Purpose This paper aims to explain how and why conventional costing systems stabilise organisational decision-making in the face of sustainability-oriented change. It develops a theoretically grounded account of the mechanisms through which established costing logics shape the incorporation of sustainability into organisational practice. Design/methodology/approach The study adopts a critical–conceptual approach grounded in management accounting, sustainability control systems and organisational change literature. It re-theorises the design logic of conventional costing systems and examines how their assumptions operate through four interrelated mechanisms: boundary-setting, temporal framing, valuation logics and accountability arrangements. Findings The analysis shows that the limited influence of sustainability on costing practices reflects organisational stabilisation rather than measurement failure. Costing systems absorb sustainability demands by rendering them peripheral, deferrable, selectively valued or weakly accountable. Sustainability may therefore gain visibility but rarely becomes decision-relevant unless aligned with core control systems and embedded within organisational routines. Research limitations/implications As a conceptual study, the paper does not provide empirical testing, but offers a framework for analysing how organisational and technical conditions shape sustainability integration. Practical implications Meaningful sustainability integration requires reconfiguring control systems rather than incrementally extending existing costing techniques. Social implications The study highlights how internal decision systems may neutralise sustainability concerns, limiting organisational responsiveness to long-term social and environmental challenges. Originality/value The paper reconceptualises sustainability integration as an outcome shaped by the alignment of control systems and organisational structures, repositioning costing systems as active organisers of organisational non-change and potential transformation.
Purpose Agricultural firms face climate, technological and geopolitical volatility. Existing management control system (MCS) frameworks acknowledge uncertainty but lack a control category that explains how external signals trigger and shape internal routines. This study aims to introduce and develop external resilience controls (ERCs) as an extension to the MCS-as-a-package, showing how firms translate external volatility into structured internal responses. Design/methodology/approach This study adopts a design science research (DSR) approach to conceptualize, illustrate and assess the ERCs framework. It draws on six years of financial and operational patterns (2019–2024) with a structured content analysis of 2024 annual reports from 12 listed agricultural firms in Southeast Asia. A three-level maturity rubric is used to assess the extent to which ERC mechanisms are embedded in planning, monitoring, governance and incentive systems. Findings The analysis shows that climate, technological and geopolitical shocks are integrated into firms’ control routines through climate dashboards, artificial intelligence-based agronomy, mobile app ecosystems and traceability platforms. These mechanisms influence key performance indicators, governance structures and incentive systems in ways not captured by existing MCS categories. This study identifies three ERC components – climate resilience, technology-driven and geopolitical and legitimacy controls – and shows how leading firms embed these mechanisms into real-time and strategic decision cycles. Originality/value This study contributes to MCS theory by proposing ERCs as a distinct control group that operates as an external wrapper to the existing MCS package. It offers a framework that clarifies how externally triggered, data-rich signals are translated into internal control routines, providing a foundation for understanding control design in climate-exposed and volatility-intensive sectors.
Purpose This study aims to examine how organizational factors arising from isomorphic pressures – and individual perception factors of perceived ease of use and perceived usefulness – influence the adoption of artificial intelligence (AI) in management accounting. By exploring cross-country cases from the United States, Germany and Austria, it seeks to uncover the mechanisms through which forces shape firms’ decisions, providing empirical insights into organizational responses and contextual variations in AI implementation. Design/methodology/approach Findings are based on an exploratory, qualitative research design using semistructured interviews. Data were analyzed through within- and cross-case analysis, applying deductive coding. Findings Adoption is driven by distinct isomorphic pressures across the USA, Germany and Austria. Mimetic pressures emerge from competitive necessity and leadership vision, while coercive pressures are exerted through regulatory compliance and client return on investment demands. Normative pressures focus on professional standards and data security. Internal strategic goals moderate responses, highlighting cross-national differences. While institutional pressures initiate adoption, the long-term integration of AI is contingent upon high levels of perceived usefulness and ease of use. At the same time, adoption is shaped by organizational frictions, validation burdens and the risk of ceremonial compliance, dynamics that are constitutive of the adoption process rather than merely incidental to it. Practical implications Understanding mimetic, coercive and normative forces helps organizations anticipate external expectations, align strategies and address barriers such as data security, skill shortages and resistance to change, fostering effective AI integration. Particular attention should be paid to governance and oversight mechanisms as preconditions for substantive adoption, and to the risk that formal compliance with institutional pressures may produce ceremonial rather than genuine integration. Originality/value To the best of the authors’ knowledge, this study is among the first to combine institutional theory and technology acceptance model with empirical evidence, it provides novel cross-national insights and expands understanding of organizational responses to technological transformation. It further challenges predominantly efficiency-oriented accounts by demonstrating that organizational frictions and ceremonial adoption are analytically co-equal dimensions of AI-related change.
