Changes In Top Management Research Articles

Impairment reversals: unbiased reporting or earnings management

PurposeThis paper aims to provide evidence that will inform the convergence debate regarding accounting standards. The authors assess the ability of impairment reversals allowed under International Accounting Standard 36 but disallowed by the Financial Accounting Standards Board to provide useful information about a company.Design/methodology/approachThe authors use a sample of 182 Malaysian firms that reversed impairment charges and a matched sample of firms which chose not to reverse their impairments. Further analysis examines if reversing an impairment charge is associated with motivations for and evidence of earnings management.FindingsThe authors find no evidence that the reversal of an impairment charge marks a company out as managing contemporaneous earnings. However, they document evidence that firms with high levels of abnormal accruals and weak corporate governance avoid earnings decline by reversing previously recognized impairments. In addition, companies that have engaged in big baths as evidenced by high accumulated impairment balances and prior changes in top management, use impairment reversals to avoid earnings declines.Research limitations/implicationsThe results of this study support both the informative and opportunistic hypotheses of impairment reversal reporting using Financial Reporting Standard 136.Practical implicationsThe results also demonstrate how companies that use impairment reversals opportunistically can be identified.Originality/valueThe results support IASB’s approach to the reversal of impairments. They also provide novel evidence as to how companies exploit a cookie-jar reserve created by a prior big bath opportunistically.

Coping with multilingualism: Internationalization and the evolution of language strategy

Research Summary: In this article, we explore the interaction between internationalization and language strategy. We identify a range of language coping mechanisms that internationalizing firms use in response to the multilingualism they encounter. Learning outcomes and strategy implications of each of these mechanisms are identified. We then build a conceptual model to depict how, over time, interaction and influence between internationalization and language strategy become a two‐way, co‐evolutionary process. A key aspect is the role of management in shifting the firm from a reactive to a more proactive stance on language strategy. A case study is used to contextualize and illustrate the co‐evolutionary process over the long term. Case data demonstrate the constant adoption and adaptation of coping mechanisms that feed into language strategy as internationalization unfolds. Managerial Summary: This article links the internationalization process of firms with the exposure to multilingualism and the development of language strategy. We outline how internationalizing firms may utilize a range of language coping mechanisms—such as the adoption of a common corporate language—to handle multilingualism. These feed into the development of language strategy. The case of Fazer, the Finnish bakery, confectionary, and catering firm, provides an illustration of how language strategy co‐evolves over time as internationalization proceeds—in Fazer's case, many decades. Fazer's experience also demonstrates the importance of management and changes in top management in ensuring a more proactive language strategy is adopted and enforced. Adequate allocation of resources and a link to performance management were found to be critical in supporting strategic implementation.

Do Venture Capital-Driven Top Management Changes Enhance Corporate Innovation in Private Firms? - Dissertation Executive Summary

Using hand-collected data on top management changes in venture capital (VC)-backed private firms, I show that VC-driven top management changes are associated with significantly more and higher quality innovation. Further, the effect of VC-driven top management changes on innovation is stronger for firms with greater VC power. An instrumental variable analysis using an exogenous shock to the supply of outside managers available for hire shows that the above relations are causal. Making use of hand-collected information on the founders of private firms, I find that both founder replacements and non-founder top management changes have a positive effect on corporate innovation. Decomposing top management changes into different types, I show that replacing top managers with new ones (rather than adding or removing managers alone) is most effective in enhancing innovation. Delving deeper into the educational background and employment history of the top management team, I find that adding seasoned CEOs has a significantly positive effect on innovation, while changing senior managers with a prior technical background does not. I also analyze the possible mechanisms through which top management changes affect corporate innovation, and establish that one such mechanism is through new management teams hiring a greater number of inventors for a given investment size. Finally, I find that VC-driven top management changes increase the probability of a firm's successful exit (via an IPO or an acquisition), partially driven by their enhanced innovation.

What causes abrupt and massive change in the top management of a successful entity in an emerging economy

What causes abrupt and massive change in the top management of a successful entity in an emerging economy

The pattern of fraudulent accounting : Ethics, external auditing and internal whistle-blowing process

The ongoing debate in the literature centres on the compromised auditor’s independence in consequence of the relevant provisions perceived for non-audit services provided to the audited clients. The accounting scandals that have occurred over the past two decades show the lack of competence and independence of external auditors, who kept quite in the face of attempted frauds. The case of Tesco represents an undeniable example of the loss of auditor’s independence, who failed to detect accounting manipulation confirming the importance of whistle-blowing procedures in disclosing concerns before they become serious problems. When turnover occurs in CEOs it is more likely that a rotation in external auditors occurs as well. Finally, changes in top management enable whistle-blowing actions to be successful, interrupting the organization’s dependence on serious wrongdoings and preventing a disastrous ending. The success of whistle-blowing in preventing company failure makes it an effective instrument of сorporate пovernance.

