Kieran James

Institutional investors, political connection and audit quality in Malaysia

Purpose - The purpose of this paper is to extend the audit pricing literature by examining whether institutional investors and political connection are associated with higher audit fees. Design/methodology/approach - Both descriptive and multivariate analyses are employed to address the research objectives. In addition, the authors use panel data to control for both heterocedasticity and contemporaneous correlations in each cross-section. Findings - Based on a panel analysis of 390 Malaysian firms from 1999 to 2003, a positive relationship between institutional ownership and audit fees is found, although the economic impact is minimal. Further, the authors find that audit fees are higher for politically connected firms. Research limitations/implications - A thorough examination on the role of political connection is much warranted to provide a better understanding on such connection influences the audit market. Originality/value - This paper provides an alternative view on the role of political connection, and on how they influence the audit market.

Political connections, corporate governance and audit fees in Malaysia

Purpose - The purpose of this paper is to examine the relationship between political connection, corporate governance and audit fees in Malaysia. Specifically, it is argued that politically connected firms are perceived to be riskier and thus require auditors to undertake greater audit efforts which in turn lead to higher audit fee. Furthermore, it is also hypothesised that the demand for better corporate governance practices requires more audit effort exert from the auditors, and the demand for higher quality work is expected to be stronger for politically connected firms as these firms are being perceived to have higher risks. This is turn results in higher fees paid to the external auditor. Design/methodology/approach - This paper employs panel regression analysis. The panel data set consists of 382 non-financial firms (1,022 observations) for three years from year 2001 to 2003. Findings - Based on 1,022 firm-year observations for the period of 2001 to 2003, the results reveal that politically connected firms pay higher audit fees, while firms with better governance demand a higher audit quality, leading to higher audit fees. However, there is no evidence to support that corporate governance demands for a higher quality audit especially for politically connected firms. Originality/value - This paper contributes to the corporate governance-audit fees literature by examining a large number of corporate governance variables based on the Malaysian Code on Corporate Governance. In particular, instead of using several individual governance variables such as audit committee, board structure or composition, this study condensed the large number of corporate governance variables into a single index. Furthermore, this study was conducted in Malaysia, which is a unique environment that offers clear identifiable segments based along ethnic line, whereby, politically favoured firms are generally given special privileges by the government.

Antecedents and organisational performance implications of internal audit effectiveness: Some propositions and research agenda

– The purpose of this paper is to synthesize relevant theoretical and empirical literature to develop propositions and suggest a research agenda on the antecedents and organisational performance implications of internal audit effectiveness., – The paper employs institutional theory and Karl Marxs theory of the “circuit of industrial capital” to synthesize relevant internal audit literature to develop theoretically justifiable propositions and highlight an operational research agenda., – Propositions and a research agenda are provided on potential antecedents of internal audit effectiveness and its possible association with company performance measured as rate of return on capital employed. Also, key variables are identified and operationalisation issues discussed., – As the extant literature does not provide a canon of internal audit effectiveness, the papers originality is its argument that a positive association between compliance with standards for the professional practice of internal auditors and organisational goal achievement could serve as an approach to assess internal audit effectiveness. Furthermore, the use of the two theories in combination provides additional insights into identifying the antecedents of internal audit effectiveness and its measurement.

Accounting professionalization amidst alternating state ideology in Ethiopia

Purpose - This study aims to examine accounting professionalization in Ethiopia focusing on how the state, occupational group struggle and transnational accountancy bodies influence the realization of closure. Design/methodology/approach - A qualitative research approach is employed. Data were collected using document review and oral history approaches. Findings - Accounting professionalization in Ethiopia was initiated by the state to strengthen the countrys financial system. Owing to a change of state ideology to communism in 1974, a strategy of developing accounting professionals as government-employed experts was pursued. The return to a market-oriented economy in 1991 has seen a trend towards a more autonomous accountancy profession. Inflow of UK capital in the early twentieth century and activities of the UK-based Association of Chartered Certified Accountants (ACCA) in recent decades have influenced Ethiopias accountancy. Its professional and financial power has enabled ACCA to make arrangements with Ethiopian Professional Association of Accountants and Auditors (EPAAA) and consolidate its position in Ethiopias accountancy by controlling EPAAAs member training and certification. Originality/value - The literature on accounting professional projects in developing countries has focused on imperialistic influence in former British colonies. The present study extends this literature by illustrating how British influence has continued to extend beyond Britains former colonial possessions. This enables an understanding of the dynamics of accounting professional projects in the developing world with analytical dimensions building on the hitherto dominant lens of “formal” colonial connection.

This is England: punk rock's realist/idealist dialectic and its implications for critical accounting education

Abstract This paper studies the lyrics of two songs from the Clash, one of the two most important bands from the U.K.’s ‘first wave of punk’ scene. The paper interprets the songs within their institutional, social, economic and political context, i.e. pre-Thatcher and Thatcher Britain. I then draw out the implications of the Clash’s punk ideology for critical accounting educators today, and especially the implications for ethics education. The Clash’s message and moral compass are especially relevant today as (like the Clash’s England) both Bush’s America and an immediately post-Howard Australia have been vastly altered by a harsh neo-liberalism under which alternative (and especially collectivist) voices have been frequently mocked and suppressed. The Clash was able to simultaneously be both realist and idealist and, whilst this contradiction captured the hearts of many, the classic line-up of the band was to disintegrate under the weight of its own contradictions. The critical accounting community is reminded to continue to aspire to both aspects of the realist/idealist dialectic that is so vividly apparent in the Clash’s powerful and poignant early work and especially from the self-titled debut album up to Sandinista!