Purpose This study aims to investigate how conspiracy illusion (CI) is associated with auditors’ professional skepticism (PS) and examines whether tolerance for ambiguity (TA) and religious attitude (RA) moderate this relationship. While PS is central to audit quality, auditors’ judgments may be shaped by belief-driven cognitive tendencies that are related to deviations from evidence-based reasoning. The study addresses the limited understanding of how conspiracy-oriented cognition operates within professional auditing contexts. Design/methodology/approach Using a survey-based research design, data are collected from 300 external auditors employed by the Iranian Audit Organization and private audit firms. Established multi-item scales are used to measure CI, PS, TA and RA. Hypotheses are tested using partial least squares structural equation modeling, including interaction terms to assess moderating effects. Findings The results show a strong negative association between CI and PS. Further analysis reveals that TA is associated with a weaker negative relationship, suggesting that auditors who report higher TA exhibit a weaker negative association between CI and PS. RA also moderates the relationship, and the data indicate that stronger RAs are associated with a weaker negative association between CI and PS. Additional analyses show that CI is positively associated with presumptive doubt and negatively associated with neutrality, highlighting an imbalance in the components of skepticism. Originality/value To the best of the authors’ knowledge, this study is among the first to introduce CI as a cognitive correlate of PS in auditing. By integrating cognitive bias and motivated reasoning perspectives and providing evidence from an emerging market context, the study extends behavioral auditing research and offers practical insights for auditor training, selection and regulatory oversight.
Purpose The purpose of this study is to assess the impact of war events on the performance of self-regulatory organizations (SROs), specifically equity markets. Furthermore, it is segregated into classifications: developing, emerging, stand-alone and frontier regions, including America, Europe, Asia, the Middle East, Africa and the Pacific. This study aims to precisely quantify and assess war-induced volatility and drawdown risks across global SROs, with a focus on structural breaks and recovery potential. Design/methodology/approach The sample data includes daily SRO returns from 80 countries between January 3, 2022 and December 31, 2024. Various methodologies are used; the Chow test is used to identify structural breaks during the Russia–Ukraine war. The GARCH model estimates the volatility series, and impulse indicator saturation (IIS) is applied to the event-window analysis. Maximum drawdown is widely used as a key measure of downside risk. The Calmar ratio (CR) provides a risk-adjusted performance measure that captures the speed and strength of the SRO’s recovery after major disruptions. The coefficient of variation is used in CRs to ensure robustness. Findings The standalone SROs are most affected and face high drawdown risk. The European SROs have been severely shaken by the Ukraine crisis, while Asian SROs have been slightly affected. The developed SROs are less exposed to such shocks and have a chance of a speedy recovery. The emerging and frontier SROs have similar drawdown ratios, but the frontier SROs show lower strength ratios and weak recovery capacity. Research limitations/implications This study used data on developing, emerging, stand-alone and frontier SROs, but it could be extended by conducting an analysis across regions. Practical implications The paper can be extended to include further SROs in the region over a wide range of data. Originality/value This study makes a novel contribution by using the IIS approach, structural break testing, volatility modeling and reaction and recovery estimators to explore war-induced uncertainty in SROs worldwide with greater precision. Unlike previous research, the approach simultaneously identifies unexpected events, volatility due to disruptions and market sensitivity across regions, and classifies SROs. This combined methodology provides a data-driven, comprehensive understanding of how war-induced and geopolitical crises emerge and spread worldwide.
