Figureheads or potentates? CEO power and board oversight in the context of Sarbanes Oxley

Research question/issue We depart from studies that separately explore chief executive officers' (CEOs') and boards' effects on firm performance. Instead, we examine the direct relationship between CEO power and firm performance, and how board monitoring, and most importantly, a change in the regulatory environment alter the relationship. As such, our study jointly examines the role of both internal and external corporate governance mechanisms on the relationship between CEO power and firm performance. Research findings/insights Our findings indicate that the negative main effect of a powerful CEO on firm performance is reduced by board monitoring and that the Sarbanes Oxley (SOX) legislation amplifies board monitoring and reduces the negative effects of CEO power. Theoretical/academic implications Our study shows that agency relationships are grounded in social and institutional contexts. More precisely, our results suggest that CEO power is a function of CEO's relationship with the board, as CEO power and board monitoring interactions affect firm performance. Furthermore, they indicate that the CEO-board relationship is constructed within the legal institutional context, as the shock of SOX alters the effects that different combinations of CEO power and board monitoring have on firm performance. Practitioner/policy implications Our results highlight to investors and directors that corporate boards should be designed in relation to the power of CEOs. In addition, they provide valuable guidance for policy-makers, suggesting that tight regulations may represent effective deterrents for some CEOs' misbehaviors and favor the alignment of interests with those of company owners

A Commentary on 'The Order of Teaching Accounting Topics-Why do Most Textbooks End with the Beginning?'

This paper deals with an issue of relevance to all those involved in teaching accounting from a student-centred perspective – the order in which topics should be introduced to students in an introductory accounting subject. The stated purpose of the paper is “to stimulate debate” (p. 9). In order to do this, the author presents an argument for her proposed ordering for the introduction of topics and then reports the results of her analysis of the sequencing of chapters in twenty three selected textbooks. These two distinct sections of the paper will be discussed first separately and then drawn together in the concluding remarks

Ethics, Social Responsibility and Tax Aggressiveness. Can a Code of Ethics Absolve a Company?

The aim of the paper is to contribute to the debate on the relationship between ethics, socially responsible behaviour and tax aggressiveness through the analysis and discussion of a case study.The case presented in this paper concerns a famous Italian fashion house, well known all over the world, which in recent times was tried in court for a tax inversion operation. D&G Group was involved in a long legal trial, whose outcome has given rise to many discussions. The story definitely ended, and after the final trial the Group was judged innocent. However, this case raised a fervent debate that is still ongoing, and it gives the opportunity to discuss some important issues: What is the boundary between legality and ethics in tax behaviour? Can a company claim to adhere to ethical principles if it adopts aggressive tax practices? Can aggressive tax behaviours be acceptable from an ethical point of view?The case also opens questions related to the boundaries between the responsibilities of directors/managers and institutional responsibilities, at both national and supranational level

How Do Information Ambiguity and Timing of Contextual Information Affect Managers’ Goal Congruence in Making Investment Decisions in Good Times vs. Bad Times?

Information ambiguity is prevalent in organizations and may influence management decisions. This study draws upon research on information bias and ambiguity research to empirically test how information ambiguity and non-financial factors (e.g., interpersonal information) affect managers’ capital budgeting decisions when in good vs. bad times. Ninety-two managers completed two experiments. In Experiment One, the information was presented sequentially. Our results show that without the presence of non-financial factors, managers tend to maximize the firm value. After receiving non-financial factors, a significant number of managers switched to the self-serving option in good times (the gain condition) but stayed with firm-value maximization in bad times (the loss condition). In Experiment Two, the information was presented simultaneously in the presence and absence of ambiguity. We found that in the presence of ambiguity, the information presentation has no impact on managers’ self-serving bias in good times or their firm-value maximization tendency in bad times. Interestingly, we also observed managers’ use of interpersonal information even in the absence of ambiguity. Copyright Springer Science + Business Media, Inc. 2005information ambiguity, firm-value maximization, self-serving bias, presentation mode,

The effect of embedded managerial values on corporate financial outcomes

This paper explored the relationship between the embeddedness of a firm’s managerial values and corporate financial performance in Swiss small and medium-sized enterprises (SMEs) by developing a conceptual maturity model of managerial values (MM-MV). The MM-MV articulates the extent to which managerial values are embedded within organizations, allowing the analysis of the interrelationship between the degree of values-embeddedness and financial performance in SMEs. The findings suggested that as managerial values become more embedded, financial performance increases; therefore, SMEs exhibiting highly embedded managerial values such as customer-minded, team spirit, innovation-driven reliability, persis-tency, competency, and engagement tend to financially outperform SMEs that have not fully embedded managerial values throughout the firm