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LUXURY HOSPITALITY IN
CROATIA 2004-2014: A CASE
STUDY MAISTRA – EVOLUTION
ANALYSIS OF CROATIAN LUXURY
TOURISM WI...
Joe Di Donna
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Volume X Number 4 2015

Journal of Strategic and

International Studies

EDITOR-IN-CHIEF
Dr. Carlo Bagnoli
Ca’ Foscari University of Venice, Venice, Italy

Academic Organization for Advancement of Strategic and International Studies™

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Journal of Strategic and International Studies

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TABLE OF CONTENTS
FAMILY FIRMS, ACCOUNTING CONSERVATISM, AND PRIVATE INFORMATION: EVIDENCE FROM JAPAN
Keiichi Kubota, Hitoshi Takehara 5
LUXURY HOSPITALITY IN CROATIA 2004-2014: A CASE STUDY MAISTRA –EVOLUTION ANALYSIS OF CROATIAN
LUXURY TOURISM WITH A SPECIFIC ATTENTION OF MAISTRA COMPANY PART OF THE ADRIS GROUP
Giuseppe Di Donna 22
IMPROVEMENT OF THE MANAGEMENT OF THE UNIVERSITIES IN BULGARIA

Mariana Kuzmanova 28
EXAMING MOTIVATION CONSTRUCT AMONG AMERICAN AND KOREAN VOLUNTEERS IN LPGA

TOURNAMENTS: DOES CULTURE MATTER?
Keunsu Han 35
IMPACT OF ONLINE SOCIAL NETWORKING ON ACADEMIC PERFORMANCE OF UE STUDENT- USERS

Angelito C. Descalzo 40
ENHANCING THESES RECORDING AND MONITORING USING A CUSTOMIZED DATABASE MANAGEMENT

SYSTEM (DBMS)
Eladio M. Avellanoza, Marah Joy A. Nanglegan, Marla A. Hernandez, Caroline A. Angeles 56

ISSN 2326-3636 Issued by the Library of the Congress of The United State of America, Washington, DC, USA
EDITOR-IN-CHIEF
Prof. Dr. Carlo Bagnoli

Ca’ Foscari University of Venice, Venice, ITALY
EDITORIAL BOARD MEMBERS
Vice President Dr. Valentino G. Baac, Emilio Aguinaldo College, Manila, PHILIPPINES
Dean Dr. Faridah Djellal, Lille1 University, Lille, FRANCE
Dean Dr. Ivan Manev, University of Maine, Orono, Maine, USA
Dean Dr. Sylvie Albert, University of Winnipeg, Winnipeg, Manitoba, CANADA
Dean Dr. Paula Rodrigues, Lusiada University, Porto, PORTUGAL
Dean Dr. Karen L. Shumway, University of North Texas, Dallas, Texas, USA
Dean (Assoc.) Dr. Jim Chen, Norfolk State University, Norkfolk, Virginia, USA
Dr. (Assoc.) Teodor Sedlarski, Sofia University, Sofia, BULGARIA
Dr. Dieter Flämig, President, INFRAWIND EURASIA & Professor, Technical University of Berlin, Berlin, GERMANY
Dr. Khalid Alkhathlan, Ministry of Education and & Professor, King Saud University, Riyadh, SAUDI ARABIA
Dr. Marco Taliento, University of Foggia, Foggia, ITALY
Dr. Erez Z. Shoshani, Ruppin Academic Center, Emeq Hefer, ISRAEL
Dr. Varghese P. George, University of Massachusetts-Boston, Boston, Massachusetts, USA
Dr. Cecilia Cheng, The University of Hong Kong, Hong Kong, CHINA
Dr. Tania Casado, University of São Paulo, São Paulo, BRAZIL
Dr. Chivonne T. Algeo, University of Technology Sydney, Sydney, AUSTRALIA
Dr. Charles Wankel, St. John’s University, New York, USA
Dr. William Rapp, New Jersey Institute of Technology, Newark, New Jersey, USA
Dr. Joana Pimentel Kuntz, University of Canterbury, Christchurch, NEW ZEALAND
Dr. Hui-Sung Kao, Feng Chia University, Taichung, TAIWAN
Dr. Mark M. Lennon, Pennsylvania State University, Pennsylvania, USA
Dr. Amy Yeo Chu May, Tungku Abdul Rahman (TAR) University College, Kuala Lumpur, MALAYSIA
Dr. David Wilemon, Syracuse University, New York, New York, USA
Dr. Ekaterina Prasolova-Forland, Norwegian University of Science and Technology, Trondheim, NORWAY
Dr. Stephanie Watts, Boston University School of Management, Boston, Massachusetts, USA
Dr. Agnes P. Ladia, Tarlac State University, Tarlac City, PHILIPPINES
Dr. Kamran Ahsan, Federal Urdu University of Arts, Science and Technology, Karachi, PAKISTAN
Dr. Javier Rojas, Executive Office of the President of Mexico, Mexico City, MEXICO
Dr. Arnold Schneider, Georgia Institute of Technology, Atlanta, Georgia, USA
Dr. Tina Loraas, Auburn University, Auburn, Alabama, USA
Dr. David Cawthorpe, University of Calgary, Calgary, Alberta, CANADA
Dr. Abdullah Basiouni, Ynabu Industrial College, Yanbu Industrial City, SAUDI ARABIA
Dr. Terry Power, Royal Roads University, Victoria, BC, CANADA
Dr. Sudhir Chawla, Gulf University of Science & Technology, Hawally, KUWAIT
Dr. Henrik Egbert, Anhalt University of Applied Sciences, Bernburg, GERMANY
Dr. Marcela Ganea, Artifex University of Bucharest, Bucharest, ROMANIA
Volume X Number 4 ISSN 2326-3636
FAMILY FIRMS, ACCOUNTING CONSERVATISM, AND PRIVATE INFORMATION:

EVIDENCE FROM JAPAN
Keiichi Kubota, Chuo University, Tokyo, Japan

Hitoshi Takehara, Waseda University, Tokyo, Japan
ABSTRACT
This paper identifies the disclosure quality of listed family firms in reporting their losses earlier and
investigates whether founding families and/or firm managers are concerned with reporting losses to
outside investors. We empirically test accounting conservatism utilizing Basu’s (1997) conditional
conservatism measure and extend this model by probability of information-based trading. The data used is
from listed Japanese family and non-family firms from 2004 to 2011. We find that family firms in Japan
adopt more conservative accounting reporting practices than non-family firms when disclosing earnings
and extraordinary losses, while the probability of information-based trading is higher. We claim that efforts
by management, in particular, professional managers, to resolve the degree of private information for the
benefit of non-family minority shareholders plays a role in adopting more conservative accounting choice
among family firms in Japan.
Keywords: Family Firms, Conservative Reporting, Probability of Information-based Trading
1. INTRODUCTION
Claessens et al. (2000) investigated ownership structure among East Asian corporations for the first time
and found that 13.1% of listed firms in Japan are controlled by families with a 10% shareholding cutoff
level of founding families, and 9.7% are controlled by families with a 20% cutoff level. Allouche et al.
(2008) investigated financial performance of Japanese family firms vs. non-family firms using financial
statement information, but did not investigate the quality of accounting disclosure per se.
For the tests in this paper we utilize not only Basu’s (1995 and 1997) conservatism regression model, but
also incorporate market microstructure variables. In related literature which previously investigated the
relationship between accounting conservatism and microstructure variables, LaFond and Watts (2008)
found a positive association between PIN measures (Easley et al., 2002) and accounting conservatism for
U.S. firms, claiming that conservatism is a response to information asymmetry of their traded stocks.
Following LaFond and Watts (2008), we investigate accounting conservatism, by which is meant to report
losses earlier and postpone uncertain revenue. The main objective of this paper is to explore the degrees
of observed accounting conservatism among family firms vs. non-family firms with Basu (1995 and 1997)
regression models. The degree of accounting conservatism, that is, the degree of disclosing bad news, is
expected to affect degrees of private information contained in traded stock, and thus the degree of
information asymmetry. We further extend Basu’s model to accommodate market microstructure variables
related to private information trades.
To proceed with testing we highlight differences in the types of family firms with regard to the two points
above. That is; we classify family firms into three types with respect to the shareholding percentage by
founding families and whether the company CEO is from the founding family or not. Because our sample is
limited to listed firms, the reasoning to establish our maintained hypotheses is as follows. First, because
equity stocks are held more by founding families, family firms may try to conceal bad news from minority
shareholders within the limit of GAAP required for firms listed on the Tokyo Stock Exchange. We call this a

5
less agency cost and/or altruism story (Schulze et al, 2001). On the other hand, managers and/or founders
may be more concerned with disclosing bad news earlier for the sake of outside minority stockholders.
They may incur higher agency cost from the inherent pressure of outside stockholders and potential future
investors (Jensen and Meckling, 1976, Ang et al., 2000, and Chua et al., 2003). Managers and founding
families may seek to reveal bad news earlier to maintain family reputation and company or brand names
(Gomes-Mejia et al., 2007, 2011). Such behavior in financial reporting, either conservative or not, will also
directly affect the degree of information asymmetry of traded stocks. For this latter inquiry we utilize
apparatus from market microstructure studies in finance research.
As a research methodology to test these assertions, for the former inquiry we use the Basu (1995 and
1997) measure, which is widely accepted in empirical accounting, and for the latter we use the probability
of information-based trading, PIN, as devised by Easley et al. (2002), which can be estimated using tick
data. The observation period is from 2004 to 2011 and the sample is all non-financial public firms, whose
total firm years including non-family firms (64%) amounts to 12,872.
The organization of the paper is as follows. Section 2 motivates the research objectives of the current
study and Section 3 presents a literature review. Section 4 gives an overview of the sample and Section 5
establishes hypotheses and introduces testing equations. Section 6 reports empirical results. Section 7
concludes.
2. MOTIVATION OF RESEARCH
Earnings quality is one of the major properties accounting reports ought to possess (Ronen and Yarri,
2008, and Francis et al. 2006). Under the GAAP of countries like the U.S. (Financial Accounting Standards
Board, 2010) and Japan (Accounting Standards Board of Japan, 2006), fair representations of financial
reports are expected. Also, international accounting standards of IFRS (2012) view that conservatism
harms faithful representation and lacks neutrality. Note that Japanese accounting standards (Accounting
Standards Board, 1982) and U.S. accounting standards (FASB, 1982 and 2004) still advocate the use of
lower-or-cost method in practice. Thus, even though most recent accounting standards try to eliminate the
concept of conservatism per se, accounting practices of conservative income measurement still seem to
be implemented, at least in Japan and the U.S.
In the accounting literature, Hendriksen and van Breda (1992) criticize accounting conservatism as
constraints of accounting measurement from three perspectives: 1) pessimism may lead to poor decision
making, 2) accountants are not necessarily in a better position to evaluate risk, and 3) unfavorable
reported items may turn out to be wrong. Ijiri and Nakano (1989) synthesize the reasoning behind the
existence of accounting conservatism by focusing on two points; 1) conservatism leads to more objective
measurement of past cash flows, and 2) conservatism leads to a disclosure of unusual events quickly and
usual events more slowly, which may have higher informational value. In this paper we will not argue the
pros and cons of accounting conservatism per se but empirically trace accounting disclosure decisions by
Japanese family firms and refrain from making any normative statements. For another consideration, the
threat of lawsuits may increase the tendency towards conservatism (Antle and Nalebuff, 1991), especially
after the Japanese version of Sarbanes and Oxley was enacted in 2006. In this environment,
management and auditors put emphasis on disclosure of bad news early.
The quality of earnings in financial reports reflects management decisions of reporting a firm’s financial
performance to current investors and outside stakeholders. In this paper we focus on whether accounting
conservatism (Basu, 1995 and 1997) and loss recognition are stronger among family than non-family firms
and we investigate financial reporting practices of both types of firms. At the same time we are also
concerned whether the probability of information-based trading and/or information asymmetry (Easley et
al., 2002) of family firm stocks is higher than that of non-family firms.