Workplace innovation influence on occupational safety and health

Innovation is an important science for the sustainable development of any country. Workplace innovation brings radical change in the workers’ environment, thereby enhancing the profitability of companies. However, most research and discussion of innovations are focussed on product development and/or process improvement, disregarding workplace and service innovation. Hence, this study aims to identify gaps that exist in previous studies to recommend further research areas related to workplace innovation influences on Occupational Safety and Health (OSH) interventions. The research was carried out through extensive literature reviews. It is evident that the influence of workplace innovation has been neglected in many studies despite the significance for workplace safety and health. Findings from the literature review revealed that workplace innovation has not been properly differentiated from new product development innovation and there are few cases of research carried out on the workplace innovation in particular. Thus, this research finding identified gaps in workplace innovation (non-technical innovation) such as workplace organisation, workplace layout, human resource management, top management changes, workers’ participation, policy and training. Hence, the workplace innovation influence on OSH indicates further research that can be conducted.

Turmoil in the C-Suite: Top Management Change and Corporate Turnaround

Firms experiencing performance decline are often expected to change their top management teams, yet research findings about top management change and turnaround success has reported conflicting res...

Government Agencies' Hiring of Management Consulting Services in Sweden - An Explorative Study

The current paper investigates the use of management consultants in the Swedish public sector. Based on an analysis of the use of management consulting services in 55 Government agencies (GAs) in the years 2004-2011 the paper makes a number of contributions. First it confirms an overall growth of the use of consulting services in the public sector. However, it also shows that the use of consulting services and its growth are unevenly distributed across organizations, where GAs with a highly professionalized work force are less heavy users of consulting services than regular GAs. The study also points at temporal variations in GAs use of consulting services. Here changes in top management, especially the CEO, are identified as initiators of temporary reductions of the use of consulting services.

Successful Successions: Employee Approval Ratings of New CEOs

The financial implications of CEO successions are well-documented; however, they offer little in the way of understanding the mechanisms that link changes in top management and subsequent changes in financial outcomes. In this study, I start to unpack this black box using a novel dataset to empirically examine the effects of CEO successions on employees’ CEO approval ratings. I find that changes in employees’ CEO approval ratings following a CEO succession vary based on the characteristics of the predecessor and successor CEOs: CEO approval ratings increase following the appointment of an outsider CEO and after CEO resignations, and decrease when interim CEOs take office and following malfeasances by preceding CEOs. Taken together, the results highlight the conditions under which employees react more and less favorably to new CEOs, and offer suggestive evidence on the types of successions that foster conducive environments for implementing successful strategic and organizational changes.

Development of a Model for Successful Implementation of Supply Chain Management Information System in Indian Automotive Industry

Supply chain management information system (SCMIS) has gained a lot of importance because of its ability to reduce costs and increase responsiveness in the supply chain. The implementation of SCMIS is a complicated process with significant risk since disparate systems spanning across companies are being integrated. A review of literature has revealed that the success in implementing SCMIS is not very encouraging. Against this backdrop, this paper identified 18 critical success factors and proposes a model for successful implementation of the system that can give the organization an edge over their competitors. The proposed model confirms that following factors play a significant role during implementation of SCMIS—top management support, user involvement, pre-implementation analysis, user training, change management, data accuracy and communication. The process model and critical success factors will provide a useful guide for industry practitioners who are planning to implement SCMIS in their organization. The study can help them gain an understanding of the complexities intrinsic in implementing these systems, improve decision-making for successful implementation of the system right from inception and subsequent realization of the enormous benefits, such as, reduction of inventories, minimization of bullwhip effect and cost reduction, that will accrue with right implementation.

The analysis of the effects of financial distress on the top management in the Republic of Serbia

This study aims to examine the effects of financial distress on top management structures, as well as to identify the factors affecting managerial change in the companies that adopted the reorganization plan during bankruptcy proceedings in the Republic of Serbia for the period 2009- 2014. Out of 39 companies that adopted the reorganization plan, the top management change was observed in 21 companies after the bankruptcy filing year, or within two years following the reorganization plan adoption. Research results indicate a strong negative correlation between the company's liquidity and the probability of change in top management structures, with the impact of other observed factors not being statistically significant.

Cupcakes by Lizbeth: flash in the baking pan or here to stay

Synopsis Cupcakes by Lizbeth (CBL) was a “gourmet” cupcake‐focussed retail store chain founded by a married couple. Eight years after opening, CBL used the relatively uncommon process of a “reverse merger” to become publicly traded. At that time, it had seemed as if CBL was on track to be the largest among cupcake focused businesses. However, financial setbacks as reported by the company and change in top management gave reason for pause and closer examination. Did the CBL business model have staying power or did there need to be a serious reconsideration of the company's strategic choices? Research methodology This case was prepared from secondary sources. Relevant courses and levels This case is appropriate for courses in strategy and management at the undergraduate level. Theoretical basis Competitive positioning, competitor analysis, operations strategy, SWOT analysis, planning business strategy, business expansion (franchising vs company owned).

