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Research summary: We examine the influence of CEOs' military background on financial misconduct using two distinctive datasets. First, we make use of accounting and auditing enforcement releases (AAER) issued by the U.S. Securities and Exchange Commission (SEC), which contain intentional and substantial cases of financial fraud. Second, we use a dataset of \"lucky grants,\" which provide a measure of the likelihood of grant dates of CEOs' stock options having been manipulated. Results for both datasets indicate that CEOs who served in the military are less inclined to be involved in fraudulent financial reporting and to backdate stock options. In addition, we find that these relationships are moderated by board oversight (CEO duality and independent directors in the board). Managerial summary: CEOs who formerly served in the U.S. military are prevalent among U.S. firms. The military puts strong emphasis on the obedience of its personnel. In this study, we test if time spent in the military leads individuals to be more obedient to rules and regulations in the years after they have left the military and become CEOs. Our findings strongly suggest that CEOs who served in the U.S. military are less likely to be involved in financial misconduct. We also find evidence that tougher board oversight strengthens this relationship. Our findings have implications for regulators, auditors, practitioners, and researchers who are interested in determinants of and mechanisms to prevent fraud and stock option backdating.

PurposeThis paper analyses the establishment and evolution of a public oversight body (POB) – the Egyptian Audit Oversight Unit (AOU) – and its implications for local auditing firms and practices.Design/methodology/approachPrimary data were gathered from 34 semi-structured interviews (including follow-up ones) between 2014 and 2020. Secondary data was obtained through publicly available documents and internal memos. Drawing on Debord's (1967) Society of the Spectacle, the insights focus on the POB's conception, materialisation and evolution in a context characterised by weak regulatory structures.FindingsThrough a series of acts, the findings reveal how the AOU first accepted the image of “international best practice” oversight (the “metaphorical”), followed by the construction of the local structure and décor replicating a United States (US) style POB archetype (the “transformational”) by primarily relying on visible processes/procedures. Yet, these mechanisms emphasised the spectacular nature of oversight, with little improvement for practice and limiting itself to “cracking down” on smaller local firms. A final stage (the “performative”) reveals how the AOU seeks to expand its activities beyond its original mandate without challenging the image-driven nature of its oversight.Originality/valueThe paper offers two key contributions. First, it reveals how actors, through a combination of symbolic and tangible measures, create a new performative reality of public oversight. Second, it advocates Debord's “spectacle” to complement other theoretical lenses, with a view to illuminating the materialisation stages that bridge the gap between proclaimed oversight policies and actual practices (including conscious and unconscious omissions) within a given political economy context.

We analyze the board of directors' equilibrium strategies for setting CEO incentive pay and overseeing financial reporting and their effects on the level of earnings management. We show that an increase in CEO equity incentives does not necessarily increase earnings management because directors adjust their oversight effort in response to a change in CEO incentives. If the board's responsibilities for setting CEO pay and monitoring are separated through the formation of committees, then the compensation committee will increase the use of stock-based CEO pay, as the increased cost of oversight is borne by the audit committee. Our model generates predictions relating the board committee structure to the pay-performance sensitivity of CEO compensation, the quality of board oversight, and the level of earnings management.

International auditing of publicly owned corporations is governed largely by either U.S. Public Company Accounting Oversight Board (PCAOB) auditing standards or International Standards on Auditing (ISA) established by the International Federation of Accountants (IFAC). In some respects, the U.S. PCAOB and ISA are similar, but in other ways they are not. In this book, we describe key differences between PCAOB auditing standards and ISA. Our goal in doing so is to provide students, managers, and researchers with a clear, concise guide to the major differences between PCAOB and ISA standards. Understanding these differences will provide the reader with a greater appreciation of the differences in the auditing process between nations, and a greater understanding of what the audit opinion means as issued in different parts of the world.

This book is a tool that students, faculty, and practitioners can use to better understand the relationship between US PCAOB auditing standards and IFAC IAASB auditing standards. With time, the designations of US PCAOB standards were reorganized from the initial publication of this book. Accordingly, we have added to this addition an Appendix, Appendix 1. It shows the correlation of the old designation of PCAOB auditing standards, before reorganization, and the new designations for these standards. We also have added a second appendix, Appendix 2. The latter presents the PCAOB standards, the related AICPA standards, and the IFAC IAASB standards. We suggest bookmarking the Appendices and referring back to them as you use the text.

This article explores the use of constitutional narratives in social media platform governance, addressing the concept of digital constitutionalism. It aims to elucidate how digital constitutionalism manifests in platforms and the implications for democratizing these governance environments. It argues that digital constitutionalism exposes three goals toward platform governance: (1) an analogous application of constitutional values in private landscapes; (2) an ideological framework permeating multiple normativity levels; and (3) a policy consideration framing the symmetry of regulatory efforts with fundamental values. These three objectives hinge on a liberal and normative approach to constitutionalism, detaching from the political and social considerations at the centre of constitutional democracy. The article argues that this leads to extensive legitimacy issues when considering the transnational character of social media platforms and the localized issues of its users, as explored through an analysis of Meta’s Oversight Board. It is argued that a societal perspective of (digital) constitutionalism must guide the institution’s goals and procedures to promote legitimacy and accountability. This societal approach exposes the reliability issues of the established self-referencing system. It also allows an analysis of the hybridization of traditional constitutional principles in the emerging societal constitution developed by the corporation.

