Articles scientifiques

Blockholder Exit Threats in the Presence of Private Benefits of Control

Ole-Kristian HOPE, H. WU, Wuyang ZHAO

Review of Accounting Studies

juin 2017, vol. 22, n°2, pp.873-902

Départements : Comptabilité et Contrôle de Gestion

Mots clés : Exit-Threat Theory, Private Benefits of Control, Liquidity, China, Split-Share Structure Reform, Operating Performance, Quasi-Experiment

Exit theory predicts a governance role of outside blockholders’ exit threats; but this role could be ineffective if managers’ potential private benefits exceed their loss in stock-price declines caused by outside blockholders’ exit. We test this prediction using the Split-Share Structure Reform (SSSR) in China, which provided a large, exogenous, and permanent shock to the cost for outside blockholders to exit. Using a difference-in-differences design combined with propensity-score matching, we find that firms whose outside blockholders experience an increase in exit threats have a greater improvement in performance than those whose outside blockholders experience no increase. Moreover, the governance effect of exit threats is ineffective in the group of firms with the highest concern for private benefits of control. Finally, a battery of theory-motivated tests show that the documented effects are unlikely explained by outside blockholder intervention or some well-known intended effects of SSSR

Consequences of the Abandonment of Mandatory Joint Audit: An Empirical Study of Audit Costs and Audit Quality Effects


European Accounting Review

2017, vol. 26, n°2, pp.311-339

Départements : Comptabilité et Contrôle de Gestion

Mots clés : Joint audit, Audit cost, Audit quality, Audit market, Denmark

This paper focuses on the unique Danish setting in examining the consequences of abandoning a mandatory joint audit regime. We study the effects on audit costs (measured by audit fees) and audit quality (measured by abnormal accruals) of the abandonment of the mandatory joint audit in Denmark in 2005. We perform our analysis on non-financial listed Danish companies for the 2002–2010 period. Our results show that a joint audit is associated with higher fees, but that the association between joint audit and abnormal accruals is insignificant. This suggests that the higher audit fees cannot be explained by higher audit quality. Our results are robust to alternative measurements of fees and audit quality. Additional analyses show that the fee premium related to a joint audit decreases over time and that the Big 4 concentration in our sample has increased since the switch from mandatory to voluntary joint audit. Our results are consistent with the motivations driving the regulatory change in Denmark and are of interest to regulators and actors in the audit market

Constructing, Contesting, and Overloading: A Study of Risk Management Framing


European Accounting Review

2017, vol. 26, n°4, pp.703-728

Départements : Comptabilité et Contrôle de Gestion, GREGHEC (CNRS)

In this study, we examine the ways in which actuarial consultants attempt to motivate their clients to see pension-related accounting regulations and market volatility as ‘risks’ that need to be managed through particular risk-mitigating technologies. This study is predicated on 23 interviews conducted with actuarial consultants and their clients and consulting agencies’ publically available documents. Taking framing theory and the sociological literature on risk as conceptual starting points, we find that consultants engage in specific framing strategies to persuade clients by rhetorically weaving a series of financial risk objects, financial de-risking strategies, and calls for action. We also find that current and prospective clients sometimes contest consultants’ prescriptions, despite the pervasiveness of risk management as the ultima ratio of organizational governance. This contestation occurs, ironically, because adopting de-risking solutions in one area is perceived by some clients as triggering new risks in areas unforeseen by consultants. This research increases our knowledge of how new risk objects and de-risking solutions come into existence and why some risk management practices fail to be diffused within organizations despite the staggering success of the risk management rationality. We explain the latter through the concepts of frame diffraction and overload

Evaluative Infrastructures: Accounting for distributed network production


Accounting Organizations and Society

juillet 2017, vol. 60, n°7, pp.79-95

Départements : Comptabilité et Contrôle de Gestion

Mots clés : AccountingHierarchical consciousnessEvaluationInfrastructurePlatform organization!

Platform organizations such as Uber, eBay and Airbnb represent a growing disruptive phenomenon in contemporary capitalism, transforming economic organization, the nature of work, and the distribution of wealth. This paper investigates the accounting practices that underpin this new form of organizing, and in doing so confronts a significant challenge within the accounting literature: the need to escape what Hopwood (1996) describes as its “hierarchical consciousness”. In order to do so, this paper develops the concept of evaluative infrastructure which describes accounting practices that enable platform based organization. They are evaluative because they deploy a plethora of interacting devices, including rankings, ratings, reviews, and audits to establish orders of worth. They are infrastructures because they provide the invisible yet essential mechanisms for the flow of economic activity and exchange on platforms. Illustrating the concept of evaluative infrastructure with the example of eBay, the paper's contribution is to (1) provide an analytical vocabulary to capture the accounting practices underpinning platforms as new organizational forms, and in so doing (2) extend accounting scholars' analytical focus from hierarchical settings towards heterarchies. Conceptually, this shift from management accounting to evaluative infrastructures entails a focus on relationality (evaluative infrastructures do not represent or reference but relate things, people and ideas with each other); generativity (evaluative infrastructures do not territorialize objects but disclose new worlds); and new forms of control (evaluative infrastructures are not centres of calculation; rather, control is radically distributed, whilst power remains centralized).

Internal Audit Effectiveness: Multiple Case Study Research Involving Chief Audit Executives and Senior Management


The EDP Audit, Control, and Security Newsletter

2017, vol. 55, n°1, pp.1-17

Départements : Comptabilité et Contrôle de Gestion

The focus of this study is the relationship between chief audit executives (CAEs) and senior management (SM) and its relationship with internal audit (IA) effectiveness. The study reveals differences between more and less effective IA functions and offers explanations by studying organizational, personal, and interpersonal factors within the German corporate governance context. The findings show that the pattern of interaction between CAEs and SM is a key determinant of IA effectiveness. This study highlights the danger of viewing customer satisfaction as the key measure of IA effectiveness since in practice expectations can vary significantly and as sometimes very little may be demanded. Moreover, CAEs typically adjust to expectations, upward and downward. CAEs can drive the agenda as well. When it comes to personality factors, “Fingerspitzengefühl” and swimming in the organization characterize the successful internal auditor. IA designations for CAEs were not found to be of added value. At the organizational level, the findings show that companies that are considered as “hidden champions” demand and benefit from effective IA practices