Accounting for value and governance

The waves of financial scandals and corporate failures in most of the developed countries in the 1980s and early 2000s, and indeed the 2008 global financial crisis, placed the corporate governance of the modern firm under greater and closer scrutiny. Filatotchev and Nakajima (2010) point to the distorted system of incentives and lapses in the personal and professional integrity of managers as having contributed significantly to the global financial crisis, undermining confidence in capital markets and leading to the erosion of stakeholder trust. Against this backdrop, and beginning in the early 1990s, developed and developing countries have published best practice corporate governance recommendations as well as regulatory laws to improve the quality of corporate governance. The governance recommendations and regulations are motivated by the rationale that strong governance supports sustainable value creation in firms via improvement in responsibility and accountability (OECD, 2004; King Report, 2009). Consequently, a considerable amount of research has examined the role of corporate governance in organisations, particularly in the public firm. In this context, studies have examined the impact of corporate governance on organisational value creation outcomes such as firm value (e.g. Yermack, 1996; Coles et al., 2008; Mangena et al., 2012; Liu et al., 2013), disclosure (e.g. Karamanou and Vafeas, 2005; Ajinkya et al., 2005; Mangena and Pike, 2005), and earnings management (e.g. Peasnell et al., 2005). Collectively, these studies show that effective corporate governance arrangements are important for organisational outcomes. Nevertheless, Larcker and Tayan (2011) point to the fact that the impact of corporate governance on value creation is complex and there are gaps in knowledge that further research should continue to address. They argue that careful research is important in providing a framework that enables policy makers to formulate sound corporate governance policy and practitioners to make sound decisions in designing governance systems that enhance value creation.

This Special Issue of the Journal of Applied Accounting Research (JAAR) comprises a collection of six peer-reviewed papers that contribute to the debate relating to corporate governance and value creation outcomes. These contributions are part of a large number of papers that were presented at the 2013 Joint Annual Conference of the British Accounting and Finance Association Northern Area Group and Interdisciplinary Perspectives Special Interest Group held at Nottingham Business School, Nottingham Trent University, UK. In line with the conference theme, “Accounting for value and governance”, the JAAR special issue call for papers invited submissions on a wide range of accounting and finance-related topics. The contributions in this special issue have attempted to address some of the issues raised in the call for papers, with particular focus on the role of corporate ownership and corporate governance quality, the external audit function, voluntary disclosure of information about greenhouse gases, and investments in intellectual capital assets.