6
Among family firms, lower agency cost is expected on the one side (Jensen & Meckling, 1976, and
Chrisman et al., 2005) by a more congruent owner and manager relationship, and higher agency cost is
expected on the other side from outside stockholders and/or lenders to the firm. Ang et al. (2000) find for
small U.S. firms that agency costs are higher when outsiders become managers of family firms. Chua et
al. (2003) find evidence from a Canadian sample and point out the existence of family concerns against
non-family managers from the viewpoint of agency cost. For the former case of less agency cost,
managers do not choose to disclose bad news early in order to promptly face issues and try to find
measures for improving future performance. Moreover, if a CEO from a family or an executive manager
under the guardianship of founding families possess strong authority (Aghion and Tirole, 1997), they may
choose not to disclose bad information to non-family shareholders. In such a case, information asymmetry
of traded stocks will be higher. For the latter case of higher agency cost, firm managers, either from the
family or not, will seek to reveal bad news earlier. They may be serving as a steward for founding families,
who want to maintain the reputation of families and socioemotional wealth of firms (Gomes-Mejia et al.,
2007, 2011). This will reduce the degree of information asymmetry of traded stocks as well. LaFond and
Roychowdhury (2012) argue that managerial ownership in general is negatively related to accounting
conservatism. In our context, family firms with large shareholding and a founding family CEO (defined as
Type 1 in Section 4) belong to this category. However, we argue that the opposite can be true, the reason
being that our sample of listed firms and firm managers have to consider non-family stockholders in
addition to family stock owners (stated as Hypothesis 3 in Section 5).
Morck et al. (1988) find that the quality of firms as measured by Tobin’s q is a concave function of the
percentage of shares held by managers and show the entrenchment effect of managers is dependent
upon managerial ownership of firm stocks. That is, initially, efficiency improves when managers hold
stocks and there is an optimal point beyond which shareholdings by managers hamper firm performance.
In particular, when firm managers are from founding families, the implication from this study is two-fold:
whether agency cost comes from family manager ownership or from founding family ownership no matter if
the manager is from the family or not. By classifying types of family firms into three categories, we can
hopefully partially untangle these effects and answer this question.
We empirically investigate which of these two forces dominate in a family firm by empirically assessing the
relationship between reported income numbers, stock returns, and the PIN variable, a measure of private
information-based trades. We believe these are worthwhile empirical questions in view of the fact that
there is no study investigating accounting conservatism and the degree of private information of Japanese
family firms. Based on previous evidence about the usefulness of using the probability of
information-based trading called PIN (Easley et al., 2002) for Japanese data (Kubota and Takehara, 2009)
we hope to detect information asymmetry in relation to accounting conservatism (LaFond and Watts,
2010). In addition, we employ alternative market microstructure variables as proxy variables denoting bad
news. In related literature, Bagnoli and Watts (2005, p. 787) emphasize the role of managers’ tenure
versus the degree of private information owned by management in the context of accounting conservatism.
These aspects can be directly applied in a family business context, and in our test we can detect the
degree of disclosure of management’s private information by the use of the PIN variable. Our use of a
microstructure variable to detect degrees of private information for Japanese family firm data is a first in
the literature and is a new contribution.
3. PREVIOUS STUDIES ON FAMILY FIRMS AND INFORMATION ASYMMETRY
Salvato and Moores (2010) and Songini et al. (2013) conduct an extensive survey of accounting research
in the context of family firms. The research on accounting conservatism applied to family or private firms is
sparse except for Ball and Shivakumar (2005). If family firms are indeed long-term oriented (Miller and Le
Breton-Miller, 2005, Boyd, 2010), and can face immediate losses for the benefit of future improvement and
sustainability, we expect them to deal with incurred losses and bad news earlier than non-family firms.
Managers of family firms may try to inform pertinent stakeholders including non-family holders, which is

7
also an empirical question to be answered. In addition, recently the role of the third party, the auditor, has
been emphasized because of more stringent regulations like the 2002 U.S. Sarbanes-Oxley Act and the
2005 Japanese version of SOX in 2006. Basu (1995, Appendix) points out this aspect is important and
Antle and Nalebuff (1991) analyze the role of auditors in forming accounting conservatism by using
contract theory.
For evidence on earnings quality for family firms, Ali et al. (2007) report that family firms are more likely to
warn for a given magnitude of bad news using the earnings forecast release. They interpret this point as
evidence of less severe agency problems, leading to less opportunistic behavior on withholding bad
earnings forecast news. As we explain later, however, their way of constructing this hypothesis is different
from ours. On the other hand, for a sample of private firms in the U.K., Ball and Shivakumar (2005) find
that financial reporting is of lower quality using accounting accruals measures. Because more private firms
are expected to be family owned, their finding against accounting conservatism is evidence that U.K.
family firms may show lower accounting conservatism. Conversely, Beeks et al. (2004) investigated the
relationship between board composition, earnings quality, and accounting conservatism for U.K. firms, but
the sample does not include family firms. Note that these studies have not yet investigated accounting
conservatism for a listed family firm sample.
LaFond and Watts (2008) were the first to use the PIN variable in accounting conservatism for U.S. firms,
and found a positive association between it and PIN measures (Easley et al., 2002) and claim that
conservatism is a rational response to information asymmetry for traded stocks. Without using market
microstructure variables, Khan and Watts (2009) extended the original measure by Basu (1997) and
created the so-called C Score to measure the degree of accounting conservatism. They find that this
measure can predict future conservatism and higher firm-specific uncertainty and information asymmetry
are related to higher accounting conservatism with longer investment cycles. Our study is the second in
the market microstructure field, but the first using Japanese family business data. In order to test the
degree of family firm accounting conservatism, we use the measure used by Basu (1995) and extend it
using market microstructure variables.
For the probability of information-based trading and information asymmetry of family firm stocks, as far as
the authors are aware, Anderson et al. (2009) is the only study which investigated measures of information
asymmetry for a U.S. family firm sample. They investigate firm opacity and find that stocks of
heir-controlled firms have higher bid-ask spreads than founder-controlled family firms or non-family diffuse
shareholder firms. However, they only used bid-ask spread data, not the tick-based PIN measure which
we use here. Furthermore, Anderson et al. (2012) report that stocks of family-controlled firms experience
higher abnormal short sales, suggesting the existence of more privately informed trades for U.S. family
firms. This result is relevant for our study in order to construct our hypotheses and original testing models.
A priori we expect higher concentrations of family firm stocks will lead to a lower proportion of traded
floating stocks which may affect the degree of public and private information contained in those family
stocks. We believe an answer to this question, that is, how much private information (Bagnoli and Watts,
2005) is disseminated among family firms relative to public information, is an important one in its own
context. Conservative accounting reporting practices may be able to attenuate this information asymmetry
problem, or create an opportunity cost if bad information is wrong.
For earlier related literature using Japanese accounting data, Chung et al. (2004) investigates the
relationship between level of accruals and ownership structure, but does not focus on family ownership.
Ebihara et al. (2012) investigates the accruals quality of Japanese family firms using the absolute value of
abnormal accruals with modified Jones models, and find that the quality of earnings is higher for family
than non-family firms. Their measure, however, is limited and the observation period spans only three
years.
The arguments in previous studies seem to suggest that either family firms show higher accounting
conservatism because firms have less agency problems and/or altruism and show less conservatism, or

8
alternatively, by higher agency cost with respect to other stakeholders and outside investors. If the former
is the case, they are less concerned with disclosing bad news to non-family stockholders, and the
information asymmetry of traded stocks will be higher, or vice versa.
The next section gives an overview of the characteristics of family business data in Japan before we
establish hypotheses in Section 5, and then proceed with testing models and empirical results.
4. FAMILY FIRMS IN JAPAN AND BASIC FINDINGS
Data for the largest 30 stockholders and detailed descriptions of board members, including the CEO and
executive directors, from the Major Shareholders Database and Directors Database by Toyo Keizai Inc. is
the basic source for family firm data about listed firms on the first and second sections of the Tokyo Stock
Exchange. To further check the kinship of founding families, old company handbooks published by Toyo
Keizai and individual company histories were also used.
In Japan, the board and executive committee are almost identical except for one to three outside board
members. This is the most dominant form of corporate governance structure required by Japanese
corporate law. It is called the representative right of the company, and it literally means any contract signed
and supported by the board or executive committee possesses legal validity. Thus, managers who
possess a so-called representative status of the company have a decisive role in both the board and
executive committee. A U.S. style board and executive committee model is also allowed, but the number
of firms which employ this is very small. In our study, if one family member serves as the CEO, chairman,
or is on the executive board, we count the CEO dummy variable as value 1 and 0 otherwise. As to the
one-share one-vote requirement, this clause is still in existence in new corporate law, while other forms of
stocks can also be issued. However, there has been only one case of issuing stock with multiple votes
among listed firms in Japan at TSE Mothers in March, 2014 by CYBERDYNE Corp.
Type 1, more than 10 % shareholdings and CEO from family, Type 2, more than 10 % shareholdings, but
CEO is not from family, Type 3, less than 10 % shareholdings, but CEO is from the founding family. The
observation period is from 2007 through 2009. We did not include the sample for which the minimum days
of available trade (buy and sell order) data were less than 120 days to compute the annual PIN values.
TABLE 1. NUMBER OF THE SAMPLE
Type 1 Type 2 Type 3 Non-FB Total

2004 274 61 147 999 1,481
(PIN N.A.) 128 21 21 193 363
2005 312 65 159 1,033 1,569
(PIN N.A.) 93 16 21 156 286
2006 333 81 171 1,108 1,693
(PIN N.A.) 66 11 14 88 179
2007 363 81 173 1,090 1,707
(PIN N.A.) 63 12 16 89 180
2008 376 90 169 1,053 1,688
(PIN N.A.) 76 12 17 119 224
2009 363 90 164 1,011 1,628
(PIN N.A.) 92 16 20 124 252
2010 355 84 159 992 1,590
(PIN N.A.) 93 21 18 126 258
2011 319 84 145 968 1,516
(PIN N.A.) 85 17 19 135 256
Total 2,695 636 1,287 8,254 12,872
Family Business (%) 21.27 4.75 10.13 63.85 100.00