Purpose This study aims to investigate how modern management accounting (MMA) drives organizational success by examining the sequential pathway through which MMA enhances competitive advantage (CA) via two marketing capabilities - customer response (CR) and market acceptance (MA) - as parallel mediators, ultimately leading to Business Goal Achievement (BGA).Design/methodology/approach Grounded in the resource-based view and dynamic capabilities theory, this study proposes a novel conceptual model that captures MMA's shift from information provision to capability enablement. Data were collected from 158 senior accounting executives in Thai listed companies and analyzed using partial least squares structural equation modeling.Findings The results reveal a fully mediated transformation process. MMA significantly strengthens both CR (ss = 0.521) and MA (ss = 0.618) but does not directly affect CA. Instead, CR and MA serve as significant parallel mediators, fully channeling MMA's influence into CA. Furthermore, CA demonstrates a strong positive effect on BGA (ss = 0.678), explaining 45.7% of its variance. This confirms the complete value-creation chain from MMA through marketing capabilities to CA and ultimately to BGA.Research limitations/implications The findings are based on data from a single emerging economy (Thailand), which may limit generalizability to other institutional contexts. The cross-sectional design precludes strong causal inference. Future research should validate this model using longitudinal data across multiple countries. In addition, the partial mediation findings suggest other potential mechanisms (e.g. operational agility, strategic flexibility) that warrant further investigation. Qualitative studies could also enrich understanding of how MMA information is translated into marketing capabilities in practice.Practical implications Managers should view MMA as a capability-enabling platform rather than merely an information tool. Investments in MMA should be justified not only by informational efficiency but by their potential to enhance CR and MA capabilities. Organizations benefit from strengthening Market-Based and Information-Centered Accounting to support CR, while developing Innovation-Focused Accounting integrated with Market-Based Accounting to support MA. Creating cross-functional collaboration between accounting and marketing functions - such as joint task forces for new product development - helps ensure MMA insights are effectively translated into market actions that drive CA.Social implications By enabling CR and MA capabilities, MMA helps firms better address customer needs and deliver innovations that achieve market legitimacy. This contributes to higher customer satisfaction, stakeholder confidence and more responsible resource allocation. Furthermore, MMA's support for strategic goal achievement extends beyond financial metrics to include non-financial indicators such as stakeholder trust and long-term value creation. In emerging economies like Thailand, where corporate governance reforms are strengthening transparency and accountability, MMA can play a role in fostering more sustainable and stakeholder-oriented business practices that benefit society.Originality/value This study provides a precise, mechanism-based explanation of MMA's strategic role by testing dual mediating pathways in parallel and extending the outcome to goal achievement. It advances beyond establishing direct relationships to specifying how MMA creates value through CR and MA as parallel mediators. By demonstrating full mediation, it resolves ambiguity in prior literature regarding direct versus indirect effects. The study offers managers guidance to reconceptualize MMA as a capability-enabling platform rather than merely an information tool, and extends dynamic capabilities theory by operationalizing sensing and seizing microfoundations in the accounting-marketing interface.
