Faculty Authors Display 2021

• Larger companies exhibit lower levels of related party transactions (RPTs). • Increased profitability and financial leverage leads to increased levels of RPTs. • Larger and more independent boards of directors lead to decreased levels of RPTs. • Above-average operating RPTs are associated with above-average operating expenses. • Above-average financing RPTs are associated with below-average interest rate.

We discover that in each shipping segment the price of scrap, earnings, and the fleet size are jointly determined. Deploying a Vector Error Correction model, we find that international steel-scrap prices explain ship scrap prices, but the price of nickel, crude oil, and seaborne trade have an even higher positive explanatory power on them. This dependence is mainly attributed to the economic nature of the major ship-breaking countries: they are all emerging economies, heavily relying on steel as well as nickel in their development process.

Background and objectives

There are concerns that financial statements no longer reflect the underpinning drivers of value in modern business (Bernanke 2011; Haskel and Westlake 2017; Lev and Gu 2016). Such concerns are particularly relevant to accounting for internally generated intangible assets and intangibles in general. International Accounting Standard (IAS) 38 Intangible Assets, which governs the treatment of the capitalisation of development costs, has been characterised as a standard reflecting prudence and conservatism with a corresponding prevalence of expensing (Mazzi et al. 2019a). Nonetheless, there is significant lack of evidence about the extent to which companies capitalise other internally generated intangible assets, especially those that fall outside the scope of IAS 38.

In this research, we complement the study by Mazzi et al. (2019a) and focus on the accounting treatment of Exploration and Evaluation expenditure (hereafter E&E) by companies in the extractive industry (hereafter EI). E&E expenses include: the acquisition of rights to explore; topographical, geological, geochemical and geophysical studies; exploratory drilling; trenching; sampling; and activities that relate to evaluating the technical feasibility and commercial viability of extracting a mineral resource. In essence, the accounting for E&E costs can be viewed as an extension of the debate on the recognition of intangible assets versus the level of accounting conservatism.

While there is scant literature on EI firms, and in relation to E&E expenditure in International Financial Reporting Standards (IFRS) reporting regimes, this research concentrates on the accounting policies used for the treatment of these expenditures. To the best of the authors’ knowledge, however, research on the amounts involved and hence recognised, expensed and impaired is not available. Furthermore, there is an absence of evidence on the characteristics of firms that capitalise and impair such expenditure. The overall objective of this research is to shed light on these areas.

Method

This research project was conducted in three key stages.

First, we identified a sample of firms in general mining, and oil and gas industry groups for 2018. These firms are listed in eight countries with significant constituents in the EI. From potentially 1,646 firms, the final sample used consisted of 1,096 firms that have an annual report available in English and perform direct exploration activities. Using this sample, we first categorised the firms’ accounting policy choices for E&E expenditure into four types, which ranged from more aggressive to more conservative reporting, namely: Full Cost, Area of Interest, Successful Efforts and Expense All. Subsequently, we categorised the firms on the basis of their policy choice and of their country of origin, industry, and company development stage.

Second, we collected the net book values of E&E amounts, E&E costs capitalised internally and externally and E&E costs impaired in the year. We then performed univariate statistical descriptive analysis, considering the different policy choices, country of origin, industry, and company development stage.

In the third and final stage, we performed multivariate regression analysis. This stage addressed three main research aims: i) identifying the factors influencing the decision of companies to capitalise; and identifying the factors affecting the magnitude of E&E expenditure capitalised in the year; ii) investigating companies’ decision to choose a certain accounting policy; and iii) identifying the factors driving the likelihood that companies would impair and provide the determinants of the impairment amounts.

Main findings

Overall, we find a general tendency of companies to capitalise and recognise significant amounts of internally generated E&E expenditure. Specifically, around 75% of the sample firms had a non-zero net book value of E&E assets on the balance sheet and 66% capitalised internally generated E&E assets in 2018. These, on average, accounted for 35% and 8% of companies’ total assets, respectively. We also find that impairments are significant and commonly occur (ie 36.6% recognised an impairment of E&E assets in 2018), with the mean value of E&E costs impairment accounting for a large proportion of the previous year’s non-current assets (mean 33.5%).

