Partner In Firm Research Articles

Managing the Auditor-Client Relationship Through Partner Rotations: The Experiences of Audit Firm Partners

ABSTRACTWhile current audit standards explicitly state engagement partner tenure requirements, firms have flexibility in managing the rotation process. We conduct semi-structured interviews with 20 U.S. audit firm partners who share their experiences on topics including how they identify appropriate candidate partners and what efforts they undertake to manage relationships with clients post-rotation. We investigate firms' motivation to manage the auditor-client relationship through the lens of Social Exchange Theory (SET), and we consider how likely outcomes of this rotation process map onto regulators' intent that a newly rotated partner provides a fresh perspective to the audit. Our study informs regulators and investors about the process by which engagement partners are selected for rotation, documenting that partner assignment is typically not random. Further, our finding that partner rotation is an extended process (rather than a single discrete event) has implications for audit researchers investigating the effects of partner rotation.

Factors determining financial constraint of SMEs: a study of unorganized manufacturing enterprises in India

Small and medium enterprises (SMEs) play a critical role in generating employment and revenue for the Indian economy. However, they face severe financial constraints. The present study intends to identify the determinants of SMEs’ access to external finance. Analysis of data of the 62nd round of National Sample Survey Organization on unorganized enterprise using instrument variable probit technique found that larger firms, partnership firms, firms with highly educated owners, firms that maintain accounts, growing firms, and firms located in the urban areas were less financially constrained. Further, the study revealed that firms located in financially and economically better off states have better access to finance. The policy implication of the study is that the government should strengthen the financial sector and education needs to be emphasized for promoting SMEs entrepreneurship in India. Findings of the study will help facilitate India and other developing countries with similar structure and composition design suitable policies to improve access to finance of the SMEs. This will encourage small enterprises to realize their true growth potential, and thereby help the economy in achieving its long-term social and economic goals.

Institutional quality, investment efficiency, and the choice of public–private partnerships

AbstractWe examine a sample of 625 public–private partnership (PPP) firms from 1980 to 2015 that straddle nine countries with varying degrees of economic development and PPP markets. We find that the motivations of the firms that undertake PPP investments vary. While private sector firms in economies with low institutional quality choose to engage in PPPs to alleviate capital constraints attributed to underinvestment, those in economies with high institutional quality participate in PPPs to solve the problem of overinvestment due to an abundant cash flow. In the long run, the benefits of lower capital constraints through PPP investments are more pronounced in economies with high institutional quality.

Matter Mills and London-Lite offices: exploring forms of the onshoring of legal services in an age of globalisation

ABSTRACTThis paper explores professional identity formation and the increasing differentiation and fragmentation of the corporate end of the legal profession through a consideration of onshoring, the opening (for the first time) of satellite offices in the UK (but outside of London) by elite law firms. We situate interviews with 25 lawyers, associates and partners, working in onshored UK law firm offices in work on legal services globalisation and the sociology of ‘dirty work’ (tasks and occupations likely to be perceived as disgusting or degrading). In the context of onshoring, globalisation has led to sidelining in that onshoring allows entry to elite, global firms both for those (the graduates of ‘good-enough’ law schools) perhaps unable to ‘make it’ in London and for those law firm partners and associates who have tasted City life and rejected it. That entry is, however, imperfect. It is the ‘dirty [legal] work’ that is done outside of London: seen as both lesser and also necessary to the law firm’s profitability. We see onshoring as a relatively simple organisational change to the shape of the profession, and also as part of a radical reorientation of a division of labour and what it means to be a professional.

Resource Capital Fund IV: Uncertainties Persist in Private Equity

Uncertainties surrounding the availability of treaty privileges for non-resident partners of private equity firms has been a contentious issue in Australia. Unfortunately, the recent decision by the Full Court involving a private equity firm in mining has not removed these uncertainties.

Wind Point Partners to sell Valicor Environmental Services

Private equity firm Wind Point Partners has entered into a definitive agreement to sell Valicor Environmental Services, a provider of non-hazardous wastewater treatment services in North America, to Pritzker Private Capital.

Partnership Income Tax on Social and Economic Development in Nigeria

This research work examines the partnership income tax on social and economic development in Nigeria. The objective of the study was to examine how partnership income tax revenue contributes to social and economic development in Nigeria. Secondary data are obtained from relevant literatures such as Central Bank of Nigeria Statistical Bulletin and National Bureau of Statistics publications. Data were tested using the Ordinary Least Square Linear Regression model. Findings show that, partnership Income Tax Revenue is making a unique significant contribution to the social and economic development in Nigeria and composition of the GDP. It is concluded that the results affirmed a rise in the income tax from partnership firms leads to an increase in social and economic development in Nigeria. It is recommended that government should ensure effective utilization of the income accrued taxation to encourage continuity in tax payment by the tax payers. Keywords: Economic Development, Gross Domestic Products, Partnership, Partnership Income Tax, Personal Income Tax, Social Development DOI : 10.7176/RJFA/10-6-03 Publication date :March 31 st 2019