Purpose The purpose of this study is to examine the role of strategic management accounting (SMA) in facilitating strategic decisions and organizational performance. Drawing on contingency theory, the authors examine how two elements of the decision support system for strategic decisions – managerial reliance on SMA and accountants’ involvement in strategy processes – mediate the relationship between three distinct organizational strategic choices (strategy deliberation, market orientation and nonfinancial priorities) and organizational performance. Design/methodology/approach The study uses a cross-sectional survey design. The proposed conceptual model is tested with partial least squares structural equation modeling analysis on a sample of 138 Czech firms. Findings Support is provided for four of the six hypothesized mediation effects. The test of simple mediation reveals that managerial reliance on SMA positively mediates the relationship between two strategic choices (strategy deliberation and nonfinancial priorities) and performance, but not for the strategic choice of market orientation. The same pattern of mediation effects was also observed for serial mediation. Practical implications Firms pursuing deliberate strategies and nonfinancial priorities can benefit from involving accountants in strategy processes and from managers relying on information gathered through SMA. These decision support system elements collectively enhance decision quality and, in turn, improve performance. Originality/value The study advances SMA literature in two important ways. First, it introduces a novel SMA construct – managerial reliance on SMA – which adopts the perspective of information users rather than information preparers, unlike prior conceptualizations. Second, it advances a contingency model of SMA by theoretically proposing and empirically demonstrating that SMA is a powerful mediator between strategic choices and performance.
Purpose The purpose of this study is to focus on the relationships among the sophistication level of performance measurement systems (PMSs), sustainability orientation and sustainability performance. Design/methodology/approach Data from 207 small- and medium-sized enterprises (SMEs) across distinct industries were collected using a structured survey questionnaire. Findings The results of this study show that a higher level of PMS sophistication is positively related to sustainability orientation, which in turn affects sustainability performance. Thus, this study provides evidence that an orientation toward sustainability mediates the connection between PMS sophistication level and sustainability performance. This finding of this study suggests that PMS sophistication alone is insufficient. Sustainability benefits are more likely when PMSs are substantively used to inform decisions and trigger concrete actions. Originality/value While an orientation toward sustainability has been encouraged in prior research, comparatively limited research has focused on PMS sophistication level that underlies the execution of target-oriented activities and, hence, provides the potential for sustainability. The results of the current study enrich the understanding of managerial means (i.e. PMSs) and the implications underlying the enhancement of SMEs’ sustainability orientations.
Purpose This study aims to examine whether firms’ commitment to emission, energy, and water leads to stronger climate change performance and, consequently, higher firm value. Design/methodology/approach Analyzing 73,739 firm-year observations across 48 countries of the world’s 50 largest economies. The empirical design uses country-industry-year fixed effects with firm-clustered and structural equation modeling, supplemented by coarsened exact matching, entropy balancing and two-stage least squares Heckman to address robustness and potential endogeneity. Findings This study shows that corporate commitments to emission, energy and water commitments are positively associated with stronger climate change performance and higher firm value, with climate performance serving as a key mediating channel. Research limitations/implications The study uses commitment level based on environmental targets: emission, energy and water, which may capture stated commitments rather than actual implementation, and may oversimplify complex environmental outcomes. Theoretically, this limitation underscores the need to distinguish between symbolic and substantive actions to better understand how legitimacy signals, organizational identity and stakeholder responses. Practical implications The study suggests that managers may benefit from adopting integrated environmental targets that are transparently monitored and embedded in operations, as credible commitments enhance both operational resilience and investor confidence. Policymakers and regulators can support this process by adopting standardized disclosure frameworks and offering sector-specific incentives that enhance comparability, transparency and accountability across firms. Originality/value This study fills a key gap by examining quantifiable, target-based environmental commitments using secondary data, whereas prior research on commitment levels has predominantly relied on primary survey-based measures.