9
Table 1 lists the number of total observations for both family and non-family firms of our sample. The
observation period is 2004 through 2011. In the table we report total firm years by four categories of firms:
Type 1 (family owns more than 10% and CEO from the family), Type 2 (more than 10%, and CEO not from
family), Type 3 (less than 10% and CEO from family), and non-family firms. The total firm years (second
row from the bottom) are 2695, 636, 1287, and 8254, respectively. For each year the upper figures in each
row are a sample size for each category and the lower figures in each row with the title “PIN N.A.” are
cases for which a minimum of 120 days of daily buy and sell orders were not available or sufficient to
compute PIN variables and are not included in the sample. We find 36.15% of the total firm-years of our
sample classified as family firms of either Type 1, 2, or 3. Overall, we have 4,618 total firm-years of family
firms and 8,254 total firm-years of non-family firms.
Tick-by-tick quote and transaction data necessary to estimate the PIN are provided by Nikkei Media
Marketing. Table 2 reports descriptive statistics of relevant variables.
FFO: Percentage of shares held by founding family (in %), FSR: Floating stock ratio (in %), Directors: Percentage of
shares held by directors, Individuals: Percentage of shares held by individual investors, EPR: Earnings-to-price ratio
(in %), ROE: Return on equity (in %), ROA: Return on asset (in %), Ret: annual stock returns, DR: a dummy variable
which takes value 1 if the return is negative, PIN: Probability of information-based trading, lnMV, Natural logarithm of
market equity, TDTA, Total Debt to Total Assets (in %), CFOTA, Cash flow from operations to total assets (in%).
TABLE 2. DESCRIPTIVE STATISTICS
Type 1 p -value Type 2 p -value Type 3 p -value Non-FB

%FFO 31.725 0.000 23.647 0.000 3.919 0.000 0.478
FSR 45.640 0.000 48.689 0.000 59.374 0.000 51.047
Directors 20.079 0.000 7.481 0.000 2.690 0.000 1.258
Individuals 51.886 0.000 49.160 0.000 36.052 0.000 32.273
ROA 2.674 0.000 1.971 0.402 1.829 0.144 1.548
ROE 4.346 0.042 4.838 0.334 4.829 0.044 1.629
EPR -2.018 0.378 -3.785 0.154 0.470 0.231 -0.647
Ret 0.078 0.748 0.021 0.005 0.070 0.869 0.072
DR 0.524 0.011 0.549 0.011 0.482 0.333 0.496
PIN 0.201 0.000 0.198 0.000 0.181 0.004 0.187
lnMV 9.849 0.000 9.887 0.000 10.542 0.245 10.488
TDTA 45.444 0.000 42.867 0.000 52.258 0.000 55.737
CFOTA 6.272 0.000 5.292 0.993 5.498 0.421 5.287
Definitions of variables in Table 2 are as follows. %FFO is the percentage of shares held by the founding
family, FSR is the floating stock ratio, Directors, the shares held by directors, Domestic, shares held by
Japanese corporations, Foreign, shares held by foreign institutions, and Individuals, shares held by
individual investors. EPR is the earnings-to-price ratio, ROE is return on equity, ROA is return on total
assets, PIN is the probability of information-based trading. The PIN variable is the measure of information
asymmetry and liquidity computed from investors’ ordering behavior, and it is the measure between
non-family stockholders, because the family will not sell their stocks regularly. Thus, in our test of
conservatism using the PIN variable, we include it in addition to basic conservatism testing equations as a
first proxy variable for bad news. Finally, lnMV is a natural logarithm of market value of equity (in million
Yen), and BPR is the book-to-market ratio in percent.
From Table 2 we find the shares owned by directors and individuals (Directors and Individuals) are higher
for family firms, in particular, for Type 1 and Type 2 firms at 51.886% and 49.160%, respectively, while
floating stock ratios (FSR) are lower than Type 3 firms and non-family firms. Interestingly, the floating stock
ratio for Type 3 firms is higher than that for non-family firms. The p-values denote the significance of the
mean difference of three types of family versus non-family firms, and we find that these differences are all
significant except for Foreign for Type 2 firms. Overall, directors own more stocks than non-family firms,

10
and more so for Type 1 and Type 2 firms. We also find that shares of family firms are owned more by
individuals.
For earnings related variables, in the case of return on assets (ROA), Type 1 firms have the highest at
2.674%. For return on equity (ROE), it is the highest for Type 2 at 4.838%, the second highest for Type 3
at 4.829%, and then 4.346% for Type 1. ROE of non-family firms are much lower at 1.729%, but the
differences are significant only for Types 1 and 3. For earnings to price ratios (EPR) for Type 1 and Type
2 firms as well as non-family firms, they show negative numbers because losing firms have low stock
prices and the mean is affected by these extreme observations.
For annual stock returns (Ret), Type 1 firms are the highest at 7.8% per annum, but the difference is not
significant. Type 3 firms are the second highest and the difference is not significant. The mean values for
the dummy variable for negative return (DR) thus take values of larger than 0.5 for Type 1 and Type 2
firms. As for PIN, it is higher for Type 1 and Type 2 firms, while non-family firms show a higher PIN than
Type 3 firms.
Finally, for candidates of control variables to be used in later regressions, we find that Type 1 and 2 firms
are significantly smaller in size (lnMV) at 9.849 and 9.887, respectively. The leverage ratio measured in
book value (TDTA) is the lowest at 42.867% for Type 2 and the difference is significant. The other two
types of family firms also have lower leverage ratios and the differences are significant. Hence, we find
family firms in Japan are less leveraged. Finally, operating cash flow divided by total assets (CFOTA) is
the highest for Type 1 and the difference is significant. These variables were chosen to control for size for
firm market position differences, the leverage for financial risk differences, and cash flow for profitability
and growth differences. We also use seven sector dummy variables and year dummy variables.
In Table 3 we report the correlation of the selected variable of our interest. The upper right off-diagonal
elements are Pearson correlations and the lower left off-diagonal elements are Spearman rank
correlations.
TABLE 3. CORRELATION AMONG VARIABLES
%FFO EPR Ret DR PIN lnMV TDTA CFOTA

%FFO 1.00 0.05 0.00 0.04 0.10 -0.18 -0.20 0.04
ROA 0.10 1.00 0.15 -0.14 -0.12 0.26 -0.19 0.45
Ret -0.04 0.21 1.00 -0.54 0.12 0.09 0.04 0.11
DR 0.03 -0.19 -0.87 1.00 -0.07 -0.15 -0.02 -0.10
PIN 0.12 -0.13 0.08 -0.07 1.00 -0.53 0.04 -0.09
lnMV -0.18 0.29 0.18 -0.15 -0.62 1.00 -0.04 0.18
TDTA -0.24 -0.34 0.02 -0.02 0.04 -0.05 1.00 -0.14
CFOTA 0.04 0.49 0.15 -0.13 -0.14 0.24 -0.22 1.00
Definitions of the variables are the same as in Table 2. Pearson moment correlations are in the upper-right
triangular matrix and Spearman rank correlations are in the lower-left triangular matrix.
We confirm that the percentage of shares held by founding families (%FFO) and PIN are positively
correlated at 0.12. More importantly, in order to conduct multiple regressions, we find that the size and PIN
are highly correlated at -0.62. Liquidity and information asymmetry variables should be strongly related to
firm size (Easley et al., 2002). This raises concern to use the size variable, lnMV, directly as a control
variable because we use PIN as components of independent variables. Thus, to avoid this multicollinearity
problem, we use for proxy a dummy variable of whether the firms’ stocks are listed on the first section
(takes value 0) or the second section of the Tokyo Stock Exchange (takes value 1). The requirement of
listing for market value is 12 times larger for the first section firms than second section firms and the
requirement for the number of shareholders is 3 times larger for the former and it should work as a divisor

11
variable of firm size. We find the average value of this dummy variable is 0.377 for Type 1, 0.401 for Type
2, 0.175 for Type 3, and 0.255 for non-family firms, respectively. So, for the second section, Type 2 firms
have the highest proportion of listings, and Type 3 has the lowest, even lower than non-family firms. The
result shows the high product market positioning of Type 3 firms because more firms are listed on the first
section.
5. HYPOTHESIS
We expect the two forces of agency costs (less cost vs. high) may work the other way, and the consequent
disclosure quality in terms of accounting conservatism and degree of private information will be affected. In
view of this we establish three hypotheses.
The first hypothesis is related to agency cost of family firms between family shareholders and
management, depending whether it is high or not. If agency cost is lower between family shareholders and
management, a firm does not have to and will not adopt conservative accounting as proposed in
Hypothesis 1-a, and an alternative hypothesis for this is Hypothesis 1-b. For the latter, firm managers,
either from the family or professiona. ls, find their stewardship duty important to outside stockholders other
than family owners (note our sample is listed firms), even though agency cost with owners is low. They try
to disclose bad news earlier to reduce agency cost between managers and outside stockholders
(Chrisman et al., 2007). Furthermore, managers from a founding family may think it is important to
maintain family reputation and family socioemotional wealth by promptly disclosing bad news to minimize
harm.
The second hypothesis is related to the role of professional managers (Type 2 family firms). The question
is whether they are concerned more with their own reputation in relation to owner and outside minority
shareholders than family managers. This leads to establishment of Hypotheses 2-a and Hypothesis 2-b.
The third hypothesis is related to improvement or concern for information asymmetry of stocks, which will
reflect the behavior of managers in accordance with Hypothesis 1-b, and Hypothesis 2 in the case of the
CEO from outside the family. The important point is that, because our sample is public firms listed on the
Tokyo Stock Exchange, management may be concerned with the trading status of their stock and its stock
price. Accordingly, if managers of family firms think that timely disclosure of bad news helps reduce the
degree of private information and thus information asymmetry, they may adopt conservative reporting of
bad news, and try to convey it to non-family stockholders. In this way, in the last hypothesis we focus on
the effect of private information-based trades upon the choice of accounting disclosure policies with Basu’s
regression model. In other words, family firms may conduct efforts to increase the level of disclosure by
taking a conservative approach to disclose bad news, but not good news. This leads to Hypothesis 3.
We establish three hypotheses below. First, if family firms have lower agency cost and family managers or
professional managers as agents possess stronger altruism for the family, Hypothesis 1-a will be
supported (Ball and Shivakumar, 2005).
Hypothesis 1-a. Family firms adopt less conservative accounting reporting practices than non-family
firms.
Even if managers have less agency cost to founding families, when they find a higher agency cost from
outside stockholders and feel a strong stewardship to maintain family reputations, Hypothesis 1-b will be
supported (Basu, 1997).
Hypothesis 1-b. Family firms adopt more conservative accounting reporting practices than
non-family firms

