprises should be the challenge and the top priority in the agenda of the government (Wu & Li, 2012).


The Profession of Accountancy in Turkey

Dr. Huseyin Cetin, Necmettin Erbakan University, Konya, Turkey

Tuna Han Samanci, Karamanoglu Mehmet Bey University, Karaman, Turkey



In the present day when globalization is the most determinative element of economic life, accounting and accountancy, which are described as “The Language of Managements,” have an importance that gradually grows, and this process brings professional staff of accountancy in one of indispensible actors of commercial life. Accountants are among the persons of whom national and international managements, establishments, and states feel the need and trust at most or should have confidence anymore, and in this way, accountancy has become one of the professions that are at most preferred.  Accountancy is a profession which is based on a longest past, directs the commercial life along the history with the functions on which it bears, and in this manner, also affects on social life, and has a great significance in terms of both a management and community and state. The accounting systems differentiating from country to country in the historical process have been synchronized with each other in the period in which we are, and so, it has become one of the most important justifications of global economy. In this Study, it will be given information about the profession of accountancy and the professional accounting chambers.  The development of the profession of accountancy has followed a parallel course to the improvement and development of managements. The establishments in which accounting practices are carried out are the industrial, commercial, and service organizations. Accountancy presents a support service for these establishments and organizations. Therefore, the development of these establishments, in particular, the improvement of industrial organizations directly affects on the development of the profession of accountancy.  The root of the modern accounting system used in Turkey is the code of “Kanunname-i Ticaret” (The Code of Commerce) dated 1850, which was regulated based on “Code de Commerce,” which entered into force in France in 1807. This code is known as the first regulation influencing the accountancy in Turkey (Hicsasmaz, 1970: 60). In addition, the practice of the dual accounting method by 1880, which is the foundation of accountancy, is the milestone of the Turkish accounting system. In the formation of the modern Turkish accounting thought, the regulations made in the Tanzimat Period made an important and positive contribution. The development of the profession of accountancy gained speed since the first years of the Republic. Moreover, the legal regulations constituting the revolutions of the Republic granted important effects on the modernization and the developing process of the profession of accountancy. In this development process, the tendency of globalization started to make itself feel in the world by 1980’s. By the effect of the globalization tendency, countries, communities, individuals, and occupations went in this process of change too. The accountancy and its members in profession in Turkey were also affected from these developments. The legal regulations in the field of accountancy now constitute the examples of globalizing tendance (Ayboga, 2003: 329).


The Impact of the Enterprise Resource Planning Systems on Company’s E-business Efficiency

Dr. Mario Spremic, Dr. Bozidar Jakovic, Dr. Ivana Nacinovic Braje, and Dr. Nevenka Cavlek

Faculty of Economics and Business, University of Zagreb, Croatia



Enterprise information systems speed up the flow and communication of information throughout the company, making it easier for businesses to coordinate their daily operations. Electronic business (e-business) is a contemporary business organization form which is based upon the intensive application of information, internet and communication technologies in managing current business activities. In this paper an analysis of the impact of Enterprise resource planning systems (ERP Systems) on the company’s e-business efficiency is made. The analysis is based upon the secondary data on the application of the e-business in the companies in 29 European countries, as well as on the primary data obtained by a survey on 252 Croatian companies. A relevant empirical research was conducted (using Hi-square and T-test of arithmetic mean differences) which provides new evidence on the impact of number of employees on e-business efficiency. The hypothesis that indeed number of employees affects the e-business efficiency is accepted.  New ways for doing business are developed through the innovative usage of information and communication and internet technologies. E-business encompasses the electronic information exchange within the organization, as well as between the organization and all other subjects. It helps companies to achieve the competitive advantage on the global market (Jaković, 2012). Furthermore e-business does not consist only of internet companies or sales and purchases on the web, e-business is a much broader concept which includes also the internet related technologies so as to integrate and reorganize the internal company activities, business processes and external linkages (Li, 2006). E-business evolves rapidly and its significance grows, but also the factors that affect it change daily (Chaffey, 2007). Understanding the effective adoption of technological innovations, such as e-business, is arguably one of the key challenges facing organizations (Voola et. al., 2012). In today's dynamic and uncertain economic and business environment, companies and organizations try to find new ways in order to achieve their strategic goals, and ensure their long-term success. E-business can help organizations gain competitive advantages through connection and automation of processes with their partners, customers, and suppliers, the reduction of processing latencies, the development of new capabilities which would improve service levels while reducing costs, the growth of their assets and their markets, and the facilitation of information and knowledge sharing and exchange (Katsanakis & Kossyva, 2012). Although most countries fully realize the importance of the need to implement the computerized e-business into the vast majority of their businesses, somehow, the large-scaled enterprises during the economic development of a country, often take the lead, and as a result the needs of SME for wanting to be technologically competitive could often be ignored. How to implement computerized e-business into the entire small and medium enterprises should be the challenge and the top priority in the agenda of the government (Wu & Li, 2012).


