Governance Structures, Voluntary Disclosures and Public Accountability: The Case of UK Higher Education Institutions

Purpose: We investigate the extent of voluntary disclosures in UK higher education institutions’ (HEIs) annual reports and examine whether internal governance structures influence disclosure in the period following major reform and funding constraints. Design/methodology/approach: We adopt a modified version of Coy and Dixon’s (2004) public accountability index, referred to in this paper as a public accountability and transparency index (PATI), to measure the extent of voluntary disclosures in 130 UK HEIs’ annual reports. Informed by a multi-theoretical framework drawn from public accountability, legitimacy, resource dependence and stakeholder perspectives, we propose that the characteristics of governing and executive structures in UK universities influence the extent of their voluntary disclosures. Findings: We find a large degree of variability in the level of voluntary disclosures by universities and an overall relatively low level of PATI (44%), particularly with regards to the disclosure of teaching/research outcomes. We also find that audit committee quality, governing board diversity, governor independence, and the presence of a governance committee are associated with the level of disclosure. Finally, we find that the interaction between executive team characteristics and governance variables enhances the level of voluntary disclosures, thereby providing support for the continued relevance of a ‘shared’ leadership in the HEIs’ sector towards enhancing accountability and transparency in HEIs. Research limitations/implications: In spite of significant funding cuts, regulatory reforms and competitive challenges, the level of voluntary disclosure by UK HEIs remains low. Whilst the role of selected governance mechanisms and ‘shared leadership’ in improving disclosure, is asserted, the varying level and selective basis of the disclosures across the surveyed HEIs suggest that the public accountability motive is weaker relative to the other motives underpinned by stakeholder, legitimacy and resource dependence perspectives. Originality/value: This is the first study which explores the association between HEI governance structures, managerial characteristics and the level of disclosure in UK HEIs

An Analysis of the Methodologies adopted by CSR Rating Agencies

Purpose: This paper analyses the similarities and differences in the methodologies adopted by CSR (corporate social responsibility) rating agencies. Design/methodology: We gather secondary and primary evidence of practices from selected agencies on the methodologies and criteria they rely upon to assess a firm's CSR performance. Findings: We find evidence of similarities in the methodologies adopted by the CSR rating agencies (e.g. the use of environment, social and governance themes, exclusion criteria, adoption of positive criteria, client/'customised' input, quantification), but also several elements of differences emerge, namely in terms of the thresholds for exclusion, transparent vs. confidential approach, industry-specific ratings, and weights for each dimension. Drawing from Sandberg et al.’s (2009) conceptualisations, we tentatively argue that this mixed picture may reflect competing organisational pressures to adopt a differentiation approach at the strategic and practical levels whilst recognising, and incorporating, the ‘globalising’ tendencies of the CSR business at the terminological levels. Implications: Although our data is based on a relatively small number of agencies, our findings and analysis convey some implications for users of CSR ratings and policy-makers; particularly in light of the recent Paris 2016 Agreement on Climate Change and the increased emphasis on the monitoring of social, environmental and governance performance. Originality: We contribute to the literature by highlighting how key intermediate rating organisations operationalise notions of CSR

To what extent do governance, government funding and chief executive officer characteristics influence executive compensation in UK charities? Insights from the social theory of agency

This paper draws on agency theory, as extended by the social theory of agency (STA) (Wiseman, Cuevas-Rodríguez & Gomez-Mejia, 2012), to examine the association between governance arrangements, reliance on government funding, chief executive officer (CEO) non-profit experience, and CEO compensation in the UK charity sector. We rely on a hand-collected data for the largest 240 charities and find that greater trustee board diversity (specifically gender and education diversity) and the existence of a remuneration or nomination committee are positively associated to CEO compensation. The results also show that a reliance on government funding and CEO’s non-profit work experience, together with the presence of a finance/accounting expert on the audit committee are negatively associated with CEO compensation. The existence of an audit committee, internal audit function, use of specialist external auditor and CEO characteristics (gender, ethnicity and managerial experience) are not significant factors. Our findings are largely consistent with the STA’s propositions. Specifically, executive compensation levels reflect the CEO’s ability to work with a diverse board while a higher reliance on government funding signals the role of the State’s pressures in moderating CEO compensation. Finally, in a context characterised by altruism and public benefit, financial rewards are not seen as the dominant ‘value metric’, resulting in lower compensation for CEOs previously working in the sector. Our findings have policy implications, specifically in relation to the role, composition and effectiveness of governance structures (e.g. trustee boards, audit and remuneration committees) in overseeing the design of executive compensation schemes within the charity sector

The Perceptions and Determinants of Auditing and Reporting Quality in the Asia-Pacific Region

A country’s institutional environment significantly influences perceptions of auditing and reporting quality (ARQ) at the national level. Relying on a relatively unique measure of ARQ, collated by the World Economic Forum (WEF), we evaluate the influence of nine key isomorphic pressures on the ARQ in 26 Asia-Pacific countries. The results suggest that six of these (the efficacy of the corporate board, securities exchange regulations, reliance on professional management, protection of minority interests, adoption of international financial reporting and prevalence of foreign ownership) have a highly significant influence on the perception of ARQ whereas adoption of international standards on auditing is only moderately significant. However, contrary to expectations, our findings do not support the argument that the efficiency of legal frameworks and political systems significantly influence the perceptions of auditing and reporting quality in the Asia-Pacific region. These results should be of use to investors and the accounting profession in evaluating economic environments