12
As an additional hypothesis related to 1-b, we want to empirically investigate the role of professional
managers vs. family managers (Type 2 firms vs. Type 1 and 3) and try to find whether they are concerned
with their own reputation as professional managers, as well as stockholders outside of the family (Ang et
al., 2000, and Chua et al., 2003).
Hypothesis 2-a. Family firms with incumbent professional managers adopt more conservative
accounting reporting practices than other types of family firms and non-family firms.
The Hypothesis 2-a is focusing on the role of professional managers and the following Hypothesis 2-b is
focusing on one of family managers. Note even if Hypothesis 2-a is supported the Hypothesis 2-b may
hold because the comparisons are done to the aggregate of non-family firms and family firms without
family CEO and the sample universe is different although the intersection is not null.
Hypothesis 2-b. Family firms with family managers adopt more conservative accounting reporting
practices than non-family firms and family firms whose CEO is not from the family.
Note that our sample is listed firms, which also may contrast with the argument and results by Ball and
Shivakumar (2005) using a private U.K. firm sample. Thus, in this paper we establish Hypothesis 3,
arguing that firms try to adopt conservative reporting for the sake of non-family shareholders and outside
lenders in addition to the accounting format required by corporate law and stock exchange regulation. That
is, firm managers, either from the family or professionals, may try to help reduce the probability of
information-based trading for the sake of minor stockholders outside of the family. Such behavior will
decrease the cost of equity and WACC, which is outside the scope of this paper (Easley and O’Hara,
2005).
Hypothesis 3. The larger the degree of private information-based trades of family firm stocks, the
higher the accounting conservatism
Given these three hypotheses, in Section 5 we use our sample of listed family firms on stock exchanges in
Japan and conduct cross section regression tests. The regression equations used are as follows. Using
the Basu (1997) measure as our benchmark as in (1), we also extend this model to incorporate bad news
using the PIN variable from Easley et al. (2002) as in (2).
First, equation (1) and (2) are tested and definitions of the variables are as follows: Xit is an earnings
number denominated by the beginning March end book value of total assets, TAit-1, DRit is a dummy
variable, which takes the value 1 if the stock return Rit is negative, TDTAit is the total debt to total assets,
NOTSE1it is the dummy variable which takes value 0 if the stock is listed on the first section of the Tokyo
Stock Exchange, and CFOTAit is the cash flows to total assets. The last three variables are used as control
variables. DSectorik is the sector dummy variable, where sector classification schemes are based on
Kubota and Takehara (2007) as listed in Appendix B, DYearit is a yearly dummy variable, and ε it . is the
residual term.
We used the beginning book value of total assets as a divisor for the dependent variable, unlike Basu
(1995 and 1997) who uses the stock price. One reason is that Patatoukas and Thomas (2009, 2010) point
out empirical irregularities triggered by the relationship between EPR and stock returns irrespective of the
existence of accounting conservatism. We also detect possible simultaneity problems inherent in standard
Basu (1997) regressions. These are the two reasons why we decide to report the case when we use total
assets as a divisor, although we computed both cases. Results using market value of equity are similar
and available upon request from the authors. However, note that further defense of the original Basu
measure is conducted by Ball et al. (2012).

13
X it / TAit −1 = α 0 + α1DRit + β0 Rit + β1(Rit × DRit ) + γ 1TDTAit + γ 2NOTSE1it + γ 3CFOTAit

6 2011
(1)
+ ∑δ
k =2
k −1DSectorik + ∑η
t =2005
t −2004 DYearit + ε it .
In equation (2), in addition to (1), we add the PIN variable inferring that Basu conditional conservatism test
equations may have omitted variable problems (Patatoukas and Thomas, 2009 and 2010). In (2) FFO is
the percentage of shares owned by the founding family, and PIN is the probability of information-based
trading as devised by Easley et al. (2002). First we introduce the additional cross term of (Rit×DRit×FFOit)
to account for the effects of shareholdings by founding families. Second, because the PIN variable
measures information asymmetry and illiquidity of traded stocks, it will complement the explanatory
variable of (Rit×DRit) and Hypothesis 3 will be tested with this framework at the same time.
X it / TAit −1 = α 0 + α1DRit + β0 Rit + β1(Rit × DRit ) + β2 (Rit × DRit × FFOit )

+ β3 (Rit × DRit × PIN it ) + γ 1TDTAit + γ 2 NOTSE 1it + γ 3CFOTAit (2)
6 2011
+ ∑δ
k =2
DSectorik +
k −1 ∑η
t =2005
t −2004 DYear it + ε it .
In the two equations above, if firm managers adopt more conservative reporting strategies, the
sensitivity of earnings to bad news should be higher. In other words, the slope coefficient β0 without
dummy plus β1 which corresponds to the case when bad news has occurred should be steeper than
when there is no bad news; i.e., β0+β1>β0 (Basu, 1997). Because we also added a second
interactive term β2, an interactive family share ownership variable, and an interactive term β3 with the
information asymmetry variable, PIN (Easley et al., 2002) for (2), we can enforce the possible impact
of bad news in equation (2), which has never been done in family business research nor in the
accounting literature. This is a pioneering model proposed here.
6. EMPIRICAL RESULTS
6.1. Standard Basu Equation
Table 4 reports the results from cross section regressions of the basic Basu equation [equation (1) above]
with only the first three variables and sector and year dummies used as independent variables. The
dependent variable is the net income divided by total assets for Panel A, extraordinary income for Panel B,
and extraordinary loss for Panel C. The latter two variables are also denominated by the beginning book
value of total assets.
Dependent Variable is the earnings denominated by the beginning of the period total assets. Ret: Annual stock return
(from July of year t-1 to June of year t), DR: Dummy variable which is equal to 1 if Ret<0, FFO: Percentage of shares
held by founding family, PIN: Probability of information-based trading.

14
TABLE 4. RESULTS OF REGRESSION ANALYSIS
Panel A. Dependent Variable: Net Income

2
Intercept Ret DR DR×Ret Adjusted R
Coef. 0.032 0.012 -0.002 0.021 0.285
Type 1
p -value 0.000 0.001 0.502 0.071
Coef. 0.036 0.014 -0.006 0.057 0.314
Type 2
p-value 0.000 0.085 0.285 0.009
Coef. 0.019 0.013 0.003 0.017 0.354
Type3
p -value 0.002 0.003 0.325 0.318
Coef. 0.030 0.016 -0.002 0.009 0.259
Non-FB
p -value 0.000 0.000 0.209 0.166
Panel B. Dependent Variable: Extraordinary Income

2
Coef. 0.003 -0.001 -0.002 -0.009 0.045
Type 1
p -value 0.004 0.498 0.010 0.002
Coef. 0.003 0.000 0.000 -0.003 0.016
Type 2
p -value 0.036 0.955 0.752 0.498
Coef. 0.003 -0.001 0.001 0.000 0.041
Type3
p -value 0.034 0.755 0.308 0.939
Coef. 0.005 0.001 0.000 -0.003 0.045
Non-FB
p -value 0.000 0.520 0.682 0.072
Panel C. Dependent Variable: Extraordinary Loss

2
Coef. 0.009 0.000 -0.001 -0.019 0.056
Type 1
p -value 0.000 0.933 0.328 0.000
Coef. 0.004 -0.001 0.003 -0.027 0.116
Type 2
p -value 0.333 0.804 0.383 0.016
Coef. 0.009 0.001 0.000 -0.018 0.045
Type3
p -value 0.001 0.587 0.907 0.027
Coef. 0.009 0.001 0.000 -0.018 0.059
Non-FB
p -value 0.000 0.432 0.583 0.000
In each panel, results are presented separately for Type 1 firms (Panel A), Type 2 (Panel B), Type 3
(Panel C), and non-family firms (Panel D) from the top to bottom rows in each panel. For net income
shown in Panel A, we find that the coefficient for additional conservatism, DR×Ret, is all positive.
Estimated slope coefficients for conservative income measurement, (β0+β1) in equation (1), responding to
negative returns, are, from the top to bottom row of this panel, 0.033 (=0.012+0.021) for Type 1, 0.071
(=0.014+0.054 and so forth) for Type 2, 0.030 for Type 3, and 0.025 for non-family firms. Accounting
conservatism is stronger for family firms in descending order for Type 2, 1, and 3 firms, and larger than
non-family firms. We find the degree (slope coefficients) of loss recognition from negative return is the
strongest for Type 2 firms; that is, the type of firms where non-family managers are incumbent and the
percentage of shareholding by founding families is more than 10%. For Type 1 and 3 firms it is marginal,
but more conservative than non-family firms.
For robustness check we conducted tests of the hypothesis for the equality of β1s using ANOVA for the
differences in four family types vs. non family firm type, 10% shareholdings cut off rate, and the CEO
dummy, and they were all rejected at a 5% significance level. Hence, we conclude for Type 2 firms both
Hypothesis 1-b and Hypothesis 2-a are supported, while for Type 1 and 3 firms, Hypothesis 1-b and
Hypothesis 2-b is supported. For firms with CEOs from founding families, it seems altruism and less
agency cost tend to reduce the degree of conservatism compared to Type 2 firms where professional

15
managers are non-family. The lower agency cost between professional managers and owners might play
a role, especially when we compare the result with non-family firms where the conservatism slope
coefficient is only 0.025 relative to 0.071 of Type 2 firms.
Moreover, if we highlight the relative size of coefficients on negative and positive returns, (β0+β1)/β0 as in
Basu (1997), the numbers from the top to bottom panel are 2.75(=(0.012+0.021) /0.012), 5.07, 2.31, and
1.56, respectively. We again find that family firms are the most conservative and more so than non-family
firms. Even with these relative ratio comparisons, Hypothesis 1-b and Hypotheses 2-a and 2-b are
supported.
Our interpretation is that family firm professional managers are more concerned with family reputation as
well as outside minority shareholders than are non-family firm agents, and family firms with family CEOs to
a lesser extent. Overall, for our sample of listed family firms in Japan, we find some evidence to resolve
concerns raised by Ang et al. (2000) and Chua et al. (2003).
In the case of extraordinary income shown in Panel B, the results are not as strong and we find estimated
coefficients for DR×Ret are even negative or zero. Thus, both family and non-family firm management in
Japan is not concerned with recognizing and disclosing extraordinary income when returns are bad.
In the case of extraordinary losses, predicted sign conditions should be negative because we measure
losses as positive numbers and find that coefficients for DR×Ret are indeed negative and even significant
for all family firms. The values for (β0+β1) are -0.019 (=0.000-0.019) for Type 1, -0.028 for Type 2, -0.017
for Type 3, and -0.017 for non-family firms. Again, the most conservative among family firms is Type 2
firms, and it supports Hypothesis 1-b and 2, but other types of family firms are almost indistinguishable
from non-family firms. Because these items are non-recurring in nature, (Hendriksen, 1970, Ch. 5), we
believe this is an important finding about financial reporting practices among Japanese family and
non-family firms. Not only should we focus primarily on net income, but also pay close attention to
reporting of extraordinary loss items (Shrand and Walther, 2000).
6.2. Extended Model Results
In Table 5 we add two other explanatory dummy variables as shown in equation (2). These are shares
owned by the founding family, whose coefficient is β2, as well as a microstructure variable PIN, whose
coefficient is β3 in equation (2). The share variable is intended to test Hypothesis 3. In this case we find
original additional conservatism coefficients β1 from negative returns become insignificant for all panels for
earnings, extraordinary income, and extraordinary losses, except for non-family firm earnings with the
wrong sign with a coefficient -0.020.
For the net income case of Panel A, β2 coefficients (the coefficient on Rit×DRit×FFOit) which denote the
effect of family shareholdings, are close to zero and not significant at 5% except for non-family firms with a
p-value of 0.014. It is a little counterintuitive, but overall the effect of shareholding is nil. On the other hand,
we find β3 coefficients (the coefficient on Rit×DRit×PINit which denote the reaction to a degree of private
information trade, PIN, are all positive and significant for Type 1 and non-family firms. The coefficient β3 is
again the largest for Type 2 firms at 0.293.
In these extended regressions, the Basu coefficient β1 on Rit×DRit loses significance and becomes
negative, while the microstructure variable PIN takes up the role instead. Thus, we interpret that the
probability of information-based trading can well serve as a substitute variable for the original Basu bad
news variable. If we add coefficients of β0, β1, β2 and β3, as in equation (1), they are 0.359
(=0.012-0.010-0.001+0.250), 0.269, 0.126, 0.241 for each type, respectively. In this case, Type 1 shows
the highest conservatism followed by Type 2. However, because the coefficients in these regressions are
not significant except for the PIN variable for Type 1 and non-family firms, we do not conclude from this
model. Overall, the evidence supports Hypothesis 1-b for Type 1 firms and Hypothesis 2-a for Type 2
firms and Hypothesis 2-b for the aggregate of Type 1 and Type 2 firms.

