Determinants of voluntary audit and voluntary full accounts in micro- and non-micro small companies in the UK

This is an Author's Accepted Manuscript of an article published in Accounting and Business Research, 42(4), 441 - 468, 2012, copyright Taylor & Francis, available online at: http://www.tandfonline.com/10.1080/00014788.2012.667969.This study investigates the link between the auditing and filing choices made by a sample of 592 small private companies, which includes 419 micro-companies. It examines decisions made in connection with the 2006 accounts following UK's adoption of the maximum EU size thresholds in 2004, and the impact of the proposed Directive on the annual accounts of micro-companies. The research extends the model of cost, management and agency factors associated with voluntary audit, and develops a complementary model for voluntary full accounts. The results show the benefits of placing full audited accounts on public record that outweigh the costs for a significant proportion of companies. In non-micro small companies, voluntary audit is determined by cost and agency factors, whereas in micro-companies it is driven by cost, management and agency factors. In both groups, the predictors of voluntary full accounts include management and agency factors, and choosing voluntary audit is one of the key factors. The study provides models that can be tested in other jurisdictions to provide evidence of the needs of micro-companies, and the discussion of the methodological challenges for small company researchers in the UK makes further contribution to the literature

Explaining the demise of the intellectual capital statement in Denmark

Purpose - This paper provides an overview of the Danish Guideline Project and its subsequent fate within participating companies since its conclusion in late 2002. Particular focus is placed on the traction that the Intellectual Capital Statement approach to reporting, as the principal outcome of the project, was able to acquire in practice.Design/methodology/approach – Following the reconstruction of the original sample of 102 companies that originally participated in the project, a survey using semi-structured interviews was pursued among 64 individuals who were identified as having some involvement with the guideline project and/or producing intellectual capital statements in these companies. In addition to the interviews, a range of secondary information has been used to supplement the primary data and research protocol.Findings – The project was found to have enjoyed only modest success and thereby failed to achieve any substantial traction among the participating companies and related public stakeholders. On balance, however, respondents believed that the exercise had been a positive experience, with benefits for the internal management of the companies, as well as for human capital (employees). The obstacles that radical initiatives such as the Intellectual Capital Statement continue to face should not be underestimated.Research limitations/implications – A single study of a specific initiative necessarily entails many limitations. It is conceivable that the views of some of the participants in the guideline project who are absent from the present sample may provide details of a different experience, although it is unlikely that these would seriously challenge the findings reported here.Originality/value – This study is the first to explore the fate of the critically acclaimed Intellectual Capital Statement approach among companies participating in the Danish Guideline Project

The determinants of corporate internet reporting in Egypt:an exploratory analysis

Purpose: The purpose of this paper is to provide exploratory evidence about the use of the internet for disclosure purposes by non-financial companies listed on the Egyptian Exchange – and influences thereon – at two points in time: 2010 and 2011. Selection of these periods permits direct investigation of the extent to which the disruption caused by the popular uprising in early 2011 impacted on practice.Design/methodology/approach: The sample comprises all of the 172 non-financial listed companies at the end of 2010. A disclosure index was developed to evaluate the content of the investigated websites in 2010 and 2011. Univariate and multivariate analysis is used to examine the cross-sectional determinants of disclosure both in total and in terms of three specific content categories.Findings: The study reveals that 40.7 and 42.7 per cent of the sample companies provided some form of financial information via their websites in 2010 and 2011, respectively (i.e. pre and post the Spring 2011 political revolution). The results of the multivariate analysis indicate consistency across the two years in terms of total score determinants, but some variation in the disaggregated evidence.Originality/value: This study indicates that Egyptian firms have started embracing the power of the internet as a disclosure channel, but the extent of these practices is still limited, with great variations evident amongst the sampled companies in this regard. Encouragingly, the disruption caused by the political upheaval in 2011 appears not to have caused reduction in the propensity to provide online disclosures

Audit Tendering in the UK: A Review of Stakeholders’ Views

This study reports the results of a content analysis of the comment letters sent to the UK Financial Reporting Council (FRC), in response to its consultation document on the 2012 revisions of the UK Corporate Governance Code, concerning the proposal for mandatory audit tendering. The results indicate a general support for the FRC’s proposals with a number of key concerns related to audit quality, auditor independence and audit cost. There is also clear conflict of interests among some stakeholder groups such as audit firms and companies on one side and institutional investors on the other side. There is evidence of conflict of interest between Big 4 and non-Big 4 audit firms. Implications for future consultations and legislations are also discussed

Putting our money where their mouth is: alignment of charitable aims with charity investments - tensions in policy and practice