The relationship between top management turnover with earnings management and default risk and earnings forecast error in the Tehran Stock Exchange

In this paper, we present a study to measure the relationship between top management turnover with earnings management and default risk and earnings forecast error in the Tehran Stock Exchange. The proposed study selects necessary information from 117 firms from the exchange over the period 2005-2010 and, using ordinary least squares technique as well as Pearson correlation ratios, examine three hypotheses of this paper. The results of the survey indicate that there are some meaningful relationships between change in top management with earning management, default risk and earning forecast error.

Voluntary Corporate Financial Disclosures as Strategy: Case Study of an Indian Company

Voluntary Corporate Financial Disclosures (henceforth voluntary disclosures) are such information disclosures made by firms as are not required by laws or regulations Much of the existing literature on voluntary disclosures have focused on the question as to why should firms make voluntary disclosures or on the question of what are the characteristics common to firms making voluntary disclosures. The question of why do firms make voluntary disclosures has not received adequate attention in the literature. This paper attempts to answer the question of why do firms make voluntary disclosures by doing an in depth case study of an Indian company operating in the Financial Services sector. The voluntary disclosures made by the company in its annual report of 1995-96 were the focus of the investigation.The paper presents a review of the literature on voluntary disclosures in Section 2. Section 3 is a description of the regulatory framework governing financial reporting by Financial Service companies in India. Section 4 describes the methodology. Section S provides a background of the company and describes the specific voluntary disclosures made by the company under study. Section S presents the analysis. The concluding section presents some generalizations and directions for future research.The additional disclosures made by the case company represent a major shift in the company's disclosure policies The disclosures collectively communicate the poor financial state of the company The disclosures result in the company reporting a large loss and in a substantial write down of its assets Casual observation would lead us to believe that companies adopt an approach of gradually increasing the levels of voluntary disclosures Evidence from the case suggests that major shifts in the level of voluntary disclosures are likely to be associated with a shift in corporate strategy and/or a change in top management. The absence of any linkage between top management remuneration and financial performance of the company can facilitate disclosures which have negative implications for the reported financial performance and position of the company. Disclosures are used to both communicate strategy and as an element of strategy The results of the analysis are related to the model of disclosure process proposed by Gibbins, Richardson and Waterhouse ( 1990).

TOP MANAGEMENT CHANGES AND STAKEHOLDER ORIENTATION: CASE OF CROATIA

Stakeholder theory of the corporation was developed as an alternative to the prevalent system of corporate governance with shareholders being the only group managers are responsible to. Top management’s responsibility goes far beyond shareholders alone, because the corporation is not merely an instrument for maximizing shareholders’ wealth, but also is a social entity with broader and more complex purpose and role. Top management should balance multiple interests, demands and claims of various stakeholder groups and therefore top management’s success can not be easily and unambiguously described using traditional performance measures based on return on equity. The challenges top managers are facing can be better expressed by a question: How can they satisfy (often conflicting) stakeholders’ demands while maximizing firms’ wealth creating capacity at the same time? Top management’s position and role within the structure of corporate governance are determined by firm’s stakeholder orientation ; power constellations, shifts in negotiating positions and interactions between various stakeholder groups, so our main research goal was to expand the understanding of the context, reasons and circumstances of top management changes, starting from the basic premises of the stakeholder theory of the corporation. The results of this research indicate that there are differences in stakeholder orientation regarding top management changes, and the observed differences are even larger when the change was forced. The results of this research also suggest that managers may engage in active stakeholder management as to protect their own position-as part of a managerial entrenchment strategy.

A Successful Enterprise System Re-Implementation Against All Odds - A Multisourcing Case Study

Achieving success in enterprise systems (ES) implementations is challenging. The success rate is not high in view of the sums invested by many organizations in these companywide systems. The literature is charged with reasons for unsuccessful implementations, such as a lack of top management support and insufficient change management. Contrary to this research, empirical data from an ES re-implementation in a Scandinavian high-tech company shows successful implementation despite many problematic shifts in outsourcing partners. Therefore, it is natural to ask: why was the re-implementation of the ES at SCANDI successful despite the major troubles encountered during the project? Building on critical success factor (CSF) analysis of ten CSFs combined with an investigation into the institutional structures at play, we present several reasons for the successful implementation. The CSF analysis shows an equivocal result: four fulfilled, three partially fulfilled and three not fulfilled. Even the two top CSFs, top management support and change management, are either not fulfilled or only partial fulfilled. However, the institutional analysis provides additional explanations, such as a few heroes acting as glue in a conflicting multi sourcing environment and resilience towards ES implementations created over many years. Important implications from this study are that one should be critical of CSFs and that the combined analysis can guide both practitioners and researchers to understand and position factors better for success in ES implementations.

