This research examines the use of accruals (AEM) and real earnings management (REM), and how they are affected by corporate governance mechanisms preceding leveraged buyouts in the UK. The sample includes all UK leveraged buyouts of listed firms between 1997 and 2011, which covers the second wave of leverage buyouts in the UK. The research considers management buyouts (MBOs) and institutional buyouts (IBOs) separately, because managerial incentives regarding earnings management are expected to differ in these two settings. The first empirical study investigates the existence of AEM, and how audit committee characteristics and external auditing quality affect AEM, prior to MBOs and IBOs. The findings suggest that managers engage in negative AEM prior to MBOs, possibly to reduce the perception of firm value, and thus depress the purchasing price of MBOs. The research finds no evidence that firms subsequently targeted in IBOs engage in AEM to a greater degree than non-buyout firms. This finding might be related to the fact that managers are unable to predict IBOs. Moreover, the research suggests that quality of audit committees and external auditing has a greater impact on AEM in IBO than in MBO firms. The second empirical study explores the use of REM preceding MBOs and IBOs, and how block ownership and board characteristics affect it. Surprisingly, the findings suggest that managers pursue positive REM prior to both IBOs and MBOs. As firms targeted by IBOs tend to be undervalued compared to non-buyout firms, managers might engage in positive REM to improve the firm’s share price to reduce the risk of IBO bids. Positive REM prior to MBOs may serve to enhance prospective external financiers’ perceptions of the firm’s value to secure financing for MBOs, even though it is likely to increase the purchasing price of MBOs. The research also indicates a positive relationship between insider and outsider block ownership and REM. While the findings for firms targeted by IBOs in first two empirical projects are consistent with the expectation that managers try to improve the perception of the performance and value of their firms, the findings for MBOs appear inconsistent and rather baffling. The third empirical study thus explores the puzzle of how decisions about AEM and REM are related in firms prior to IBOs and MBOs. The research reveals that, while AEM and REM have a complementary relationship preceding IBOs, prior to MBOs, AEM and REM have a substitutive relationship. This thesis contributes to our understanding of earnings management prior to IBOs and MBOs. Moreover, the findings highlight that the impact of firms’ corporate governance characteristics on earnings management differs depending on the setting. This might be related not only to different managerial incentives but also to a lack of context awareness by directors or auditors.

This thesis presents an exploration of a branch of contemporary management accounting practice that is concerned with creating value for an organisation. Scholars within management accounting have highlighted the impact that such techniques have had in changing the practical landscape of organisational practices, but that paradoxically, there is a lack of corresponding empirical and theoretical knowledge about them. Therefore, this thesis examines these contemporary practices: firstly in a theoretical manner, through an examination of underlying theoretical influences, and secondly in practical contexts by analysing two case studies of implementation. The case studies adopt a critical realist framework to examine the extent and effects of accounting change stemming from the implementation of contemporary practice, arguing that within the case study organisations contemporary practices are not as divergent in their use as presented within the extant management accounting literature. Instead, empirical findings suggest that contemporary practices are representative of an extension of traditional management accounting logic. By utilising critical realism, an exploration of the socio-political context of these contemporary practices is also considered.

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This study examines the relationship between executive directors’ remuneration and the financial performance and corporate governance arrangements of the UK and Spanish listed firms. These countries’ corporate governance framework has been shaped by differences in legal origin, culture and backgrounds. For example, the UK legal arrangements can be defined as to be constituted in common-law, whereas for Spanish firms, the legal arrangement is based on civil law. We estimate both static and dynamic regression models to test our hypotheses and we estimate our regression using Ordinary Least Squares (OLS) and the Generalised Method of Moments (GMM). Estimated results for both countries show that directors’ remuneration levels are positively related with measures of firm value and financial performance. This means that remuneration levels do not lead to a point whereby firm value is reduced due to excessive remuneration. These results hold for our long-run estimates. That is, estimates based on panel cointegration and panel error correction. Measures of corporate governance also impacts on the level of executive pay. Our results have important implications for existing corporate governance arrangements and how the interests of stakeholders are protected. For example, long-run results suggest that directors’ remuneration adjusts in a way to capture variation in financial performance.

