The Determinants of Zero Leverage: Evidence from Multinational Firms

There is an ongoing debate in the capital structure literature as to the direction of the effects of internationalisation on firm debt. Despite the increasing attention on the role of internationalization in firms’ capital structure decisions, and the increasing adoption of zero leverage policies by multinationals, no study attempts to explain the effect of multi-nationality on the zero leverage decision. This study explores the relationship between the level of internationalization and zero leverage using a large panel of UK companies, while controlling for various company-related factors. We find strong evidence that multi-nationality affects the propensity of firms to have zero leverage and that this decision is affected by industry specificities

Tomorrow’s accounting and society’s future

Despite the growing trend towards greater corporate accountability and increasing revival of social accounting there remains a significant gap between what organisations do, what they are willing to report, and the rights of society. In this concluding chapter, we consider the realities and myths of social accounting in relation to tomorrow’s accounting and society’s future. The chapter begins with a discussion of accounting as a social and institutional practice. It then moves on to consider the issues raised throughout the book and reflects on how the public sector, third sector, cooperatives and family businesses need to adapt and respond to demands for increased social responsibility and demonstrate this through a social accounting and accountability system. The chapter concludes with a discussion of the changing nature of accountability and social accounting, future directions and potential developments within the social accounting arena

Cooperatives and family businesses

Cooperatives provide a significant contribution to the economy, a large proportion of the UK’s economy is also supported by family businesses. Indeed, it is estimated that family businesses account for almost 25% of the UK’s gross domestic product (GDP). As such these two areas are of increasing importance when considering the accountability and governance responsibilities of organisations. With new questions arising every day to challenge the contributions that cooperatives and family business make to our communities, it is essential that we have the tools to clearly demonstrate their worth. Likewise, given the importance of the role boards play in the success or failure of cooperative organisations and family businesses, and the importance of these organisations in the wider economy, it is prudent to develop some knowledge and understanding of the complexities of the way in which these boards are structured and the role that they play in achieving accountability and governance within their organisation. The chapter considers the following: who governs; board roles and board relationships with management; board size and director selection processes; the importance of board members participation; and the input of managers in relation to accountability and governance in these two sectors. The chapter begins with a short overview of the evolution of cooperatives and what constitutes a family business. This is followed by a discussion of the organisational model and governance structures and their effectiveness

Reports on Payments to Governments: A report on early developments and experiences

We are concerned in this report to review and discuss aspects of the Reports submitted in line with the Payments to Governments Regulations. We consider the process of transposition of this Accounting Law into UK law and the early implementation or operationalization of this law in the UK. Recommendations drawn from the study will be useful for Publish What You Pay (PWYP) and other interested stakeholders in communications with government, regulators and standard setters and in general campaign activity

Accounting Law in Practice: Compliance, Consistency and Substance Focusing on the UK’s Implementation of EU Extractive Industry Country by Country Reporting of Government Payments to Governments

The passing into EU Law of a requirement that all companies domiciled in member states or listed on EU stock exchanges should publish a Report of Payments to Governments on the face of it is a victory for the civil society organizations long campaigning for the attendant increased transparency and accountability, a step towards better conditions and possibilities for many of the world’s poor. But it cannot be taken for granted. It was passed with a condition that it be reviewed (at both member state level, where a review can feed into the federal level review, and at the level of the EU), which is an opportunity to better it or a threat to reverse positive potentialities. The UK Brexit vote adds some uncertainty regarding the future of the law in the UK. And studies of manifestations of practices such as accounting and auditing (often intersecting with the law) caution against too much optimism as to their straightforward effectiveness. With a view to understanding this particular law in practice, so that it be strengthened and better function in line with its intended aims, we explore processes of its construction and early adoption in the UK. In a preliminary analysis, we elaborate how interpretations of the Law within the Extractives Industry run counter to the spirit or substance of the law and give rise to different and apparently problematic translations of the law into practice. Reflecting on our analysis, we make some recommendations as to ways forward

Reports on Payments to Governments: A critical review of early developments and experiences

We are concerned to review and discuss aspects of the Reports submitted in line with the Payments to Governments Regulations. We consider the process of transposition of this EU Accounting Law into UK law and the early implementation or operationalization of this law in the UK. Recommendations drawn from the study are intended to be of use to a variety of stakeholders who may input into the upcoming government consultation on these regulations. This version was published by Robert Gordon University

Transparency and accountability for the global good? The UK's implementation of EU law requiring country-by-country reporting of payments to governments by extractives

We draw upon the critical accounting literature to theorise what we see here as an accounting mobilisation and functioning in context. The manifestation entails ostensibly a progressive transparency and accountability and merits critical attention vis-à-vis concerns to better link accounting with the common good. We here find Gallhofer et al. (2015) and Gallhofer and Haslam (2017), with their appreciation of ‘emancipatory’ dimensions of accounting and how accounting can become ‘more (or less) emancipatory’, a useful framing, especially if, informed by critical studies that have problematised dimensions of transparency and accountability systems, their notions of the complex and multifaceted ambivalence of accounting systems are elaborated more explicitly vis-à-vis transparency and accountability. We focus upon the UK’s implementation of Chapter 10 of the EU’s Accounting Directive (and the equivalent Transparency Directive provisions), which is ostensibly progressive legislation prescribing Reports on Payments to Governments. Our empirical study indicates both progressive and problematic dimensions of the accounting and its dynamics in context, extending theoretical appreciation including for praxis

VfM audit and the UK public sector: A critical review of the VfM reports

The study investigates why the value for money (VfM) audit, in its current form, fails to capture the actual state of affairs in the UK public organizations. To address this, we utilize a VfM assessment matrix and key public sector performance indicators to critically evaluate the VfM reports published by two main public bodies in the United Kingdom, that is, the National Health Services and the police authorities, alongside the reports published by the National Audit Office and Her Majesty's Inspectorate of Constabulary and Fire & Rescue Services. Our results reveal that the VfM reports do not clearly show how the 3Es (i.e., economy, efficiency, and effectiveness) associated with the VfM assessment are attained. There are also limited suggestions on the public bodies’ service output or social outcomes and how performance targets are fulfilled. We deduce that the VfM audit's failure to capture these elements significantly curtails the benefits of the VfM exercise to public bodies. We argue for complementing the current VfM assessment with a review of the performance of these bodies based on the services they offer as well as their strategic objectives

Internationalization and Zero Leverage

Despite growing attention on the role of internationalization in capital structure and the increasing adoption of zero-leverage policies by multinationals (MNC), no study examines the effect of internationalization on zero leverage. Using data from the United Kingdom (UK), we present the first empirical evidence of a positive and significant relationship that increases in the level of internationalization both statistically and economically. We find that the motivation for zero leverage differs between MNC and domestic firms (DOM). Whilst the major driving factor for MNC is the maintenance of financial flexibility, financial constraints motivate DOM