Accounting for Quality: On the relationship between accounting and quality improvement in the UK National Health Service


BMC Health Services Research

2015, vol. 15, n°1, pp.178-211

Départements : Comptabilité et Contrôle de Gestion

Mots clés : Quality Quality improvement Accounting Measurement Patient survey

BackgroundAccounting-that is, standardized measurement, public reporting, performance evaluation and managerial control-is commonly seen to provide the core infrastructure for quality improvement in healthcare. Yet, accounting successfully for quality has been a problematic endeavor, often producing dysfunctional effects. This has raised questions about the appropriate role for accounting in achieving quality improvement. This paper contributes to this debate by contrasting the specific way in which accounting is understood and operationalized for quality improvement in the UK National Health Service (NHS) with findings from the broadly defined ‘social studies of accounting’ literature and illustrative examples.DiscussionThis paper highlights three significant differences between the way that accounting is understood to operate in the dominant health policy discourse and recent healthcare reforms, and in the social studies of accounting literature. It shows that accounting does not just find things out, but makes them up. It shows that accounting is not simply a matter of substance, but of style. And it shows that accounting does not just facilitate, but displaces, control.SummaryThe illumination of these differences in the way that accounting is conceptualized helps to diagnose why accounting interventions often fail to produce the quality improvements that were envisioned. This paper concludes that accounting is not necessarily incompatible with the ambition of quality improvement, but that it would need to be understood and operationalized in new ways in order to contribute to this end. Proposals for this new way of advancing accounting are discussed. They include the cultivation of overlapping and even conflicting measures of quality, the evaluation of accounting regimes in terms of what they do to practice, and the development of distinctively skeptical calculative culture

Are We Lost in Translation? The Impact of Using Translated IFRS on Decision-Making


Accounting in Europe

2015, vol. 12, n°1, pp.107-125

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

Mots clés : Translation, Language, Decision-making

International Financial Reporting Standards (IFRS) are issued in English and subsequently translated into a multitude of languages to make them accessible to non-English-speaking IFRS users. In an international work context, IFRS users apply either the original English version or a translated version of an IFRS standard to input information presented in different languages. While research has reported numerous challenges inherent in IFRS translation, we know very little about the actual impact of using different languages on decision-making. Based on a series of 2 × 2 between-subjects experiments with German students who possessed different levels of accounting knowledge, we investigate the influence of language on decision-making. Our experimental manipulations entail the language of the accounting standard used (English vs. German) and the language of the input case information (English vs. German). Our German participants made decisions about a series of cases relating to IAS 24 Related Party Disclosures. Based on an expert benchmark solution for the cases, we determine the quality of participants’ decisions. We find that the use of IAS 24 in the participants’ mother tongue (German) has a positive impact on decision-making quality. We also find some support for a positive influence of the native language of the input case information relative to English input case information. Moreover, participants’ accounting knowledge and English language skill are positively associated with decision-making quality

Boards’ Response to Shareholders’ Dissatisfaction: The Case of Shareholders’ Say on Pay in the UK


European Accounting Review

décembre 2015, vol. 24, n°4, pp.727-752

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

Mots clés : Executive compensation, Say-on-Pay, shareholders' vote, dissatisfaction

In 2002, the United Kingdom adopted a regulation allowing shareholders to cast non-binding (advisory) votes on their firm's Directors' Remuneration Report during annual general meetings (the 'Say-on-Pay' rule). This study evaluates a decade of this regulation and examines how it affected the behavior of shareholders and boards in a sample of FTSE 350 firms during the period 2002-2012. I find evidence that shareholder dissatisfaction increases with excess CEO compensation. This relationship does not exist for the expected level of compensation, suggesting that shareholders take a sophisticated approach when casting their vote. Boards do not appear to respond to shareholder dissatisfaction systematically, however they do respond selectively by reducing the excessiveness of CEO compensation when performance is poor. Boards also seem to respond swiftly to shareholder dissatisfaction. There is evidence that the probability of CEO turnover increases with shareholder dissatisfaction. Overall, the evidence suggests that 'Say-on-Pay' regulation addressed regulatory concerns about transparency, accountability, and performance linkage