16
Because PIN also measures the degree of private information trade and information asymmetry, the fact
that the coefficients of β3 are positive and larger than the coefficients of β0 for the Ret variable
demonstrates that the degree of private information trade is positively related to accounting conservatism
of all firms, particularly Type 1 and 2 firms. The coefficient is the largest for Type 2, and is an indication to
support Hypothesis 2-a. The overall positive coefficient demonstrates Hypothesis 3 unanimously holds for
all type of firms. The results reveal the general tendency of management in exercising efforts to reduce
information asymmetry of their stocks. That is, whenever the PIN is higher and information asymmetry is
serious, managers of all types of firms adopt a more conservative accounting strategy to attenuate the
information asymmetry problem, whose tendency is the strongest for Type 2 firms. Overall these results
are also consistent with the findings for U.S. firms by LaFond and Watts (2008).
For extraordinary income, the results are again not strong and the coefficients are close to zero. Although
the coefficients related to family shares owned, FFO, are positive and significant for Type 1 firms and
non-family firms, the estimated coefficient is close to zero and the effects will be very small. It seems that
family firm managers care less about recognizing extraordinary income early.
For extraordinary losses we find β3 coefficients (the coefficient on Rit×DRit×PINit) for the PIN and β2 (the
coefficient on Rit×DRit×FFOit) for family shareholdings are small. β3 coefficients are negative as predicted
except for Type 1 firms, but these are not significant. The original Basu coefficient β1 on (Rit×DRit) is
negative as predicted, and it shows the robustness of Basu’s coefficient even in this extended model.
While these small coefficients are insignificant, we cannot conclude from this extended model result for
extraordinary losses.
In interpreting our results so far we note that Ball and Shivakumar’s (2005) results for U.K. private firms are
opposed to ours in the sense that family firms show less conservatism in their accounting disclosure. Our
sample is only limited to listed firms, in which firm managers have to consider the quality of disclosure to
non-family shareholders and outside lenders. We infer that this may be the reason why our sample of
family firms showed more conservatism. Also, because firm owners may be more concerned with
long-term sustainability of socioemotional wealth and family reputation (Gomez-Mejia et al. 2007,
Gomez-Mejia et al.2011, and Berrone et al. 2010), family and non-family managers may want to reveal
bad news earlier.
Dependent Variable is the earnings denominated by the beginning of the period total assets. Ret: Annual stock return
(from July of year t-1 to June of year t), DR: Dummy variable which is equal to 1 if Ret<0, FFO: Percentage of shares
held by founding family, PIN: Probability of information-based trading.
TABLE 5. THE EXTENDED MODEL
Panel A. Dependent Variable: Net Income

Intercept Ret DR DR×Ret DR×Ret×FFO DR×RET×PIN Adjusted R 2
Coef. 0.031 0.012 -0.002 -0.010 -0.001 0.250 0.288
Type 1
p -value 0.000 0.001 0.463 0.711 0.210 0.020
Coef. 0.035 0.014 -0.006 -0.039 0.001 0.293 0.321
Type 2
p-value 0.000 0.090 0.240 0.439 0.138 0.167
Coef. 0.019 0.013 0.003 -0.013 0.002 0.124 0.355
Type3
p -value 0.002 0.003 0.339 0.658 0.530 0.260
Coef. 0.030 0.016 -0.002 -0.045 0.006 0.264 0.266
Non-FB
p -value 0.000 0.000 0.115 0.000 0.014 0.000

17
Panel B. Dependent Variable: Etraordinary Income

Intercept Ret DR DR*Ret DR×Ret×FFO DR×RET×PIN Adjusted R 2
Coef. 0.003 -0.001 -0.002 -0.002 0.000 0.009 0.049
Type 1
p -value 0.004 0.500 0.012 0.796 0.011 0.777
Coef. 0.003 0.000 0.000 -0.003 0.000 0.024 0.014
Type 2
p -value 0.040 0.975 0.752 0.736 0.382 0.572
Coef. 0.003 -0.001 0.001 -0.002 -0.002 0.048 0.046
Type3
p -value 0.047 0.712 0.321 0.765 0.028 0.087
Coef. 0.005 0.001 0.000 -0.004 0.001 0.001 0.045
Non-FB
p -value 0.000 0.513 0.707 0.163 0.001 0.919
Panel C. Dependent Variable: Extraordinary Loss

Intercept Ret DR DR*Ret DR×Ret×FFO DR×RET×PIN Adjusted R 2
Coef. 0.009 0.000 -0.001 -0.029 0.000 0.007 0.056
Type 1
p -value 0.000 0.945 0.291 0.016 0.179 0.891
Coef. 0.004 -0.001 0.003 -0.010 0.000 -0.021 0.115
Type 2
p -value 0.327 0.808 0.365 0.705 0.296 0.829
Coef. 0.009 0.001 0.000 -0.003 -0.001 -0.076 0.047
Type3
p -value 0.001 0.567 0.917 0.866 0.687 0.337
Coef. 0.009 0.001 0.001 -0.003 -0.001 -0.076 0.060
Non-FB
p -value 0.000 0.411 0.491 0.588 0.464 0.007
7. CONCLUSION
Our empirical results reveal that Japanese family firms adopt more conservative accounting reporting than
non-family firms, while the degree of information asymmetry of family firm traded stocks is higher than that
of non-family firms. The effort to reduce this degree is related to accounting conservatism by type of family
firm. Because family or professional managers as stewards may be more concerned with family reputation
and sustainability of socioemotional wealth (Gomez-Mejia et al. 2007, Gomez-Mejia et al.2011, and
Berrone et al. 2010), we infer that family firm managers are encouraged to disclose bad news earlier.
We find little evidence that family shareholding is related to a positive degree of conservatism. Moreover,
we find that the degree of private information is higher for family than non-family firms. We conclude that
efforts of family firm management, either by the family or by professionals, to resolve the degree of private
information for the benefit of non-family minority shareholders leads them to more conservative accounting
choices. This finding is consistent with LaFond and Watts (2010) for U.S. firms. We also find the tendency
is stronger among professional managers whose main role is a steward to founding families.
As a policy implication we recommend family firms maintain current conservative accounting practices and
exert more efforts to reduce the degree of private information trades by increased voluntary disclosure
since those firms have less floating stocks actively traded in the market.
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AUTHOR PROFILE
Dr. Keiichi Kubota (Ph. D., Osaka University) is a Professor of Finance at Graduate School of Strategic
Management, Chuo University, Japan and Professor Emeritus at Musashi University, Japan. His areas of
research include corporate finance, asset pricing, family firm research, corporate taxation, and accounting
disclosure. He has published four books in Japan, and one book is forthcoming from Palgrave-Macmillan
in 2015. His research appeared in professional journals such as International Journal of Accounting,
Journal of Business, Finanz Archiv, International Review of Finance, and Journal of International Financial
Management & Accounting, among others.
Dr. Hitoshi Takehara (Ph.D., University of Tsukuba) is a Professor of Finance at Graduate School of
Finance, Accounting and Law, Waseda University, Japan. His research interests are empirical studies on
asset pricing models, portfolio management, and equity valuation. He has published a few books and his
research appeared in academic journals including Annals of Operations Research, Journal of Business,
Pacific Basin Finance Journal, Management Science, etc.

21
LUXURY HOSPITALITY IN CROATIA 2004-2014: A CASE STUDY MAISTRA –

EVOLUTION ANALYSIS OF CROATIAN LUXURY TOURISM WITH A SPECIFIC
ATTENTION OF MAISTRA COMPANY PART OF THE ADRIS GROUP
Giuseppe Di Donna, University of Lausanne, Lausanne, Switzerland
ABSTRACT
The objective of this article is to analyse the evolution of the Croatian tourism and the implementation of
new luxury hotels and resorts in that territory. This paper points out also the history and the development
strategy of the hospitality brand Maistra part of the Adris Group.
This research has been done according with an accredited academic methodology, the knowledge of
touristic data from the Croatian Ministry of Tourism, the Istra Tourist Board, and Maistra-Adris
documentation. The approach of this paper will be focused more on the developing marketing strategy of
Croatian luxury hospitality more than a simple touristic approach. The aim is to show how a touristic
country like Croatia has been moved from a low cost image to an image of “experience”, in same cases of
luxury.
Keywords: luxury, hospitality, tourism, hotels, Croatia, Istra
1. INTRODUCTION
The tourism in Croatia is the most important revenue for this country that now is member of the European
Community. During the last years the number of tourists in Croatia has continued to grow, but the new
strategy is to improve the quality of the touristic offer with four and five star hotels. The aim is changing,
step by step, the image of economic touristic country in the direction of a country in which you can try new
experiences.
2. OBJECTIVE
Objective of the research is to demonstrate, with some data and academic evidence that the process of
transformation related to the hospitality industry in Croatia is now a reality.
3. METHODOLOGY
The methodology is related to the Creswell, J.W. approach (Creswell, J.W. 2008). I can consider this a
research on secondary data, but at the moment doesn’t exist any academic research on this topic on the
marketing point of view. The documents that I have analyzed are: historical records, company/organization
records, statistical data, and researcher observation on site.
The aim of this research is: to analyze the transformation of the Croatian tourism from an economic
touristic offer to one more articulated from the point of view of the experience. So, now the Croatian
tourism is less economic, and more emotional.