We have identified very different policies applied, resulting in capitalisation with materially different outcomes and a consequent lack of comparability. The Successful Efforts policy is the most common accounting method used and it is most common among Canadian and UK firms in the sample. The Area of Interest method is the second most common accounting method, being most common among Australian firms (where it is mandated under Australian Accounting Standards Board (AASB) 6 Exploration for and evaluation of mineral resources) (AASB 2004). The third most common method we identify is the so-called Expense All. This method is the most closely related to what is prescribed in IAS 38 with respect to other intangible assets. The Full Cost method is the least used (only 2.5% firms in the sample use it).

When we analyse these choices across industry groups, we find that mining firms appear to be more heterogeneous than oil and gas firms, with an almost equal split across the Successful Efforts, Area of Interest and Expense All methods. The application of the Area of Interest method is largely driven by the high number of Australian mining firms, highlighting a country effect. Oil and gas firms mostly follow the Successful Efforts method (70%) and 22% follow the Area of Interest method. This finding is what we would intuitively expect, given that only 20% of firms in this industry are from Australia.

When delving more into the characteristics of our sample firms, we identify the following.

Consistent with the classification of the Area of Interest method as a less conservative approach, we find that firms that follow this method report higher values of total E&E capitalised and internally generated E&E asset capitalised than firms following the Successful Efforts method. Nevertheless, the impairment in relation to E&E assets is of similar magnitude among firms using these two methods. The latter is attributed to the fact that, although companies choosing the Area of Interest method follow more aggressive reporting when capitalising costs that may relate to unsuccessful projects, they do not necessarily differ significantly with the firms following the Successful Efforts method in their choice of the unit of account for impairment testing.

Mining firms report higher values of total E&E capitalised, internally and externally generated E&E assets capitalised and E&E intensity. Even so, the likelihood of recognising an impairment is lower for mining firms and the magnitude of E&E assets impaired is not significantly different across mining and oil and gas firms.

Finally, we classified our sample firms into three categories: junior explorers, developers and producers, on the basis of the distribution of values of revenue. For example, junior explorers have zero revenue. We find that junior explorers have higher net-book value of capitalised E&E to total assets, and are overall more E&E intense. These values decrease monotonically as revenues increase. Further, more companies in the mining sector are junior explorers or developers while oil and gas involve more producers (who correspondingly have larger asset bases). Moreover, the mean (median) value of impairment relative to non- current assets at the end of the previous year for junior explorers is significantly larger than that for the developers and producers. Nonetheless, impairment recognition for E&E assets is not necessarily more frequent in smaller firms (junior explorers) than in developers or producers.

Conclusions and policy recommendations

The findings of this research are very timely. The International Accounting Standards Board (IASB) is collecting information to help it make a decision on whether to start a project to replace or amend International Financial Reporting Standards (IFRS) 6 Exploration for and Evaluation of Mineral Resources. It is also timely because IASB technical staff presented a paper to the Board in October 2020 on the accounting policy diversity when applying IFRS 6 (IASB 2020b). The evidence provided herein about the amounts companies capitalise, impair and expense complements the IASB staff paper (IASB 2020b) and provides a more holistic view of the significance of the amounts involved and the complexities facing users of the financial statements. The present report aims at supplying insights that would assist the IASB in its decisions on the replacement or amendment of IFRS 6 in the future. The key recommendations arising from our findings are summarised as follows.

This paper investigates how the containership sector has responded to the IMO environmental regulation. In doing so, it identifies the determinants of the IMO regulation compliance and derives a strong positive bidirectional relationship between the probability of compliance and lower fuel consumption in the container segment of the shipping sector. Using data for a population of over five hundred S&P of container ships registered in Clarkson’s database over the period 2016–2019, this paper then employs cross-sectional analysis and General Method of Moments (GMM) estimation to derive the impact on the probability of compliance of fuel consumption, vessel size, type of fuel price differential, price of ships, vessels’ age and country specifics. The findings are consistent with specific characteristics of the containers sector, such as high-energy intensity and a rather competitive market structure. Furthermore, they indicate that a restructuring is under way, towards a more environment friendly and fuel efficient sector. Finally, the buyers’ and shipbuilding countries nationality, are found to be important factors in explaining the probability of compliance and preference for energy-efficient vessels.

