This dissertation investigates the factors that explain why managers are held accountable for uncontrollable items of performance. It examines, in particular, the influence of the various determinants of this controllability principle in China, a socialist economy, and compares them with those in Hong Kong, a capitalist economy. Previous studies in this controllability principle are either theoretically based or non-generalisable. They were mostly carried out in the western countries. This study attempts to test this principle empirically and to ascertain whether western accounting theories can be equally applied in the oriental areas with different socio-economic settings. Based on data collected from 71 managers in China and 57 managers in Hong Kong, empirical results show that variations in the treatment of uncontrollables can be explained by ten factors, namely, risk-averse attitude, managerial influenceability, environmental uncertainty, management subjectivity, information cost, performance observability, levels of hierarchy, firm size, divisional diversity and coordiantion need. Among these factors, the most influential ones in China are coordination need and information cost, and the most influential ones in Hong Kong are coordination need, divisional diversity and managerial influenceability. Comparison of the results between China and Hong Kong reveals that all the ten factors differ in degree and managerial accountability of uncontrollables was shown to be more likely in Hong Kong than in China. Contrary to the theories in the literature, this research discovers that managers are more likely held accountable for uncontrollables if they and/or their superiors are more risk-averse and coordination need is low. It was also found that managers in China are more ready to take risks than their Hong Kong counterparts. These findings indicate that certain theories of the controllability principle need to be reviewed. Risk attitude of the evaluator, institutional factors and divisional interdependency may exert significant influence on managerial practices.

Government debt management, as a distinct policy, with a clear objective of managing risks and cost minimisation first started among the industrialised economies in the late 1980s. The need to improve government debt management arose with rising debt levels, caused by macro-economic imbalances especially in the mid-1970s and 1980s. In sub-Saharan Africa however, debt management as a strategy was undeveloped or lacking completely. A research in the area of debt management is significant to the economic growth and development of the sub – Saharan Africa. The significance of debt management is supported by empirical studies showing that effective public debt management could go a long way in protecting both low and middle income countries against the negative impact of the financial crisis. This research focus specifically on the choice between short and long term, domestic and external debts and how the process affects the economy as measured by per capita income and debt ratio or level of indebtedness. The work also looked at the extent of implementation of debt management among the SSAs especially as contained in the World Bank and IMF debt management performance guidelines. The research adopted the quantitative approach to answer questions raised in relation to the effect of government borrowing; the choice of debt maturity, and how sovereign debt and its management affect economic growth. It was found that debt is related negatively to economic growth; and the phenomenon of debt overhang actually exists. Debt management however was found to be relevant; where it was observed that the entire process of debt management is vital to economic growth and the development of a country. In particular, countries in sub-Saharan Africa need to put in place an effective and sound debt management strategy that would aid in promoting the needed stability, reduce risks in borrowing and guide in the prudent management of borrowed resources. The work contribute to both theoretical and empirical aspects of debt and its management.

I present three essays on income taxation in Pakistan. The first essay investigates how taxes influence agents’ earnings, compliance and business organization choices. Using a tax reform introduced in Pakistan in 2010, which raised tax rates on partnership earnings as compared to sole proprietorship income, as a natural policy experiment, I (i) identify a full range of behavioral responses to the tax rate changes (ii) study the determinants of tax compliance (iii) investigate if VAT causes firms to be more tax compliant. Relying on administrative tax records that comprise the universe of income tax returns filed in 2006-11 and a rich set of firm characteristics, I find that the reform induced substantial extensive and intensive margin responses including reduction in earnings, income shifting, movement into informality, and spillover effects on VAT base. I also find that the firms that have greater fraction of their tax withheld at source, are registered for VAT, or withhold taxes of other agents are more tax compliant. This highlights the importance of the notion that information trails on arm-length business transactions facilitate enforcement. Comparing short-term responses of partnership firms – which arguably identify tax evasion – on both sides of the VAT exemption threshold, I find that the evasion changes discontinuously at the cutoff suggesting that the VAT causes firms to be more compliant. In the second essay, I along with my co-authors, analyze the design of tax systems under imperfect enforcement. A common policy in developing countries is to impose minimum tax schemes whereby firms are taxed either on profits or on turnover (with a much lower tax rate on turnover), depending on which tax liability is larger. This is a production inefficient tax policy, but has been motivated by the idea that turnover taxes are harder to evade. Such schemes give rise to kink points in firms’ choice sets as the tax rate and tax base jump discontinuously at a profit rate threshold. Analyzing responses to one such scheme in Pakistan, we find large bunching of corporate firms around the minimum tax kink. We show that the combined tax rate and tax base change at the kink provides small real incentives for bunching, making the policy ideal for eliciting evasion. Based on the methodology that we develop, we estimate that turnover taxes reduce evasion by up to 60-70% of corporate income. In the third essay, I along with Henrik Kleven, develop a framework for non-parametrically identifying optimization frictions and structural elasticities using notches – discontinuities in the choice sets of agents – introduced for example by tax and transfer policies. We apply our framework to tax notches in personal income tax schedule of Pakistan to estimate structural elasticities of taxable income.