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4. LITERATURE REVIEW
The history of the Croatian tourism was quite elegant during the nineteenth century; I am speaking
moreover about the Dalmatia. During that period Dalmatia was part of Italian territory and there were
strong influences from Venetian architecture. Some examples are Abbazia (Opatija), Parenzo (Porec),
Rovigno (Rovinji), Lussino (Losinji), Brioni islands (Brijun), Ragusa (Dubrovnik), etc.
In 1943, Dalmatia became part of Yugoslavia and Tito started to improve tourism, but with a Communist
approach, so it was a popular tourism for the population of Yugoslavia. In 1991, Croatia became
independent under the name of Republika Hrvatska and started to improve the tourism from a different
point of view.
Ragusa (Dubrovnik) became immediately the most important touristic destination of Croatia. This place is
also part of UNESCO worldwide site, and some four and five star hotels started their activities here. At the
moment Dubrovnik, called Dubra by all the tourists has 14 five star hotels and 9 four star hotels.
But there is another touristic area that improves a lot: Istra. At the moment in Istra there are 4 five star hotel
and 45 four star hotels. Two of the five star hotels are owned by the touristic company Maistra, part of the
Adris group. Istra is Croatia’s undisputed tourist capital (Palin M., 2010).
5. SOME DATA ABOUT TOURISM IN CROATIA
According to the Central Bureau of statistics of the Croatian Ministry of Tourism (Central Bureau of
statistics 2014) there are many data that confirm the evolution of Croatian tourism.
Croatia is a country with:

• 88,073 Km2 ,
• 4, 28 mln of inhabitants
• 6,278 km length of coast
• 1,244 number of islands (Central Bureau of statistics 2014).
• In Croatia there are seven world tangible cultural and natural heritages protected by UNESCO
(Central Bureau of statistics 2014).
• The number of tourists (in 000) has increased considerably in these years:
• 7,929 (in 000) in 1980
• 10,604 (in 000) in 2010 (Central Bureau of statistics 2014).
• And also the number of four and five star hotels has increased a lot:
• 31 – five star in 2013 (30 in 2012)
• 202 – four star in 2013 (190 in 2012) (Central Bureau of statistics 2014).
• On the contrary the number of 2 star (budget hotel) continues to decrease.
• This is a clear sign of a push to improve the level of offer and the level of tourists, from the
economic point of view. In this situation Istra is the county of Croatia with the largest number of
beds (249.861) (Central Bureau of statistics 2014), and a clear progression respect the precedent
years. Beside this, there is also the number of foreign tourists that it’s in a strong progression:
• 4,007 (in 000) in 1980
• 9,111 (in 000) in 2010 (Central Bureau of statistics 2014).
• Speaking about the most important markets for Croatia, also if the Germans and Austrians are the
main markets (19,707.000 and 4,420.000 on 2010) (Central Bureau of statistics 2014), the number
of Italians doubled in 30 years, and also there is a big increase of Dutch and French tourists. But
the most interesting data is the area of “others”, increased 6 times since 1980! The conclusion is

23
that Croatia is opening a more international tourist markets, not only the tourism of neighbor
countries.
• Also if Dubrovnik remains the most important touristic city, Rovinj, where Maistra is located, is the
second touristic city for number of tourists (440.000 on 2013) (Central Bureau of statistics 2014).
• Others interesting data that can support the thesis of the improvement are:
• Number of vessels in marinas (196,656 on 2013) in continue increasing also respect 2012
(188,332) (Central Bureau of statistics 2014).
• Number of cruises of foreign vessels (823 on 2013) in continue progression also respect 2012
(802) (Central Bureau of statistics 2014).
• And the last data refers to the travel related revenues, 7,188.4 GDP (in mil. EUR) on 2013. Again
in continue progression also on 2012 (6,843.3).
Also about marinas and cruising (i.e. yacht tourism) Croatia is developing a lot. For those who prefer the
comfort of marinas, these are well spaced along the coastline and on the islands. Many of the largest ports
and harbors also have good facilities and are improving steadily (Cody J., Nash J., 2007).
“National Geographic Adventure” nominated Croatia as one of the top three countries for a vacation in
2006. It was also listed in the Lonely Planet directory of top ten destinations in the world for 2005 (Ban I.,
2008).
But one of the limitations of Croatia remains the quality of service, service marketers must ensure that the
needs of targeted markets are well understood in order to bring service products and the marketing mix
into line with customers’ exact requirements (Dibb S., Simikin L., Pride W.M., Ferrel O.C., 2012).
In order to do so I think that the Croatians companies of the hospitality industry needs to improve a lot their
marketing research to understand better which areas they need to improve. International marketing
research can be much more complex than domestic research because the researcher must consider the
environments prevailing in the international markets being researched (Malhotra N.K., Birks D. F., Wills P.
2010). And they have changed their target market, more international, in the last years.
6. STUDY FINDINGS – MAISTRA CASE STUDY
Maistra is a Croatian leader in hospitality and it is part of the Adris Group. “Adris grupa is one of the most
successful companies in Croatia and a leader according to the criteria of profitability, competitiveness and
innovation” (www.adris.hr). It’s very important for Maistra to be part of a big corporate group like Adris
because of: a corporate brand can be a powerful means for firms to express themselves in a way that isn’t
tied to specific products and services (Keller K. L. (2008). This group is in the sectors: of tobacco industry,
tourism, insurance, retail, healthy food, and real estate. Adris operates 20 companies organized in two
strategic business units (SBU): Tobacco with TDR at the helm and Tourism with Maistra at the helm
(www.adris.hr). In this research I want to focus more on Maistra: Maistra offers great accommodation and
customized service with a smile in Rovinj and Vrsar. Get spoiled at one of their 9 hotels and 8 resorts.
Maistra is a leading hotel company in Croatia, thriving on 50 years of tourism excellence (www.adris.hr). In
particular Maistra has created 2 five star hotels: Monte Mulini and Lone, with the marketing strategy of
conquering the luxury target market. Here Maistra using the HEM (Hedonic, Experiential, Model)
positioning perspective: so it views consumer-choice behavior as resulting from the pursuit of fun, fantasy,
and feeling (Shimp T. A., 2010). The importance of the activity of branding in this case is a key factor for
improving the image of this company: brands as assets can impact heavily on the financial well-being of a
company (Fill C. 2013). The investment was on Rovinj, because is the most important touristic location,
after Dubrovnik, that deserve a strong focus on it for its great development potential. Some examples of
international attention to this county are:

24
• 10 Best Wine Travel Destinations 2015
•
nd
• World’s 2 Best Olive Oil Region 2010 – 2015
•
• Top 10 Valentine’s Day Retreats 2014
•
• Best Wine Regions for Winter and Spring Travel 2014
•
• Best Beach Holiday Destination 2013
•
• Istria Top Summer Food Destination 2013
• About these two hotels above there some facts that show the evidence of a clear marketing
strategy for the market target of luxury:
• Lone Wins International Award for Best Design – from European Hotel Design Awards 2012 in
London.
• Monte Mulini among World’s Best Hotels – Accepted as a Member of The Leading Hotels of the
World (LHW).
• Monte Mulini receives Excellence Award the Q Mark by the Croatian Ministry of Tourism
Committee (only 3 hotels got it).
• Hotel Lone Is The Only Croatian Hotel To Make Condé Nast Traveler’s 2012 Hot List.
• HOTEL LONE, FIRST DESIGN HOTEL IN CROATIA WAS FEATURED ON THE NEW YORK
TIMES.
• HOTEL MONTE MULINI – THE FIRST AND ONLY CROATIAN HOTEL IN THE OFFER OF
GERMAN TOUR OPERATOR AIRTOURS.
• HOTEL LONE IS WITHIN THE DESIGN HOTELS COLLECTION 2009 (WWW.MAISTRA.HR).
These are some examples of Croatian Hospitality Company strategies directed in two directions:
• Internationalize more their offers, in past directed moreover to the German middle class tourists
• Improving the image of luxury destinations and hotels.
• This strategy has been implemented with special international events organized in these
destinations (i.e. sailing and golf), and with a strong improving of some hotel facilities dedicated to
a special target “up” (i.e. sensorial SPA, etc.). There is also an attention to a new category of

25
tourists that loves eco-luxury. For this reason Maistra put a strong attention to the Environmental
Protection Management System according to ISO 14001:2004 norm which, together with the
Quality Management System implemented according to ISO 9001:2008 norm, makes a part of the
Integrated Quality Management System implemented throughout the entire organization
(www.maistra.hr).
7. LIMITATIONS
One of the problems of Croatia is transportation, for example there are no underground trains in Croatia
(Ban I., 2008), and also the airport of Istra, like Pula is not real international.
8. CONCLUSION AND FUTURE RESEARCH
The future of the country’s tourism undoubtedly lies in the diversity of its landscapes and culture, and in
protecting them while continuing to develop suitably controlled infrastructure and quality accommodation
(Kuijper F. R., O’Neill K., Nichols R., 2007). The trend is towards more independent tourism, more
luxurious accommodation and better infrastructure, and also rental agencies have an increasing number of
elegant villas boasting pools and sea views in their books (Kuijper F. R., O’Neill K., Nichols R., 2007).
Croatia is in a strong transformation, according with the TALC model is in a phase of rejuvenating (Fletcher
J., Fyall A., Gilbert D., Wanhill S. 2013). And Croatia needs to continue of improving its destination image:
the image “picture” people have in their mind of specific tourism destination (Morrison A.M. 2013). So,
Maistra targeted a new segment of market that we can call: the Influentials, the New Grown-Ups and the
Get Set. These consumers are realistic about what they can afford and prefer to sacrifice in some areas so
they can have the best in others (Solomon M., Bamossy G., Askegaard S., Hogg M.K., 2006). In any case
the choice of improving the luxury hospitality sector in Croatia is strategic and profitable, but the limits of
the luxury strategy are: firstly is very demanding in day-to-day management as most of the usual,
well-known and very powerful marketing techniques - among them market surveys ad benchmarking – do
not apply (Wiedmann K.P., Hennigs N. 2013). From this point of view Croatia needs to improve a lot if they
want to continue in this new strategic direction. At the end, the two main problems that I have found here
are: image pricing and luxury communication. The price premium proves the brand’s value, as in the case
of consumption goods, but it is much higher in luxury, since the price is “part of the dream” and the
recreation of a distance are added to it (Kapferer J.N., Basten V., 2012). The pricing image of Croatia was
affordable and not exclusive for many years. The second problem is the luxury communication. Here the
first point is “communicate, don’t advertise” (Kapferer J.N., Basten V., 2012) and the communication in
Croatia need to evolve in this sense. Moreover now in which the luxury hospitality companies need to
communicate in an effective way: off line, online and through the social media (Kapferer J.N., Basten V.,
2012). Coming back to Maistra, this company has done a lot of amazing things in the luxury field: i.e.
design, service, facilities, experiences, etc. and the last step is to acquire the capability of communicating
their top experiences also through social media, one good example of this is Mandarin Oriental, in which
they communicate day-by-day in an efficient way on eight social media
(http://www.mandarinoriental.com/connect/).
REFERENCES
Adris group www.adris.hr

Ban I., (2008) Croatia – the essential guide to customer & culture, UK, London, Kuperard
Bernstein, T.M. (1986). The Careful Writer: A Modern Guide to English Usage. New York: Athennum.
Central Bureau of statistics (2014). Tourism in Figures 2013, Zagreb, Ministry of Tourism – Republic of
Croatia
Chadha R., Husband P.,(2006) The cult of the luxury brand – inside Asia’s love affair with luxury, India,
Nicholas Brealey International