The Basel II accord implemented in 2006, meant that banks worldwide could use Internal Ratings-Based (IRB) models, in order to evaluate the components of their Capital Adequacy Ratio (CAR). In 2017 the IRB approach was also included into the Basel III Framework. The financial crisis of 2007-09 revealed the unsustainability of the Greek debt and lead the economy into a deep and prolonged recession. As a result the Greek stock exchange and the quotes of Greek banks plummeted. Five out of the six listed Greek banks adopted IRB models between 2008 and 2017. This paper investigates whether Greek IRB-banks performed better, within the adverse economic conditions, compared to the non-IRB banks. Difference-in-difference (DiD) and spatial DiD methodologies are employed and annual data from the Athens stock exchange, over the period 2001–2017, is used. It appears that there is a negative impact of the IRB implementation on listed Greek banks. This is mainly attributed to the higher cost involved in deriving risk estimates with the IRB approach, especially during this period of the stressful economic conditions. It is also attributed though to the restrictive regulatory measures imposed on Greek banks, which minimized any benefits derived from the IRB transition.

• Larger companies exhibit lower levels of related party transactions (RPTs). • Increased profitability and financial leverage leads to increased levels of RPTs. • Larger and more independent boards of directors lead to decreased levels of RPTs. • Above-average operating RPTs are associated with above-average operating expenses. • Above-average financing RPTs are associated with below-average interest rate.

The importance of mega sports events in relation to city branding has long been recognised by both academics and practitioners from a variety of functional disciplines. This paper links the concepts of city branding and sports events with that of patriotism. The study is based on a systematic literature review that results in a proposition of a conceptual framework, and a synthesis of key findings, which are presented through the proposed conceptual framework. The framework suggests that patriotic feelings enjoyed by citizens of the host city are expected to further develop and intensify in the context of a sports event, while at the same time, positively moderate the impact of the given sports event on the city brand. The implications for practitioners and academics are discussed.

The importance of branding strategies, either in terms of brand architecture or in relation to the role of brand heritage, has often been put under the microscope in the case of larger businesses. Yet neither aspect has been explicitly investigated in terms of its role and contribution for smaller wine businesses. Focusing on the case of local family wineries in Crete, Greece, helps us identify links with and applications of both brand architecture and brand heritage literature. Findings suggest that most wineries do not use an umbrella brand to create relevant sub-brands but tend to build upon mixed strategies. Furthermore, wineries often refer to place brand heritage, but family heritage is usually the cornerstone of their branding efforts. Our conclusions confirm the need to redevelop this body of literature in a way more adequate for small, family-owned wine businesses, and to enrich family wine business people's understanding of extant branding strategies.

This paper investigates how the containership sector has responded to the IMO environmental regulation. In doing so, it identifies the determinants of the IMO regulation compliance and derives a strong positive bidirectional relationship between the probability of compliance and lower fuel consumption in the container segment of the shipping sector. Using data for a population of over five hundred S&P of container ships registered in Clarkson’s database over the period 2016–2019, this paper then employs cross-sectional analysis and General Method of Moments (GMM) estimation to derive the impact on the probability of compliance of fuel consumption, vessel size, type of fuel price differential, price of ships, vessels’ age and country specifics. The findings are consistent with specific characteristics of the containers sector, such as high-energy intensity and a rather competitive market structure. Furthermore, they indicate that a restructuring is under way, towards a more environment friendly and fuel efficient sector. Finally, the buyers’ and shipbuilding countries nationality, are found to be important factors in explaining the probability of compliance and preference for energy-efficient vessels.

