Mark Mulcahy

Board Structure, Ownership, and Voluntary Disclosure in Ireland

This is a cross-sectional study of the relation between corporate governance and voluntary disclosure in Ireland. We report clear evidence that voluntary disclosure increases with the number of nonexecutive directors on the board. Firms that have a nonexecutive chairman make greater voluntary disclosures than other firms. This finding is not robust to the inclusion of other explanatory variables. We find no evidence that ownership structure is related to voluntary disclosure. The results regarding nonexecutive directors are interpreted as independent boards facilitating a reduction in information asymmetry between owners and managers. While this supports the predictions of agency theory, the absence of evidence that ownership structure influences voluntary disclosure does not. It is posited that sociological and organizational factors (e.g., informal networking) that pervade the Irish market mitigate against our disclosure measure capturing all aspects of voluntary disclosure. Furthermore, indirect evidence is provided that there are other costs and benefits to disclosure that vary across firms and may outweigh agency costs in many situations. We conclude that while agency theory has some explanatory power for voluntary disclosure, it cannot explain all the cross-sectional differences in voluntary disclosure by Irish public limited companies. The results support the attention paid by regulators to the proportion of nonexecutive directors on the board. However, the costs and benefits to disclosure vary across firms. Regardless of agency considerations and regulatory guidelines, firms will ultimately formulate their disclosure policy with reference to overall marginal costs and marginal benefits.

Females and Precarious Board Positions: Further Evidence of the Glass Cliff

The ‘glass cliff’ posits that when women achieve high profile roles, these are at firms in precarious positions. Previous research analysed appointments (male/female), estimated the precariousness of firms involved and drew inferences about the glass cliff. This study is different as it directly tests the relationship between a precarious situation and changes in board gender diversity. The sample is companies listed on the UK stock exchange reporting an initial loss in the years 2004–2006. A matched control sample is used in a difference‐in‐differences analysis to avoid inadvertently attributing improvements arising from societal/regulatory changes in gender diversity to the loss event. Findings suggest that when the loss is ‘big’ there is a difference in the increase in gender diversity versus both the control and the ‘small’ loss subsamples, i.e. compelling evidence of the glass cliff. In the context of ongoing political and social debates about women on boards our work (i) identifies continuing structural barriers for women ascending to board level in that women are more likely to be over‐represented on boards of companies that are more precarious and (ii) sounds a note of caution about celebrating increased gender diversity on boards without considering the precariousness of the company involved.

Purifying Islamic equities: the interest tax shield

Purpose - – This paper aims to add to the debate regarding the appropriate methodology to purify tainted components from Design/methodology/approach - – Based on the Findings - – Purification is a pivotal element of the Islamic investment process, yet Standard 21 permits a loose interpretation which causes portfolios to be under-purified. Standard 21 also makes no mention of the interest tax shield from debt even though the benefits are at odds with the principles of social justice in Islam. That there is no mention of the interest tax shield from debt in the (limited) literature on the purification of Islamic equities is puzzling. Practical implications - – This paper has implications for the Islamic funds industry and for devout Muslim investors. Originality/value - – The specific contribution of this paper is the identification of the interest expense tax shield (well-established in the corporate finance literature) as a significant non-compliant

Room for improvement: the impact of bad losses on board quality

Purpose - – The purpose of this paper is to study the relationship between reporting a loss and changes in board quality. Low quality corporate governance is associated with adverse accounting outcomes and is characterised by the lack of non-executive and independent directors on the board. Changes in these board quality indicators in response to the reporting of a loss and conditioned by the severity of the loss are examined. Design/methodology/approach - – This study uses four years of board information spanning the report of an initial loss for companies listed on the UK stock exchange. An industry and size matched control sample is used in a difference-in-difference analysis to isolate the impact of the loss from underlying changes in board quality. Findings - – Overall the results indicate that more severe initial loss events precipitate improvements in board quality over and above the control sample as well as less severe loss events. Research limitations/implications - – Although unambiguous, the reporting of a loss is only one measure of underperformance. Also the board quality indicators used in this study are two from several individual corporate governance variables and amalgamations used in the extent literature. Practical implications - – The findings demonstrate that the relationship between corporate governance and performance is endogenous and that the majority of any improvement in board quality actually anticipates the reporting of the loss. Any celebration of improvements in governance need to be tempered by an understanding of the precariousness of the firms at which these improvements are made. Originality/value - – This study contributes to a research stream that examines negative shocks, and losses in particular, as an event likely to precipitate firm-level changes in board quality, i.e. firms tend not to make improvements to board quality without the impetus to do so.