This thesis investigates four interrelated research issues in the context of takeover likelihood modelling. These include: (1) the determinants of target firms’ takeover likelihood, (2) the extent to which targets can be predicted using publicly available information, (3) whether target prediction can form the basis of a profitable investment strategy, and – if not – (4) why investing in predicted targets is a suboptimal investment strategy. The research employs a UK sample of 32,363 firm-year observations (consisting of 1,635 target and 31,737 non-target firm-year observations) between 1988 and 2010. Prior literature relies on eight (old) hypotheses for modelling takeover likelihood – determinants of takeover likelihood. Consistent with prior studies, I find that takeover likelihood increases with the availability of free cash flow (Powell (1997, 2001, 2004)), the level of tangible assets (Ambrose and Megginson (1992)) and management inefficiency (Palepu (1986)), but decreases with firm age (Brar et al. (2009)). The empirical evidence lends no support to the firm undervaluation, industry disturbance, growth-resource mismatch or firm size hypotheses (Palepu (1986)). I extend prior research by developing eleven (new) hypotheses for target prediction. Consistent with the new hypotheses, I find evidence that takeover likelihood is an inverse U-shaped function of firm size, leverage and payroll burden. Takeover likelihood also increases with share repurchase activity, market liquidity and stock market performance and decreases with industry concentration. As anticipated, the new hypotheses improve the within-sample classification and out-of-sample predictive abilities of prior takeover prediction models. This study also contributes to the literature by exploring the effects of different methodological choices on the performance of takeover prediction models. The analyses reveal that the performance of prediction models is moderated by different modelling choices. For example, I find evidence that the use of longer estimation windows (e.g., a recursive model), as well as, portfolio selection techniques which yield larger holdout samples (deciles and quintiles) generally result in more optimal model performance. Importantly, I show that some of the methodological choices of prior researchers (e.g., a one-year holdout period and a matched-sampling methodology) either directly biases research findings or results in suboptimal model performance. Additionally, there is no evidence that model parameters go stale, at least not over a ten-year out-of-sample test period. Hence, the parameters developed in this study can be employed by researchers and practitioners to ascribe takeover probabilities to UK firms. Despite the new model’s success in predicting targets, I find that, consistent with the market efficiency hypothesis, predicted target portfolios do not consistently earn significant positive abnormal returns in the long run. That is, despite the high target concentrations achieved, the portfolios generate long run abnormal returns which are not statistically different from zero. I extend prior literature by showing that these portfolios are likely to achieve lower than expected returns for five reasons. First, a substantial proportion of each predicted target portfolio constitutes type II errors (i.e., non-targets) which, on average, do not earn significant positive abnormal returns. Second, the portfolios tend to hold a high number of firms that go bankrupt leading to a substantial decline in portfolio returns. Third, the presence of poorly-performing small firms within the portfolios further dilutes its returns. Fourth, targets perform poorly prior to takeover bids and this period of poor performance coincides with the portfolio holding period. Fifth, targets that can be successfully predicted tend to earn lower-than-expected holding period returns, perhaps, due to market-wide anticipation. Overall, this study contributes to the literature by developing new hypotheses for takeover prediction, by advancing a more robust methodological framework for developing and testing prediction models and by empirically explaining why takeover prediction as an investment strategy is, perhaps, a suboptimal strategy.

There are a number of audited companies in Libya which have gone into bankruptcy between 1995 and 2005. Therefore, there is a significant question about the audit quality situation in Libya. There is not itself much research about audit quality in Libya. In particular, there is not much research that has tried to measure audit quality in Libya. This study is an attempt to pursue further some of the issues around financial audit quality in Libya. Secondary data analysis presents observations of Libyan companies from 2006 to 2009 to measure discretionary accruals. It applies an appropriate type of statistical method, to identify accruals and then examine the type of audit opinion related to these statements. Findings indicate that there is earnings management in almost all financial statements. The findings divided all companies into 113 positive andl40 negative discretionary accruals. In addition, Findings indicate that auditors of the agency and auditors working for him/her self issued in general 85.7% unqualified (clean) audit opinion for financial statements that have earnings management, and 11% modified audit opinion. The results answer the first question in this study about the level of audit quality in Libya: audit quality level in Libya is low. The semi-structured interviews support finding of the secondary data analysis, that is the level of audit quality in Libya is low. Also findings indicate that in Libya there are some fundamental elements which themselves are insufficient to deal to develop audit quality. Furthermore, the Libyan audit context suffers from some obstacles and problems that prevent the development of audit quality.