Using Score Carding Processes to Identify Barriers for Total Performance Rating (TPR) Values in a Commodity Association

Dr. Roger D. Hanagriff and Dr. Robert Strong, Texas A&M University, TX



The objectives of this study were to demographically describe this beef breed association’s membership and to determine membership’s perceived barriers to Total Performance Rating (TPR) values. Results are derived from 282 member survey responses from a census of all 527 active association members, which is a 53% response rate. Respondents were mostly: from Texas (48.7%), over 45 years of age (79.4%), have less than 50 head (50.0%), earning less than 40% of their income on the ranch (86%), and describe their ranch as a Seedstock enterprise (52%). This study finds that members are utilizing the breed characteristics they find important in their business and marketing decisions and little discrepancy between the importance of breed characteristics and use of those items can be found.  However, there are rankings of high use and importance variables such as docility, maternal, weaning weights, yearling birth weights, body condition score and yearling weights.  These contrasts the lower valued or used areas of rib eye area, hot carcass weight and intramuscular fat.  Member’s perceived barriers to implementing more TPR performance measures resulted in that none of the previously determined barriers ranked as an agreed barrier to implementation, which identifies there is use in the promoting and management of the association.  Research has indicated that consumers are increasingly interested in branded products that offer product attributes aligned with their demand preferences (Howard and Allen 2006, Velasquez, Eastman, and Masiunas 2005, Patterson et al. 1999, Adelaja, Brumfield, and Lininger 1990).  As these consumer preferences increase, the associated commodity groups also create stronger alliances that assist their producers in building stronger genetics, improved supply chain control and marketability. Commodity associations have long attempted to support their associated industries in a variety of manners.  This business association sometimes acts as an individual business with a focus to gain profits and reduce risk.  According to Pascale et al. (2000), firms must be proactive in managing uncertainty to create long-term value because uncertainty has upside potential as well as a downside exposure.  Focusing only on un-certainty avoidance, as is typically the case in analyzing risk could cause a firm to overlook opportunities to create value (Nottingham 1996, Talavera 2004).  Detre et al. (2006) suggest a scorecard approach to measuring operation decisions by taking areas of the operation and qualitatively measuring potential opportunities and exposures for each area.  This is sometimes called score carding and heat mapping and they apply a mental model that frames assessment of uncertainty from both a potential and an exposure perspective. Score carding consists of taking qualitative discussions about strategic uncertainties and turning these discussions into ordinal rankings. Heat mapping, a process of taking the rankings from score carding utilizing both colors/symbols and generic strategies to communicate the impact of the uncertainty on the business, further operationalizes the assessment process. In essence, these mental models are designed to promote and generate discussion around key areas of uncertainty through a systematic framework that directs the firm in selecting an appropriate uncertainty management strategy (Detre et al. 2006).