Have bailouts shifted the burden of paying for healthcare from the state onto individuals

Background/aimsThe financial crisis that enveloped Europe in 2009 created financial pressure for governments and required a number of countries to obtain a financial bailout from the IMF. The purpose of this paper is to examine the effect of the financial crisis on public health expenditure in bailout countries and if bailouts shift the burden of paying for healthcare from the state onto individuals.MethodsQuantitative health expenditure data were collected from the WHO and OECD for the period 2004–2015 and evaluated using a comparison of means Welch’s t test.ResultsThe majority of bailout countries recorded a decrease in public health expenditure as a percentage of total government expenditure, with Ireland recording the largest decrease with government health expenditure as a percentage of total government expenditure, falling by 22% (P < .01). In addition, the results also suggest that the burden of paying for healthcare shifted from the state onto individuals in three countries, namely Hungary, Ireland and Portugal, where public health expenditure declined and private expenditure increased significantly.ConclusionsThe ramifications of shifting the burden of paying for healthcare from the state onto individuals at this point remain unclear with further research required to identify the long-term consequences for healthcare.

Regulatory disclosure and the Irish Financial Services Ombudsman

Abstract This study investigates the effectiveness of a public sector financial management initiative. Specifically, the powers awarded to the Irish Financial Services Ombudsman (FSO) in 2013 to name and shame malfeasance by financial service providers (FSPs) in its annual reports. As the first country to award such powers to its public sector financial ombudsman, Ireland represents a novel setting in which to test the impact of regulatory disclosure as a way to promote accountability and transparency. Our results show that the number of complaints lodged against malfeasants dropped in the immediate aftermath of this and, following a one-year lag, so did the percentage of complaints lodged that proceeded to a full investigation and legally binding finding. Despite the failure of such strategies in some jurisdictions, the Irish experience indicates that regulatory disclosure can, in line with Neo-Durkheimian institutional theory and consistent with the accounting and accountability literature, have considerable impact where and when contextual preconditions are met. These findings have important implications for the operationalisation of regulatory disclosure as an accountability enhancing measure in other jurisdictions.

086Economic Analysis of a Physician-implemented, Medication Screening Tool in Older Irish Hospitalised Patients

Gary O’Brien, Denis O’Mahony, Paddy Gillespie, Mark Mulcahy, Valerie Walshe, Marie O’Connor, David O’Sullivan, James Gallagher, Stephen Byrne Pharmaceutical Care Research Group, University College Cork, Cork, Ireland Department of Geriatric Medicine, Cork University Hospital, Cork, Ireland School of Medicine, University College Cork, Cork, Ireland School of Business and Economics, National University of Ireland Galway, Galway, Ireland Cork University Business School, University College Cork, Cork, Ireland Health Service Executive, Cork, Ireland

Corporate governance, stickiness and losses

Purpose – This paper aims to study the impact of a significant negative shock (the reporting of an initial loss) on the stickiness of corporate governance. This paper examines whether corporate governance changes in response to the reporting of an initial loss and also whether ex ante corporate governance weakness impacts on the propensity for change. Design/methodology/approach – The study uses three years of corporate governance information spanning the report of an initial loss for companies listed on the UK Stock Exchange. An industry- and size-matched control sample is used in a difference-in-difference analysis to isolate the impact of the loss from underlying changes in governance. Findings – The results indicate that an initial loss precipitates an improvement in corporate governance and that this improvement is significantly more pronounced in those companies which displayed either weak or extreme governance before the loss. There is also evidence that the improvement in corporate governance begi...