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It is critical to determine whether ERM creates value to ensure that the significant resources deployed in ERM programmes result in tangible corporate value. This thesis analyses the valuation implications of ERM maturity using The Risk and Insurance Management Society Risk Maturity Model (RIMS RMM) data collected from 2006 to 2011 using a 5-point maturity scale. The results, measured by Tobin’s Q, suggest that firms that have reached mature levels of ERM exhibit higher firm values, demonstrating a statistically significant positive relation to the magnitude of 25 percent. Upon decomposition of the maturity score, the most meaningful aspects of ERM relate to top-down executive engagement and the resultant cascade of ERM culture throughout the firm. In addition to serving as one of the first studies to establish strong empirical evidence for ERM increasing firm value, the thesis extends its contribution to examine the firm performance implications of ERM maturation under different models, specifically identifying characteristics that engender or inhibit the aforementioned valuation implications. A discussion of how an ERM programme could significantly affect an organisation’s policies and relationship with stakeholders is also explored. ERM is theoretically projected to be a means to help strengthen the relationship that companies have with regulators, reinforce or repair relationships with shareholders, strengthen interactions with supply chain stakeholders, enhance reputational relations with clients and improve auditor partnerships. The thesis concludes by arguing that ERM has now reached a critical mass, such that further adoption and development of the ERM discipline is now inevitable.

This thesis integrates social capital and institutional theories with corporate governance insights to explore the impact of managerial political ties on access to finance, cost of debt and institutional risk exposure. Drawing on an extensive and rigorous assessment of the literature, using a unique set of survey data from 179 firms operating in Ghana, and employing robust analytical techniques, this thesis comprises three interrelated empirical studies which make significant contributions to knowledge. The first empirical study examines the impact of political ties on access to finance and cost of debt. It shows that political ties are positively related to interest rates charged by commercial banks. This positive relationship is weakened by managerial financial ties, and strengthened by borrowing from privately owned banks and the appointment of Big Four audit firms. Altogether, the findings reveal that while political ties enhance access to finance, they increase the cost of debt. They suggest that institutional lapses in emerging countries increase lenders’ perceptions of corporate governance erosion in politically connected firms, hence the high interest rates these firms are charged when they borrow. The second empirical study investigates the effect of political ties on institutional risk exposure. The findings show that political ties do not reduce risk exposure. The findings also show that while industry regulation and public affairs functions affect the strength of the relationship between political ties and institutional risk exposure, corporate social responsibility (CSR) does not. In sum, the findings suggest that the conjectured efficacy of political ties in risk reduction is illusive. The third empirical study explores mediation in the political ties-cost of debt relationship. The findings reveal a negative impact of political ties on corporate governance, and show that political ties increase cost of debt by reducing financial reporting quality and increasing the risk exposure of firms. Through the three empirical studies, this thesis contributes to Corporate Political Activity (CPA) literature, social capital theory and institutional theory. It accentuates the contingent value of political ties and addresses the salient and overlooked “how” question in CPA research. It also fills the lack of insight into the complementarity between CPA and CSR. On the social capital and institutional fronts, this thesis deepens insight into the interactive effects of different types of social capital and highlights how institutional development and organizational legitimacy moderate the value of network ties in emerging countries.