Purpose This study aims to examine the effect of the audit client’s use of metaverse technology (MVT) on audit risk assessment, especially the inherent risk (IR) assessment and control risk (CR) assessment and detection risk (DR) assessment. Design/methodology/approach The questionnaire is used to collect data from 261 auditors in five countries in the Middle East and North Africa (MENA). The data have been analysed via the partial least squares-smart program to test the hypotheses. Findings Using MVT by the audit client leads to fundamental modifications to the accounting systems and raises the audit risks that come from the audit client, which are IR and CR. Furthermore, the risk that the auditor cannot be able to detect material misstatements increases, thus increasing the DR. Research limitations/implications The study did not address other risks, such as litigation risks, fraud risks and audit client business risks. This study also did not address the impact of the metaverse environment on the planning and implementation of the audit process. Originality/value The study makes several contributions. This is the first study to address the impact of audit clients’ use of MVT on assessing DRs and material misstatement risks, represented by both IR and CR. In addition, it provides an in-depth analysis of the causes of IR, CR and DR in the metaverse environment.
Purpose Recent decades have witnessed changes in controller roles and tasks. Digitalization and automation, together with expanding sustainability reporting requirements, may further transform controller roles. Where the traditional controller role had been dominant in the past, recent research has highlighted the emergence of a business-partner role characterized by more active involvement in strategic issues. Motivated by the lack of large-scale, longitudinal research on controller roles, this study aims to identify evolving patterns and trends in role characterizations, as stated in controller job descriptions in an era marked by digitalization and emerging technologies. Design/methodology/approach To track these trends and patterns, the analysis longitudinally examines 7,426 controller-titled job advertisements from Finland, spanning the period 2016–2023. Findings The findings demonstrate a persistent emphasis on traditional controller responsibilities and provide limited evidence that business-partner language has increased over time. The results also reveal upward trends in digitalization- and sustainability-related role requirements, reflecting potential new layers to augment controller responsibilities. Originality/value This study contributes to the management accounting literature by identifying recent temporal trends in controller roles, as implied by the described tasks and skills and revealing that emerging themes of digitalization and sustainability may add layers to controller roles but do not replace traditional role expectations. It provides evidence of the roles and skills in demand, offering insights into the evolution of industry needs and organizational expectations in this new era characterized by interest in grand themes such as digitalization and sustainability.
Purpose This study aims to investigate the impact of board diversity on corporate sustainability performance, focusing on South African firms. Grounded on resource-based view, legitimacy and stakeholder theories, the study examines how various dimensions of board diversity gender, nationality, racial and skills diversity impact environmental and social sustainability outcomes. Design/methodology/approach Using a panel research design, the analysis uses data from South African firms with sustainability scores in the London Stock Exchange Group (LSEG, formerly Refinitiv) database over a 21-year period (2002–2022). Findings The findings reveal that racial and skills diversity positively and significantly enhance sustainability performance, while gender and nationality diversity do not exhibit significant effects. Moreover, the Broad-Based Black Economic Empowerment program positively influences the diversity-sustainability relationship, highlighting the importance of policy and developmental contexts. King IV reforms, however, do not demonstrate a moderating effect. Originality/value By shedding light on the nuanced effects of board diversity and regulatory frameworks, the study contributes to the literature on corporate governance and sustainability in developing economies, highlighting the importance of tailored governance mechanisms in advancing sustainability agendas.
Purpose The growing need for transparent, secure and efficient data management in higher education institutions (HEIs) has increased interest in adopting emerging technologies such as blockchain. Therefore, this study aims to examine how technological, organizational and environmental readiness factors influence the intention to adopt blockchain in private HEIs in Indonesia by integrating the technology acceptance model (TAM) and the technology-organization-environment (TOE) framework.Design/methodology/approach This study applies a quantitative approach based on 162 valid questionnaires collected from private HEIs in Indonesia. Respondents were purposively selected from top management. Data were analyzed using partial least squares structural equation modelling.Findings Perceived usefulness (PU) positively influences adoption intention. Accounting information and top management positively enhance PU, while competitive pressure positively affects adoption intention. In contrast, complexity does not have a significant effect on either PU or adoption intention, and top management support does not have a significant effect on adoption intention.Practical implications The findings suggest that private HEIs should focus on demonstrating the tangible benefits of blockchain, particularly for improving operational efficiency, service quality and accounting information quality, as PU is the primary driver of adoption intention.Originality/value This study advances the literature by integrating TAM and TOE to explain blockchain adoption in higher education, a context rarely explored in technology adoption research. It offers both theoretical insight and practical guidance for improving institutional readiness in emerging economies.