Corporate Governance in Croatian Banks

Dr. Marijana Ivanov, University of Zagreb, Croatia

Ante Roncevic, Croatian Radio-television, Zagreb, Croatia

Dr. Jurica Simurina, University of Zagreb, Croatia



The purpose of this paper is to analyses the quality of corporate governance in Croatian banking industry given the requirements and standards known as OECD Principles of Corporate Governance, but also given the recent failure of banks in Croatia. The paper provides an assessment of fulfillment of normative frame of corporate governance in terms of creating the legal and institutional regulatory framework as well as the degree of objectives given the best practices available. It also provides an evaluation of the banks in Croatia in terms of meeting the set of standards and best practices in corporate governance. We found that although formally most requirements are met, performance by mostly small and state owned banks in Croatia given their corporate governance may be considered flawed.  The corporate governance can be defined as a system by which companies are directed and controlled including the relationships among management, the board of directors, shareholders, and other stakeholders in a company. These relationships provide a framework within which corporate objectives are set and performance is monitored (Monks and Minow, 2011).  Depending on the context in which they are presented or used, it is possible to identify (1) internal and (2) external mechanisms of corporate governance (Tipurić et al, 2008). The main internal mechanisms of corporate governance are: board of directors (or dual model with separated supervisory board and management board), executive compensation, ownership concentration, stakeholder relations and disclosure. External mechanisms includes: the market for corporate control, legal and regulatory framework including activities of supervisory authorities, protection of minority shareholders and competitive conditions.  Modern processes of corporate governance development in Croatia started in the late 1980s and continued during 1990s. This period is characterized by privatization process of state owned enterprises and banks alike. Basic rules of corporate governance were laid down by appropriate legislation, including the Croatian Companies Act, the Constitutional Court Decision, the Croatian Securities Market Act and other regulations governing accounting and auditing issues. In order to develop the best corporate governance practice in Croatia, the Croatian Financial Services Supervisory Agency (CFSSA) and the Zagreb Stock Exchange (ZSE) have created a national Code of Corporate Governance (ZSE, 2007) adopted in 2010.


Effects of Demographic Variables on Organizational Commitment Among Employess’

Dr. Razali Mat Zin, King Fahd University of Petroleum and Minerals, Saudi Arabia



This empirical study examined the relationships between three dimensions of organization commitment and three selected personal characteristics (age, education level and salary), The model tested in this research is based on the pioneering work of Meyer and Allen in 1997. The survey instruments were administered to one hundred and fifty engineers who are Saudi nationals working full-time in Saudi Aramco. The results support Meyer and Allen's argument that employees with less education are likely to have fewer job alternatives, and therefore, are more likely to be committed. Also, employees with higher salaries were more committed than employees with lower salaries. This study can provide superiors and subordinates with a better understanding of how to successfully operate in this modern era of business environment.  One of the main concerns for many companies today is staff retention. Employees leaving their organizations or intending to leave their organizations are costing these organizations substantially. Because of this adverse effect on organizations, employees' commitment to their organizations and intentions to leave are two important predictors of the turnover of employees.  Saudi Arabia is witnessing an unprecedented unemployment phenomenon. One main reasons for such a gloomy situation is that the education system and the labor market are poorly aligned (Moussa, 2013). The curriculum content is largely controlled by a religion-based authority whose members are not equipped with the skills to judge the requirements of the market demand. In addition, many Saudi nationals are not prepared or motivated to meet the requirements of the private sector. Furthermore, current policies do not address concerns of employers as the needs to hire nationals differ from one industry to another (Fakeeh, 2009).  Companies survive and prosper when they succeed in retaining and maintaining their skilled employees. Employee loyalty inevitably becomes a crucial item for companies to remain at and maintain a competitive advantage. Delivering superior value to employees through fair organizational processes and procedures helps in retaining and increasing employees' loyalty.  The Saudi culture in many companies has been identified as a repelling environment for Saudis, forcing many Saudis to quit their jobs, and for others to be less committed (Madhi & Barrientos, 2003). Thus, understanding more about the correlates of  organizational commitment in a Saudi context may provide clues to enhancing organizational effectiveness. The findings of this study can guide the managers in Saudi Arabia adapt their management approaches to be more consistent with the relevant  perspectives on organizational commitment.


Possible Approach to the Implementation of IFRS for SMEs over the World

Dr. Veronika Blaskova and Dr. Hana Bohusova, Mendel University, Brno, Czech Republic