From baby boomer to millennials: the changing flavor of entrepreneurial traits

Learning outcomes The learning outcomes are as follows: decision-making in the areas of business plan, business strategy, financial management, profit planning and marketing, learning from outer business environment, succession planning for first-generation entrepreneur and choosing appropriate source of financing and drivers for diversification. Case overview/synopsis Immersed in sipping green tea in his capacious office lounge, the octogenarian Arjun Mehta introspected on the trials and tribulations of his journey as an entrepreneur, the voyage which started four decades ago. From 1976 to 2018, the business has now traversed three generations. Starting with Spice Mart (Sole Proprietor) to Hindware and Lament Construction (partnership firms) to Starlite Homes Pvt. Ltd. (corporate entity), Mr Mehta witnessed transformation and restructuring in organization with every new generation which characterized the evolution of family business. Handholding children to take up the reins of Spice Mart was not a calculated choice. Yet it is remarkable to study the growth in organizational structure of the regional family business. As a self-made entrepreneur, morals, ethics and value system are vital ingredients steering the organic growth story. Third-generation Mehta’s are enterprising, aspiring and visionary. With the incorporation of a corporate entity, they convinced themselves to bring inorganic growth in their business. Arjun Mehta gleamed with pride as Spice Mart partakes an organized structure which had lost prominence with the second-generation entrepreneurs. But he is equally hammered with juxtaposed thoughts. He contemplates whether the integration of retail business with real estate corroborates sustainable innovation. Will independent businesses create the brand’s footprints perpetually? Should the millennial confine business natively or should they grow internationally and become a conglomerate? Complexity academic level The case can be exclusively taught to masters and executive education class of students pursuing entrepreneurship and business management courses. The case will supplement understanding of theories of entrepreneurship and dimensions of family businesses in emerging economies. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes. Subject code CSS 3: Entrepreneurship.

Mistresses of company capital: Female partners in multi-owner firms, Spain (1886–1936)

Contrary to the impression put forth in the literature, Spanish women at the turn of the twentieth century played an active and visible role in the business sphere. Using a unique database containing microdata on the founders of Spanish multi-owner firms from 1886 to 1936, this study analyses the role of female owners and the legal structures that supported their participation in business. In that 50-year period, over 10% of newly registered firms had at least one female owner. Of those owners, 70% were widows. The majority of those women had management responsibilities in their firm. Multi-owner firms with at least one female owner display marked differences, in terms of capital, number of partners, family ties, and management, from those run solely by men.

Roadblocks Under Insolvency and Bankruptcy Code, 2016 – Need for Capacity Building

The Insolvency and Bankruptcy Code was framed with an intention to streamline and ease the process of corporate insolvency aiming for a time bound insolvency resolution thereby preventing the erosion of the enterprise value of the Corporate Debtor in distress and promote ease of doing business in the country. But when one critically examines the progress that the IBC regime made during the past three years it can be seen that the system has failed to meet the expectation of the financial market and the resolution process is exhibiting signs of sluggishness, which was the malady of the previous regime IBC intended to resolve. It is pertinent to note that the provisions of the Code related to the Insolvency Resolution and Bankruptcy of the Individuals and the Partnership firms is yet to be made operational. There are several inherent factors in the existing system which will have to be rectified as an ongoing process. This paper examines the underlying inherent challenges within the system which is impeding the intended progress envisaged under the Code.

'Nature of Proceedings': The Insolvency & Bankruptcy Code, 2016

It is evident from the long title of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as the IBC) that it is for reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons and to promote entrepreneurship, availability of credit and balance of interests of all stakeholders. The IBC explicitly aims to promote ‘resolution’ over ‘liquidation’.