Top management turnover and firm default risk: Evidence from the Chinese securities market

China has moved rapidly from a socialist planned economy to a market economy. As a result, many enterprises in China are seeking talented top management to increase their performance and decrease their default risk. Studies abound regarding top management turnover and its relationship with firm performance, however, few studies have connected top management turnover with firm default risk. In China, a market with extensive financial fraud, firm default risk is an important factor and thus we explore this relationship in the Chinese securities market. Our results indicate that firms with higher default risk are more likely to change their top management in the next financial reporting period. In addition, following changes in top management, such firms default less than other companies.

Top team composition and corporate turnaround under environmental stability and turbulence

PurposeThe purpose of this study is to empirically examine the effect of top management team (TMT) characteristics on corporate turnaround performance in declining firms under conditions of environmental stability and turbulence.Design/methodology/approachTheoretical hypotheses were developed and tested using data collected from 98 US manufacturing firms that experienced performance decline and turnaround during the periods 1990‐1994 and 1995‐2000 respectively. Data were collected from the COMPUSTAT database and annual filings and analyzed using a moderated regression analysis.FindingsThe results of moderated regression analysis indicate an adverse effect of long organizational tenure on corporate turnaround, especially in turbulent environments. Hence, if was found that the effect of top team composition on corporate turnaround varies depending on the environmental context.Research limitations/implicationsThe study contributes to the ongoing corporate turnaround research by examining the interplay between TMT characteristics and turnaround performance under different environmental contexts. Consequently, the findings of the study suggest that the environmental context in which declining firms operate matter just as much as the nature and characteristics of their top team in determining the success of their turnaround attempt.Practical implicationsThe results of the study shed some light on corporate governance issues, specifically on the importance of matching top management change efforts in declining firms with the respective environmental context.Originality/valueThe study contributes to the corporate turnaround literature by addressing the recent call for research in the TMT‐turnaround relationship under environmental contingencies (i.e. environmental stability/turbulence).

The influence of business process management and some other CSFs on successful ERP implementation

PurposeEnterprise resource planning (ERP) systems have become imperative for companies in order to be competitive in a turbulent and highly competitive business environment. Unfortunately, the success rate of ERP implementations is very low, which was cited in many researches and a majority of authors have reported up to 90 percent failure rate. Therefore, new empirical studies are more than necessary to validate companies' contributions to the increase of the success rate of ERP implementation, which was the primary reason for this investigation. The main goal of this paper is to stress the impact of business process management (BPM) and some other critical success factors (CSFs) on successful ERP implementations.Design/methodology/approachThe paper details an empirical investigation combined with a confirmatory approach using structural equation modeling.FindingsThe hypotheses confirm the impact of top management support, change management, and BPM on successful ERP implementation. These factors have a positive impact on successful ERP implementation and should be treated as very important in ERP systems implementation projects. The results also support the importance of top management perception (MP): if they consider BPM as a basis of business change, this contributes to a strong and positive influence on successful ERP implementation.Research limitations/implicationsOther CSFs, also required for successful ERP implementations are not covered in this paper. The sample of companies used in this study is limited only to one country, and the aspect of chief information officers (CIOs) should not be omitted either, because other CIOs might have answered the questionnaire in a different way.Practical implicationsCompanies should treat BPM as a basis of business change and therefore increase its usage in order to increase a possibility for a successful ERP implementation. Although the ERP implementation is not the most efficient per se, its effectiveness on business performance can be greater.Originality/valueContributions of the paper are important for both practitioners and researchers. The paper will provide a very few specific factors and findings which are useful for companies when planning to implement ERP systems, and should not be omitted. From theoretical standpoints the most CSFs in ERP implementations can be combined, which are dispersed in the literature, and thus facilitate or somehow even stimulate other researchers in further investigations of those factors, which are still not defined enough or investigated.

Turnaround Strategies in Established Small Family Firms

This study employs a case-study approach to identify unique characteristics of established small family firms that affect their ability to initiate turnaround strategies when encountering an organizational crisis. In our case studies, we found evidence for family firms employing the standard strategies of top-management changes, infusion of external management expertise, and retrenchment that have been proposed in the general turnaround literature. The implementation of these strategies was, however, moderated by eight characteristics generally associated with family firms, including strong ties to the family firm, internal orientation, altruistic motives, and long-term goal orientation. The introduced framework contributes to a more fine-grained understanding of the turnaround challenges of established family firms and how they can be addressed. This is a topic of substantial practitioner interest considering the high failure rates of family firms.