Budgeting in times of economic crisis


Contemporary Accounting Research

Winter 2016, vol. 33, n°4, pp.1489–1517

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

Mots clés : Budgeting, budgeting functions, economic crisis, crisis management

This paper examines how corporate reliance on budgets is affected by major changes in the economic environment. We combine survey and archival data from the economic crisis that began in 2008. The results indicate that, as a result of the economic crisis, budgeting became more important for planning and resource allocation but less important for performance evaluation. Additional evidence from interviews and data gathered in a focus group further illustrate these results and show the changes organizations have introduced to respond to the economic crisis. Taken together, and contrary to more general conclusions from the literature such as an overall increase or decrease in the importance of budgeting, we find that companies emphasize certain budgeting functions over others during economic crises

Disciplinary practices in the French auditing profession


Accounting, Auditing and Accountability Journal

2016, vol. 29, n°1, pp.11-42

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

Mots clés : Content analysis, Audit quality, Auditing, Disciplinary practices, Public accounting profession, Public interest

Purpose – The purpose of this paper is to contribute to understand the role of the statutory auditing profession in France. The study is theoretically based on distinctions between a functionalist view of professions and a neo-weberian view. Prior research, conducted in Anglo-American countries has shown that the auditing profession has focussed primarily on protecting the private interests of the profession. Hence, there is a need to conduct research on this topic in a code law country where the state is expected to play a significant role in protecting the public interest.Design/methodology/approach – The methodology involves a content analysis of 148 disciplinary decisions issued against statutory auditors in France from 1989 to 2006. This analysis identified 21 types of violations grouped into public interest or private interest offences. Because visible offences are public and are more likely to threaten the reputation of the profession, these types of decisions are also studied with respect to their visibility.Findings – The results reveal that in a code law country such as France the auditing profession tends to defend both the public interest as well as its private interests. The results also support the “visibility” effect.Research limitations/implications – The written disciplinary decisions have been anonymized so that the names of the auditors and the clients cannot be identified.Originality/value – This paper differs from previous studies conducted in the Anglo-American context which show an emphasis on protecting the private interests of the auditing profession. Moreover, this study reveals the existence of “mixed” offences and underlines that a profession primarily focusses on these cases. Thus, the work reconciles in part the functionalist and neo-weberian perspectives. Lastly, this paper confirms the importance of the visibility effect

Financial Distress Risk and New CEO Compensation


Management Science

février 2016, vol. 62, n°2, pp. 479 - 501

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

Mots clés : CEO compensation, Compensation premium, CEO incentives, Financial distress risk

We examine how ex ante financial distress risk affects CEO compensation. To disentangle the joint effects of performance on compensation and distress risk, we focus our analyses on new CEOs. Our results indicate that financial distress risk affects compensation through two channels. First, new CEOs receive significantly more compensation when financial distress risk is higher. This finding is consistent with CEOs receiving a compensation premium for bearing this risk since CEOs experience large personal costs if their firms later become financially distressed. Second, financial distress risk is associated with the incentives provided to new CEOs; distress risk is positively associated with pay-performance sensitivity and equity-based compensation and is negatively associated with cash bonuses. Further, financial distress risk is positively associated with pay-risk sensitivity for new CEOs. These findings suggest that financial distress risk alters the nature of the agency relationship in ways that lead firms to provide CEOs with more equity-based incentives. We also build on research that finds a positive relation between forced turnover risk and CEO compensation. Our analyses suggest the compensation effects of forced turnover risk appear to be mainly attributable to financial distress risk. Overall, our results indicate financial distress risk is an economically important determinant of new CEO compensation packages

Institutional Complexity and the Strategic Behaviors of SMEs in Transitional Environments


International Journal of Emerging Markets

septembre 2016, vol. 11, n°4, pp.514 - 532

Départements : Comptabilité et Contrôle de Gestion

Mots clés : Institutional Logics, Institutional Complexity, Strategic Behaviors, SMEs, Transition Economies

We study how five privately owned Chinese companies adapted their strategies in the 2000-2012 period to large-scale macro-level institutional changes. Drawing on recent developments in institutional theory, in particular on the constructs of institutional logics, institutional complexity and “organizational filters”, we explain why our subject firms’ range of strategic behaviors went from broad to narrow, as a function of i) the stage of institutional transition and ii) organizational filters, i.e., how the firms make sense of the institutional complexity based on their own attributes. We discuss the implications of ourfindings for managers of SMEs in transitional economies and researchers