The importance of mega sports events in relation to city branding has long been recognised by both academics and practitioners from a variety of functional disciplines. This paper links the concepts of city branding and sports events with that of patriotism. The study is based on a systematic literature review that results in a proposition of a conceptual framework, and a synthesis of key findings, which are presented through the proposed conceptual framework. The framework suggests that patriotic feelings enjoyed by citizens of the host city are expected to further develop and intensify in the context of a sports event, while at the same time, positively moderate the impact of the given sports event on the city brand. The implications for practitioners and academics are discussed.

The importance of branding strategies, either in terms of brand architecture or in relation to the role of brand heritage, has often been put under the microscope in the case of larger businesses. Yet neither aspect has been explicitly investigated in terms of its role and contribution for smaller wine businesses. Focusing on the case of local family wineries in Crete, Greece, helps us identify links with and applications of both brand architecture and brand heritage literature. Findings suggest that most wineries do not use an umbrella brand to create relevant sub-brands but tend to build upon mixed strategies. Furthermore, wineries often refer to place brand heritage, but family heritage is usually the cornerstone of their branding efforts. Our conclusions confirm the need to redevelop this body of literature in a way more adequate for small, family-owned wine businesses, and to enrich family wine business people's understanding of extant branding strategies.

Since March 2020, more than half of the world’s population went under a lockdown or stay-at-home orders. Studies by marketing practitioners hint that consumption during the lockdown has changed due to consumers’ attempts to regulate their negative moods. Drawing on literature on self-gifting, mood-regulatory consumption, and consumer behavior in times of hardship, we posit that consumers under lockdown will be more likely to engage in self-gifting for mood alleviation and that behaviors will be associated with individuals’ mood regulation. Preliminary findings from an online survey on a sample of 118 Greek adults support our central tenets, with the mean propensity for self-gifting for mood alleviation during the lockdown being higher than general propensity for self-gifting for mood alleviation. The findings also provide support for a partial mediation model, where mood alleviation frequency during the lockdown positively affects propensity for self-gifting for mood alleviation during the lockdown, which in turn affects general propensity for self-gifting for mood regulation.

This paper examines the views and attitudes of senior female executives in Greek advertising agencies. Using intersectionality as a theoretic lens, the authors study the intersection of sex, age, profession, and ethnicity, within a patriarchal, Southern European society and a male dominated industry. Research findings from 12 interviews reaffirm the motherhood penalty but also demonstrate how successful women refuse to be part of the boys' club, deconstruct the male stereotype, and engage in fierce counter-stereotyping while showing lack of solidarity and empathy toward other women. After years at the intersection of two male-dominated cultural contexts, these women have limited visibility of the barriers they encounter and see themselves as an embodied exception proving the rule, not as agents of change. Thus, individual success leads to collective defeat and to the prevalence of male dominance. This research contributes by presenting the view of successful women in adverse intersections, who demonstrate accumulated frustration, lack of collective gender consciousness, and lack of a sense of self-fulfillment. The paper calls for further research that combines intersectionality with emotional transfers and defense mechanisms; research that explores the influence of intersectional conscientiousness, especially in the southern context.

Purpose
This paper explores the potential impact of mobile marketing tools on consumer buying behaviour within the context of dining. The aim is to examine the influence of mobile marketing tools through their different functions on the stages of the consumer buying process. The study addresses a lack of relevant research with evidence from both customer and supplier perspectives.

Design/methodology/approach
The mobile tools that are found useful for dining were considered in this study. Qualitative interviews with marketers and consumer opinion leaders were conducted, given the limited extant research.

Findings
The results reveal that mobile marketing tools influence consumers' decision-making differently and their effect varies according to the customer type. Additionally, it shows that loyalty has a direct influence on mobile marketing effectiveness, as the decision-making process of loyal customers is more affected by mobile marketing tools than the non-loyal customers.

Research limitations/implications
The limitations are mainly based on the qualitative nature of this study and are relevant to the research context. Further research could examine these findings in different service and geographical contexts.

Practical implications
Marketing activity through the smartphone should focus on loyal customers and opinion leaders with the use of appropriate mobile tools.

Originality/value
The study provides empirical evidence on the variable influence of mobile marketing tools on consumer decision-making and develops a conceptual framework. It is also found that loyalty is an important factor that positively affects smartphone tools adoption.