Search results

There are two problems when a principal invests capital and hires an agent to do the work. The problems relate to inducing the agent to exert the optimal effort and to effect an optimal risk sharing arrangement. This paper introduces the concepts and enumerates the fundamental solutions to this agency problem. This approach is very useful in the managerial accounting area of determining the value of accounting information for setting performance evaluation and incentive payment schemes.

Recently, performance measurement and management (PMM) has received increasing attention from both the academic and industrial environments. Companies that try to use PMM systems report experiencing implementation problems including goal incongruence. Based on a discussion of the state of the art of PMM, this paper aims to provide research guidelines for building a PMM system through a reference framework, and to identify major design challenges.

At a macro level, the evolution of research is analyzed using citation and co‐citation analysis techniques. Further, the evolution of PMM systems in the last 20 years is traced. The feasibility and applicability of these frameworks/models are analyzed by considering five milestones that a performance measurement system should have. Based on this, an integrated framework is proposed as a basis for designing a cohesive PMM system.

The research on the subject is quite diverse. In fact, the research appears to be quite mature in terms of publications and citations, while PMM systems developed do not meet the PMM challenge faced in the current environment. The framework proposed for PMM system design integrates five systems: a performance system, a cost system, a capability evaluation system, a benchmarking system and a planning system. Integration among the five systems is to be viewed as the driver to address the PMM challenge.

The proposed framework is a starting point for PMM system design and it provides important guidelines for successful implementations of PMM initiatives for various types of companies in the current global business environment. However, further empirical studies are needed before the concepts described here can be assessed to ascertain its applicability.

The paper provides a literature review of PMM research, discusses the mutual consistency of models and frameworks therein, and explores how the framework proposed might be implemented and improved, as well as the major challenges facing researchers. Practical implication and benefits of the proposed framework adoption are highlighted through an example.

Research in PMM has become increasingly important given the significant impact it can have on competitive strategy and operations of firms in the present global business environment. This paper demonstrates the need of an holistic approach to PMM, which requires an intensive and deep comprehension of the key activities in the company and their related drivers.

In recent years, performance measurement and management (PMM) has received much attention from researchers and practitioners. Despite the growing use of PMM systems, companies experience difficulty in implementing such systems, with consequent risk of partial benefits or total goal failure. The literature on PMM is quite vast, but only few of the models address the problem in its entirety, while many other works focus on specific issues related to PMM. The purpose of this paper is to analyze the state of the art of PMM models and propose an integrated framework as a base for performance measurement and management design.

The evolution of the literature on PMM models and frameworks is highlighted starting from the development of the last twenty years. Further, the characteristics raised in the literature are merged so as to identify the milestones of an integrated performance measurement and management system. Based on it, an integrated framework is proposed as a base for a cohesive PMM design.

The framework integrates five systems: a performance system, a cost system, a capability evaluation system, a benchmarking system and a planning system.

Though the proposed framework is a starting point for performance measurement and management design, it provides important guidelines for successful implementations of PMM initiatives inside companies.

The paper elaborates on the findings in the literature through a review and explores how the framework proposed might be implemented and improved.

The framework is based on the belief that PMM study requires an intensive and deep comprehension of the business in focus, which begins with a complete analysis of all the key activities in the company and their related drivers. Accordingly, the framework proposed starts with a defining “which” information should be analyzed, “how” they should be processed and “how” they should be integrated for generating valuable information to facilitate managers' decision‐making processes.

Corporate social responsibility (CSR)‐based strategies have become important concepts in dealing with firms' stakeholders. The purpose of this paper is to focus on the processes of stakeholder legitimacy and interest detection, namely ethical considerations and community obligations, to promote CSR as an intangible strategic asset.

The two relatively large service‐based firms (contrasting not‐for‐profit with for‐profit) that were selected for study were Pittsburgh‐based, namely the largest single employer of the metropolitan area of Pittsburgh (The University of Pittsburgh Medical Center (UPMC)) and WESCO, a distributor of electrical construction products and electrical and industrial maintenance products and the largest domestic provider of integrated supply services.

It was found that the management teams at UPMC and WESCO approach CSR‐based strategies and its initiative from completely different perspectives. UPMC functions a not‐for‐profit organization while WESCO is a for‐profit entity. They also approach CSR differently as a result from its geographically based service and product offerings, UPMC being more local/regional and WESCO going for global markets. These differences promote differences in the groups and types of CSR that each company is currently engaged in promoting.

The paper demonstrates that both not‐for‐profit and for‐profit entities have a reason to be socially responsible, whether they are local or global firms. The overarching fact is that consumers expect firms to be conscience of the social concerns of the community in which they operate and socially responsible to the various stakeholder groups they serve.

The UN Global Compact (GC) is the world's largest voluntary corporate social responsibility (CSR) initiative. Signatory companies voluntarily agree to abide by the GC ten principles and explicitly declare compliance with social and human rights, environmental protection, and anti‐corruption practices. Participants commit to CSR and are required to publish a yearly report called Communication on Progress (COP). If firms fail to provide a COP for one year they are labeled “non‐communicating”, and for two years they are “delisted” from the GC. In 2006, the first list of non‐communicating and delisted firms was announced. The purpose of this paper is to investigate the extent by which being a signatory company – that reports COP – reduces information risk, and thus leads to better market returns, lower cost of debt, and lower cost of equity.