Development of Financial Supply Chain Management and Supply Chain Finance Model

Expansive economic, production and commercial development today has made businesses and enterprises to have active presence and contribution in network-based and chain economy. Although focusing on this approach has brought some privileges and productivities for the firms which are members of networks and supply chains, it has been accompanied by various problems and complexities for financial crisis management, cash flow and flow capital amount of the foundations and their commercial partners. To overcome such problem, besides developing the concepts of supply chain management and logistics, Financial Supply Chain Management (FSCM) was also promoted to minimize inefficiencies of financial flow in supply chain using financial, engineering and management approaches, and to provide an effective management ground for cash inventory and flow capital all throughout the supply chain by making use of various tools and techniques of supply chain finance and/or SCF. Hence, by changing approach and role of financial services provider from just supplier of financial resources as the commercial partners of economic and commercial firms, it caused that a major part of managerial duties of financial flow of chain enterprises could be defined in collaboration with financial services provider, and they may be executed in a more desirable manner considering the capacities and capabilities of banks and financial institutes. Thus, regarding the significance of financial flow management in the chain and benefitting the principles and fundamentals of research by fact finding and case study, it was tried to present a framework to make use of financial flow management and its principles and fundamentals effectively by reviewing evidences as well as applicable experiences in this area. The present paper emphasized that as logistic services providers are responsible in supply chains to improve inventory level; financial services providers also have the same role concerning liquidity level in the chains. Therefore, by making coordination and integrity in the inventory flows, information and financial flows through supply chain, we can handle financial risks and provide more stable value flow in supply chain till distribution, and create a ground better for materializing objectives of the firms which are members of supply chain. Keywords: Financial Supply Chain Management, Supply Chain Finance, Supply Chain Management, Financial Services Providers. DOI : 10.7176/RJFA/10-1-03

Auditors' issue contingency of reduced audit quality acts: perceptions of managers and partners

This study examines how managers and partners in audit firms perceive the moral intensity of various reduced audit quality (RAQ) acts, and whether perceived moral intensity affects the likelihood of these acts being committed. We surveyed managers and partners employed by audit firms operating in Sweden, measuring their perceptions of the moral intensity of seven RAQ acts using Jones' (1991) moral intensity scale and their self-reported frequencies of these acts. The study finds that managers and partners regard RAQ acts as morally serious, and that the moral intensity of an RAQ act is negatively related to the frequency of the act's occurrence for three of the seven acts. This suggests that managers' and partners' moral intensity perceptions do not unequivocally discourage auditors from committing these offences.

A study of the interactions between internal audit function and external auditors in Italy.

This paper shows the results of a research study whose main objectives have been to understand the way and the extent of dependence and consideration which the directors of internal audit departments and the partners in external audit firms have of each other. We relied on the exploratory research methods that examine the level of operative co-operation and activity co-ordination between Internal audit functions and auditing firms through questionnaires and interviews. The findings suggest that mutual collaboration increases the reliability of controls and that, at least in part, avoids duplication of work, although there is no full agreement on the usefulness of the internal audit outcome for the external auditor activities. These findings are particularly relevant given the growing emphasis on the role of Internal Audit as an important corporate governance mechanism and on the new challenges faced by external auditors in the form of greater audit requirements. Overall, our findings have practical implications for both (i) external auditors who are evaluating the role of internal audit functions and its usefulness and (ii) CAEs who could on their turn increase the efficiency and effectiveness of internal audit functions. This article also provides a contribution to the literature examining public companies internal and external audit interrelationships as well as the literature on audit effectiveness and performance.

Auditors' issue contingency of reduced audit quality acts: perceptions of managers and partners

This study examines how managers and partners in audit firms perceive the moral intensity of various reduced audit quality (RAQ) acts, and whether perceived moral intensity affects the likelihood of these acts being committed. We surveyed managers and partners employed by audit firms operating in Sweden, measuring their perceptions of the moral intensity of seven RAQ acts using Jones' (1991) moral intensity scale and their self-reported frequencies of these acts. The study finds that managers and partners regard RAQ acts as morally serious, and that the moral intensity of an RAQ act is negatively related to the frequency of the act's occurrence for three of the seven acts. This suggests that managers' and partners' moral intensity perceptions do not unequivocally discourage auditors from committing these offences.

The Law Firm Chief Innovation Officer: Goals, Roles, and Holes

So many lawyers are sick of hearing that they must “innovate or die,” yet their clients call for innovation continues to be loud; and, although not clear, it is clearly resounding. Demand for innovation is old news; now, clients are going even further – requesting in pitch proposals (RFPs) that law firms demonstrate how they have innovated or how they will innovate or be innovative. Even those clients who do not use what might be better called ‘the i-word’ ask for it in other forms, including demanding cheaper, better, faster, services or asking for ‘collaboration’ within the firm, or with other competing law firms or legal services companies on projects and panels. Even more compelling evidence for the magnitude of this call? Clients who say they value innovation by their law firms and reward it or, worse yet, punish firms without it. General Counsels (GCs) have been consistent and clear: “If you don’t want to be an innovation partner with [them], then [they] are going to be inclined not to give you business.” In other words, collaboration towards innovation is no longer a higher standard – it is quickly becoming the standard requirement. True, as I have argued in my book Legal Upheaval: A Guide to Creativity, Collaboration, and Innovation in Law, many clients have not been clear as to what they mean by innovation, nor have they quite figured out how to measure it. True, many law firms are unsure what they or their clients mean by innovation or what the ROI is on investing in innovation. But these – and other – ambiguities have not stopped law firms from answering their clients’ call by investing (in some way, shape or form) in innovation. One way law firms are answering this call is by appointing, identifying or hiring someone in the role of what is sometimes called, the chief innovation officer (CINO), or some other title that signifies this person is the head of innovation. The very first time I heard of the role of CINO at a law firm was in April 2015. Inspired, I decided to investigate. Over the past couple years, I have interviewed more than 100 GCs, heads of innovation at law firms, and law firm partners to uncover what is meant by the hackneyed i-word in the law market, to understand lawyers’ views of innovation, and to explore the role of the CINO at law firms. One of the many questions I sought to answer was whether designating someone as the head of innovation at a law firm is an effective way to meet changing marketplace demands and satisfy clients’ expectations. This article explores that question along with others concerning the CINO role. It is divided into two parts. Part 1 begins by overviewing the goals and roles of a law firm CINO as described to me by my interviewees. Part 2 highlights the holes that I believe exist within and between the goals and the roles. It concludes by providing three recommendations to law firms to help mend the holes so that the roles are better leveraged and the goals are better met. Note: This article was published in seventh and eighth issue of the new Modern Legal Practice, published by Globe Law and Business, www.globelawandbusiness.com/journals/modern-legal-practice (October 2018 and January 2019)