Purpose The purpose of this study is to examine the role of informal governance mechanisms, specifically corporate culture, in enhancing Environmental, Social and Governance (ESG) transparency. This study investigates whether strong cultural values can complement or substitute for formal regulatory frameworks in driving higher ESG disclosure.Design/methodology/approach Using this 20-year panel data set (2001-2021), which includes a firm-year corporate culture index based on five key values, including innovation, integrity, quality, respect and teamwork, this study examines the relationship between corporate culture and ESG disclosure scores. The analysis uses panel regression, supported by instrumental variable estimation, propensity score matching, placebo tests and a series of robustness checks.Findings Firms with stronger corporate cultures exhibit significantly higher ESG disclosure scores. This positive relationship is robust to endogeneity concerns and alternative specifications. Further analysis shows that the effect of culture is attenuated in stringent regulatory environments but strengthened under conditions of high market competition.Originality/value This study contributes to the ESG literature by empirically establishing corporate culture as an effective informal governance mechanism that can partially substitute for formal regulation in promoting transparency. This further highlights the contingent role of institutional and market contexts, offering practical insights for regulators and firms aiming to improve ESG disclosure.
Purpose This study aims to examine how zero-based budgeting (ZBB) enables nonprofit organizations to balance stability and flexibility during environmental disruptions, addressing the gap in empirical research on ZBB’s crisis adaptability. Design/methodology/approach Using a qualitative case study of the California Independent System Operator, the authors analyze ZBB implementation from preadoption (2006) through the postpandemic period (2025). Data collection combined focused interviews with four organizational members across executive and operational levels, with documented insider knowledge from a co-author. The authors use Hoque and Kaufman’s (2024) stability-flexibility framework integrated with institutional logics theory. Findings ZBB enabled systematic adaptation across three phases, each characterized by distinct institutional logics: tradition logic during preadoption incremental budgeting, accountability logic following ZBB implementation and adaptability logic emerging during the pandemic. Rather than forcing trade-offs between stability and flexibility, ZBB’s structured evaluation processes enabled responsive resource reallocation while maintaining organizational continuity. Research limitations/implications The single-case design limits generalizability across organizational types and regulatory contexts. Reliance on four key informants, though supplemented by insider knowledge, constrained the sample size. The authors did not directly interview external stakeholders. Future research could examine budgeting systems as institutional logic integration mechanisms, explore temporal dimensions of management control effectiveness and investigate how justification cultures shape organizational resilience during disruptions. Practical implications ZBB functions as more than a technical tool. It enables organizations to navigate competing institutional demands. The justification culture made resource reallocation acceptable within a shared rule system, allowing organizations to maintain structured evaluation while responding to changing needs. ZBB’s framework enabled both mid-cycle crisis response and structured long-term adaptation through annual planning processes. Social implications For nonprofit organizations, ZBB enables continued mission fulfillment during crises while maintaining operational effectiveness. The transition from tradition logic to accountability logic illustrates how budgeting practices can drive cultural transformation. Enhanced stakeholder confidence, indicated by reduced scrutiny and fewer questions, suggests ZBB’s systematic processes may strengthen external trust in organizational financial management. Originality/value This study demonstrates budgeting’s dual functionality as both stabilizing routine and adaptive mechanism, advances institutional logics research by showing how accounting practices integrate competing demands, extends crisis management understanding and introduces the concept of systematic adaptation that challenges traditional dichotomies between organizational stability and change.
