External Control Mechanisms Research Articles

The EU in multilateral environmental compliance mechanisms: an outside view

With reference to its unique characteristics, the European Union (EU) regularly requests a special position in treaty cooperation or external judicial control mechanisms. Recurrently, these requests are successful and lead to the EU being treated differently from other treaty parties. These situations have been captured by the concept of ‘European exceptionalism’. EU requests for special treatment can also be witnessed in the supportive and facilitative procedures of compliance mechanisms in international environmental law. In those mechanisms, however, EU requests for special treatment are subject to careful scrutiny, and are even met with strong opposition by treaty institutions and treaty partners. Taking a closer look at the EU’s participation in compliance mechanisms, the present article discusses how certain unique EU characteristics may prompt an EU request for special treatment under compliance mechanisms and explores how compliance institutions and treaty partners have treated existing requests so far. With this outside perspective of non-EU actors, it is possible to understand where such requests can be successful and where they fail to be. In this way, the insights gained permit reflection upon the EU’s participation in compliance mechanisms and whether it truly constitutes a further phenomenon of ‘European exceptionalism’.

Cracks in Education: Alternative Schooling in Cultic Groups

The breakdown of cross-social values characteristic in a cult, expressed in limiting its members’ contacts with people from outside their own community, manifests itself in its critical attitude towards the common education system, and therefore in establishing its own schools, with a formula of education that is different from that found in traditional educational institutions. Some groups also use legal provisions enabling the implementation of home education, which allows them to protect children against the harmful, in their opinion, impact of the external environment. All this leads to a kind of gap in the cult’s relationship with the education system, causing it to lose both external and internal control mechanisms to limit potential abuse, making children from cultic milieu more vulnerable and defenseless than their peers growing up in a society equipped with the mentioned mechanisms, even if they are sometimes insufficiently implemented. Pupils taught in the mainstream school system maintain regular contact with their peers from different families and social groups. Similarly, teachers and other employees of the education system are embedded in different social contexts, which provides them with a perspective that lets them notice an occurring problem and offer help to the child.

Earnings Management Behavior in Malaysia: The Role of Ownership Structure and External Auditing

"This paper aims to empirically investigate firms’ earnings management (EM) behaviour, representing an issue in the realm of corporate financial reporting. Specifically, it explores the strategic roles of two common governance elements of ownership (managerial, institutional and family) and external audit in shaping the firms’ EM behaviour based on the two common EM attributes of Discretionary Accruals (DA) and Real Activities EM (REM). The analyses based on 227 survived Malaysian listed firms throughout the sixteen-year period from 2001 to 2016 (3,632 firm-year observations) indicate a dynamic EM behaviour depending on the presence of different ownership structures. Whilst a high percentage of family and institutional ownership mitigates DA, it however does not hold true for REM. Further, this paper also shows that the external control mechanism of audit quality is not significant in mitigating both EM attributes. The empirical results suggest that firms facing different challenges would affect the firms’ financial reporting behaviours in their choice of EM. The paper adds to the growing body of empirical knowledge dealing with the determinants of DA and REM from the lens of an emerging economy like Malaysia. KEYWORDS: Earnings management, discretionary accruals, real earnings management, accrual earnings management, financial reporting quality."

The impact of ownership structure on dividend policy of listed firms in Jordan

This study investigates the impact of ownership structure on the dividend policy in Jordan. In particular, it aims to uncover the effects of family ownership, institutional ownership, foreign ownership, and state ownership on dividend decisions for a sample of 66 Jordanian industrial and service firms listed on the Amman Stock Exchange (ASE) for the period 2014–2017. Tobit Panel Regression is used to test the hypotheses of the study. The results show a significant positive association between institutional ownership and dividend yield, while foreign ownership is associated with a less likelihood of paying dividends. No evidence is found to support that family ownership and state ownership have an impact on dividend yield. Hence, the study provides a clear evidence that high institutional ownership as an external control mechanism increases the need to pay dividends. The results also indicate that Jordanian listed firms have highly concentrated ownership structures and are mainly dominated by families followed by financial institutions, then foreign investors while the state shows relatively lower ownership. The study recommends that investors should take into account ownership structure when making investment decisions to help them choose the best investment opportunities.