The authors studied the period from the launch of the GC until the first list of non‐communicating firms was made public, investigating the extent by which being a signatory company – that reports COP – reduces information risk, and thus leads to better market returns, lower cost of debt, and lower cost of equity.

The results suggest that communicating (reporting) firms have statistically significant higher market valuation – lower book to market – than companies that initially agree to participate in the GC but that do not comply with the reporting requirement. Communicating firms also have statistically significant higher ROA, lower cost of debt, lower cost of equity, and lower beta indicating better performance and less risk. The authors also find some evidence that non‐communicating firms might be “free riding” and could have joined the GC to improve their corporate image.

The paper provides evidence of the value of CSR reporting. It is not enough to disclose compliance with CSR, but it is also necessary to account for this through some sort of formal mechanism such as a CSR report. Voluntary disclosures and narrative statements in annual reports will continue to have questionable information content, but standards of environmental reporting, such as the Global Reporting Initiative, not only improve the way in which social and environmental performance is measured, but they also provide evidence of compliance. This paper also presents evidence of the value of voluntary initiatives such as the GC when these initiatives are supported by formal reporting and when accountability/enforcement measures are in place.

Previous research in lease finance and evaluation has given little consideration to environmental factors. The purpose of this paper is to add to the literature by analysing how leasing provides a more attractive option than selling and extended producer responsibility (EPR) in helping to close product life‐cycle loops, extend the useful life of products, and increase environmental benefits.

This paper revisits the accounting concepts of asset depreciation, residual value and cost of leasing and proposes methods to incorporate these concepts into the “closed loop” lease and service mode for product life‐cycle management.

For business, the “closed loop” lease and service mode changes asset values through the extension of the asset's useful life and in particular, the increase of the residual value of the product (i.e. recoverable value to the producer/lessor). Such changes reduce the cost of leasing to the advantage of both lessor and lessee. However, the argument about a “win‐win” monetary and environmental outcome being associated with leasing presents several challenges for current accounting standards in terms of recognition of lease and lease revenue, recognition of intangible assets and internalisation of environmental costs and impacts associated with the leasing process.

To date, accounting and finance literature seems to focus exclusively on the economic aspects of leasing strategies. This paper uses a different lens to make a call for a rethink about leasing with environmental considerations. It is expected that the findings and suggestions in this study will facilitate the adoption and diffusion of the “closed loop” lease and service mode in the business world for the benefit of the environment in the future.

The purpose of this paper is to explore the ways in which a leading Australian public company uses sustainability reporting to respond to reputation risk arising from proposed regulation.

The paper uses a case study approach and both qualitative and quantitative methods of content analysis. The qualitative component is based on a framework of reputation conceptualisations and image restoration strategies adopted from existing literature.

The key findings of this paper are that the concept of reputation risk management (RRM) could assist in understanding what motivates sustainability reporting, and how proposed regulation could lead to a decrease in the quantity but increase in the quality of sustainability reporting. In addition, “honesty” is revealed as a potential RRM strategy.

The paper extends existing research on the RRM thesis by studying an Australian case of a reputation‐damaging event over a number of reporting years, examining a range of sustainability reporting media, and adding a quantitative aspect to an otherwise qualitative research framework.

A growing number of companies are measuring the sustainability performance of their businesses. Some companies are using pre‐existing sustainability indicator systems to assess their performance. Other companies are looking beyond measurement of impacts to create their own system of indicators to measure sustainability. Formulating relevant indicators of sustainability performance is a difficult task for any organization, but especially for small/medium enterprises (SMEs) that often lack financial, knowledge, and labor resources. The purpose of this paper is to consider two different sustainability assessment approaches undertaken by a single case study company, a start‐up SME.

The authors developed a method for an SME, Ecologic Designs, Inc., a self‐identified green business that reclaims materials to make bags and accessories, to create its own sustainability indicators without outside expert help. This research chronicles the struggles and triumphs of the SME in measuring its sustainability performance using a pre‐existing system and then using the developed method.

The SME's managers applied the developed method to create, select, and weight sustainability indicators to help answer a strategic planning decision – where to locate operations and facilities in an expanding supply chain.

The paper describes the struggles and triumphs of a start‐up SME in measuring its sustainability performance using a pre‐existing system and then using the developed method.

The purpose of this paper is to examine the relationship of sustainable development in businesses with corporate social responsibility (CSR) and accounting, in 53 developed and emerging economies over the period 1997‐2008.

The authors test the relationship of sustainable development in businesses with CSR and accounting using ordinary least squares estimation technique for country‐level panel data.

The results of the analyses provide evidence that sustainable development is strongly related to CSR and accounting standards, even after controlling for a variety of macroeconomic variables such as inflation, foreign direct investment, and unemployment. Moreover, the authors find that sustainable development is strongly and positively associated with customer satisfaction and the availability of senior managers.

Conclusions that have been drawn are important for a large group of stakeholders such as investors, companies' managers, employees, customers, suppliers, governmental and private regulatory agencies, and the general public, indicating that socially responsible firms and good accounting standards are likely to contribute to sustainable development in businesses in developed and emerging countries.

To the best of the authors' knowledge, this is the first country‐level study of its kind that attempts to explore the association of sustainable development in businesses with CSR and accounting standards.