This thesis concerns strategic profitability management. The emergence of strategic management accounting has created a growing need for companies to discover the key factors that affect profitability and then to understand how these factors should be managed. To fulfil strategic management accounting requirements necessitates the use of appropriate strategic management accounting techniques. However, the traditional profitability system is inappropriate to meet the task. In addition, there has also been a lack of attention paid by researchers to the study of the integration between the most important drivers affecting profitability (cost, assets, and revenue). Moreover, there has inadequate Investigation of the management of each driver using strategic management accounting techniques. Therefore, this study attempts to create a new model for managing profitability to fulfil the requirements of strategic management and to evaluate the perceptions of managers related to the influence of such a new proposed model on profitability. A broadly positivist View, which utilizes both deductive reasoning coupled with a quantitative approach, was employed to create the profitability model. The creation of profitability model is enacted through an exploratory study. In order to create the profitability model, this thesis proposes three models for managing the key profitability drivers (cost, assets and revenue). The building of these models is based on the determination of the most important factor (driver) and approach that affect profitability in each model's case. In the light of such determination, strategic management accounting techniques were proposed to manage each driver in each model. The comprehensive profitability model is also proposed using the measurement levels of the cost, assets and revenue models. Models were tested in the Egyptian communication and information technology sector. A self-administrated questionnaire delivered and collected by hand was used to examine the hypothesized relationships. A total of 190 valid responses were used for quantitative analysis. The hypotheses related to the components of all the proposed models were examined via non-parametric measure of association, Spearman's rho technique and ordinal regression technique. The study found that there is a positive association between each proposed driver in the cost, assets, and revenue and profitability models. It also found that there is a positive association between each proposed approach in the assets and revenue model, and profitability. The main conclusion of this thesis was that the profitability model, which contains the measurement levels of the cost, assets and revenue models, is the most appropriate model because its predictors are most strongly associated with the profitability. The findings of this study can be generalized to the Egyptian ICT sector's members. In addition, the generalization of findings beyond the Egyptian ICT sector should be made with caution.

This thesis examines how to implement financial statement analysis to form some investment ideas. Specifically, we are looking at strategies such as value (going long on stocks with a high F-score and short on stocks with a low F-score), and a momentum strategy going long on stocks that have an increase in return on equity (ROE). Findings suggest that we are able to generate excess returns even after controlling for risks and recommend that the understanding of financial statement can help investors to form investment decisions and give a competitive edge over other investors in the market. There are a few lessons that investors can learn from the findings of this thesis. Value investors should focus on value firms. Momentum investors should pursue an investment strategy among firms with an improvement in return on equity. They could also benefit from forming a portfolio based on both investment ideas, which should protect them from economic downturn and offer an interesting portfolio.

This research examines the management control system (MCS) of a non-Big4 local Egyptian member firm (EMF) with the objectives of understanding and explaining how EMF's MCS is shaped by its idiosyncratic features as an accounting firm, as well as, its membership of a global network (NonA). The research situates accounting firms within the broader context of professional service firms, whose unique features, coupled with accounting firms' cost/quality conflict dilemma, require a control package approach. MCS is construed as a package of bureaucratic and clan controls. The research is theoretically informed by Ouchi's (1979, 1980) control typology, Malmi and Brown's (2008) notion of a package. A case study approach is used relying on interviews, documentation and observations in an interpretative qualitative research design.

This thesis explores the modern power of accounting in shaping individuals, organisations and society. It does so by examining a series of theoretical, empirical and historical issues at the intersection of accounting and climate change. Accounting’s modern power is studied from a disciplinary perspective derived from the work of Michel Foucault (Foucault, 1977) and Hoskin & Macve (1986; 1988) and concentrates on those historical moments where power-knowledge practices change in ‘fundamental and significant ways’. It suggests one such moment is at the intersection of accounting and climate change, where climate change becomes an object to be managed ‘by the numbers’ through accounting-based measures of control. These ideas are examined through two separate but related modes of analysis. At a macro level, the research traces the emergence of the UK Climate Change Act (2008) as an example of accounting travelling to a new governmental domain. The micro portion of the study examines the emergence of climate change as a new non-financial performance measure in a large UK energy company. The research suggests that the intersection of accounting and climate change was made possible by the modern power of accounting in tying disciplinary subjectivities and objectivities together whilst operating simultaneously at the level of individuals, organisations and government. Studying these interrelations provide a particularly apposite example of accounting’s double-disciplinary power to increasingly manage our world ‘by the numbers’.

This thesis represents the first major research to be completed either in the United Kingdom or the United States on the subject of accounting for software. Part I concentrates on the financial aspects of software accounting, and consisted of in-person interviews with a number of individuals from software' vendor and user companies who are knowledgeable about software accounting. The interviews were followed by two mail questionnaires, one each to software vending company executives and software user company executives. The NAARS database was also used to determine how software accounting policies are disclosed for these two types of company. It was concluded that more than one policy exists in practice. While approximately 90% of the companies surveyed expense internally constructed software, about two-thirds capitalize the cost of purchased software. Reasons given for individual company policy seem to be based on expediency rather than good accounting theory. The interviews and questionnaire responses in Part I seemed to indicate that software vendor companies that capitaliize software find it easier to raise debt and equity capital than do companies which expense software costs. Part II presents the results of two questionnaires that were mailed to bank lending officers and one questionnaire that was mailed to financial analysts for the purpose of obtaining more information on this point. It was concluded that companies that capitalize software costs find it significantly easier to obtain bank loans than do companies that expense software costs. The effect on stock price was less clear cut, although the questionnaire responses did indicate that a company's software accounting policy does influence the value a financial analyst places on a company's stock. Part III discusses the United States federal and state tax aspects of software. Thirteen appendices giving supplementary data are also included.