We examine the association between CEO-audit committee social ties and merger and acquisition (M&A) performance. Using a sample of 11,028 M&A transactions by U.S. listed acquirers over 1999-2022, we find that CEO-audit committee ties are significantly associated with lower acquirer announcement returns, higher bid premiums, and longer deal completion times. These associations are consistent with the view that compromised audit committee monitoring coincides with greater CEO expropriation during the M&A process and reduced accountability for poor post-acquisition performance. Cross-sectional analyses indicate that these patterns are concentrated in settings with higher information asymmetry between acquirer and target and in firms with weaker alternative governance mechanisms. We also document a contrasting pattern for CEO ties with strategy committees, which are positively associated with M&A outcomes. Taken together, our findings support a role-dependent view of director independence: the governance implications of CEO-director social ties depend on whether directors occupy monitoring- versus advisory-oriented positions.
Asset impairment accounting requires firms to reassess their existing assets-in-place, namely, the outcomes of past investments, which enriches the information environment within the firm. We investigate whether this reassessment influences corporate investment strategies for long-term growth. For identification, we employ the Regression Kink Design (RKD) that exploits a kink in asset impairment accounting rules: the sensitivity of the likelihood of asset impairments to the book-to-market ratio of assets (BTM) sharply increases when BTM exceeds one. We find a positive kink in R&D expenditures but a negative kink in over-investment in capital expenditures and acquisitions when BTM exceeds one. We also find that heightened impairment risk is associated with an increase in the value of subsequent patent filings and firm performance, suggesting that reassessment of past investments promotes the firm's long-term growth.
Qualitative characteristics (QCs) are accounting concepts stated in standard setters' conceptual frameworks, which are intended to guide their standard-setting decisions. This paper explores how the FASB and IASC/IASB used their primary QCs (relevance, reliability and faithful representation) in their fair value standards. Drawing on Derrida's notion of iterability, we analyse how and why these QCs were reiterated in different contexts to promote, defend and retreat from fair value. Our findings show that QCs are not fixed concepts, but rather evolve through reiteration across different standard-setting contexts. This malleability enables the Boards to justify standard-setting decisions as their preferences evolve. Our research contributes to the literature on conceptual frameworks by identifying the flexible use of QCs in standard setting as a subtle mode of standard setters' legitimacy work, while also showing that these reiterations shape, and sometimes subsequently reverse, revisions of conceptual frameworks. Ultimately, we reveal that neither conceptual frameworks nor standards act as fixed reference points for the meanings of QCs, which are mutually deferred in an endless process of reiteration.
We study the standard-setting role of proxy advisors when their preferences diverge from regulatory mandates and shareholders' choices. The say-on-pay (SOP) regulation in 2011 allowed U.S. firms to adopt non-annual voting schedules, whereas proxy advisors strongly preferred annual voting. We show that they leverage negative recommendations in compensation committee member elections (CMEs) as an alternative channel for expressing compensation-related concerns in non-SOP years. Among firms that hold triennial SOP votes, negative recommendations in CMEs are significantly more frequent during non-SOP years. Moreover, proxy advisors promote their standards even more strongly in firms where their preferences are less aligned with the voting choices of shareholders, highlighting their standard-setting role even when unpopular.
This study explores how the performativity of accounting devices unfolds within an organisation and examines the role of organisational actors in this process, scrutinising how they acquire and enact positional power. We qualitatively study a family firm acquired by a private equity fund, which hired new managers and introduced new accounting devices. Data collection consists of 18 semi-structured interviews conducted in two waves with founders, newly hired managers, employees, and investors, supplemented by extensive document analysis. Our findings demonstrate how organisational actors help to embed new accounting devices in an organisation, and act as 'agents of amplification'. Specifically, we identify three practices they engage in, and through which they amplify the performativity of the accounting devices: specifying, showcasing and streamlining. Our study contributes to the performativity literature by empirically illustrating how agents of amplification navigate the tension between the allure of and the resistance to accounting devices, and by showing how positional power is co-produced through the interplay between accounting devices and actors' practices. Additionally, we make an empirical contribution by providing a detailed account of the takeover and professionalisation of a family firm and provide insights into how accounting devices influence shifts in the firm's social fabric.