External control mechanisms and red tape: testing the roles of external audit and evaluation on red tape in quasi-governmental organizations

Over the past three decades, red tape has been a significant issue in public administration. Several prior studies have discovered the external origins of red tape, noting the roles of external control on increased red tape. Despite the empirical studies, it remains unclear how the particular tools of external controls, such as external audits and evaluations, are associated with employees’ perception of red tape. To answer this question, we measured different external control mechanisms in quasi-governmental organizations in Korea and investigated their effects on red-tape perception. The results show that external audits increase employees’ red-tape perception, whereas external evaluations decrease their perception. However, the positive function of evaluation disappears under a high level of government control because both external audits and evaluations increase red-tape perception when more government control is perceived. Points for practitioners This study sheds theoretical light on the negative impacts of external control in rule management. The impacts of audit and evaluation on red tape are empirically identified in public organizations. Practitioners need to realize that the use of audit and evaluation may produce unintended effects that increase ineffective rules even though such control mechanisms are designed to check mismanagement in quasi-government organizations.

Under which conditions are changes in the treatment of people under involuntary commitment justified during the COVID-19 pandemic? An ethical evaluation of current developments in Germany

The COVID-19 pandemic poses significant challenges in psychiatric hospitals, particularly in the context of the treatment of people under involuntary commitment. The question arises at various points in the procedure for and process of involuntary commitment whether procedural modifications or further restrictive measures are necessary to minimise the spread of COVID-19 and protect all people involved from infection.In the light of current developments in Germany, this article examines under which conditions changes in the treatment of people under involuntary commitment are ethically justified in view of the COVID-19 pandemic. Among others, we discuss ethical arguments for and against involuntary commitments with reference to COVID-19, the use of different coercive interventions, the introduction of video hearings, an increased use of video surveillance and interventions based on the German Infection Protection Act.We argue that strict hygiene concepts, the provision of sufficient personal protective equipment and frequent testing for COVID-19 should be the central strategies to ensure the best possible protection against infection. Any further restrictions of the liberty of people under involuntary commitment require a sound ethical justification based on the criteria of suitability, necessity and proportionality. A strict compliance with these criteria and the continued oversight by external and independent control mechanisms are important to prevent ethically unjustified restrictions and discrimination against people with the diagnosis of a mental disorder during the COVID-19 pandemic.

Regulatory agencies and creative accounting practices in Nigeria

Regulation and regulatory agencies are to serve as external control mechanisms to ensure that the financial statements provide a fair view of the company’s operating performance and financial position, free of any unethical practice and suitable for all stakeholders’ needs. Despite the increasing importance of regulatory agencies in enforcing compliance with the standards and laws, it occupies a limited space in accounting research. This study, therefore, investigated the impact of regulatory agencies on creative accounting practices. The study used descriptive and survey research design to achieve its aim. It employed a multi-stage sampling technique, also questionnaires were distributed among 405 respondents consisting of preparers of accounts, users of accounts, and regulators. Out of the number distributed, the respondents returned 241 copies, and all of them were found suitable. The study used Ordinary Least Squares (OLS) to analyze the data and test the hypothesis. The empirical findings showed that the regulatory agencies jointly show a significant impact on creative accounting practices, but the level of contribution to the overall impact by each regulatory agency varies. The study concludes that Nigeria’s regulatory agencies are weak and inefficient in enforcing compliance with the relevant rules. The study recommends that the institutional capacity of the regulatory agencies should be strengthened by enforcing compliance with financial reporting rules and regulation. Most of these agencies should develop capacity in the areas of manpower, information technology infrastructures, and funding. Acknowledgment The authors acknowledge Covenant University who has solely provided the platform for this research and has also fully sponsored the research cluster search for data across the country.