Accounting conservatism in Greater China: the influence of institutions and incentives

Purpose - The aim of the research is to use variations in measured accounting conservatism to gain a deeper understanding about the reporting incentives created by a countrys institutional structure. Design/methodology/approach - Geographic proximity, cultural affinity and integrated economic relations provide Greater China with a unique setting for studying cross-country differences in institutional characteristics which affect the demand for accounting conservatism. Ball and Shivakumar contend that the economic role of conditional conservatism is an important attribute of financial reporting quality because it improves the efficiency of contracting, reduces information asymmetry and improves corporate governance. Findings - The empirical results indicate that Hong Kong is the most conservative economy, followed by Taiwan and China, implying that the legal/judicial system, regulatory environment and political economy of different countries are the pivotal forces which drive accounting conservatism. Overall, the evidence suggests that a countrys institutional structures interact strongly with reporting incentives in determining accounting conservatism. Originality/value - This research examines cross-country differences in financial reporting quality by contrasting the influence of country-specific institutional factors on financial reporting incentives for conservative accounting practices. It is expected that this research will have important policy implication.

Romanian accounting profession: erudition and perspectives

Accounting, the accounting system and the accounting profession are all dimensions, which are deeply influenced by economic, social and political evolutions of the Romanian existence from the first considered paper within Romanian accounting literature (1792) until today. We therefore set out our attempt at following how changes in political ideology and other related influential factors induce significant changes in all this above-mentioned dimensions. Historical realities lead us from the Romanian provinces, to monarchy, communism and todays savage capitalism. Historical realities prove to be a significant force for maintaining national accounting values and culture, regardless of their amplitude at a certain time in their evolution. Beyond accounting professions evolution, development and positioning within the field of accounting, our study provides a critical analysis on the accounting professions capacity of contributing to the evolving of the so-called global accounting standards, undertaken by IASB. We therefore suggest the utilisation of a system for quantifying the capacity of the national accounting profession to participate at developing the global accounting environment.

The development of internal auditing in Ethiopia: the role of institutional norms

Purpose - The purpose of this paper is to examine the extent to which institutional norms determine attributes of internal audit practices and how institutional changes explain the development of these practices. Design/methodology/approach - The authors employed a qualitative research approach based on archival analysis and interview evidence. Findings - Findings indicate that regulation-based institutional norms explain the adoption of internal audit and the functions characteristics in Ethiopian organizations. Furthermore, innovative introduction of internal audit practices originate within individual organizations and eventually get institutionalized through diffusion. Such innovations are associated with organizational size, top management characteristics, internal audit advancement in technology, and exogenous input from the external environment. Widely accepted internal audit practices, as institutional norms, are not always taken-for-granted at the level of individual organizations. The institutional change perspective enables explaining how new internal audit approaches are introduced to supplant old ones. Originality/value - This study theorizes the development of internal audit practices from an institutional change perspective. Being the first study to do so, it contributes to the understanding of key drivers of institutional change that initiate new institutional norms that foster the development of internal audit through introduction and diffusion of new audit practices as old ones are deinstitutionalized.

Where to now, Melbourne Croatia? Football federation Australia's use of accounting numbers to institute exclusion upon ethnic clubs

Purpose - The purpose of this paper is to review the cancellation of Australias National Soccer League (NSL) competition and its replacement in 2004 with the corporatist A-League which is based on the North American model of “one team one city”, no promotion and relegation, and private-equity clubs. The authors believe that one of the aims of the A-League and its “ground-zero” ideology was to institute exclusion of the ethnic clubs that had formed the backbone of the NSL for 30 years. Design/methodology/approach - Extensive literature search, participant-observation, one personal interview and two group interviews were employed. People interviewed were the President of the Croatian communitys Melbourne Knights Football Club, the Club Secretary of Melbourne Knights, and three leaders of Melbourne Knights’ MCF hooligan firm. Findings - The authors observe the Football Federation Australia hiding behind the perceived scientific nature and technical veracity of budgeted accounting numbers to set the financial bar too high for the ethnic clubs to find a place in the brave new world that has been called “Modern Football”. However, capitalism creates its own discontents. Online forums and homemade fence banners are the new vehicles for dissent for the supporters of “Old Soccer”. Originality/value - There is still only a small academic literature on Australian football and most of this has been written by humanities lecturers. The paper offers a business school perspective.

Living the punk life in Green Bay, Wisconsin: exploring contradiction in the music of NOFX

This article studies song lyrics from three mid-period songs written and performed by Californian punk band NOFX. I discuss NOFXs skilful exploration of contradiction in the three selected songs, two of which are character studies of a single young male individual. The questions that the songs pose in true dialectical fashion (but do not definitively answer) include: Is it possible to maintain the carefree existential existence of the archetypal punk rocker in the face of the constraints imposed by suburban life and the voices of middle-class moderation? Can a Jewish gang in Fairfax, Los Angeles simultaneously affirm group self-identity, defend its turf, and practise its (marginalized) religion? Can a young man enjoy Christianity because it makes his life ‘seem less insane’ whilst simultaneously taking control of his life and not being a Christian sheep? NOFX poses these questions in admirable dialectical fashion, allows us to reflexively examine the issues involved, and form our own conclusions. The band rarely descends into moralism but moral values underpin NOFXs worldview. Above all, NOFX tries to maintain a sophisticated but precarious ‘both/and’ rather than ‘either/or’ approach to each one of the questions posed in this abstract. Clever lyrics, which highlight the contradictions that a punk rocker must face whilst living in suburban America, have become one of the bands most loved and most enduring themes.