26
Cody J., Nash J., (2007) Croatia - cruising companion, UK, Chichester, The Atrium
Creswell, J.W. (2008) Research Design: Qualitative, Quantitative and Mixed Methods Approaches, 3rd
edition, Thousand Oaks, CA: Los Angeles, Sage
Dibb S., Simikin L., Pride W.M., Ferrel O.C., (2012) Marketing Concepts & Strategies, North Way Andover,
UK, Cengage Learning
Fill C. (2013) Marketing Communications, Harlow, UK, Prentice Hall
Fletcher J., Fyall A., Gilbert D., Wanhill S. (2013) Tourism principles and practice, Harlow, UK, Pearson
Education Ltd.
Giron M. E., (2010) Inside Luxury – the growth and the future of the luxury goods industry: a view from the
top, Spain, LID Publishing Ltd.
Kapferer J.N., Basten V., (2012) The Luxury Strategy – break the rules of marketing to build luxury brands,
UK, Kogan Page Limited
Keller K. L. (2008) Strategic Brand Management, Upper Saddle River, NJ, USA, Pearson
Kotler P., Bowen J.T., Makens J.C., (2010) Marketing for Hospitality and Tourism, Upper Saddle River, NJ,
USA, Pearson
Kuijper F. R., O’Neill K., Nichols R., (2007) Croatia Chic, Singapore, Kuperard
Maistra www.maistra.hr
Malhotra N.K., Birks D. F., Wills P. (2010) Marketing Research an applied approach, Harlow, UK, Pearson
Education Ltd.
Ministry of Tourism Republic of Croatia http://www.mint.hr/
Mitchell W.J.T. (1986) Iconology – Image, Text and Ideology, Chicago, US, The University of Chicago
Press.
Morrison A.M. (2013) Marketing and managing tourism destinations, Abingdon, UK, Routledge
Newson V., (2009) Ultraluxe Hotel, The Experience awaits… Chichester, UK, John Wiley & Sons, Ltd
Official Istra tourist website of Istra www.istra.hr
Okonkwo U. (2007) Luxury Fashion Branding – trends, tactics, techniques, China, Palgrave Macmillan
Palin M., (2010) Croatia, USA, Guilford, The Globe Pequot Press
Saunders M., Lewis P., Thornhill A. (2009) Research methods for business students, Harlow, UK, Pearson
Education Ltd.
Shimp T. A., (2010) Integrated Marketing Communication in Advertising and Promotion, Printed in China,
South-Western Cengage Learning
Solomon M., Bamossy G., Askegaard S., Hogg M.K., (2006) Consumer Behaviour, Harlow, UK, Prentice
Hall
Wiedmann K.P., Hennings N. (2013) Luxury Marketing – a challenge for theory and practice, Germany,
Springer Gabler
Thanks to the Future Concept Lab of Milan that provide me same useful methods of analysis:
http://www.futureconceptlab.com/tools/
AUTHOR PROFILE
Giuseppe Di Donna is affiliated with University of Lausanne, Lausanne, Switzerland

27
IMPROVEMENT OF THE MANAGEMENT OF THE UNIVERSITIES IN BULGARIA
Mariana Kuzmanova, University of National and World Economy, Sofia, Bulgaria
ABSTRACT
The paper considers issues of present interest, connected with the improvement of the management
system of the universities in the Republic of Bulgaria. The emphasis is put on the development and use of
the balanced scorecard, which in its essence is an instrument for a complex change and stimulation of
success in a long-term perspective. Thus, the process of achieving goals and strategy realization is
assisted, and arising problems are eliminated in due time. Therefore, the balanced scorecard is
considered as a means of management metrification and improvement of the system of planning and
control at the university and a direct reference of the diversions and the unconformities (departments,
people). By using the balanced scorecard strategic and operative decisions are synchronized, financial
and non-financial indices as well as external and internal indicators are coordinated, a comparison of
results of the structural sections is provided, etc.
Keywords: Balanced Scorecard, University, Management System, crisis, Performance Measurement
1. INTRODUCTION
The functioning of universities in market conditions is connected with a number of challenges. Changes in
both legislation and state regulation policy, the intensive competition between universities and the constant
decrease of candidate students require appropriate measures by the educational institutions in order to
constantly increase the competitive power. In this connection, universities realize the significance of
actions with a long-term character as a basis for overcoming crisis events and providing opportunities for
growth.
2. THE SITUATION IN BULGARIA
The universities in Bulgaria are functioning as self-governing units. They are experiencing different types
of difficulties as far as a managing crisis event is concerned. The following trends that are relevant to the
growth perspectives of universities may be indicated:
♦ Increasing public interest towards the maintenance of the quality of the educational system in the
country, which requires the solution of various tasks: binding of education and labour market needs;
lack of a common state policy as far as optimization of the number of alumni is concerned;
necessity of timely updates of the curricula and syllabuses in accordance with the best practices
and the needs of the environment.
♦ The Europe 2020 strategy stipulates a minimum of 40% of the younger generation to have
completed their higher education, which, on the other hand, is an important prerequisite for
increasing the number of students at state and private universities. (Europe 2020 - A strategy for
smart, sustainable and inclusive growth, March 2010; COMPLET EN BARROSO 007 - Europe
2020 - EN version.pdf)
♦ The changes in the principles of financing and the reduction of the subsidies received force
universities to take good care of the optimization of expenses and to look for additional sources of
financing.

28
♦ The current demographic situation in the country, connected with the decrease of the number of
candidate students during the last years, make the management of universities face the difficult
task of attracting and involving more willing to study young people. However, we should not
underestimate the fact that there is a great number of young people who prefer to study abroad.
♦ The great number of unemployed people forces many young people to consider higher education
as a means of both avoiding the risk of becoming unemployed and an opportunity of finding a job
more easily in the future.
♦ The great number of universities in the country and their expansion as well as the opening of
branches of foreign universities sharpens the competition between educational institutions. The
number of students who study at state universities has increased from 90 to 190 thousand students
over the last 25 years, and in total in all universities - to 240 thousand. (https://www.mon.bg)
Universities, on the other hand, supply not the typical for them professional specialties, but the
ones that are demanded the most. Thus, an extensive growth has been achieved.
♦ The fast development of the Rating Evaluation System and the National Evaluation and
Accreditation Agency requires universities to constantly improve the process of education, to
increase competitiveness, the construction of up-to-date facilities, etc. Academic members also
need to constantly improve themselves.
Moreover, the management of the universities takes special care in this area, since the amount of
subsidies is going to be connected with the received assessments and the professional realization of
graduates. For instance, the Higher Education Strategy in the Republic of Bulgaria in the period 2014 -
2020 plans a set of measures for differentiated financing of universities according to the results and for
terminating the admission of students with low scores. The action plan of the Strategy for development of
the high-school education stipulates that the value of the relative share of the education costs will
gradually increase from 40% (Y2017) to 60% (Y2020). This growth should be achieved in accordance with
the performance of a complex quality valuation of the education and its compliance with the needs of the
labour market.
Besides, the Law for development of the academic staff in the Republic of Bulgaria and the regulation for
its implementation, adopted in 2010, have changed a lot the procedures for career development of the
academic staff and have brought significant changes in the attestation procedures and professors'
evaluation. These changes in the Bulgarian legislation have eliminated the centralized approach and the
long procedures for acquiring academic degrees and academic ranks.
Universities have been given the freedom to make their own decisions as far as procedures openings and
composition of academic juries are concerned, but the principles of the academic autonomy and ethics
must be strictly followed. The improvement of the quality of education requires the leading criterion for
professors' academic growth to be their scientific achievements. The necessity of applying a complex
evaluation of the quality of education and its conformity with the labour market needs imposes serious
changes in the management system of universities.
3. BUILDING UP THE MANAGEMENT SYSTEM OF UNIVERSITIES
In connection with the upper mentioned challenges for universities the use of the balanced scorecard may
be recommended as a proper instrument for solving various types of tasks, related to competitiveness,
sustainable development and effectiveness of universities. (Kaplan and Norton, 1992, 1996, 2001)
Furthermore, the strategic card allows the development of an integrated conception of the management of
the contemporary university in accordance with its specificity. This may happen when short-term decisions
are properly bound to strategic initiatives. Thus, a wide range of tasks will be successfully solved:
improvement of key processes and activities, changes stimulation, continuous increase of the
effectiveness in a long-term perspective, etc. By specifying the system of objectives of the educational
institution within the particular perspectives of the model we increase the motivation of the employees
through the implemented measuring system and rapid feedback.

29
The term 'sustainability' means 'a quality of endurance, persistency - some people consider it stability; it
appears when changes (disturbances) occur in the equilibrium state of the system, provoking forces that
restore the initial condition in order the system to function' (Stanulov, 2002, p. 37). The publication
considers that the sustainability of the organization (the university) is a harmonious development of the
organization within the particular perspectives of the balanced scorecard, aimed to provide long-term
success. (Kuzmanova, 2005)
Effectiveness is complex - it transforms the used indices and the related decisions into restricted ones.
Furthermore, the private indices bear оne-sidedness due to the narrow field of connections and
relationships, which are characterized and measured by them.
In this connection the following statements may be pointed out:

• Effectiveness is complex - it reflects all the complicated interconnections within the organizations
as far as goals, resources, information, communications, adaptability, growth, development and
life cycle are concerned.
• Effectiveness must be defined within the concept of a long-term success and sustainable
development of the organization.
• It is appropriate if the effectiveness reflects on the readiness of the organization for flexibility and
change.
• It is necessary that the effectiveness characterizes the interaction of the organization as a system
with its external environment and the management characteristics of the organization's internal
variables.
• Effectiveness must reflect stakeholders' expectations as far as the analysis of relations interests -
specific goals - criteria for effectiveness in terms of the specific group is concerned. With regard to
this it is absolutely obligatory to find the reasonable compromise and balance between the
different groups of interests.
The indices included in the balanced scorecard allow us to make a profound analysis of what has been
achieved in terms of the system of goals and what is best for the organization in unison with stakeholders'
expectations. There are opportunities for using a common assessment scale of the various quantitative
and qualitative indices as a basis of taking out integrated factors of effectiveness (fuzzy indicators,
11-ranked Likert scale, applicable in the area of the fuzzy sets, 'experton' functions etc.) (Kaufmann and
Aluja, 1993) This way the concept of management metrification is implemented.
Table 1. shows a sample balanced scorecard of the universities:
TABLE 1. A SAMPLE BALANCED SCORECARD OF THE UNIVERSITIES
PERSPECTIVE INDICES
1. Total assets amount.
THE FINANCIAL PERSPECTIVE 2. Volume and structure of the incomes.
3. Share of the assets in comparison with the total incomes.
4. Volume and structure of the expenses.
5. Liquidity as a ratio between current assets and current liabilities
of the university.
6. Prime cost of the training.

30
1. Number and structure of students and Ph.D. students (doctoral

THE STUDENTS AND PH.D. candidates).
STUDENTS PERSPECTIVE 2. Number and structure of candidate students and candidate PhD
students in the university.
3. Number of foreign students and Ph.D. students.
4. Ratio between the students, who have reached different
educational degrees.
5. Results from inquiries among: (1) students, who are studying at
the moment and (2) graduated students and Ph.D. students.
6. Statistical data about the realization of the graduated students
and Ph.D. students.
1. Results from inquiries among employers - % of positive opinions/
THE EMPLOYERS PERSPECTIVE evaluations.
2. Number of probationers from the university.
3. Number of discussions of the employers’ opinions.
4. Number of participations of employers in examination
procedures, including at defence of course and diploma
papers.
5. Number of meetings and round tables with employers at the
university.
6. Frame agreements with employers.
1. Number of officially registered changes in the educational
THE BUSINESS PROCESS documentation.
PERSPECTIVE 2. Relative share of the educational disciplines, developed during
the last 3 years in comparison with the total number of
disciplines in the curricula.
3. Relative share оf disciplines that use interactive forms of
teaching (including multimedia products).
4. Providing the necessary equipment.
5. Number of conducted internal and external audits and
announced results from them in the website of the university.
6. Expenses related to providing access to education of
disadvantaged students
1. Number and structure of the lecturers on first labour contract.
THE HUMAN RESOURCES 2. Number and structure of the lecturers on second labour contract.
PERSPECTIVE 3. Average age of the different categories of lecturers.
4. Number of the successfully completed competitions for academic
positions.
5. Number of attestations of lecturers and employees.
6. Number of the courses, organized by the university, for
increasing the qualification of lecturers, being on a labour
contract.