Given the values-driven nature of the mission of most charities, it might be expected that investment behaviour would be similarly values-driven. This paper documents the ethical investment policies and practices of the largest UK charities and explores how these are aligned with the charitable aims, drawing upon accountability, behavioural and managerial perspectives as theoretical lenses. The study employs two distinct research methods: responses to a postal questionnaire and follow-up semi-structured interviews with selected charities. The evidence indicates that a significant minority of large charities do not have a written ethical investment policy. Charities with larger investments, fundraising charities and religious charities were more likely to have a written ethical policy. We suggest that there is a pressing need for improved alignment between charities' aims and their investment practices and better monitoring of investment policies

Communitarian perspectives on social enterprise

Concepts of social enterprise have been debated repeatedly, and continue to cause confusion. In this paper, a meta-theoretical framework is developed through discussion of individualist and communitarian philosophy. Philosophers from both traditions build social theories that emphasise either consensus (a unitarist outlook) or diversity (a pluralist outlook). The various discourses in corporate governance reflect these assumptions and create four distinct approaches that impact on the relationship between capital and labour. In rejecting the traditional discourse of private enterprise, social enterprises have adopted other approaches to tackle social exclusion, each derived from different underlying beliefs about the purpose of enterprise and the nature of governance. The theoretical framework offers a way to understand the diversity found within the sector, including the newly constituted Community Interest Company (CIC).</p

The development of accounting in UK universities:an oral history

This article reports on the development of the accounting discipline in universities in England and Scotland from the 1960s. Drawing on the oral history narratives of six distinguished accounting scholars who played a significant role in the discipline, this article documents (1) the initial influences on the teaching of accounting in English universities, (2) the different influences on the teaching of accounting in Scottish universities and (3) the influence of US universities and their scholars on the development of academic accounting in the United Kingdom. With a focus on the second wave of accounting professoriate who followed the London School of Economics (LSE) ‘Triumvirate’ of William Baxter, Harold Edey and David Solomons, this article provides first-hand insights into the shape and spread of university accounting education at a crucial stage of its development. This, in turn, develops an understanding of the contemporary academic accounting discipline in the United Kingdom.PostprintPeer reviewe

Risk Reporting During a Crisis: Evidence from the Egyptian Capital Market

Research purpose: This paper examines corporate risk disclosure (CRD) practices and determinants in the annual reports of Egyptian listed companies during the 2011 political crisis (uprising) in Egypt. Design/Methodology/Approach: Content analysis of the annual reports of a sample of nonfinancial listed companies representing different industry sectors was conducted to investigate attributes and factors underlying their risk disclosures. Findings: The findings demonstrate that companies disclosed more monetary, future and good risk information. The results show a positive and significant relationship between company size and the level of CRD, a positive but insignificant relationship between the extent of CRD and some company-specific characteristics: industry type, profitability and cross-listing, and a negative and insignificant relationship between corporate reserves and the level of CRD. Research Limitations/Implications: A larger sample size would be needed for greater generalization of the findings. This study extends the literature on CRD by examining CRD practices at a time of current and ongoing crisis. However, more research is needed to examine variations in CRD practices before and after the 2011 political crisis. Practical Implications: The results could be used by information users, companies and the capital market authority to inform policy-making and tighten regulations to improve CRD. Recommendations are made for improving the quality and informativeness of risk information. Originality/Value: It is important to investigate CRD practices, considering the dearth of research, particularly in emerging capital markets and during crises, when companies are exposed to more, especially uncontrollable, risks. This study fills a void in literature by examining CRD practices during the 2011 political crisis in Egypt

Impact and implications of international financial reporting standards in the UK : evidence from the alternative investment market

This paper investigates implications of the IFRS adoption from the perspective of small and growing companies listed on the UK Alternative Investment Market (AIM). The study considers the cost-benefit issues of the IFRS adoption and investigates its economic consequences. The results reveal that only a small number of comparatively larger AIM companies have voluntarily adopted IFRS for some anticipated economic objectives. The results also suggest that most of the mandatory adopters have done so for regulation compliance purposes and that they would have not adopted IFRS if a choice was available to them. As the existing literature mainly covers the impact of IFRS adoption on large listed companies, the findings of this study will give better insights about extending IFRS to private companies. The findings show an association between the early adoption of IFRS and firm size and conclude that size matters in both the adoption and implications of the IFRS. This study also contributes to the debate on the implication of the new IFRS based UK GAAP for SMEs-FRS 102, which will replace the majority of existing UK accounting standards for SMEs with effect from 2015. Our findings have implications for managers, regulators, market participants, practitioners, and other stakeholders