Marian Yew Jen Wu Tong, Gladie Lui and Albert Lew
This paper seeks to provide empirical evidence showing how bank users of audited financial statements perceive and interpret various dimensions associated with financial reporting…
Abstract
This paper seeks to provide empirical evidence showing how bank users of audited financial statements perceive and interpret various dimensions associated with financial reporting in Hong Kong. Employing a survey instrument, we asked bank loan officers to rank the importance of thirty‐five reporting dimensions for lending decisions and to ascertain their expected level of information on each exploratory dimension, as well as their perceptions of the level of information actually provided by audited financial statements. Reliance on principal‐component analysis to extract a set of important dimensions shows that nine reporting dimensions are significantly associated with lending decisions. When bank loan officers' levels of expectations on important reporting dimensions were compared with the corresponding levels of perceived reporting performance, the statistical results reflect the existence of an expectations‐performance gap. Finally, when bank loan officers' perceived levels of reporting performance were hierarchically positioned, audited financial statements were found to provide the most information on a firm's liquidity and profitability, moderate information on reliability‐related dimensions, and the least information on relevance‐related dimensions pertaining to the future prospects of a firm. This empirical evidence signifies the need for future corrective actions in closing the expectations‐performance gap.
Connie Shum, Wing‐Hung Tam and Gladie Lui
This study examines accounting academics' perceptions of practical experience. Although such experience is perceived as important for student learning and school image, it is not…
Abstract
This study examines accounting academics' perceptions of practical experience. Although such experience is perceived as important for student learning and school image, it is not a relevant factor in hiring, tenure and promotion decisions in their schools. As a result, even though faculty would like to gain/refresh their practical experience, they do not find much opportunity provided by their schools. In addition, faculty members, especially those who have not obtained tenure status, find it more important to have publications in order to succeed. Consequently, they find no incentive to gain such experience.
Lan Guo, Bernard Wong-On-Wing and Gladie Lui
We examine how input- (vs. output-) based performance evaluation and incentive intensity impact employees’ autonomous motivation, thereby influence their proactive work behaviors.
Abstract
Purpose
We examine how input- (vs. output-) based performance evaluation and incentive intensity impact employees’ autonomous motivation, thereby influence their proactive work behaviors.
Methodology
We collected survey responses from 309 employees of different firms. Multi-group Structural Equation Modeling analyses were used to analyze the data.
Findings
Input-based evaluation had a positive effect on autonomous motivation and proactive work behaviors when task uncertainty was high, but a negative effect when it was low. Autonomous motivation had a positive effect on proactive work behaviors.
Research implications
Our results on the moderating effect of task uncertainty provide insights into inconsistencies in earlier studies. Moreover, applying self-determination theory of motivation to incentive research can provide some insights into why sometimes, incentives can negatively affect performance.
Practical implications
The study of proactive work behaviors is important because despite their necessity in the fast-changing business environment, they are relatively unexplored in the incentive literature. Proactivity is especially important for tasks that are high in uncertainty because the exact tasks to achieve those goals are hard to specify.
Originality/value of paper
We investigate the effect of performance management system on proactive work behaviors, mediated by autonomous motivation and moderated by task uncertainty.
Details
Keywords
Lei Dong, Bernard Wong-On-Wing and Gladie Lui
Management has considerable discretion over how to present and announce earnings components that are either unusual or infrequent, but not both (hereafter referred to as special…
Abstract
Purpose
Management has considerable discretion over how to present and announce earnings components that are either unusual or infrequent, but not both (hereafter referred to as special items). In this study, we study the independent and joint effects of the accounting presentation format of, and the level of announcement prominence given to income-decreasing special items on investors’ judgments about the persistence of declining earnings.
Methodology/approach
Our study uses a 3 (format) × 2 (prominence) between-subjects design. In the experiment, participants act as proxies for nonprofessional investors to assess the persistence of a hypothetical firm’s declining earnings and make investment decisions.
Findings
Our results suggest that investors’ judgments are influenced by accounting presentation format and the level of announcement prominence. With respect to format, both classification and disaggregation affect investors’ assessment of earnings persistence. In addition, the degree of prominence given to an income-decreasing special item, albeit self-serving and not audited, introduces additional influence beyond that of accounting presentation format. In particular, we find that announcement prominence has a greater effect when the special item is aggregated with other operating expenses than when the special item is presented under the two other alternatives.
Research implications
Our study contributes to the literature by demonstrating that presentation format and announcement prominence both have significant impact on investors’ judgments and decisions, and that their effects are interactive. Our results also indicate that future research can possibly gain better insight if it considers the accounting attributes of the special items in addition to their economic attributes.
Details
Keywords
Lan Guo, Bernard Wong-On-Wing and Gladie Lui
The present research examines the effect of incentivizing both outcome and driver measures of SPMS on middle managers' proactivity in influencing the strategy formulation process…
Abstract
The present research examines the effect of incentivizing both outcome and driver measures of SPMS on middle managers' proactivity in influencing the strategy formulation process. A case-based experiment was conducted among 74 full-time employees. The results suggest that when incentives are linked to both outcome and driver measures of SPMS, compared with when they are outcome-based and not linked to the SPMS, managers are more proactive in communicating strategy-related issues to top management. In addition, this effect of SPMS-based incentives on middle managers' proactivity is mediated by their autonomous extrinsic motivation to achieve strategic goals. The results are in general consistent with postulates of the self-determination theory of motivation. This chapter also has practical implication. Specifically, recent evidence suggests that most SPMS adopters fail to validate causal business models underlying their formulated strategies (Ittner, 2008; Ittner & Larcker, 2003, 2005). Middle managers' proactive strategic behavior may be one means to prompt top management to inspect formulated strategies and their underlying business models.