Knowing patients: The customer survey and the changing margins of accounting in healthcare


Accounting Organizations and Society

aout 2016, vol. 53, pp.17-33

Départements : Comptabilité et Contrôle de Gestion

Mots clés : Survey Healthcare Accounting change Quality improvement Customer

This research investigates the changing “margins of accounting” (Miller, 1998) in the field of healthcare where, as in other fields, customer surveys have emerged as a means of accounting for customers and of holding professionals and organizations to account. Drawing upon methodological insights provided by genealogical studies of accounting and anthropological studies of “things,” this research addresses the activities and transformations that take place to move the survey from war to ward—from a means of learning about medical populations during and immediately after World War II to a means of accounting for the views of consumers and of holding providers accountable for their care. These movements are shown to entail the staging and stabilizing of “knowing patients” in both senses of the term: these are patients that are equipped and empowered as consumers with knowledge about quality and their care, and simultaneously stripped of their individualizing characteristics so as to be made knowable to organizations in terms that can be managed and improved. These findings speak to the limitations of accounting as it infiltrates fluid and personal spaces in order to represent people in modes other than financial and to reconstitute knowledge from below. Doing so is shown not just to limit the possibilities for customers to speak and to be heard, but to give rise to a particularly pernicious form of territorialization in which the subject and object of accounting knowledge become inextricably intertwined and indistinguishably blurred. This has implications for the promises and practices of accounting in a post-modern society and for the kinds of questions that researchers ask about its effects.

Performance Measurement in Global Governance: Ranking and the Politics of Variability


Accounting Organizations and Society

novembre 2016, vol. 55, pp.12-31

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

Mots clés : Ranking; Epistemic work; Professional vision; Commensuration; Performance measurement; Regulatory capitalism

The past thirty years have witnessed the spread of rankings, ratings and league tables as governance technologies which aim to regulate the provision of public goods by means of market pressures. This paper examines the process of company analysis underlying the production of a ranking known as the Access to Medicine Index. We conceptualize the Index as a “regulatory ranking” with the explicit mission of addressing a perceived regulatory gap and market failure: the lack of access to medicine in the Global South. The Index, which ranks the world's largest pharmaceutical companies with regards to their access to medicine policies and practices, aspires to help address the problem of access to medicine through stakeholder consultation, transparency and competition. This study unbundles the epistemic work underlying the performance measurement process leading to the creation of the Index. We trace how the goal of stakeholder consensus, the need to project objectivity and the aspiration to govern through competition shape analysts' epistemic work. We discuss how through notions such as “the good distribution” and “aspirational indicators”, performance measurement and ranking become entangled in a “politics of variability” whereby company data need to be variably interpreted in order to optimise the possibilities of intervening in companies through competitive pressures, while at the same time complying with the imperatives to remain in the space of perceived stakeholder consensus and to provide a faithful representation of companies performance to inform public debates. We reflect on the challenges posed by these analysis processes for the regulatory aspirations of the ranking

The Effect of IAS/IFRS Adoption on Earnings Management (Smoothing): A Closer Look at Competing Explanations


Journal of Accounting and Public Policy

juillet-août 2016, vol. 35, n°4, pp.352–394

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

Mots clés : IFRS, Earnings management, Smoothing

Prior research provides mixed evidence on whether the transition to IAS/IFRS deters or contributes to greater earnings management (smoothing). The dominant explanation for the conflicting results is self-selection. Early voluntary adopters had incentives to increase the transparency of their reporting in order to attract outside capital, while those firms that waited until IFRS adoption became mandatory in EU countries lacked incentives for transparent reporting leading to increases in earnings management (smoothing) after IFRS adoption. We maintain that the IFRS standards that went into effect in 2005 provide greater flexibility of accounting choices because of vague criteria, overt and covert options, and subjective estimates. This greater flexibility coupled with the lack of clear guidance on how to implement these new standards has led to greater earnings management (smoothing). Consistent with this view, we find an increase in earnings management (smoothing) from pre-2005 to post-2005 for firms in countries that allowed early IAS/IFRS adoption, as well as for firms in countries that did not allow early IFRS adoption. We find no evidence of changes in incentives that can explain these results.