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.

Man Sik-Fai. / Summary in Chinese. / Thesis (M.B.A.)--The Chinese University of Hong Kong. / Bibliography: l. 94-96.

This thesis examines several important aspects of the impact of religiosity, national culture, corporate governance, BIG4 auditors and legal environment on earnings management practices in the U.S. and 63 other countries. First, the study investigates the extent to which religious socials norms of the firms' environment interact with corporate governance and BIG4 audit to affect managers' motivation to engage in expense and revenue misclassification in order to influence reported core earnings. The results show that religiosity decreases misclassification and complements corporate governance and the Sarbanes-Oxley Act (2002) to mitigate classification shifting in high, rural and geographically centralised segment areas. In a religious social norm environment, the study finds that managers have a disincentive to shift revenue items from, and core expenses into, special items to inflate reported core earnings to avoid market penalties and beat analysts' forecasts, even more so in the presence of board independence. In addition, the study shows that the interactive term between religiosity and audit from the big four auditors also lowers the presence of misclassification. Overall, the results show that religiosity lessens misclassification and complements corporate governance and audit against the misclassification of revenue items or core expenses. Second, the study examines the extent to which religiosity, firms' legal environment, and the interaction between these two variables affect accrual-based and real-activities earnings management. The results suggest that religiosity, legal environment and the interaction between them mitigate accrual-based earnings management. In contrast, the study observes a positive association between religiosity and real-activities earnings management, suggesting that religious social norms facilitate real-activities earnings management. However, the positive effect of religiosity on real activities is subdued when the study interacts the legal environment with religiosity. The results also indicate that firms' corporate governance mechanism mitigates both accrual-based and real activities earnings management. Finally, in Chapter four, the study provides new international evidence by examining the relationship between the misclassification of core expenses into special items and country-wide religiosity, the national dimensions of culture, and the legal environment in developed, emerging and developing countries. The study observes that the interaction between religiosity and legal environment, or national cultural dimensions and legal environment, mitigates expense misclassification in developed, emerging and developing countries. Therefore, the positive effect of power distance, masculinity and uncertainty avoidance on earnings management can no longer be demonstrated when national dimensions of culture interact with the legal environment. In Chapter five, the study concludes, summarises and discusses some of its major findings and contributions. The limitations of the study, policy implications and suggestions for future research are also provided.

The perceived capability of corporate organizations to influence politics, although fueling an ongoing public debate, features in literature as a source of probable benefits. According to the majority of the pertinent studies, these benefits, more often than not, materialize with important value-adding implications. In the U.S. context, whereby political money contributions constitute the prevalent way of establishing connections, this can result in a hefty return on a firm's political investment. Our research posits that if political connections formed via monetary donations elevate the donor to a higher status, this should reflect in circumstances whereby a firm needs to assert its quality to other economic agents. This is the case for firms that are plagued by the market newness liability. Whether as a form of insurance from tail risk or entitlement to economic rents, proximity to politics offers legitimacy and a compelling way of introducing a new venture to the marketplace. To prove this conjecture, we mainly draw from IPOs for representing a setting of acute uncertainty. Our findings confirm that both lobbying and PAC (Political Action Committee) expenditure pays off on listing day as donors incur less underpricing; an effect which can be amplified with contribution size and strategic targeting of recipients. Donor IPOs also experience negative offer price revisions and lower aftermarket volatility. Collectively, these results offer new empirical grounding to uncertainty and signaling theories. Subsequently, we frame IPO pricing as an efficiency problem for prospective issuers and develop an approach of general application in finance, where relationships of influence are suspected. Rather than imposing a regression-based framework, we allow relationships to manifest themselves in a data-driven manner. Our analysis reveals nonlinearities between IPO pricing efficiency and the two contribution avenues (justifying the fully nonparametric treatment). We are able to uncover relationships separately according to business sector, which we interpret in terms of varied competitive environments. Broadening up our scope prior to and after the IPO event, we document that connected firms are associated with a longer time to venture or other equity capital financing, attesting to a greater financial autonomy. Additionally, they attain larger market shares and have a superior likelihood of survival in the public domain.

