Accounting and Finance - Doctoral Theses

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Motivations, incentives, and commitments: financial benefits and citizen participation in onshore wind energy in Ireland
(University College Cork, 2023) le Maitre, Julia; Ryan, Geraldine; Power, Bernadette; Horizon 2020; Irish Research Council; Sustainable Energy Authority of Ireland
Social acceptance of onshore wind energy is a fundamental constraint for the delivery of sustainable electricity supply (Wüstenhagen et al., 2007). For a country such as the Republic of Ireland, this is a significant impediment to the decarbonisation of the energy sector (Brennan et al., 2017; Hallan and González, 2020; Van Rensburg et al., 2015), since onshore wind energy is expected to increase from approximately a third of the electricity mix to 80% by 2030 (SEAI, 2023). In 2019, Ireland introduced the Renewable Electricity Support Scheme with the aim of quadrupling its supply of onshore wind energy. The policy introduced a variety of financial benefits directed towards local communities to facilitate social acceptance, including community benefit funding and incentives focused on households closest to the wind farm, in the form of ‘near-neighbour’ compensation (DECC, 2021). The scheme also opened consideration for a new mechanism to encourage citizen investment into wind farms (DCCAE, 2020). The novelty, scope, and value of these mechanisms underscore the need for detailed research to identify how they could be designed and implemented to enhance their fairness, benefit, and acceptance. This thesis asks how specific attributes of financial participation mechanisms aimed at enhancing social acceptance influence citizens' willingness to accept, or to invest in, wind farms in their community. This thesis is based on two specialised surveys to examine how Irish citizens trade-off between different features of wind farm developments and their associated financial benefits. The research provides detailed insights into the preferences of supporters, conditional supporters, and non-supporters for wind farm developments in the community and presents recommendations concerning distributive and procedural issues across each phase of project development. Firstly, the findings show that citizens’ preferences for the distribution of financial benefits from wind farms are affected by procedural factors over planning, construction, and operation. Community participation in the governance of the community benefit fund and in the ownership of the wind farm have particularly high relative importance for strong supporters of wind farms. In addition, the developer and the proximity of the wind farm strongly influence willingness to accept. Secondly, the thesis contributes new evidence towards the design of citizen wind energy investments, and reveals a strong relationship between community acceptance, the proximity of the wind farm, and citizen investment preferences. Overall, financial attributes including the level of risk and expected return on investment have the greatest influence on citizen investment. However, the structure of voting rights, ownership and administration of the investment are generally regarded as having a higher relative importance if the wind farm is within 2km of the community, or a respondent is supportive of wind energy development. Thirdly, familiarity with a wind farm, whether a result of its proximity or phase of development, is a significant determinant of residents’ willingness to accept further development in the community. Critical points for local support of wind farms are at the earliest pre-planning / planning phases of development, as well as for households within the 2km radius of a wind farm. Other latent factors, such as attitudes towards wind electricity, trust in information provided by a developer, or awareness of community energy initiatives significantly affect community acceptance. Lastly, a comparative case study analyses the design of financial benefits, citizen investment and near-neighbour incentives in Ireland with corresponding mechanisms introduced by Denmark, Germany, and the United Kingdom. Based on a critical assessment of the design and adaptation of policy mechanisms over time, the findings suggest that it is becoming more common for these governments to endorse the development of community trusts or municipality community benefit funds. It also suggests that community-led wind farms experience difficulties related to the competitive nature of the auction regime. The chapter recommends that when defining eligibility or boundaries on citizen financial participation, policymakers could use a phased approach, first prioritising residents closest to a wind farm, and then opening opportunities across a wider geography in the second instance. The research is relevant for policy and practice. It enhances the understanding of citizens’ preferences for financial participation mechanisms in onshore wind farms, which is conducive to social acceptance and fairer local energy transitions. It would be valuable for future studies to develop on this evidence in the context of offshore wind energy and demand-side response which are increasingly important for the Irish energy transition. The diffusion of these innovative technologies similarly depends on citizen participation, fairness, and ultimately social acceptance.