Nonprofit Governance in an Age of Compliance

The stakes for proper nonprofit governance are extremely high. Over 1.5 million nonprofits are registered with the IRS, collectively employing 12 million people and accounting for 5.4% of US GDP. Yet while for-profit companies have significant checks on the behavior of boards and management, nonprofit firms lack many of the same types of internal and external governance control mechanisms. Covid-19 is just the latest shock to expose the lack of preparedness and capability of many nonprofit boards in fulfilling their essential governance functions. This Article contributes to the corporate governance literature by identifying aspects of nonprofit governance that create unnecessary risk to nonprofit entities and to society overall. Currently many governance failures that would be corrected in traditional for-profit entities go unaddressed among nonprofits. We make unique contributions to addressing these governance shortcomings by suggesting an enforcement reorientation by both public and private actors. Our novel solutions encompass disclosure, certification, oversight by state attorneys general, and federal actors.

Multiple Light Control Mechanisms in ATP-Fueled Non-equilibrium DNA Systems.

Fuel‐driven self‐assemblies are gaining ground for creating autonomous systems and materials, whose temporal behavior is preprogrammed by a reaction network. However, up to now there has been a lack of simple external control mechanisms of the transient behavior, at best using remote and benign light control. Even more challenging is to use different wavelengths to modulate the reactivity of different components of the system, for example, as fuel or building blocks. Success would enable such systems to navigate along different trajectories in a wavelength‐dependent fashion. Herein, we introduce the first examples of light control in ATP‐fueled, dynamic covalent DNA polymerization systems organized in an enzymatic reaction network of concurrent ATP‐powered ligation and restriction. We demonstrate concepts for light activation and modulation by introducing caged ATP derivatives and caged DNA building blocks, making it possible to realize light‐activated fueling, self‐sorting in structure and behavior, and transition across different wavelength‐dependent dynamic steady states.

Multiple Light Control Mechanisms in ATP‐Fueled Non‐equilibrium DNA Systems

AbstractFuel‐driven self‐assemblies are gaining ground for creating autonomous systems and materials, whose temporal behavior is preprogrammed by a reaction network. However, up to now there has been a lack of simple external control mechanisms of the transient behavior, at best using remote and benign light control. Even more challenging is to use different wavelengths to modulate the reactivity of different components of the system, for example, as fuel or building blocks. Success would enable such systems to navigate along different trajectories in a wavelength‐dependent fashion. Herein, we introduce the first examples of light control in ATP‐fueled, dynamic covalent DNA polymerization systems organized in an enzymatic reaction network of concurrent ATP‐powered ligation and restriction. We demonstrate concepts for light activation and modulation by introducing caged ATP derivatives and caged DNA building blocks, making it possible to realize light‐activated fueling, self‐sorting in structure and behavior, and transition across different wavelength‐dependent dynamic steady states.

Factors Associated With Intention to Moderate Drinking Among Student Drinkers

This study addresses the dearth of literature into drinking moderation and demonstrates the value of a social ecological approach for identifying the influencers of students’ intention to moderate drinking. In doing so, the study supports a promotion approach over an avoidance approach as a new opportunity for addressing heavy student drinking through social marketing. A quantitative survey is conducted within a sample of university students ( n = 660) in Vietnam where drinking moderation is commonplace. This research context is arguably helpful to discover factors linked to drinking in moderation, which could inform interventions to reduce problematic drinking in heavy-drinking cultures. Findings suggest that there exist multiple levels of influence on students’ intention to moderate drinking beyond individual factors, which makes drinking moderation a complex phenomenon. There also exist gender differences in how the factors affect moderate drinking intention. Females appear to moderate their drinking through both internal and external control mechanisms, while males tend to moderate their drinking mainly through internal control. These findings can be used to develop interventions aimed at fostering safe and sensible drinking cultures. By taking a comprehensive approach, the most necessary targets are identified to bring about the desired change. It is also suggested that the interventions should be tailored to different gender needs.