The financial crisis that started in 2008 led to issues of corporate financial distress and bankruptcy. The global financial crisis has resulted in many venerable institutions being rescued by the government. There is an ongoing research debate in law and economic theories about the efficiency of the US bankruptcy code (Senbet and Wang, 2012; Jory and Madura, 2010; Zhang, 2010; Faelten and Vitkova, 2014). Due to the global financial crisis, there is a fundamental issue questioning whether the bankruptcy law (e.g., Chapters 11 and 7 of the US Bankruptcy Code) is efficient in rehabilitating economically efficient but financially distressed firms and liquidating economically inefficient firms (Senbet and Wang, 2012). Mergers and acquisition (hereafter M&A) involving financially distressed targets and bankrupt targets have become a common practise in the US. Theoretically, restructuring is meant to be a way of reorganizing operations and generating extra resources. However, due to the complexity of businesses and recent global financial crises, there is inconsistency in the association of rewards for Chief Executive Officers (CEOs) and management with the firm's performance. This thesis explores the issues about corporate restructuring, performance and governance of firms including banks in the US emanated from the economic crisis. It comprises three empirical pieces of research. The first empirical research is on the wealth creation of bidders and of M&As of financial distressed and bankrupt targets. Our second research is about the earnings management behaviour of managers. Of those that were involved in the restructuring and reorganization of an organization. It is especially related to carve-out, sell-off, spin-off and other types of divestitures. Our third essay is on bank efficiency; taking into consideration the importance and crucial and urgency in the research related areas, such as the pay structure of the top management, and the existence of the internal monitoring. Institutional ownership plays an important role in corporate performance of firms particularly to banks in the US. First, we examine the wealth effects of M&A activities involving financially constrained targets (hereafter FCTs). By interrogating the wealth creation of bidders of these target firms, this study extends the analysis on the relationship between the discount on deal value, and the financial health of bidder firms. Based on sample data between 1985 and 2012, the study finds that bidders of FCTs earn abnormally positive cumulative abnormal returns (CARs) the day of the M&A announcement. This contrasts with the findings of negative to zero CARs accruing to bidders of financially healthy targets, as documented in the literature. The bidder firms benefit from a low M&A premium on these deals. However, in the long run, both their stock and operating performance lag those of bidders of healthy targets. Second, we examine the earnings management (hereafter EM) behaviour of firms engaged in corporate reorganization and restructuring. More specifically, our sample includes carve-outs, spin-offs, asset sell-offs, and divestitures. We follow Anagnostopoulou and Tsekrekos (2015) and Cohen and Zarowin (2010) to calculate the EM variables. This is so especially the accrual-based and real EM variables. To measure firm performance, we use industry-adjusted return on assets (ROA), cumulative abnormal returns (CARs), and Buy-and-Hold Abnormal Return (BHARs). We use the standard deviation of monthly stock returns (SDAR), as the proxy to measure the stock volatility and information asymmetry. We document a direct relationship between firms that manage earnings above the industry-year median EM index, and changes in the ROA, CARs, and BHARs. Conversely, firms that manage their earnings EM are associated with lower standard deviations in the firms' stock returns for carve-outs. Finally, we examine the relationship between the CEO's pay (CPS) and each of the bank's efficiency and risk. We use several measures of CEO pay including the ratio of CEO pay-to-the total pay of the top five managers. The ratio of CEO pay to the total pay of executives who also serve on the firm's board. We use the Stochastic Frontier Analysis (SFA) to measure bank efficiency. To measure firm risk, we compute the Z-Score and standard deviation of daily and annual returns. We document an inverse relationship between CEO pay ratio and bank efficiency. Conversely, high pay disparity is associated with lower insolvency risk, lower Z-scores, and lower standard deviations in the banks' stock returns.

In empirical financial accounting research, there continues to be a debate as to what the best predictors of future earnings and future cash flows might be. Past accruals, earnings and cash flows are the most common predictors, but there is no consensus over their relative contributions, and little attention to the underlying accounting identities that link the components of these three prominent variables. The aim of this thesis is to investigate this controversy further, and to apply an innovative method which yields consistent estimations of future earnings and cash flows, with higher precision and greater efficiency than is the case in published results to date. The estimation imposes constraints based on financial statement articulation, using a system of structural regressions and a framework of simultaneous linear equations, which allows for the most basic property of accounting - double entry book-keeping - to be incorporated as a set of constraints within the model. In predicting future cash flows, the results imply that the constrained model which observes the double entry condition is superior to the models that are not constrained in this way, producing (a) rational signs consistent with expectations, not only in the entire sample but also in each industry, (b) evidence that double entry holds, based on the Wald test that the estimated marginal responses sum to zero, and (c) confirmation of model improvement by way of a higher likelihood and greater precision attached to predictor variables. Furthermore, by then using an appropriately specified model that observes the double entry constraint in order to predict earnings, the thesis reports statistically significant results, across all industries, that cash flows are superior to accruals in explaining future earnings, indicating also that accruals with a lower level of reliability tend to be more relevant in this respect.