Small business is important to U.S. economy. However, they are difficult to obtain external finance. Since 1990s, deregulations happened in the U.S. banking market and affected small business finance greatly. Relationship banking is an effective lending technology for small business finance. Therefore, this thesis aims to investigate the nature of relationship banking and its impacts by using the data from U.S. Survey of Small Business Finances 1993, 1998 and 2003. The survey is led by U.S. Federal Reserve Board and it is representative and comprehensive for U.S. small business finance. The thesis contains three pieces of empirical research on small business: 1. Investigation on the impacts of relationship banking and banking market concentration on capital structure. Findings: relationship banking has favourable impacts on the availability of external finance for small firms. 2. Examination on the primary banking relationship switching behaviour and its impacts on loan terms. Findings: such switching behaviour decreases loan approval rate, increases borrowing cost and lengthens loan maturity. 3. Investigation on the determinants of communication in person approach with primary banks and its impacts on small business finance. Findings: ‘soft information’ transmission strengthens the banking relationship, reduces the borrowing costs and improves the availability of finance. The contributions to the existing knowledge regarding small business include: 1. First to investigate the reverse financial life cycle effect of relationship banking on small business’ capital structure; 2. First to examine the impacts of “switching behaviour” on certain terms of loan deals; 3. Frist to capture the beneficial effects of soft information communication on banking relationships, borrowing costs and discouraged borrowing. This thesis sheds lights on policy agenda/debate as follows: 1. Government would be wise not to increase banking market competition. 2. Encouragement from the policy aspects on the innovative information technologies making soft information transmission computerized is meaningful.

The motivation for this research was to investigate whether both parties benefit if landlords treat tenants as valued customers. Are satisfied occupiers more likely to renew their lease and recommend the landlord to others? Does this, in turn, improve the financial performance of commercial properties? This research analyses data from 4500 interviews with occupiers of UK commercial property to determine which factors affect occupiers’ satisfaction with the property management service they receive. Various statistical techniques are employed, including Structural Equation Modelling, Ordinary Least Squares Regression and Logistic Regression. Results are presented for four sectors of commercial property – retailers in Shopping Centres, managers of retail warehouses on Retail Parks, occupiers of Office buildings, and occupiers of light industrial units on Industrial Estates. Although the precise determinants of occupiers’ overall satisfaction are found to differ between the sectors, the most important factor for all occupiers is satisfaction with property management. The key determinant of lease renewal intentions is the perception of receiving value-for-money for rent, whilst ‘Empathy’ and ‘Assurance’ are particularly relevant to occupiers’ willingness to recommend their landlord. Perception of receiving value for money is largely influenced by the reliability of the property management service. Following this part of the research, occupier satisfaction ratings and property returns are analysed for 273 properties over an 11-year period, to explore the relationship for the different sectors of commercial property. Positive correlations are found between the satisfaction of occupiers at a property and the risk-adjusted financial returns at that property, measured by reference to IPD benchmarks. The relationship is found to be particularly strong for the retail sector. It also appears stronger during the Global Financial Crisis, indicating that attention to satisfying the needs of occupiers might reduce void periods and maintain rental income when property supply exceeds demand.

In this thesis, I examine several important aspects of firms’ financing processes in the G-5 countries consisting of France, Germany, Japan, the UK, and the US.First, I investigate the asymmetry in firms’ partial adjustments toward their target leverage, conditional on deviations from target leverage and financing gaps. Using the system Generalized Method of Moments, I show that the asymmetry in firms’ leverage adjustments are driven by differences in these factors. Firms adjust toward their target leverage faster when being over-levered and/or facing a financing deficit, a behavior in strong support of the dynamic trade-off theory of corporate leverage. Second, I examine whether firms’ choices of securities enable them to close out deviations from target leverage through asymmetric, logistic models that take into account both total costs of leverage adjustments (as proposed by the trade-off theory) and costs of adverse selection (as proposed by the pecking-order theory). The results suggest that even when firms’ choices of securities reflect their target adjustments as they allow them to move closer toward their target leverage, costs of adverse selection may still have some influence on these choices.Finally, I develop asymmetric, partial adjustment models to examine firms’ cash holdings adjustments. Consistent with the optimal cash holdings view, I find that firms have optimal levels of cash holdings and attempt to adjust toward these over time. Further, there is asymmetry in both their speeds and mechanisms of adjustments. Firms with above-target cash holdings adjust toward their targets faster than those with below-target cash holdings as their mechanisms of adjustments may involve relatively lower costs. They adjust mainly via changes in cash flows from financing and cash flows from investing while their counterparts adjust mainly via changes in cash flows from operating. I also document some evidence on the asymmetric impact of the magnitude of deviations from target cash holdings and factors which proxy for the levels of financial constraints on firms’ cash holdings adjustments and find that the impact of these proxies tends to be weaker than that of deviations from target cash holdings.