Purpose Using the UK’s relatively less regulated “comply or explain” institutional setting as a lens, this paper aims to investigate the aggregate effects of audit and board committee quality governance effectiveness on financial disclosure and their complementary or substitutive relationships in UK-listed companies. Design/methodology/approach The sample of the study is based on 170 firms selected from either winners or runner-up (second position) for the Investor Relations Magazine Award and their matched-pair 170 control sample firms. Different methods are used to test the hypotheses developed, depending on the variables of interest, such as Poisson regression, logistic regression and Durbin–Wu–Hausman endogeneity test. Findings Results suggest that audit committee quality effectiveness has an incremental positive effect on disclosure quality. Moreover, board committee quality effectiveness appears to have a partially significant impact on disclosure quality, while other board characteristics, such as board size, board meetings and board independence, show significant positive effects on disclosure quality. Additional analyses support the view that effective board committee quality complements audit committee quality in improving disclosure quality in large firms, rather than in small firms, thereby reducing information asymmetry per the proposed governance. Further evidence shows that audit committee quality is more effective in large firms compared to small firms. Research limitations/implications Disclosure quality measurement is a subjective and complex matter that has been extensively debated in the literature. This study is not an exception. Practical implications The findings suggest that board and audit committee quality can contribute incrementally to improving disclosure quality in UK firms. Originality/value This study expands upon existing literature and offers valuable insights for regulators, investors and other stakeholders concerning the potential advantages of improving audit committee effectiveness, an imperative consideration for the cultivation of strong and robust governance systems.
Purpose This study aims to investigate whether variation in city-level crime is related to firms' likelihood of accounting misconduct, using social disorganization theory to conceptualize the association between community disorder and organizational rule-breaking.Design/methodology/approach Using a sample of 33,663 US firm-year observations from 2002 to 2018, the study examines the association between crime rates in firms' headquarter cities, measured using FBI Uniform Crime Reporting data and fraudulent reporting, measured by SEC accounting and auditing enforcement releases (AAERs). The authors use logistic regression, fixed effects models, instrumental variables and generalized propensity score balancing to assess whether the documented association is stable across alternative approaches.Findings Firms headquartered in cities with higher crime rates are associated with a higher incidence of AAER-based misconduct. The association is stronger for violent crime than property crime and is more pronounced when CEOs are both highly compensated and long-tenured. The association is also stronger in larger cities and weakened among high-tech firms.Originality/value This study introduces a novel perspective by examining the association between community-level social disorder and confirmed, regulator-sanctioned instances of accounting fraud. By focusing on AAERs - rather than discretionary but legal accounting measures used in prior research - it shifts attention to misconduct that meets formal enforcement thresholds. The findings provide potential insights for regulators (e.g. prioritizing oversight in high-crime areas), auditors (e.g. integrating crime statistics into fraud risk assessments) and policymakers (e.g. developing targeted governance initiatives in vulnerable communities). This approach refines the theoretical scope, strengthens inference and connects environmental context to concrete strategies for preventing corporate wrongdoing.
Purpose This study aims to examine the relationships among board compensation (BOARDCOMP), chief executive officer (CEO) compensation and bank performance, and the moderating roles of board independence, the nature of the bank and unprecedented economic crises such as COVID-19.Design/methodology/approach Underpinning agency theory, this study examines the roles of board and CEO compensation (CEOCOMP), across different levels of board independence, in mitigating the agency problem and improving bank performance. Based on a sample of 420 firm-year observations for 2008-2022 across 28 listed banks in an emerging economy, the study applies panel regression analysis to test the models.Findings Findings show a negative relationship between CEOCOMP and both accounting-based and market-based measures of bank performance. However, the relationship reverses during the COVID period, when CEO pay is positively associated with performance, which may reflect improved alignment between managerial incentives and firm performance during the crisis. Meanwhile, BOARDCOMP is positively related to performance for conventional banks, but negatively related to the accounting-based performance measure of Islamic banks. Findings also show the negative moderating effect of board independence in the BOARDCOMP-performance relationship for conventional banks.Research limitations/implications These results deepen policymakers' and regulators' understanding of the complex roles of BOARDCOMP, CEOCOMP and board independence as corporate governance instruments for improving bank performance across different organizational natures and changing economic scenarios.Originality/value This study adds new insights to the organizational literature on the compensation-performance relationship and on how corporate governance instruments, organizational nature and a changing economic context moderate this relationship in banks in an emerging economy.