Default clauses in debt contracts


Review of Accounting Studies

décembre 2015, vol. 20, n°4, pp.1596-1637

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

Mots clés : Events of default, Default clauses, Loan contracts, Bond contracts, Cross-default

We examine the determinants of events of default clauses in syndicated loan and bond contracts, provisions that allow lenders to request the repayment of principal and to terminate lending commitments. We document significant variation in the use of default clauses and their restrictiveness within the same type of lending contract but also across loans and bonds. We find that default clauses in public bond contracts are less restrictive than those in syndicated loan contracts. We also document that two ex ante proxies for bankruptcy costs, the level of intangible assets and capitalized research and development expenditures at the time of debt contracting, are associated with less restrictive default clauses, especially in bond contracts. We conclude that bondholders attempt to mitigate the occurrence of inefficient defaults. Given their inability to coordinate with each other and their ownership of subordinated claims, bondholders incur higher default costs than bank lenders

Do Rating Agencies Cater? – Evidence from Rating-Based Contracts


Journal of Accounting and Economics

2015, vol. 59, pp.264-283

Départements : Comptabilité et Contrôle de Gestion

Mots clés : Rating agencyOff-balance-sheet financeSoft informationDebt contracting

I examine whether rating agencies cater to borrowers with rating-based performance-priced loan contracts (PPrating firms). I use data from Moody׳s Financial Metrics on its quantitative adjustments for off-balance-sheet debt and qualitative adjustments for soft factors. In the cross-section and for borrowers experiencing adverse economic shocks, I find that these adjustments are more favorable for PPrating firms than for other firms, consistent with rating agencies catering to the PPrating borrowers. I find that this catering is muted in two circumstances when rating agencies׳ reputational costs are higher than usual: (1) near the investment grade and prime short-term rating thresholds and (2) when Fitch Ratings also provides a rating

Effect of Impairment-Testing Disclosures on the Cost of Equity Capital


Journal of Business Finance & Accounting

2015, vol. 42, n°5-6, pp.583-618

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

Mots clés : impairment test, cost of capital, information risk, disclosures, IAS 36

Information risk – the uncertainty regarding the parameters of the distribution offirms’ future cash flows – generates valuation errors and is costly to investors who require a higher return to compensate for greater information risk. We argue that, on average, through their impairment-testing disclosures, managers convey information that reduces information risk. Using disclosures from firms included in the SBF 250 index of Euronext Paris over the period 2006–2009, we document a negative association between impairment-testing disclosures and implied cost of equity capital. We find that prospective entity-specific impairment-testing disclosures are negatively associated with cost of capital whereas descriptive disclosures exhibit no association with cost of capital. Additionally, we document that firms which avoid booking impairments when low performance indicators suggest a greater likelihood of impairments exhibit no association between impairment-testing disclosures and cost of capital. This suggests that those firms’ disclosures are perceived as less accurate by investors. We also find that prospective impairment-testing disclosures are negatively related to analysts’ forecast errors. Our study adds to the literature on the economic consequences of financial reporting and sheds light on the consequences of one accounting mechanism, namely impairment-testing disclosures, ensuring conservatism of financial reporting

Instituting a transnational accountability regime: The case of Sovereign Wealth Funds and “GAPP”


