Giulio Greco

Determinants of board and audit committee meeting frequency: Evidence from Italian companies

Purpose - This purpose of this paper is to investigate the determinants of board and audit committee meeting frequency. Design/methodology/approach - The determinants studied are related to the ownership structure and to the board characteristics. The study is conducted in an agency setting featured by high ownership concentration and large insider shareholders. Hypotheses are developed based on agency theory. The empirical evidence is provided by a sample of Italian listed companies. Negative binomial regression is used in the multivariate analysis to test the relationships. Robustness checks provide further empirical support. Findings - The paper finds that insider ownership negatively impacts – either on the board or on the audit committee meeting frequency – whilst the proportion of independent directors in the board has a positive impact. This evidence is consistent with the hypothesis that insider ownership and board independent monitoring are substitute control mechanisms. The findings also show that audit committees are more active in larger firms. Originality/value - The paper provides an agency theory-based explanation of the board and the audit committee meeting frequency, in a setting featured by large controlling shareholders.

From Tuscany to Victoria: Some Determinants of Sustainability Reporting by Local Councils

Abstract This paper seeks to respond to recent calls by the academic community for studies investigating sustainability reporting by the public sector, as well as for more engagement-based studies of this issue by examining the views of managers within local councils (LC). The objective of this project is to provide insights as to the possible reasons and explanations for the types of sustainability disclosures among a group of local councils operating in Italy and Australia. In particular, an international comparison is undertaken to ascertain the effect of culture on the adoption of sustainability reporting (SR). Evidence is collected from semi-structured interviews with managers and accountants from ten local councils consisting of five from Italy (Tuscany) and five from Australia (Victoria). The findings suggest that although there are available some general policy documents relating to sustainability reporting, councils are left to their own discretion as to what they consider fit under the definition of sustainability and therefore, determine to a large extent, what to report to stakeholders. Moreover, there was a range of legitimacy type behaviours displayed by a number of councils while others were influenced by notions of public sector accountability and transparency. Adopting Hofstedes cultural framework, the research also highlights the relevance of the Italian and Australian cultural settings in shaping the SR practices used by LCs. The findings suggest that differences regarding cultural dimensions, such as ‘power distance’ and ‘uncertainty avoidance’, influence key aspects of SR.

The Influence of Stakeholder Engagement on Sustainability Reporting: Evidence from Italian local councils

This study investigates the motivations of local councils for producing a sustainability report. Inter-connecting theories of legitimacy, accountability, and the New Public Management are used to structure an investigation that explains patterns of behaviours by Italian local councils. The project assesses if, and how, stakeholder engagement can influence the local councils’ decision-making process through the adoption of sustainability reporting. Semi-structured interviews were conducted with the sustainability report preparers of a sample of Italian local councils. The findings demonstrate that initially sustainability reporting is introduced for accountability and legitimacy reasons. However, over time traditional sustainability reporting was incidental to more sophisticated tools of policy-making and reporting, in which some of the stakeholders were actively involved. The findings highlight the political negotiations in which sustainability reporting finds itself. The stakeholder engagement projects implement legitimizing strategies within the context of the search for an arrangement between political programs and stakeholder demands.

Full cost accounting in the analysis of separated waste collection efficiency: A methodological proposal.

Recycling implies additional costs for separated municipal solid waste (MSW) collection. The aim of the present study is to propose and implement a management tool - the full cost accounting (FCA) method - to calculate the full collection costs of different types of waste. Our analysis aims for a better understanding of the difficulties of putting FCA into practice in the MSW sector. We propose a FCA methodology that uses standard cost and actual quantities to calculate the collection costs of separate and undifferentiated waste. Our methodology allows cost efficiency analysis and benchmarking, overcoming problems related to firm-specific accounting choices, earnings management policies and purchase policies. Our methodology allows benchmarking and variance analysis that can be used to identify the causes of off-standards performance and guide managers to deploy resources more efficiently. Our methodology can be implemented by companies lacking a sophisticated management accounting system.

Exploring intellectual capital in family firms. An empirical investigation

We investigate the influence of family ownership and family involvement in the management on the firms intellectual capital (IC). The resource-based theory of the firm predicts both benefits and disadvantages of the family on the firms IC. Using Pulics VAIC as a proxy for the IC of the company, we test two sets of competing hypotheses through multivariate regressions of panel data from Italian listed companies. The results show that family firms have a significantly higher average VAIC than non-family firms. We find a non-linear association between family involvement in the management and IC. At lower levels, the family involvement has a positive association with IC. At higher levels, when the benefits of the family interaction with the business are overcompensated by the disadvantages, the relationship reverses and becomes negative. The research can contribute to both the academic literature on intellectual capital and to family business studies.