Corporate board structure and foreign equity investments in weak institutional regimes

AbstractResearch Question/IssueConcentrated ownership is more the rule than the exception in weak institutional environments, and the absence of external control mechanisms, leading to ineffective legal enforcement, intensifies principal–principal agency issues. Our study examines how the structuring of the corporate board plays a vital role in informing foreign investors about the risk of being expropriated, which affects their decisions to make equity investments in firms in weak institutional regimes.Research Findings/InsightsUsing a sample of large listed Indian firms in the period 2010–2014, we hypothesize that the presence of affiliate directors on the board has a negative impact on foreign investments. Likewise, the presence of controlling owners‐directors on the board together with chief executive officers' additional directorial positions has an inverted U‐shaped impact on foreign investments.Theoretical/Academic ImplicationsBy making use of agency theory and focusing on the importance of foreign financing, our study highlighted the factors that deter foreign investors from providing capital to firms in weak institutional regimes. The use of this theoretical perspective, by emphasizing the differences in agency problems prevalent in strong versus weak institutional regimes, further suggested that examination of the structure of corporate boards is an important way to detect and gauge the potential for expropriation in countries suffering from weaknesses in investor protection.Practitioner/Policy ImplicationsOur study has important implications for corporations operating in markets suffering from a legal environment that offers little investor protection. Investors are less prone to invest in these countries, as the risk of expropriation by dominant shareholders means they cannot be sure of actually getting the putative return. Our work shows how corporations can structure their boards effectively to convince investors that they face less danger of expropriation and so attract foreign capital.

The effect of board and audit committee effectiveness on internal control disclosure under different regulatory environments in South Asia

PurposeThe purpose of this paper is to investigate the internal control disclosure (ICDISC) practices in South Asia and compare those disclosure practices across enforced setting (India) versus comply or explain setting (Pakistan and Bangladesh). Further, whether the audit firm size moderates the relationship between ICDISC practices and board & audit committee effectiveness.Design/methodology/approachTo achieve these objectives, a sample of 100 non-financial companies was selected from Pakistan and India for three years’ period (2013-2015), whereas 93 companies were selected from Bangladesh based on market capitalization. The ICDISC index has been used which is based on the COSO framework.FindingsResults of univariate analysis show that public sector companies in South Asia tend to disclose significantly more internal control information as compared to private sector companies. In terms of enforcement variable, the results of Mann–Whitney test show that companies listed in enforced setting have disclosed significantly greater extent of overall as well as individual categories of ICDISC as compared to companies listed in comply or explain setting. Based on multivariate analysis results for overall sample, it was found that board and audit committee characteristics and ownership by government have positive significant effect on ICDISC except representation of female or foreigner on audit committee which was found negatively significant. In addition to this, listing on foreign stock exchange and enforcement effect emerged as significant variables to influence ICDISC. Finally, the results of additional analysis state that the role of board and audit committee for influencing ICDISC has been moderated by the external auditor size in South Asia. In addition, enforcement variable is highly positively significant for companies having non-big four audit firm.Research limitations/implicationsThese results imply that enforcement variable acts as an important alternative external control mechanism when companies do not have big four audit firm as their external auditors.Originality/valueThis is very first study on ICDISC in South Asia which explores the effect of enforcement and governance on ICDISC practices of firms. It also contributes toward the literature that the regulation on reporting of internal control can be effective in developing country only if there is strong penalty for non-compliance by regulatory authorities.

