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PurposeStudies have reported negative effects of felt accountability on employees' extra-role behavior. Deviating from that focus, this study proposes that leadership plays a role in shaping the implications of felt accountability for employees' extra-role behavior. We propose that under high transformational leadership, felt accountability can motivate employees to engage in task-relevant information elaboration and facilitate innovative work behavior, a form of extra-role behavior that seeks to improve the work environment.Design/methodology/approachWe conducted a pilot study to validate measurements of felt accountability and task-relevant information elaboration in a sample of 202 employees. We then conducted the main study using a time-lagged, multisource survey design with a sample of 120 supervisor–employee pairs.FindingsThe results from the main study reveal that the association between felt accountability and task-related information elaboration is positive and stronger when transformational leadership is higher. Furthermore, task-relevant information elaboration positively predicts innovative work behavior. Finally, when transformational leadership is higher, the mediation effect of task-relevant information elaboration on the association between felt accountability and innovative work behavior is stronger.Originality/valueOur study indicates that felt accountability can have positive implications for employees' extra-role behavior contingent on leadership styles. In contrast to previous studies that emphasize the negative implications of felt accountability on employees' behavior, our study depicts when and why felt accountability can have positive implications on employees' behavior.

Improving operating efficiency is one objective of internal controls (IC). This paper investigates the relationship between IC implementation and operating efficiency of universities. Using data from questionnaire survey and from the field, this study measures IC implementation and applies data envelopment analysis to estimate operating efficiency of 99 universities in Taiwan. The OLS regression results indicate that IC implementation has an insignificant association with teaching-related efficiency, but has a negative and significant association with research-related efficiency. Dividing the sample into public and private universities, the analysis indicates that for public universities, IC implementation has no significant association with any of the two measures of efficiency. But, for private universities, there is a positive and significant association between IC implementation and teaching-related efficiency. The association between IC implementation and research-related efficiency is negative and significant.

Purpose The purpose of this study is to examine whether the corruption level of a country is associated with a firm’s decision to choose Big 4 versus non-Big 4 auditors. In addition, the authors examine whether firms that are cross-listed in a country with a corruption level different from that of the home country are more likely to appoint Big 4 auditors. Design/methodology/approach Based on a sample of 185,549 firm-year observations from 78 countries over 2003-2012, panel regression analysis is used to investigate the research questions. Findings The authors find a negative association between corruption and the propensity to hire Big 4 auditors and that cross-listed firms are more likely to hire Big 4 auditors than their domestic counterparts. Interestingly, the authors find that when firms cross-list in less corrupt countries relative to their home countries, firms are more likely to hire Big 4 auditors. However, this tendency disappears when firms cross-list in more corrupt countries. Originality/value The authors contribute to the audit choice literature by providing evidence that the political environment, as manifested in the corruption level of a country, plays a role in the decision to choose Big 4 versus non-Big 4 auditors. The study complements the prior auditor choice literature, which focuses mostly on single countries such as the USA, by expanding the scope to 78 countries. Furthermore, the authors enhance the understanding of how the absolute and relative performance of the political environment affects cross-listed firms’ choice of auditors.

In this paper we decompose productivity growth into four components: efficiency change, technical progress, information technology (IT) capital accumulation, and human capital accumulation. We analyze data on the operations of 51 public accounting firms in Taiwan for the years 1993 and 2003, and find that productivity growth was driven primarily by the accumulation of IT capital and human capital. We also find that the difference in productivity growth between Big 4 and non-Big 4 accounting firms is attributable to technical progress and, especially, IT capital accumulation. Further, our multiple regression results indicate that accounting firms that had high growth in non-audit services (NAS) during the 11-year period enjoyed significantly higher productivity growth through greater IT capital and human capital accumulation than firms that remained focused on traditional audit services.

A study describes the design and implementation of an activity-based costing (ABC) system for a textile company in Taiwan. An in-depth field investigation by collecting and analyzing 39 months of field data, gathering information from files and archives, direct observation, interviews, and statistical analyses was conducted. First, the company's existing cost system adopted a volume-based cost driver to allocate overhead costs to products. While the company devised an \"equivalent factor\" to take production-complexity into account, the weakness of the metric led to product cost distortions. Second, the existing volume-based cost system ignores the impact of rework processes on product costs. Third, adding complexity-related cost drivers to the volume-based cost driver increases the ability to explain variations in overhead costs. Fourth, the newly designed ABC system incorporates both volume-based and non-volume based drivers, which considers the effect of rework on product costs. Fifth, the existing volume-based cost system overestimates the costs of high-volume products and underestimates the costs of products with high production-complexity. Finally, the company still stays at the analysis phase of the ABC system implementation, possibly due to revision of strategy, no linkage to incentives, lack of MIS support, and inadequate inventory control. The above findings have implications for companies attempting to implement ABC. This study extends prior research in the following. First, it reports on the entire process of ABC implementation for a given company, as well as facilitators/impediments in the process. Second, while most prior research tends to focus on success cases, the study presents a failure case, which has implications for practitioners trying to avoid the same mistakes.