Accounting Organizations and Society

juillet 2015, vol. 44, pp.15-36

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

This paper analyses the development of a transnational accountability regime, – the Generally Accepted Principles and Practices (GAPP), introduced in 2008 for sovereign wealth funds. Facilitated by the International Monetary Fund, the regime aimed to improve the transparency, governance and accountability of these government-owned investment funds that originate primarily from the Middle East and Asia. I focus here on the struggles leading to the establishment of the boundaries of the GAPP accountability regime by diagnosing the accountability problem, determining the providers and the imagined users of the accounts and defining the appropriate course of action. I then analyse the struggles involved in negotiating the process and technologies used to establish the accountability relationship including the role of standards in accounting, audit and risk management, as well as transparency and compliance pressures. In each case I identify the different ideas or templates that emerged during the negotiations and how consensus was achieved through careful steering by a core coalition comprising the US Treasury and the largest, most legitimate funds. I highlight the need to go beyond typical fault lines in debates surrounding the origins of global governance regimes (e.g. local vs. global, western vs. non-western, core vs. peripheral) by focusing on emerging coalitions of local/global and western/non-western actors that increasingly drive such regimes. I show how the disproportionate representation of financial actors in such coalitions leads to less attention to questions of public accountability, and instead focusing such regimes on financial accountability. I further elaborate on the implications of the fall-back to transparency in transnational accountability regimes as a last resort and the types of resistance emerging against it

International evidence on the impact of adopting English as an external reporting language


Journal of International Business Studies

février 2015, vol. 46, n°2, pp.180-205

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

Mots clés : English, Language (language design, silent language, translation), Annual report, Foreign ownership, Information asymmetry, Analyst following

This study investigates the economic consequences of non-English-speaking companies adopting English as an external reporting language. We examine a sample of European companies that initiate the voluntary issuance of an annual report in English in addition to the local language annual report. To control for self-selection, we use a difference-in-differences design with a propensity score matched control sample. We find that adoption of English as an external reporting language is associated with increased foreign ownership, decreased information asymmetry, and increased analyst following. We also find that these benefits are not conditional on the use of IFRS for financial reporting. Our findings hold if we run a number of robustness checks to control for correlated events (creation of an investor relations service, provision of conference calls, and/or changes in management). These results are consistent with the language used in the annual report acting as a barrier to investment for some investors and with annual reports issued in English reducing investors’ information processing costs.

Investment, Duration, and Exit Strategies for Corporate and Independent Venture Capital-Backed Start-ups


Journal of Economics and Management Strategy

été 2015, vol. 24, n°2, pp.415–455

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

We propose a model of investment, duration, and exit strategies for start-ups backed by venture capital (VC) funds that accounts for the high level of uncertainty, the asymmetry of information between insiders and outsiders, and the discount rate. Our analysis predicts that start-ups backed by corporate VC funds remain for a longer period of time before exiting and receive larger investment amounts than those financed by independent VC funds. Although a longer duration leads to a higher likelihood of an exit through an acquisition, a larger investment increases the probability of an IPO exit. These predictions find strong empirical support

Non-financial information: State of the art and research perspectives based on a bibliometric study


Comptabilité Contrôle Audit

décembre 2015, vol. 3, n°21, pp.15-92

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

Mots clés : Non-financial information (NFI), Corporate social responsibility (CSR), Intellectual capital, Environmental reporting, Social reporting, Literature review, Bibliometrics

We conduct a bibliometric analysis of academic articles published on the topic on non-financial information (NFI). We analyze 787 articles published in 53 journals over the timespan 1973 to 2013. We examine several important questions about the state of the art of academic research on NFI: How is NFI defined in the literature? Can NFI be precisely defined? How has the interest for NFI evolved over time in the academic literature? What are the main topics covered by NFI research? What are the main methodologies used by researchers? To what extent are studies country-specific? We find that many articles do not define the notion of NFI but refer to underlying concepts such as social, environmental, human capital or corporate social responsibility (CSR) reporting. We document that academic research on NFI has reached a certain degree of maturity around the end of the 1990s/beginning on the 2000s. Several new specialized journals that now capture an important share of the market were created around that time. We find 10 topics covered by research on NFI and show that the most frequent topic studied in NFI research is CSR reporting. We also discover that the volume of research on auditing of NFI is growing whereas management accounting/control research on NFI is relatively limited. We find that the growth of research on NFI is fueled by articles relying on archival (whether quantitative or qualitative) and essay methodologies. Finally, we suggest directions for future research