Accounting and Finance - Doctoral Theses

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    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.
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    How placement in accounting degree programmes influences developing professional identities: an empirical analysis
    (University College Cork, 2021-02-01) Dempsey, Julia Sylvia; Healy, Margaret; Linehan, Carol
    The growing popularity of placement as part of undergraduate degree programmes suggests that placement is a valued element of undergraduate education for students. Literature exploring the value of placement for students focuses on identifying or measuring specific outcomes post-placement for students. However, the same level of attention has not been given to students’ placement experiences. The objective of this study is to gain an understanding of and to document how students make sense of their placement experiences. To fulfil this objective, two key sets of literature are considered. Situated learning literature provides a holistic way of exploring students’ experiences of overlapping membership of the communities in which they find themselves. Professional identity (PI) literature provides a way of exploring the nuanced sensemaking by students of who they see themselves becoming in organisations. To gain access to the subjective worlds of students, and capture their experiences, forty students who completed placement in accounting roles are interviewed at three points in time (pre-, during and post-placement). Modes of identification (Wenger 1998; E. Wenger-Trayner and B. Wenger-Trayner 2015) from situated learning literature provide theoretical lenses to investigate, in different ways, students’ experiences of multi-membership of university and the workplace. Using thematic analysis, the themes created point to emerging PIs from students’ experiences of reducing uncertainty around what could be required of them in accounting roles and who they see themselves becoming. Using insights from interpretivists in the PI literature, such as Covaleski et al. (1998), Ibarra (1999), Ashforth and Johnson (2001), Reid (2015) and Ashforth and Schinoff (2016), further thematic analysis facilitates a more nuanced exploration of the ongoing positioning and repositioning by students of their identities. Drawing from both situated learning literature and PI literature, analysis of the data in this study positions sensemaking of placement experiences by students as influencing their developing PIs. This study contributes to placement literature by advancing understanding of placement from achievement of disparate outcomes to a more holistic and nuanced view of placement experiences influencing developing PIs. A framework for understanding how placement experiences influence developing PIs is presented. This framework captures experiences of making sense of multiple possibilities as future accounting professionals and constructing differing forms of fit with these possibilities. Personal fit, reflected fit, projected fit and absence of fit are identified, and how these are constructed is described. Feeling, feigning or forsaking developing PIs are presented as legitimate beneficial experiences from placement, as each involves reducing uncertainty around possible future selves. The framework presented in this study adds to the placement literature by collectively capturing and documenting placement experiences, bringing pre-placement uncertainty and imagining and reimagining possible future selves in association with placement to the fore. The framework presented can be used by others to better understand processes of developing PIs in placement in other fields of study and processes of developing PIs in other periods of transition.
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    Reflective capacity, auditors and professional scepticism: an empirical analysis
    (University College Cork, 2020-08) O'Sullivan Rochford, Claire P. R.; Donnelly, Raymond; Healy, Margaret
    Professional scepticism (PS) can be described as an ability to question and critically assess evidence. The literature provides an established measure for trait scepticism but recognises a state component. A comprehensive measure encompassing both is timely. The study posits that including a capacity for Reflection is the key to unlocking state scepticism, thereby establishing a new Reflective Scepticism Scale (RSS), combining trait and state components. In addition, the study examines experience as a determinant of PS and contributes to this ongoing debate within the literature. Data is gathered from a survey of 392 professional Irish auditors, of all career grades from trainee to partner, to include all the largest audit firms. The new comprehensive RSS is designed and tested using Factor Analysis, while experience as a determinant of PS is assessed through a series of regression analyses. Clear evidence is provided that PS increases with experience and confirms that PS changes throughout an auditor’s career, which has implications for recruitment, training and regulation.
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    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.
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    Evaluating the impacts of legacy infrastructure and stranded assets on energy markets and utilities in low carbon energy systems
    (University College Cork, 2020) Hickey, Conor; O'Gallachoir, Brian; O'Brien, John; Environmental Protection Agency; Science Foundation Ireland
    This thesis contributes improvements to the modelling methods and evidence base for developing low-carbon policy measures and investment strategy. Techno-economic energy system models are integrated into investment appraisal frameworks to support policy and investment analysis. Beginning with a review of the literature on stranded assets; risks to gas infrastructure, subsequent impacts on energy markets and methods of measuring stranded assets, particularly the impacts of stranded assets on corporate debt, are highlighted as areas for further research. Consequently, gas infrastructure is analysed in two parts and at a national and European level. The first part questions whether there is a role for a gas network in a low carbon energy system by analysing its expected utilisation and subsequent tariffs. Next, both gas-fired power plants and gas transmission networks are evaluated based on their impacts on the harmonisation objectives of energy markets in Europe in 2030. Finally, the utilities operating this infrastructure are assessed under a novel investment framework. This framework measures the financial capacity that utilities have to transition to European net zero carbon targets, by proxy of their credit rating. Concluding that in all instances the financial risks arising from these fossil fuel infrastructures and climate policy targets could be mitigated if timely prudent management of these assets was pursued.