An exploratory study of the financial and non-financial performance impacts of interactions between ecosystem actors of the FinTech revolution
(University College Cork, 2022) Browne, Oliver; Hutchinson, Mark; O'Reilly, Philip
FinTech is an abbreviation of financial technology, characterised by start-ups and emerging technologies that have the potential to transform traditional financial services by making transactions and processes less expensive, more convenient, and more secure. This thesis conducts three studies on FinTech firms at various corporate life cycle stages. These studies explore the financial and non-financial impacts of interactions between incumbents, new entrants, and regulators as key FinTech ecosystem actors. The first study seeks to understand the barriers to technology adoption for an incumbent multinational systemically important financial institution. This study explores emerging financial technologies as a potential solution to issues of historic myopic investment in information technology. Second, this thesis examines new FinTech ventures and their decision-making process around accelerator programmes, exploring whether high-quality ventures choose to participate in accelerators and their impact on performance and external capital. Third, this thesis seeks to understand the relationship between board diversity and performance for a sample of private FinTech firms. Incumbent FS firms encounter legacy information system (LIS) issues and competing priorities for the provision of internal investment resources. Many incumbents’ labyrinth of legacy systems are prone to lacking documentation, poor data quality and manual processes. At the same time, routine rigidity persists due to fears of system downtime affecting core customers. The first study in this thesis describes the design and development of a novel ontology-based framework to illustrate how ontologies can interface with existing distributed data sources. The framework is then tested using a survey instrument and an integrated research model of user satisfaction and technology acceptance. The results reveal a significant reduction in manual processes, increased data quality, and improved data aggregation from employing the framework. In contrast to incumbents, new ventures often have limited resources and may seek external investment to survive. However, private firms face significant competition for scarce resources and information asymmetries between investors and new entrants. To reduce information asymmetry, new entrants may seek certification from accelerators as a signal of venture quality. The second study in this thesis uses a handcollected dataset of 1,253 private UK firms to explore the impact of accelerator participation on firm performance. This study shows that firms that participate in an accelerator raise greater amounts of capital than a matched sample of non-accelerator FinTech firms. However, these firms, in turn, exhibit poorer financial performance. This finding indicates that accelerators do not attract the highest quality firms, and high-quality firms may choose to avoid participating in accelerators as a countersignal of venture quality. In contrast, evidence suggests that regulatory accelerator participation may signal venture quality. The final study assesses the effect of board characteristics on firm performance in a sample of 189 UK registered FinTech firms as new ventures may signal quality through cultivating a large, more diverse, or prestigious board. The final empirical chapter provides evidence that increased female board representation contributes to improved performance in early-stage private FinTech firms. Furthermore, more than half of firms have no female board representation, and only one-in-ten directors are female. FinTech is characterised by increased start-up activity and innovations that threaten to disrupt incumbent processes. This thesis contributes to assessing the efficacy of FinTech firms’ efforts to signal venture quality, the impact of board characteristics on private firm performance, and incumbents’ response to FinTech. This thesis, therefore, provides significant contributions to the FinTech domain through advancing science and knowledge. It creates value for those operating accelerator programmes, incumbent organisations seeking to integrate new financial technologies with legacy information systems, and for effective governance of FinTech firms towards optimum performance.
Insights from financial data - old and new
(University College Cork, 2020) Nguyen, Quang Minh Nhi; Hutchinson, Mark; Mulcahy, Mark; Vietnamese Government Scholarship; UCC-Vied MoA
This thesis investigates financial data — the backbone of empirical research in finance — to provide insights into the importance of precisely interpreting existing data as well as the power of findings from new data. Specifically, the first study in this thesis examines the impact of event-day misspecification on the market reaction to FDA new drug approval announcements granted by NYSE listed firms. The second study uses an entirely new dataset of company filings from hedge fund management companies registered in the UK to investigate the true profitability of investment companies which manage hedge funds and to explain why it varies across firms over time. The last study utilizes the same new hedge fund manager filings dataset to investigate whether the hedge fund compensation contract effectively aligns managerial incentives with investor interests. Previous research has offered the attention-grabbing hypothesis as a behavioural explanation for abnormal returns in the day after FDA approval announcements. The first empirical study shows that when the precise timing of announcements is properly identified (i.e. existing data is precisely interpreted), the market reaction is centred on the event day and the increase in firm value is driven by after-market-close approval announcements. The second study shows that hedge fund management companies generated incredibly high profitability and revenue growth prior to 2008. With the onset of the global financial crisis, profitability and growth rates dropped. Analysis of cross-sectional variability in hedge fund management firm profitability finds that the key determinant is firm size. That is, larger firms generate significantly higher profitability and this relationship is particularly severe during the financial crisis period. Existing evidence shows that the standard hedge fund compensation contract incentivises the manager to grow the fund assets they manage, even if it deteriorates investment performance. Facilitated by the novel hedge fund dataset in this thesis, firms which are entirely focused on hedge fund management are distinguished from diversified firms (which generate a relatively small proportion of compensation from hedge funds). The third empirical chapter in this study confirms that the actual compensation of hedge fund only firms increases as fund assets grow, despite the increased cost and performance diseconomies of scale. This result also holds for diversified firms, even though there is a weaker alignment between managerial incentives and fund performance within these firms. Hedge funds managed by diversified firms have a markedly lower performance.