Meta, formerly the Facebook Company, faces immense pressure from users, governments, and civil society to act transparently and with accountability. Responding to such calls, in 2018, it announced plans to create an independent oversight body to review content decisions. Such a forum is now in place in the form of the Oversight Board. To Meta’s credit, the speed at which the Oversight Board has been established is remarkable. Within two years, a global consultation process was completed with input obtained from users as well as experts, the regulatory infrastructure for the Oversight Board built, its members selected, and the first decisions of the Board already rendered in January 2021. With its institutional structure in place, and plenty of resources to tap into, the Oversight Board could have a real effect on how some transnational disputes are resolved. Thus, the Oversight Board may very well be setting the direction for how tech companies in particular, and multinational corporations in general, go about providing grievance mechanisms to individuals who their actions adversely affect. Through a study of the Oversight Board, this article considers whether we are witnessing the birth of a special type of “transnational hybrid adjudication” that could have a systemic impact on international law, or an experiment with limited relevance.

Purpose: Approaches to return individual results to participants in genomic research variably focus on actionability, duty to share, or participants’ preferences. Our group at Boston Children’s Hospital has prioritized participants’ preferences by implementing the Gene Partnership, a genomic research repository, based on the “Informed Cohort” model that offers return of results in accordance with participant preferences. Recognizing that ethical oversight is essential, the Gene Partnership Informed Cohort Oversight Board was convened in 2009. Methods: Over 3 years, the Informed Cohort Oversight Board developed guidelines for the return of individual genomic research results. Results: The Informed Cohort Oversight Board defined its guiding principles as follows: to respect the developing autonomy of pediatric participants and parental decision-making authority by returning results consistent with participants’ preferences and to protect participants from harm. Potential harms and strategies to eliminate harm were identified. Guidelines were developed for participant preferences that consider the child’s development and family dynamics. The Informed Cohort Oversight Board agreed that to prevent harm, including harms related to interfering with a child’s future autonomy, there will be results that should not be returned regardless of participant preferences. Conclusion: The Informed Cohort Oversight Board developed guidelines for the return of results that respect the preferences of parents, children, and adult participants while seeking to protect against harm. Genet Med 16 7, 547–552.

In this study, we examined the association between CEO greed and corporate social responsibility (CSR) performance with a particular emphasis on the curtailing role of corporate governance. We found that CEO greed has a negative effect on CSR, since an uncontrolled pursuit of personal gain typically reveals myopic behavior and the foregoing of investment in CSR by a greedy CEO. Additionally, we found that CEO compensation in the form of large bonuses, support, and restricted stocks options weakened the link between CEO greed and CSR. Concerning the power dynamics amongst CEOs (CEO duality and tenure), we found that CEO duality moderates the negative relation between CEO greed and CSR. We also explored the curtailing role of corporate governance (proxies represented by board gender diversity and board independence) in the association between CEO greed and CSR. Our findings show that gender diversity curtails the negative effect of CEO greed on CSR once it reaches critical mass on the corporate board. Gender critical mass also curtails the negative impact of CEO greed on CSR, even if the CEO exercises duality. Our findings have empirical and practical implications. This study contributes to the existing literature by exploring the relationship between CEO greed and CSR in Asia, a region not renowned for CSR performance. This study also provides evidence for the curtailing role of compensation and governance factors in the negative relationship between CEO greed and CSR.

Research purpose The purpose of this study is to examine the corporate governance practices disclosed by large- and medium-sized audit firms in South Africa, with a particular focus on transparency reports. Audit firms serve the public interest. Motivation for the study This study was motivated by recent corporate failures in South Africa, such KPMG, VBS Bank, and Steinhoff, to mention a few. Research approach/design and method The research approach followed for this study consists of a mixed method approach. Qualitative secondary data were obtained from publicly accessible information published on the websites of the audit firms. The data, which consisted of the firms' transparency reports, were analysed through content analysis. The results were then converted into quantitative data. Main findings The main findings reveal that audit firms in South Africa do not disclose sufficient corporate governance information in their transparency reports. There are inconsistencies between audit firms. Practical/managerial implications In South Africa, audit firms do not have a corporate governance code for audit firms, and thus audit firms are not disclosing the relevant corporate governance information to their stakeholders. Contribution/value-add This article contributes to the limited literature available on audit firm governance. Based on the findings, the study proposes best practice recommendations and regulatory and statutory recommendations regarding audit firm governance.