Rong-Ruey Duh

Strategy, IT applications for planning and control, and firm performance: The impact of impediments to IT implementation

Our study examined the association among strategy, the extent of IT applications to 12 planning and control functions, and firm performance. Special attention was paid to the moderating effect on these relationships of 15 technical, human, and organizational impediments to IT implementation. We analyzed survey data obtained from 296 Taiwanese companies, supplemented by financial data from publicly disclosed financial reports. Results indicated that strategy significantly influenced the extent of IT applications for planning and control. In turn, the extent of IT applications had a significant direct effect on firm performance, while the direct effect of strategy was insignificant. The relationship between strategy and the extent of IT applications, and between the latter and firm performance were both stronger when the level of impediments to IT implementation was low. The findings went beyond these general relationships to reveal systematic differences in the specific IT applications and impediments of firms pursuing different strategies.

Determinants and performance effect of TQM practices: An integrated model approach

An integrated model approach is proposed to investigate the determinants and performance effects of total quality management (TQM) practices. Applying structural equation modelling to archival and survey data from 209 firms, the results support the expectation that firm size and degree of competition are positively associated with the implementation of TQM, and that leverage and product diversity are negatively associated with TQM implementation. We then find that TQM implementation has a positive effect on non-financial performance (NFP), and NFP and financial performance (FP) are also positively related. Our results suggest that TQMs direct effect on NFP mediates TQMs indirect effect on FP.

The Effect of Audit Committees on Earnings Return Association: Evidence from Foreign Registrants in the United States

This study offers important insights to foreign firms listed in the US. As the choice not to form an audit committee may increase the cost of capital in the US, but save the cost of establishment in home market, the managers of foreign registrants should weigh the costs and benefit of the options and make a choice accordingly. Our empirical results suggest that foreign registrants that have chosen to establish audit committees have better earnings return associations. This implies that the effectiveness of the audit committee in resolving agency problems is applicable to foreign companies, even though their home countries adopt non-Anglo-American corporate governance systems. Our empirical results indicate that earnings return associations for foreign registrants without audit committees are significantly lower compared with those of their US-matched firms which are required to establish audit committees. This result is even more pronounced after the introduction of new audit committee rules in 1999 aimed at increasing the responsibilities of audit committees. In addition, earnings return associations of foreign registrants are found to increase following the establishment of audit committees. Overall, our results are consistent with the idea that the establishment of audit committees may be related to higher earnings return associations. This study examines whether foreign registrants that choose not to establish audit committees in the US have generally lower earnings return associations. Empirical this study examines whether foreign registrants that choose not to establish audit committees in the US have generally lower earnings return associations. Our empirical results indicate that earnings return associations for foreign registrants without audit committees are significantly lower compared with those of their US-matched firms which are required to establish audit committees. This result is even more pronounced after the introduction of new audit committee rules in 1999 aimed at increasing the responsibilities of audit committees. In addition, earnings return associations of foreign registrants are found to increase following the establishment of audit committees. Overall, our results are consistent with the idea that the establishment of audit committees may be related to higher earnings return associations. Our empirical results suggest that foreign registrants that have chosen to establish audit committees have better earnings return associations. This implies that the effectiveness of the audit committee in resolving agency problems is applicable to foreign companies, even though their home countries adopt non-Anglo-American corporate governance systems. This study offers important insights to foreign firms listed in the US. As the choice not to form an audit committee may increase the cost of capital in the US, but save the cost of establishment in home market, the managers of foreign registrants should weigh the costs and benefit of the options and make a choice accordingly.

Management accounting practices in the People's Republic of China

Abstract This chapter surveys the current management accounting and control practices by Chinese companies and factors that affect their adoption. This discussion is placed in the historical context of management accounting practices in China. The Chinese governments open door policy and economic reform beginning in 1978 ushered in a period of increasing receptivity to modern management accounting applications. Since 1997, the pace of application has accelerated because of increased marketization and privatization. As a result, current management accounting practices, as reported by our sample of listed companies and a number of other recent surveys, have at best reached the third stage defined by the International Federation of Accountants (1998), though there are some fourth stage applications. Marketization and privatization, together with Chinas accession to the World Trade Organization, information technology, accounting education, and research, will continue to drive future development of management accounting in China

The design and implementation of activity‐based costing: A case study of a Taiwanese textile company