Background: Small businesses are considered as a valuable source for the society and the economic growth and bank loan is the main source of finance for them. Small businesses are commonly seen as riskier than larger businesses it is thus noteworthy to examine banks’ credit assessment for small businesses. The implementation of the Basel III Accord will start in 2013 with the aim to generate further protection of financial stability and promote sustainable economic growth, and the main idea underlying Basel III is to increase the capital basis of banks. Purpose: The purpose of this study is to describe how larger and smaller banks in Sweden are managing credit assessment of small businesses, and if this process differs according to the size of the bank. The authors further want to investigate how expectations of new capital regulations, in form of Basel III, affect the credit assessment and if it is affecting the ability of small businesses to receive loans. Method: In order to meet the purpose of the thesis a mixed model approach is used. The authors conducted semi-structured interviews with representatives from three smaller and three larger banks. Additional, statistics were computed in order to examine the economic state of the Swedish market, where also an archival research with 10 allocated banks operating with corporate services was executed. Conclusions: The banks have a well-developed credit process where building a mutual trust relationship with the customer is crucial. If the lender has a good relationship with the customer, it will ease the collection of credible information and thus enhance the process of making right decision. The research examined minor differences between smaller and larger banks in their credit assessment. Currently, the banks do not see any problems with adjusting to the new regulation and thus do not see specific effects for small businesses and their ability to receive loans. The effects that can be identified by the expectations of Basel III are the banks’ concern of charging the right price for the right risk and the demand of holding more capital when lending to businesses. The banks have come a long way on the adjustment to Basel III, which has pros and cons, thus it implies that banks are already charging customers for the effect of the regulations that will not be 100 percent implemented until 2019. The difference that was identified between larger and smaller banks is that larger banks seem to have more established strategies when working on the implementation of Basel III.

Efficient financing for small and medium enterprises (SMEs) is important so that SMEs can grow and be sustainable. This thesis applies a qualitative approach informed by the concept of private sector-led development (PSD) to examine the problems of SME financing in South Africa, and generates useful insight on the complexity of SME finance in a developing country. Results highlight how private SME finance can be an efficient driver of small business development. At the same time, results reveal a need to develop financing for ‘transitional’ SMEs, and to clearly define the role of private and government financiers, to improve the efficiency of the overall sector. The limits of private finance to widely fund all SMEs show a need to be critical and discerning when it comes to the involvement of the private sector to drive development initiatives. This limit, however, is also a core benefit of the private sector. / MA thesis.

This study demonstrates an original contribution to knowledge by providing a deeper understanding of management accounting practices in the context of service organisations. It explores a number of traditional and contemporary tools and their relationship to service organisations. The study focuses on the extent to which both traditional and contemporary tools are utilised in practice and also the underlying reasons why some tools become embedded in practice and the barriers and enablers of management accounting change in a service sector context. The study is explanatory in nature and uses a cross sectional survey to provide an understanding of what tools are used by service sector organisations and five in depth case studies to explore the nature of how the tools are used and the factors influencing the diffusion of new tools and the replication of existing tools. The analysis of the cases is done using Stones (2005) quadripartite framework which allows a sensitising of the data to provide insights into the external and internal structures which govern and are governed by the actions of the accountants. From the empirical research it was concluded that the management accounting practices of service sector organisations are similar to those of other organisational sectors and mainly rely upon the use of the traditional tools with limited use of the more contemporary tools. The exploration of the tools used in the case studies showed the internal structures in place which allowed the traditional tools to be embedded and replicated over time and also the external structures which when coupled with the internal structures resulted in barriers and enablers of change to the management accounting tools used. This thesis contributes to knowledge by providing a greater understanding of service sector management accounting and by the development of the strong structuration model to provide valuable insights into management accounting change and to demonstrate the continued theory practice gap in management accounting.

The aim of this dissertation, undertaken between 2012 and 2017, is to contribute towards the improvement of international joint venture (“IJV”) management in real estate development projects by analysing performance and factors, critical for the success of real estate IJVs. The assumption is that a real estate capital investor acts as the international partner of the IJV-construct, while local developers, operators and/or real estate professionals represent the local partner. The thesis focuses on the perspective of the real estate capital investor as a key actor in an IJV. The thesis adopts a systems approach in identifying and discussing the critical success factors of IJVs in the literature review, followed by the development of an integrated, theory-based framework that offers a theoretical conceptualisation of the research problem and key research questions. The methodology and research design were compiled using quantitative (questionnaire survey) and qualitative (focus group and semi-structured interviews) approaches. Data were collected from international capital providers investing as IJV-partners in real estate development using a mixed method approach, the thesis proposes and elaborates on a performance model for IJVs in real estate development, with an aim to ensure empirically valid performance measurement. The focus was to identify and justify determinants and their relationships. The empirical investigation in the thesis supports the notion that the investment process and the selection of the partner are particularly important for a project’s success in real estate development IJVs. In addition, aspects related to the structural and organisational dimension are relevant to the overall IJV performance. Moreover, the model has shown significant relationships between the (1) structural, organisational and investment dimensions on the one hand, and the (2) external, organisational and investment dimensions, on the other hand, for the overall success in the formation-stage. With respect to the post-formation stage, relationships between (1) partner and organisational dimension, (2) partner and investment dimension and (3) investment and organisational dimensions have been proven relevant to improve IJV performance in the context of real estate development IJVs.