Os critérios de recepção das decisões acerca dos delitos de desacato do sistema interamericano de direitos humanos no Superior Tribunal de Justiça à luz do controle de convencionalidade externo

O artigo trata, à luz do controle de convencionalidade, da recepção da recomendação do Sistema Interamericano de Direitos Humanos de descriminalizar os crimes de desacato pelo Superior Tribunal de Justiça. Restringe-se à análise de dois recursos orientadores dos posicionamentos do Tribunal: o Recurso Especial n. 1.640.084/SP e o Habeas Corpus n. 379.269/ MS. O método é indutivo e são utilizadas a revisão bibliográfica e a análise documental como técnicas de pesquisa. Conclui-se que o Superior Tribunal de Justiça considerou apenas decisões nas quais o Estado tenha sido parte no litígio, o que descarta a recepção via mecanismo do controle de convencionalidade externo.

How does product market competition affect corporate takeover in an emerging economy?

This study investigates the effect of product market competition as an external control mechanism on the operation and efficiency of corporate takeovers in an emerging economy. Empirically, we find that firms in more competitive product markets are more likely to experience a change in control than those in less competitive markets after controlling for other firm and industry characteristics. Further, the positive effect of a change in control on shareholder wealth is observed in more competitive product markets but disappears in less competitive markets. The results imply that product market competition improves market efficiency for corporate control in an emerging economy with less developed capital markets and weak investor protection, supporting the complementary Hypothesis between product market competition and corporate takeover.

La auditoría externa como instrumento de fiscalización privada de la administración social

Este artículo se propone responder a la pregunta por la función sustantiva de la auditoría externa, como mecanismo de fiscalización o control externo de la administración social. En este contexto se ofrece evidencia normativa e histórica que demuestra que la auditoría externa es un instrumento de control o fiscalización sustantiva de la administración social, ejercitado por entidades privadas independientes (las EAE); y también un proceso de verificación de conformidad formal de los registros contables con estándares generalmente aceptados. La auditoría externa se introdujo históricamente para prevenir y controlar fraudes y malas prácticas en las bolsas de valores, para proteger el interés de los accionistas, del mercado relevante, y el correcto flujo de información desde y hacia la entidad auditada. La auditoría externa incluiría, por tanto, como elemento inherente a ella, la obligación profesional de detectar y revelar fraudes o engaños, imposibles de ocultar en un proceso de auditoría.

How collaborative innovation system in a knowledge-intensive competitive alliance evolves? An empirical study on China, Korea and Germany

In terms of the research content, previous studies did not analyze influences of interactions among different knowledge behaviors on collaborative innovation in the knowledge-intensive competitive alliance. Meanwhile, they overlooked exploring the external control mechanism together with internal interaction mechanism. In terms of the research method, previous studies failed to deal with challenges brought by collaborative innovation complexity. In order to address these gaps, different knowledge behaviors that influence collaborative innovation are identified as knowledge creation, knowledge transaction and knowledge application. The theory and method of synergetics, which is capable of explaining collaborative innovation complexity, is introduced to establish a dynamic collaborative innovation evolution model. Taking high-end medical device knowledge-intensive competitive alliances in China, Korea and Germany as empirical research subjects, we reveal the collaborative innovation principles in the knowledge-intensive competitive alliance by analyzing external control mechanism (resource input mechanism) and internal interaction mechanism (interactions among different knowledge behaviors). Results showed that: I) resource input mechanism, the most important external control mechanism, is able to alter collaborative innovation period. II) in the process of collaborative innovation, there is a highly non-linear positive correlation between knowledge creation and knowledge application, but the collaborative innovation does not depend on knowledge transaction. III) no matter what the role of resource input mechanism is, the collaborative innovation in knowledge-intensive competitive alliance is able to enter into a new stability spontaneously under interactions among different knowledge behaviors. With this research, this study can promote studies on collaborative innovation in the knowledge-intensive competitive alliance, provide new perspectives and methods for researchers, and offer important implications for managers to set strategies.