Small and medium sized companies (SMEs) have an important position in the economy, mainly in the area of employment. They represent a heterogeneous group, possessing different size, sector, or location. Due to the growing significance of SMEs over the world, the harmonization of financial reporting of SMEs seems to be necessary. There was developed a special standard for SMEs (IFRS for SMEs) which could meet the financial reporting needs of these entities. There are approximately 80 countries over the world which have already adopted or planning to adopt the IFRS for SMEs. The adoption of the IFRS for SMEs is voluntary; however, it is expected that the standard will gradually become world-wide accepted.  The aim of the paper is a predictive model concerning the potential adoption of the IFRS for SME   development. The model development is based on evaluation of the current approach to the IFRS for SME adoption and implementation over the world. The model construction is based on indicators describing individual countries which have already adopted the IFRS for SMEs. The statistical methods are used for the comparison of countries which have already adopted the IFRS for SMEs with those which have not adopted it yet. The level of economic development and other characteristics are used for comparison. The  t-test reveals whether the values of the indicators differ in case of countries, which have already adopted the IFRS for SMEs and countries, which do not intend to adopt it.  Small and medium sized companies (SMEs) have an important position in the economy, mainly in the area of employment despite the fact that until the mid of 20th century most researchers considered SMEs as an impediment to further economic development and SME.  Due to the growing significance of SMEs over the world, the harmonization of financial reporting of SMEs seems to be necessary. This is the reason why the International Accounting Standards Board (IASB) took  part in the project IFRS for SMEs development. The publishing of final version of IFRS for SMEs in July 2009 was the final result of this project.  The main aim of a special standard for SMEs (IFRS for SMEs) is to meet the financial reporting needs of entities that do not have public accountability and publish general purpose financial statements for external users. This standard could be a suitable instrument for a SMEs financial reporting harmonization. The IFRS for SMEs is aimed at millions of companies, which represent over 99% of all companies all over the world. The adoption of the IFRS for SMEs is voluntary; however, IASB expects that the standard will gradually become world-wide accepted.  In the PricewaterhouseCoopers study concerning the development of the IFRS for SMEs (2006) is stated that the adoption of the IFRS would provide a lot of benefits to SMEs. The adoption will improve the comparability of financial information of SMEs at either national or international levels. It will make easier to implement planned cross-border acquisitions and to initiate proposed partnerships or cooperation agreements with foreign entities. It can help SMEs to reach international markets. It can have a positive effect on the credit rating scores of enterprises, this can strengthen SMEs’ relationships with credit institutions. The adoption of IFRSs will enhance the financial health of the SMEs, as well. More than 80 jurisdictions have already the IFRS for SME adopted or stated a plan to adopt.


Data Mining Application in Forecasting the Demand for Oil in Saudi Arabia

Dr. Mohammed A. Al-Sahlawi, Professor of Energy Economics,

King Fahd University of Petroleum & Minerals, Dhahran, Saudi Arabia



Saudi Arabia possess almost one-fifth of the world’s proven oil reserves, it is the largest producer and exporter of oil in the world, and maintains the world’s largest oil production. Saudi Arabia was the world’s leading producer and exporter of total petroleum liquids in 2012.  Its economy remains heavily dependent on oil where petroleum exports accounted for almost 90 percent of total export revenues in 2011.  However, Saudi Arabia is the major consumer of oil and oil products in the Middle East, particularly in the area of transportation and power generation.  Domestic consumption growth has been spurred by the economic boom as a result of historically high oil prices and large fuel subsidies.  Saudi Arabia ranked the world’s 13th largest consumer of total primary energy in 2009, of which about 60 percent was petroleum-based.  Given these facts, the Saudi demand for oil became an important issue.  This paper is focusing on forecasting the demand for oil in Saudi Arabia using data mining method. Since first oil crisis of 1973, energy demand and supply received the highest attention of academics as well as policy makers.  Energy modeling in general and modeling energy demand in particular became a very essential task for planning and management purposes.  Bhattacharyya and Timilsina (2009) provides a recent survey of energy demand models.  Most of the studies surveyed concentrate on estimating demand elasticities for different types of energy mainly oil and oil products in developed countries.  However, Alsahlawi (1988) studies the demand for energy in the GCC countries.  An early attempt of estimating and forecasting the demand for oil and oil products in Saudi Arabia is Alsahalwi (1997).  Moreover, econometric analysis is the general feature of most energy demand studies.  However, variation in energy modeling and differences in energy demand models are attributed to many factors such as energy types, various economic sectors, data availability, estimation periods, and economic development level of the countries.  One important outcome of energy modeling is forecasting the demand for energy.  There are several forecasting techniques vary with their ultimate applications and their relevance to a particular country or an economic sector.   This is true in the case of Saudi Arabia where the quality or magnitude of data is relatively poor. Utilizing Data Mining, the demand for oil in Saudi Arabia is forecasted to the year 2030.   In this paper data mining technique has been applied in forecasting the demand for oil in Saudi Arabia.  The results have wide perspective policy implications given the noticeable rapid increase in Saudi oil consumption.  The implications include among others increase the price of oil product and developed ways to rationalize energy consumption.