Purpose - This paper describes the design and implementation of an activity-based costing (ABC) system for a textile company in Taiwan. Design/methodology/approach - An in-depth field investigation by collecting and analyzing 39 months of field data, gathering information from files and archives, direct observation, interviews, and statistical analyses was conducted. Findings - First, the companys existing cost system adopted a volume-based cost driver to allocate overhead costs to products. While the company devised an “equivalent factor” to take production-complexity into account, the weakness of the metric led to product cost distortions. Second, the existing volume-based cost system ignores the impact of rework processes on product costs. Third, adding complexity-related cost drivers to the volume-based cost driver increases the ability to explain variations in overhead costs. Fourth, the newly designed ABC system incorporates both volume-based and non-volume based drivers, which considers the effect of rework on product costs. Fifth, the existing volume-based cost system overestimates the costs of high-volume products and underestimates the costs of products with high production-complexity. Finally, the company still stays at the analysis phase of the ABC system implementation, possibly due to revision of strategy, no linkage to incentives, lack of MIS support, and inadequate inventory control. Practical implications - The above findings have implications for companies attempting to implement ABC. Originality/value - This paper extends prior research in the following. First, it reports on the entire process of ABC implementation for a given company, as well as facilitators/impediments in the process. Second, while most prior research tends to focus on success cases, our study presents a failure case, which has implications for practitioners trying to avoid the same mistakes.

Do internal controls improve operating efficiency of universities

Improving operating efficiency is one objective of internal controls (IC). This paper investigates the relationship between IC implementation and operating efficiency of universities. Using data from questionnaire survey and from the field, this study measures IC implementation and applies data envelopment analysis to estimate operating efficiency of 99 universities in Taiwan. The OLS regression results indicate that IC implementation has an insignificant association with teaching-related efficiency, but has a negative and significant association with research-related efficiency. Dividing the sample into public and private universities, the analysis indicates that for public universities, IC implementation has no significant association with any of the two measures of efficiency. But, for private universities, there is a positive and significant association between IC implementation and teaching-related efficiency. The association between IC implementation and research-related efficiency is negative and significant.

The determinants of implementation stages of balanced scorecard

Traditional performance measurement systems are featured by their reliance on financial metrics with little attention paid to other aspects of performance and the linkage between measures and strategy. A new approach to performance measurement, the Balanced Scorecard (BSC), was introduced in recent years. This paper examines the determinants of the implementation of BSC and investigates whether the determinants vary with the implementation stages. One hundred and fifty-seven responses obtained from a questionnaire survey were analysed. The results show that CFOs involvement, participation by different departmental managers, top management support and organisation size are significantly correlated with the BSC implementation stages. In addition, the results also reveal that the determinants vary with the implementation stages. Limitations and implications for research and practice are also discussed.

Is Environmental Uncertainty an antecedent or moderating variable in the design of budgeting systems? An exploratory study

Environmental Uncertainty (EU) has been engaged in budgeting studies both as an antecedent and a moderating variable. Since these treatments have very different implications for theory development and understanding of phenomena, this study empirically explores their relative validity. Using data collected from managers of 440 publicly held Taiwanese companies, the results of path analysis and moderated regression support the view that EU is an antecedent to features of budgeting systems which in turn significantly affect firm performance. The results also reveal a (spurious) significant moderating effect of EU on the relationship between features of the budgeting system and firm performance.

Law and University Efficiency: The Amendment of the University Law in Taiwan

This paper examines the effect of the amendment of an education-related law on university efficiency using the 1994 University Law amendment in Taiwan as a case study. The results indicate that prior to the 1994 amendment; private universities operate in a more efficient manner than public universities. This difference disappears a year after the amendment, but the beneficial effect of this amendment on public universities diminishes two years after the amendment. The finding indicates that the recent (2005) amendment is in a right direction concerning the size and authority of university senate.

Connotative meaning and the challenges of international financial reporting/auditing standards convergence: the case of Taiwan's Statement of Auditing Standards Number 33

Translating international standards into local languages is a big obstacle to the global convergence of financial reporting and auditing practices. This study uses Taiwan’s promulgation of Statements on Auditing Standards No. 33 to examine an important component of this challenge: the need for local standard setters to anticipate how domestic constituents would interpret local words used to translate original English terms. Data collected from samples of Taiwanese auditors, public prosecutors, and investors revealed that as compared to the auditors, financial statement users ascribe different connotative meanings to a Chinese term that was originally proposed, and one that was chosen as its replacement after objections from the accounting profession. Further, the words’ connotative meanings significantly mediated the link between the local term and financial statement users’ judgments about auditor legal liability. Significantly, the connotative meaning that financial statement users ascribed to the replacement term was associated with a higher level of ascribed auditor liability, such that in successfully pushing for a wording change, members of Taiwan’s accounting profession may have increased, rather than reduced, their exposure to liability from audited financial statements. These findings have a number of implications for standard setters, the standard setting process, and accounting firms.