Capital structure as a control mechanism of a CSR entrenchment strategy

PurposeThis paper aims to analyse the use of level of debt as an external control mechanism against an entrenchment strategy based on corporate social responsibility (CSR) practices.Design/methodology/approachThe authors use a database of 1,916 international companies for the years 2002 to 2010.FindingsThe evidence obtained confirms in a context of asymmetric information, bounded rationality and divergent interests, the use of debt as a control mechanism of managers’ discretionary comportment. In other words, CSR practices can be used by managers as an entrenchment strategy and self-defence with the aim of decreasing the possibility of being identified by those shareholders and stakeholders whose interests have been damaged. In this context, the market demands higher debt levels to solve agency frictions, playing an active role in monitoring the management. Moreover, the demand of higher debt as a control mechanism that minimises the expropriation risk by managers through CSR is lower in contexts of greater investor protection.Originality/valueThe findings reveal that CSR engagement can be explained by the hypothesis of being a strategy of entrenchment and self-defence. Overall, this study differs from previous literature in this field by taking an alternative approach to CSR practices, in contrast to the conventional wisdom of the benefits of CSR practices. The authors contribute by empirically testing the theoretical model proposed by Cespa and Cestone (2007) who suggest the discretionary use of CSR from an agency perspective. They also give empirical relief showing the use of CSR as an entrenchment strategy. Moreover, they demonstrate that the capital market of debt decreases in a context with a greater degree of investor protection, likewise under CSR promoted as an entrenchment tool, the demand for debt as a disciplinary mechanism is less necessary to control managers. In addition, the study is enriched by the database analysis.

Frequency-domain analysis method for analyzing and improving the steady-state characteristics of microcantilever in tapping-mode atomic force microscopy

In tapping-mode AFM, the steady-state characteristics of microcantilever are extremely important to determine the AFM performance. Due to the external excitation signal and the tip-sample interactions, the solving process of microcantilever motion equation will become very complicated with the traditional time-domain analysis method. In this paper, we propose the novel frequency-domain analysis method to analyze and improve the steady-state characteristics of microcantilever. Compared with the previous methods, this new method has three prominent advantages. Firstly, the analytical expressions of amplitude and phase of cantilever system can be derived conveniently. Secondly, the stability of the cantilever system can be accurately determined and the stability margin can be obtained quantitatively in terms of the phase margin and the magnitude margin. Thirdly, on this basis, external control mechanism can be devised quickly and easily to guarantee the high stability of the cantilever system. With this novel method, we derive the frequency response curves and discuss the great influence of the intrinsic parameters on the system stability, which provides theoretical guidance for selecting samples to achieve better AFM images in the experiments. Moreover, we introduce a new external series correction method to significantly increase the stability margin. The results indicate that the cantilever system is no longer easily disturbed by external interference signals.

Real-time classifier based on adaptive competitive self-organizing algorithm

This article introduces a novel adaptive competitive self-organizing (ACS) model, with applicability for real-time clustering and vector quantization. An important feature of this model is its dynamic structure and self-adjusting parameters that also offers a solution to the problem of parasitic limit points and consequently in more accurate label assignments. This unsupervised classifier is free of any external control mechanism. Its self-organizing (SO) dynamic is governed by the gradient descent (GD) theory in cooperation with a competition mechanism based on Lotka–Volterra competitive exclusion. The core algorithm of this classifier is based on developing an energy function, where its minima or equilibrium points correspond to the centroid of similar input patterns. Since this energy function is a form of Lyapunov function, it guarantees stabilization of the dynamical trajectories of labels in finite numbers of isolated equilibrium points. This energy function along with other control parameter functions, then, will be the base for the set of ordinary differential equations (ODEs) describing the overall dynamic of our system. Finally, the effectiveness of the proposed ACS model is demonstrated by implementing it on both real and artificial data sets as well as comparing with other well-known clustering methods. ACS method showed a better clustering performance in some categories and an overall comparable rendition.