To what extent do governance, government funding and chief executive officer characteristics influence executive compensation in U.K. charities? Insights from the social theory of agency

This paper draws on agency theory, as extended by the social theory of agency (STA) (Wiseman, Cuevas-Rodríguez & Gomez-Mejia, 2012), to examine the association between governance arrangements, reliance on government funding, chief executive officer (CEO) non-profit experience, and CEO compensation in the UK charity sector. We rely on a hand-collected data for the largest 240 charities and find that greater trustee board diversity (specifically gender and education diversity) and the existence of a remuneration or nomination committee are positively associated to CEO compensation. The results also show that a reliance on government funding and CEO's non-profit work experience, together with the presence of a finance/accounting expert on the audit committee are negatively associated with CEO compensation. The existence of an audit committee, internal audit function, use of specialist external auditor and CEO characteristics (gender, ethnicity and managerial experience) are not significant factors. Our findings are largely consistent with the STA's propositions. Specifically, executive compensation levels reflect the CEO's ability to work with a diverse board while a higher reliance on government funding signals the role of the State's pressures in moderating CEO compensation. Finally, in a context characterised by altruism and public benefit, financial rewards are not seen as the dominant 'value metric', resulting in lower compensation for CEOs previously working in the sector. Our findings have policy implications, specifically in relation to the role, composition and effectiveness of governance structures (e.g. trustee boards, audit and remuneration committees) in overseeing the design of executive compensation schemes within the charity sector

Accounting and Governance in Africa - Contributions and Opportunities for Further Research

Purpose: This paper reviews and reflects on the contributions of the Journal of Accounting in Emerging Economies’ special issue on accounting and governance in Africa. Design/methodology/approach: The themes and contributions from the accepted papers are identified and discussed in relation to prior research and potential for further studies. Findings: Key aspects of boards and corporate governance, audit reporting and quality and government accounting practices are revealed as mechanisms which, in some cases, did have some consequences in the African context. However, in other cases, accounting or governance mechanisms appear to be at the periphery of organisational practice and exhibit little influence on decision making and accountability. Limitations and implications: Whilst this paper does not provide a systematic review of the literature in the African context, it provides relating to special issue’s contributions on corporate governance, audit and government accounting on the continent. Originality/value: This special issue extends the burgeoning scholarship in African accounting and governance and provides directions and opportunities for future research. Keywords

The relationship between the adoption of International Public Sector Accounting Standards and sources of government financing: Evidence from developing countries

We examine the association between the adoption of International Public Sector Accounting Standards (IPSAS) and the level of government financing in the context of developing countries. We draw upon signalling theory, robust econometric techniques and a sample of 54 developing countries over a 13-year period. Our results show that adopting IPSAS is significantly associated with increased financing from international sources and foreign aid. In contrast, there is no significant association for the case of domestic credit. Our results are more pronounced for developing countries that have adopted accrual-based IPSAS than for those that have adopted cash-based IPSAS. Finally, we find that the association between IPSAS and government financing remains similar regardless of the country’s level of institutional quality. Our evidence implies that there is a benefit of increased debt financing after adopting IPSAS, indicative of the incremental signal international capital providers place on the availability of IPSAS-based public sector financial reports

Adoption of International Standards on Auditing (ISA): Do Institutional Factors Matter?

Informed by the neo-institutional perspective, this study seeks for the first time to investigate empirically the determinants of ISA adoption and commitment to harmonisation on a cross-national basis (89 countries). The findings show that the protection of minority interests, regulatory enforcement, lenders/borrowers rights, foreign aid, prevalence of foreign ownership, educational attainment and particular forms of political system (level of democracy) prevailing in a country, are observed to be significant predictors of the extent of commitment to the adoption and harmonisation of ISAs. Our statistical analysis therefore suggests that coercive, mimetic and normative pressure have a significant impact on ISA adoption relative to economic (efficiency-led) factors. Our findings imply that current efforts by the International Federation of Accountants (IFAC) and other international agencies to implement ISAs need to recognise that a broad set of institutional factors, rather than narrow economic ones, are of relevance in the development of audit policymaking, practice and regulation worldwide

Accounting, Ideological and Political Work and Chinese Multinational Operations: A Neo-Gramscian Perspective

This paper critically analyses the role of accounting in China’s new phase of politically driven economic reforms, which is the international expansion of Chinese enterprises. In particular, the paper examines how China’s multinational state-owned enterprise (SOE) and its managers conceive of, and use, accounting and control practices in response to the state’s international political and economic objectives. Drawing upon neo-Gramscian concepts of hegemony, this study contends that the Chinese Communist Party (CCP) has sought to create and maintain its hegemony by turning its political ideologies into initiatives of “economic development”, articulated through intensive ideological and political work exercised from the national to the organisational level. The study highlights the role of SOE managers in accommodating accounting and control practices in line with the state’s hegemonic and ideological demands. Crucially, it reveals the ability of managers to coordinate and balance the state’s political ends and the enterprise’s economic interests, where there is a selective use of accounting and control practices deployed for reasons beyond their economic functionality. This paper argues that it is necessary to include the superstructure and economic base of the Chinese state in a hegemonic analysis, and to investigate how the managerial cadre engages with ideology building at the organisational level. By focusing on the Chinese state’s new political dynamism regarding the expansion of multinational business operations, this paper provides new insights into the complexity of the motivations underlying the use of accounting and control practices in a globalised context