Purpose This paper aims to examine the characteristics and relations between different phases of the knowledge creation process and their impact on the value added by the internal audit function (IAF) in banks. Design/methodology/approach A quantitative cross-sectional study was conducted to examine the impact of the knowledge creation process on the value added by the IAF in banking. Confirmatory factor analysis was applied to validate the measurement model, while structural equation modeling was performed to assess the structural relationships. Data were collected from 54 internal auditors across European countries working in banking. Findings The findings show positive correlations among all dimensions of the knowledge creation model within IAFs in banking. Internalization of explicit knowledge into tacit emerges as the key driver of value added by IAFs in banks, while other phases show no significant direct effects. Research limitations/implications This research is subject to several limitations that should be considered when interpreting the findings and initiating further research. First, expanding the scope to include a broader or diversified population of internal auditors from other regions might generate more varied or stratified results regarding relevance, direction and intensity of interrelations among variables. Second, conducting research that is limited to state or regional boundaries may lead to findings that exhibit an aggregate population and exclude cross-cultural differences. Third, a focus on another industry/sector, or a comparative analysis across different industries/sectors might reveal different interrelationships among variables. Fourth, administering questionnaires in native languages of respondents could influence their comprehension, therefore decreasing the likelihood of misinterpretation, increase the response rate and the rate of fully completed responses. Fifth, the cross-sectional design of this study limits the ability to establish causal relationships between variables, as the data represents a single point in time rather than changes over time. Finally, collecting data by self-reporting may cause a tendency of respondents to provide socially desirable answers and their scores might not entirely represent the reality of activities, relationships and situations in IAF or in organizational context. Practical implications A positive learning culture, training and participation in knowledge internalization processes should be encouraged within IAFs in banks. The evaluation of internal auditors during recruitment and performance appraisal should include their ability to internalize explicit knowledge into practical tacit capabilities that enhance value added in the banking context. Originality/value The study points to the knowledge creation process as a key driver for enhancing the value added by IAF in banks. By focusing on the banking sector, it provides novel evidence on how specific phases of the knowledge creation process within IAFs contribute to the value they add in a highly regulated, knowledge-intensive industries.
Purpose Building on social network and resource-dependence theory, the study aims to investigate the impact of independent director interlocks (IDIs) on corporate greenwashing (GW). Furthermore, the authors scrutinize how the environmental regulations (ER) and market competition (MC) affect the path between IDIs and GW. Design/methodology/approach The research sample consists of China's A-share-listed companies for the period 2010-2022. The study uses a robust analytical framework that integrates the propensity score dummy variable approach, different proxies for regressors and instrumental variable techniques. Findings Using rigorous methods, the empirical analysis indicates that IDIs contribute to deterring GW, consistent with the theoretical framework of environmental strategic congruence. The moderation analysis shows that increased levels of ER and MC strengthen strategic congruence and intensify the curbing impact of IDIs on GW. Moreover, the results suggest that the mitigating effect of IDIs on GW is particularly significant for firms that are state-owned or operate in high-pollution industries. Practical implications The findings provide practical guidance for managers and policymakers by showing how IDIs can help curb hypocritical environmental, social and governance behavior and improve the authenticity of firms' environmental initiatives, even under worse regulatory and competitive pressures. Originality/value The research investigates how independent director corporate interlocks and independent director's financial interlocks directly affect corporate GW behavior, while also exploring the moderating influence of ER and MC, an area previously overlooked.