The Influence of Family Ownership on Long-Lived Asset Write-Offs

Building on agency theory, this article investigates whether family firms’ accounting behavior regarding long-lived asset write-offs differs from that of nonfamily firms. We provide evidence that nonfamily firms use write-offs for earnings management purposes, while family firms report write-offs coherent with the firm performance. Family firms experience dwindling sales and lower profitability in the years following the write-offs, consistently with an effective decline in their assets value. The findings are consistent with reduced owner-manager agency conflicts in family firms. We find no indication of family entrenchment, which is consistent with family owners being concerned with the reputational damage associated with a loss of a firm’s asset value.

Corporate Governance in Italian Listed Companies

In the past few decades a growing number of research studies have investigated the effect that insider ownership has on other corporate governance variables like the risk of expropriation for the minor shareholders, the demand for outside directors, etc. An increasing number of studies have analyzed the relationship between insider ownership and corporate performance in Anglo-Saxon countries, Continental Europe and emerging economies.

Controlling and reporting for strategy

Management Control is an academic journal devoted to the advancement of management control, management accounting and information systems knowledge. The journal provides a forum for the exchange of insights, knowledge and information based on both theoretical development and empirical evidence. Our mission to publish high quality research manuscripts goes on with this special issue of Management Control, including a selection of five papers presented at the 1 Workshop of the Management Control Journal “Controlling and reporting for strategy”, held in Pisa in February 2012. Drawing on the literature on accounting change and on the impacts of organizational life-cycle on management accounting systems, the first paper by Zoni, Dossi and Morelli discusses how the MAS change process differentiates through the organization lifecycle. The field study suggests that, to achieve successful MAS changes, the organization should focus on the design phase at the organizations’ birth and at its revival stages. In the growth, maturity and decline stages, the organization should instead focus on the implementation phase. The second article by Chiucchi, Gatti and Marasca investigates the relationship between MAS and ERP systems in a medium-sized firm. In a departure from prior research, the Authors also focus on the way MAS can influence the design, the implementation and the use of ERP systems. Interestingly, the paper found evidence of a bidirectional relationship between MAS and ERP systems.

Cause e implicazioni del cambiamento del revisore

This paper explores causes and implications of the auditor changes. We investigate the US setting in which the changes are voluntary and there is mandatory disclosure about the reasons for the change. The findings show that changes with a departing Big-4 are motivated by the auditor’s concerns about the client firm weaknesses in internal control processes and compliance with law. The changes between Non-Big-4 auditors are associated with the issuance of going concern qualified opinions, suggesting possible audit opinion shopping by client firms. The switches from a Non-Big-4 to a Big-4 auditor are associated with issues related to the application of accounting standards. Overall, our findings suggest that changes allow auditors to better organise their audit, and balance the objectives of their assignments and the maintenance of effective client relations. The balance of reasonably effective internal controls systems and of risk-proportioned audit fees is at the core of negotiations between audit and client firms. Also, the search for more effective audit and higher governance and financial markets reputation may motivate the switch from a smaller audit firm to a Big-4. The information regarding auditor changes can shed light upon the financial reporting practices and management behaviour, signalling to investors any potential misrepresentation, to the management potential risk areas and to regulators where they might need to intervene to enforce auditor and management independence.

Governance codes and types of issuer: a global study

We study the relationship between the types of issuer and the contents of the governance codes in the new-institutional theory, using a global sample of over 70 national governance codes. We hypothesise that the code recommendations are influenced by the isomorphic pressure to embrace new social practices, exerted by the different types of issuer. The findings show that codes issued involving multiple stakeholder groups and organisations in hybrid committees are more likely to: 1) include recommendations that take into account multiple political and social institutional demands; 2) adapt the mainstream agency-theory-based governance model to the national setting. Overall, the policy-making negotiations among different stakeholder groups in the local institutional setting appear to be determinant in shaping the recommendations of the code and in improving the promotion of good governance among firms. To the best of our knowledge, this is the first study to systematically investigate the relationship between the types of issuer and the contents of codes, in a global sample.