This study examines whether firms engage in earnings management to overcome government policies on limiting outward foreign direct investment (FDI), and whether their earnings-management behavior is aligned with shareholders’ interests. Using the regulatory setting in Taiwan, where the government has placed a cap on FDI in China for listed firms, we find that firms with FDI ratios near the limit (near-limit firms) are more likely to engage in income-increasing earnings management to shore up their shareholders’ equity, thus reducing their propensity to breach government policy. In addition, near-limit Taiwanese firms engaged in income-increasing earnings management show greater increases in FDI in China and better performance in the years following their earnings-management activities. We also find that the positive effects of earnings management on the future performance of these firms are driven by incremental FDI in China. The effects are more pronounced in firms with strong corporate governance. The results suggest that when the government’s restrictions on outward FDI are inconsistent with an individual firm’s objective of maximizing shareholder value, managers are motivated to use earnings-management strategies to circumvent governmental constraints on outward FDI.

台灣自1983年開始施行由兩位會計師同時在查核報告上簽名之會計師雙簽制度，本文以雙簽制度施行前後之公開發行公司為樣本，探討會計師簽發之審計意見在單簽或雙簽制度下是否存有顯著差異。實證結果顯示，會計師雙簽制度下，會計師簽發非無保留審計意見的機率顯著較高。同時，雙簽制度施行下，會計師僅對上市公司簽發非無保留審計意見之機率提高，並未提高會計師對其他公開發行公司簽發非無保留審計意見的機率。此外，聘請會計師雙簽的公司，盈餘資訊內涵與盈餘反應係數顯著較單簽制度為高，代表資本市場亦肯定會計師雙簽制度對於盈餘品質之正面影響。

This study explores the current use and performance effects of management accounting and controls (MACs) by Chinese firms, as well as some potential facilitators and impediments. Data on 219 listed Chinese firms are obtained from a survey, supplemented by the firms' publicly available financial reports. On average, the sample firms have at least moderate use of 12 specific MAC techniques, including ones that are of relatively recent vintage (e.g., economic value-based performance measures). However, there is substantial variation across firms in the use of each technique. The extent of MAC usage is positively associated with firm attributes (e.g., activism of corporate governance participants, management support), as well as characteristics of the environment (e.g., competition). There also is a positive association between usage of some MACs and firm performance.

This paper examines whether non-audit service provision impairs auditor independence, and whether the degree of auditor independence in Taiwan changed in the wake of the 2004 Procomp scandal. The auditors involved in the Procomp affair were suspended from practice for 2 years and were sued, and we posit that these unprecedented sanctions and litigation affected subsequent auditor behavior. Considering the measurement errors involved in discretionary accruals, we propose an alternative analytic approach in which the dependent variable in the regression analysis is the difference between audited earnings and forecast earnings, scaled by total assets, and the primary independent variable is the non-audit fees ratio. After controlling for the effects of financial leverage, operating and market performance, industry, company size, audit firm size, management forecast error, and management attempts to manipulate earnings, regression analysis indicates that the coefficient for non-audit fees ratio is negative and significant in 2003 but not in 2004. Using non-audit fees instead of non-audit fees ratio to conduct the regression analysis yields similar results. This finding is consistent with the notion that auditors make a trade-off between gaining service fees and avoiding litigation and reputation loss. Limitations and policy implications are also offered.

As China seriously lacks trained and experienced personnel at its current stage of development, management consultancy may be adopted as an economical solution to improve efficiency and performance. However, as institutional theory suggests, it is likely that the adoption of management consultancy in China is driven more by mimetic isomorphism factors than by actual performance considerations. Using data from a survey of 219 listed Chinese firms, our results suggest that there are significant positive effects from mimetic isomorphism factors and adoption of management accounting and controls and information and communication technology. Our study provides strong evidence that the adoption of management consultancy has a positive effect on firm performance, yet we cannot conclude that management consultancy is adopted to improve firm performance. Moreover, state ownership held by state-owned enterprises (SOEs) has a significant and positive effect on management consultancy adoption, whereas state ownership held by government agencies does not. One interpretation is that firms controlled by SOEs have acquired increased autonomy and become more innovative.