The quality of financial information in the extractive industries: a value relevance analysis
(University College Cork, 2016) Power, Sean; Cleary, Peter; Donnelly, Raymond
The extractive industry is characterized by high levels of risk and uncertainty. These attributes create challenges when applying traditional accounting concepts (such as the revenue recognition and matching concepts) to the preparation of financial statements in the industry. The International Accounting Standards Board (2010) states that the objective of general purpose financial statements is to provide useful financial information to assist the capital allocation decisions of existing and potential providers of capital. The usefulness of information is defined as being relevant and faithfully represented so as to best aid in the investment decisions of capital providers. Value relevance research utilizes adaptations of the Ohlson (1995) to assess the attribute of value relevance which is one part of the attributes resulting in useful information. This study firstly examines the value relevance of the financial information disclosed in the financial reports of extractive firms. The findings reveal that the value relevance of information disclosed in the financial reports depends on the circumstances of the firm including sector, size and profitability. Traditional accounting concepts such as the matching concept can be ineffective when applied to small firms who are primarily engaged in nonproduction activities that involve significant levels of uncertainty such as exploration activities or the development of sites. Standard setting bodies such as the International Accounting Standards Board and the Financial Accounting Standards Board have addressed the financial reporting challenges in the extractive industry by allowing a significant amount of accounting flexibility in industryspecific accounting standards, particularly in relation to the accounting treatment of exploration and evaluation expenditure. Therefore, secondly this study examines whether the choice of exploration accounting policy has an effect on the value relevance of information disclosed in the financial reports. The findings show that, in general, the Successful Efforts method produces value relevant information in the financial reports of profitable extractive firms. However, specifically in the oil & gas sector, the Full Cost method produces value relevant asset disclosures if the firm is lossmaking. This indicates that investors in production and non-production orientated firms have different information needs and these needs cannot be simultaneously fulfilled by a single accounting policy. In the mining sector, a preference by large profitable mining companies towards a more conservative policy than either the Full Cost or Successful Efforts methods does not result in more value relevant information being disclosed in the financial reports. This finding supports the fact that the qualitative characteristic of prudence is a form of bias which has a downward effect on asset values. The third aspect of this study is an examination of the effect of corporate governance on the value relevance of disclosures made in the financial reports of extractive firms. The findings show that the key factor influencing the value relevance of financial information is the ability of the directors to select accounting policies which reflect the economic substance of the particular circumstances facing the firms in an effective way. Corporate governance is found to have an effect on value relevance, particularly in the oil & gas sector. However, there is no significant difference between the exploration accounting policy choices made by directors of firms with good systems of corporate governance and those with weak systems of corporate governance.
Leveraging lessons learned in organizations through implementing practice-based organizational learning and performance improvement - An opportunity for context-based intelligent assistant support (CIAS)
(University College Cork, 2013) Hegarty, Garrett John; Adam, Frédéric; Brézillon, Patrick
Organizations that leverage lessons learned from their experience in the practice of complex real-world activities are faced with five difficult problems. First, how to represent the learning situation in a recognizable way. Second, how to represent what was actually done in terms of repeatable actions. Third, how to assess performance taking account of the particular circumstances. Fourth, how to abstract lessons learned that are re-usable on future occasions. Fifth, how to determine whether to pursue practice maturity or strategic relevance of activities. Here, organizational learning and performance improvement are investigated in a field study using the Context-based Intelligent Assistant Support (CIAS) approach. A new conceptual framework for practice-based organizational learning and performance improvement is presented that supports researchers and practitioners address the problems evoked and contributes to a practice-based approach to activity management. The novelty of the research lies in the simultaneous study of the different levels involved in the activity. Route selection in light rail infrastructure projects involves practices at both the strategic and operational levels; it is part managerial/political and part engineering. Aspectual comparison of practices represented in Contextual Graphs constitutes a new approach to the selection of Key Performance Indicators (KPIs). This approach is free from causality assumptions and forms the basis of a new approach to practice-based organizational learning and performance improvement. The evolution of practices in contextual graphs is shown to be an objective and measurable expression of organizational learning. This diachronic representation is interpreted using a practice-based organizational learning novelty typology. This dissertation shows how lessons learned when effectively leveraged by an organization lead to practice maturity. The practice maturity level of an activity in combination with an assessment of an activity’s strategic relevance can be used by management to prioritize improvement effort.

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