Auditing Section Research Summaries Space

A Database of Auditing Research - Building Bridges with Practice

This is a public Custom Hive  public

research summary

    The construction of calculative expertise: The integration...
    research summary posted July 21, 2015 by Jennifer M Mueller-Phillips, tagged 13.0 Governance, 14.0 Corporate Matters 
    77 Views
    Title:
    The construction of calculative expertise: The integration of corporate governance into investment analyses by sell-side financial analysts.
    Practical Implications:

    This paper has investigated how analysts become to be recognized as possessing expertise to operate in a new domain, namely, corporate governance integration. This expertise is not given, but gradually constructed. It is through the ensemble formed over time between certain ideas, discourses, aspirations, arguments, tools, and devices that this particular form of expertise has come to be developed. This way of conceptualizing the construction of professional expertise may inform the understanding of the rise of expertise in other fields of calculative practice. Empirically, this study has added new insights into shifts into a new role for corporate governance consideration in the thinking and practice of analysts. The paper may also serve as a starting point for investigation into further issues related to corporate governance integration performed by analysts or by other financial market participants.

    Citation:

    Tan, Z. S. 2014. The construction of calculative expertise: The integration of corporate governance into investment analyses by sell-side financial analysts. Accounting, Organizations & Society 39 (5): 362-384.

    Keywords:
    investment analyses, international economic integration, corporate governance
    Purpose of the Study:

    A number of high profile corporate governance failures occurred in the early 2000s, such as Enron, WorldCom, and Parmalat. This shook the global business landscape. Since then, corporate governance has been perceived as ‘an area of risk’ that may have material impacts on financial performance and shareholder value. Integrating corporate governance into the investment process has become an ideal to be sought within the investing public.

    This study analyzes an emerging form of economic calculation in financial markets, namely, the integration of corporate governance into investment analyses undertaken by sell-side financial analysts. It examines how the expertise of these analysts in corporate governance integration is constructed, with particular attention to the calculative ideas and calculative devices through which it is achieved. Corporate governance integration is shaped by certain ‘calculative ideas’. These relate to ideas about the potential link between corporate governance and financial performance and the ideal of incorporating governance criteria into the investment process.

    Design/Method/ Approach:

    To trace ideas and aspirations surrounding corporate governance integration, reports of asset management firms and networks formed between them, The UN Global Compact, and industry research organizations, and the financial press were analyzed. Similarly, for Section ‘Exploring corporate governance integration by analysts: pressure and credibility’, reports of the Chartered Financial Analyst Institute and other financial market participants were analyzed to examine how analysts were constructed discursively as having the imperative and credibility in performing corporate governance integration. This paper also draws on analyst reports as empirical material.

    Findings:

    This paper suggests that these calculative ideas have constituted the discursive conditions under which analysts sought to build their expertise in a new domain. The paper also shows that at a time when the quality of traditional sell side research was scrutinized, the investment professional association and constituents of the investing public, through their arguments and discourses, constructed analysts as the ‘specialists’ having the imperative and credibility to perform corporate governance integration. Furthermore, as the paper demonstrates, analysts have sought to ‘theorize’ calculative ideas. They have normatively deployed certain ‘calculative devices’ to make corporate governance integration operational. Corporate governance integration is conducted in ways that make it receptive to the claims of a particular form of expertise, that of analysts. This paper suggests that it is through the assemblage formed over time between the ideas and aspirations on the one hand, and the tools and devices on the other, that the expertise of analysts in corporate governance integration has gradually been formed.

    Category:
    Corporate Matters, Governance