Relational capability and strategic alliance portfolio configuration

PurposeThe purpose of this paper is to focus on evaluating relational capability regarding the configuration of a network of technological partners in Brazilian technology-based firms (TBFs).Design/methodology/approachThe data were collected using an online questionnaire made available to technology-based companies resident in Brazilian Technological Parks. A total of 73 companies responded. The data were analyzed using bivariate and multivariate statistical techniques and were processed using Statistical Package for Social Sciences software. The statistical tests included factor analysis, Cronbach’s α and multiple regression.FindingsThe paper shows that the strategic alliance portfolio is influenced by organizational learning, diversity of partners, governance structure, intensity of partnership relations and configuration. In particular, the portfolio of alliances with competence orientation is characterized by tacit knowledge exchanges and learning exploration, homogeneity of partners, informal governance mechanisms, strong bonds of trust and reciprocity with partners and low diversification of actors’ profiles, their attributions and the results obtained in the portfolio. Meanwhile, the characteristics of alliance portfolios with legitimacy orientation include explicit knowledge exchange and learning exploitation, heterogeneity of partners, formal governance mechanisms, weak bonds of trust and reciprocity with partners and high diversification of the profile of the actors, their attributions and the results obtained from the portfolio.Practical implicationsThe configuration of the alliance portfolio plays an important role in innovation. To stimulate the creation of new technological skills, the executive of a technology-based company from emerging countries such as China, Russia and India, can configure the portfolio of strategic alliances with more homogeneous partners in terms of profile and attribution. However, if this executive is challenged to seek legitimacy and complementary resources in these markets he can invest in the diversification of the strategic alliance portfolio, prioritizing partners with differentiated profiles and attributions.Originality/valueThe originality of the research lies in the adoption of a complementary and multidimensional theoretical prism, considering the relational capacity of TBFs in the configuration of alliances, both in the intra-firm and portfolio perspective. Furthermore, it was considered that the configuration of alliances can be based on both competence and legitimacy factors.

Hedge Fund Franchises

We investigate the growth strategies of hedge fund firms. We find that firms with successful first funds are able to launch follow-on funds that charge higher performance fees, set more onerous redemption terms, and attract greater inflows. Motivated by the aforementioned spillover effects, first funds outperform follow-on funds, after adjusting for risk. Consistent with the agency view, greater incentive alignment moderates the performance differential between first and follow-on funds. Moreover, multiple-product firms underperform single-product firms but harvest greater fee revenues, thereby hurting investors while benefitting firm partners. Investors respond to this growth strategy by redeeming from first funds of firms with follow-on funds that do poorly. Empirically, the multiple-product firm has become the dominant business model for the hedge fund industry. This paper was accepted by Tyler Shumway, finance.

The Fearful and Anxious Professional: Partner Experiences of Working in the Financialized Professional Services Firm

This article explores the work and career of law firm partners in the context of a financialized organizational regime, highlighting the effects of performance measures and metrics on the ways partners see themselves and their careers. The empirical analysis reveals a sense of fear and anxiety as partners experience the scrutiny and pressure of financialized performance management. Furthermore, it reveals partners face contradictory demands as they are pushed to meet financial and ‘citizen’ objectives within the firm. The result is a career as a ‘project of the self’ that relies on various protection strategies and which results in professionals captured by ‘financialization’ and unable to assimilate its demands in ways that protect traditional professional values.

Korean firms partner for 20 MW fuel cell project near Busan

Korea Midland Power Company (KOMIPO) has teamed up with Korea Expressway Corporation (KEC), KyungDong City Gas and SK E&C (Engineering & Construction) to implement a KRW100 billion (US$90 million) fuel cell power generation project in South Korea, expected to begin operation in 2020.