The Mediating effect of Customer Involvement and Brand Image on e-CRM Implementation and Brand adaption: An Empirical Study in Franchising System

Dr. Mohammad A. Al-Motairi and Soad A. Al-Meshal, King Saud University, Riyadh Saudi Arabia



This study investigated different relationship paths between e-CRM implementation and brand adoption in franchising systems. More than that, this study explored the mediating effects of two mediating variables namely, customer involvement and brand image on the e-CRM implementation and brand adoption relationship. Participants were 200 male and female franchising consumers from different positions, social classes and ages.  The findings of this study showed positive and significant relationships that contributed to the academic and practitioner perspectives.  Findings, implications, limitations and future studies were provided. Due to the importance of CRM as part of the revolutionary impact of technology, an integration of web channels enhances businesses to interact more with the consumers (Feinberg & Kadam, 2002). Therefore, e-CRM has greater promise for the businesses as a solution brought into the businesses (Bentum & Stone, 2005; Q. Chen & Chen, 2004; Jang, Hu et al., 2006; Lin & Huang, 2007).  Accordingly, franchising as a contractual choice for business expansion is mainly based on relationships between companies and customers (Kavaliausk & Vaiginiené, 2011). The major goal for franchising companies is to increase the level of adoption for their brands. This will directly affect the profit level and customer satisfaction. However, taking into consideration the e-CRM implementation as a strategic tool, two main constructs could have an essential role in brand adoption level: customer involvement and brand image.  Therefore, this study investigates the mediating effect of these two constructs on e-CRM implementation and brand adoption in franchising systems. The aim of this study is to identify the mediation effects of customer involvement and brand image on the relationship between the independent variable e-CRM implementation and brand adoption, a dependent variable in franchising systems in the Saudi Arabian context.  The increasing emphasis on building committed customer relationships is the core of any successful organization (Pennie et al., 2011). Thus, a customer–based approach is becoming the ever increasing trend in businesses today. The franchising business is gaining increasing interest from both producers and consumers alike; as brand adoption strongly varies across brand categories, there is a real need to further research such phenomena in the Saudi context. This study will contribute in several ways. First, it will investigate the current e-CRM implementation in franchising systems in the Saudi context. Second, it will help to clarify the mediating effects of some important constructs: customer involvement and brand image. Third, it will provide some empirical evidence of e-CRM implementation and brand adoption. Finally, a knowledge contribution to the relevant literature will be provided.


Do Financial Constraints Matter to Earnings Management?

Mei-Hsiu Tsai, National Taichung University of Science and Technology, Taichung, Taiwan



This paper aims to initially take one step advance to discuss the effect of financial constraints on earnings management, rather than to survey the effect of financial distress on earnings management. This study explores the earnings management of financial constraint and non-financial constraint firms in Taiwan, and finds that financially constrained firms significantly affect corporate earnings’ manipulative behavior, especially abnormal accruals, while non-operational incomes are not notably utilized by financially constrained firms. We find that external auditors will lean on financially distressed firms to employ conservative accounting policy, with the purpose of reducing audit risk. Similar with the financially distressed company, the financially constrained company also has this kind of phenomenon. The continuing series of business scandals, from Enron to WorldCom, reveal evidence that financially distressed firms manipulate earnings to conceal the truth of their encountering financial crisis, only to be eventually discovered and lead to a major world stock market crash, as well as fear by investors and the public. Furthermore, prior literature stresses how pre-bankruptcy firms have motivation for earnings management to cover any financial distress they face (Lin et al., 1997; DeAngelo et al., 1994). Baum et al. (2011) test how the financial system’s structure and level of development influence their financial constraints. Chen and Wang (2012) examine how the financial constraints of repurchasing firms affect their post-buyback performance. Behr et al. (2013) investigate whether and how financial constraints of private firms depend upon bank lending behavior. Until now, to the author’s knowledge, little research studies whether the financial constraint influence earnings management of firms. Except financial distress, furthermore, the covenant hypothesis of positive accounting theory predicts managers from firms approaching debt covenant violation incline to inflate book earning in attempt to loosen the possibility of debt covenant violation. By using a sample of 94 firms that reported covenant violations in annual reports, DeFond and Jiambalvo (1994) test this hypothesis by examining the abnormal total and working capital accruals. Time-series and cross-sectional models are used to estimate normal accruals. Over the year prior to violation, both models indicate that abnormal total and working capital accruals are significantly positive. Additionally, in the year of violation, there is evidence of positive abnormal working capital accruals after controlling for management changes and auditor going-concern qualifications. Conversely, Lin et al. (1997) do not find non-operational income used by financial distress firms, since CPA firms will compel financial distress firms to employ conservative accounting policy, with the aim to reducing audit risk. Beneish (1997) indicates firms with extreme financial performance, such as financial distress, limits efficacy of accrual models.



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