31
1. Annual training costs per employee.

THE POTENTIAL AND GROWTH 2. Number of cooperation contracts with external partners.
PERSPECTIVE 3. Number and structure of publications in the country and abroad.
4. Number of quotations of the lecturers in the country and abroad.
5. Number and structure of the projects of the lecturers, PhD
students and students.
6. Number of joint educational programs, creative business trips
and specializations abroad.
As written above, the recommended system consists of 36 indices within the 6 defined perspectives. In
addition to this group of principle indices it is possible to formulate complementary ones in order to
provide management with flexibility. If necessary, some of the principle indices may be replaced with
complementary ones in accordance with the specifics of the environment, the priorities for university's
development, crisis symptoms, stakeholders' interests, etc.
The indices included in the balanced scorecard are now registered and developed as follows:
• Definition and metrics of the index;
• Graphic presentation of the index;
• Level of measuring: department, vocational stream, faculty, university;
• Person in charge of the results;
• Data source;
• Person in charge of the data;
• Frequency of extracting of data;
• Maximum/ Minimum value;
• Zones of increased attention;
• Diversions for observation;
• First alert signals;
• Important tasks for execution, necessary resources.
Building up the system of management of universities using the balanced scorecard has a lot of
advantages:
• The strategic card is based on competitive advantages - sustainable development - effectiveness.
• Emphasis on the long-term successful development of the university and the management of its
intangible assets.
• It stimulates the change and the dynamic equilibrium at the university.
• It provides flexibility and adaptiveness in the process of management.
• There is harmony between the short-term, average-term and the long-term management
decisions.
• Management decisions are made in conformity with the developed system of priorities and the
interests of the stakeholders.
• It stimulates continuous training and team work at the university.
• It decreases the risk of making incorrect management decisions.
• It increases the motivation of employees, etc.
Building up the management system of universities using the balanced scorecard faces a lot of difficulties:
• It requires the management team to have additional knowledge and skills in the model
development process and in the execution of the decisions made;

32
• Difficulties in combining indices, which are included in the balanced scorecard on the different
hierarchy levels of the university.
• Difficulties in implementing a common scale of measurement.
• Difficulties in examining the relations and subordinations as far as strategic goals - kef factors for
success -perspectives - indices are concerned.
• A quick change is necessary in the organizational culture in order to successfully develop and
apply the balanced scorecard.
• It is necessary to timely improve the human resources management system.
• It requires fast overcoming of difficulties when improving the connection between strategy,
structure and balanced scorecard, etc.
4. CONCLUSION
In conclusion we could say that the balanced scorecard is a flexible instrument for development and
execution of the strategy of the universities, as the central point in it is taken by the system of objectives.
The balanced scorecard is used to measure the management of the universities and assist them
performing various sets of tasks: planning, controlling and stimulating changes, performing an
objectives-oriented development with an emphasis on competitiveness, sustainable development and
effectiveness; team working; integration of the efforts of all employees towards the implementation of the
system of objectives of the university, etc.
REFERENCES
Barrows, E., and Neely, A.D., Managing Performance in Turbulent Times: Analytics and Insight, New
Jersey, John Wiley and Sons, 2011.
Brown, M. G., Keeping Score: Using the Right Metrics to drive World-class Performance. New York,
Productivity Press, 1996.
Drucker, P. F., Management Challenges for the Twenty-First Century. Oxford: Butterworth Heinemann,
1999.
Hinterhuber, A., Strategische Erfolgsfaktoren bei der Unternehmensbewertung, Wiesbaden, DU-Verlag
GmbH, 2002.
Horvath & Partner (Hrsg.), Balanced Scorecard umsetzen, 1. Aufl. Stuttgart, Schäffer Poeschel Verlag,
2000.
Kaplan, R. S., and D. P. Norton, The balanced scorecard - measures that drive performance. in: Harvard
Business Review, January - February, 1992, pp. 71 - 79.
Kaplan, R. S., and D. P. Norton, The Balanced Scorecard: Translating Strategy into Action. Boston:
Harvard Business School Press, 1996, pp. 2 - 19.
Kaplan, R. S., and D. P. Norton, Die strategiefokussierte Organisation. Führen mit Balanced Scorecard.
Stuttgart, (P. Horvath et. al.), Schäffer Poeschel Verlag, 2001.
Kaufmann, A., J. G. Aluja, Tecnicas especiales para la gestión de expertos. Milladoiro, 1993.
Klingebiel, N. (Hrsg.), Performance Measurement & Balanced Scorecard. München, Verlag Vahlen, 2001.
Müller, A., Strategisches Management mit der Balanced Scorecard. Stuttgart, Verlag W. Kohlhammer,
2000.
Neely, A.D., Business Performance Measurement: Unifying Theory and Integrating Practice”, Paperback
Ed., Cambridge, Cambridge University Press, 2011.
Niven, P. R., Balanced Scorecard Step-By-Step: Maximizing Performance and Maintaining Results, 2nd
Edition. New York, John Wiley & Sons Publ., 2006.

33
Norton, D., and R.Kaplan, Putting Balanced Scorecard to work. Harvard Business Review, September-
October 1993, pp. 134 - 147.
Porter, M. E., Competitive Advantage. New York: The Free Press, 1985.
Porter, M., Wettbewerbsvorteile: Spitzenleistungen erreichen und behaupten. Frankfurt/Main, New York,
1992.
Prahalad, C. K. & G. Hamel, The Core Competence of the Corporation. In: Harvard Business Review, Vol.
68 No. 3, May - June 1990, pp. 79 - 91.
Rampersad, H. K., Total Performance Scorecard. Redefining Management to Achieve Performance with
Integrity. Butterworth Heinemann, An Imprint of Elsevier Science, Amsterdam, Boston, Heidelberg,
2003.
Kuzmanova, М., Възможности на балансираната карта за оценка на резултатите като инструмент за
управление на стратегическото развитие на стопанската организация, Сборник с доклади от
Международна научна конференция "Управленски, информационни и маркетингови аспекти на
икономическото развитие на балканските страни", София, 3 ноември 2004 г., С., Унив. изд.
"Стопанство", 2004, с. 147 - 155.
Stanulov, N,, Умееш ли да вземаш решения. Магията на избора. С., Академично издателство, 2002.
http://ec.europa.eu/europe2020 (Europe 2020 - A strategy for smart, sustainable and inclusive growth,
March 2010; COMPLET EN BARROSO 007 - Europe 2020 - EN version.pdf)
http://www.eua.be (European University Association)
https://www.mon.bg (Ministry of Education and Science)
http://www.neaa.government.bg (National Evaluation and Accreditation Agency)
http://rsvu.mon.bg/rsvu3 (Ministry of Education and Science, Bulgarian University Ranking System)
AUTHOR PROFILE
Dr. Mariana Kuzmanova (PH.D. University of National and World Economy) is an Associate Professor at
University of National and World Economy, Department of Management, in Sofia, Bulgaria. Her areas of
research include strategic management, change management and crisis management.

34
EXAMINE MOTIVATION CONSTRUCT AMONG AMERICAN AND KOREAN

VOLUNTEERS IN LPGA TOURNAMENTS: DOES CULTURE MATTER?
Keunsu Han, Towson University, Maryland, USA
ABSTRACT
Volunteers have been a valuable resource for the overall success of sport events (Warner, Newland and
Green, 2011) and volunteer motivation has been a significant concept for sport managers to better recruit
and retain volunteers for achieving organizational goals (Han, 2013). This study examines the
multidimensionality of volunteer motivation and compares the primary motives that influence American and
Korean volunteers in LPGA. Data was collected from 521 volunteers who participated in LPGA tournament
events of America and South Korea. The results show that Korea volunteers were more involved with
volunteer service due to “Social/Leisure” and “External Influence” reasons, while American volunteers
were more motivated with “Egoistic” and “Materials” reasons. The study contributes to management
research and provides insight on the ways in which the sport event volunteers are managed in
multinational sport tournaments such as LPGA.
Keywords: Sport Globalization, Multinational Sport Event Management, Sport Volunteerism
1. INTRODUCTION
Volunteers in multinational sport events are a core component of sport service delivery since the sport
industry has dramatically grown with the rapid growth in the number of mega international sport events and
a key element of international sport event management because they provide sport managers with the
ability to offer or expand the quantity, quality, and diversity of sport organizations’ services (Daly, 1991;
Han, 2013). Sport globalization reaches its highest point with genuine global sport events such as the FIFA
World Cups and the Olympic Games (Andreff, 2008). Alongside this industry trend, the LPGA Tour has
taken great pride in its global reach. Global tours have been increased with growing international players,
fans and sponsors.
FIFA recruited15,000 volunteers for the 2014 FIFA World Cup in Brazil (FIFA, 2014). In the 2012 London
Olympic, 240,000 candidates applied for volunteer program and a total of 70,000 volunteers were
ultimately recruited to support the Olympic Games (Olympic, 2012). Utilizing volunteers to complement
paid employees and offset rapidly increased labor costs is not new in the field of international sport events
(Giannoulakis, Wang and Gray, 2008).
For these reasons, it is purpose of this study to investigate the concept of volunteer motivation so that
more effective volunteer recruitment and management strategies can be implemented by sport managers
in multinational sport events such as LPGA.
In American sport events, volunteers have been commonly utilized as a source for economic advantage as
well as to promote civic duty and responsibility. While American sport has adopted volunteers as a large
part of their business, Korea have less commonly depended on volunteers, but rather paid staff, to
manage their sport events.
Thus, the main purpose of this study was to confirm the multidimensionality of volunteer motivation and to
investigate the cultural differences of motivation between American and Korean volunteers in the LPGA
Tournaments. It is important for administrators or committee in multinational sport events to achieve the
best possible match of volunteers with the respective positions

35
2. REVIEW OF LITERATURE
2.1. Sport Volunteer Motivation
In the research area of sport volunteerism, volunteer motivation has been a most popular topic for many
years. Many studies have conducted in the past decade, of which three have dealt with motivation
construct (Farrell, Johnston, and Twynam, 1998; Strigas, 2001).
The most recent qualitative study found that sport volunteers of a multinational sport-for-development
event motivated by (a) building relationship, (b) encouraging learning, and (c) enhancing motivation to
work for social change and reciprocity (Peachey, Bruening, Lyras, Cohen and Cunningham, 2015).
Farrell, Johnston, & Twynam. (1998) created a 28-item scale instrument based on the scale developed
by Cnaan and Goldberg-Glen (1991) and tested by factor analysis. This study divided volunteer
motivation into four different constructs: 1) purposive, 2) solidary, 3) external traditions, and 4)
commitments. They suggested that those who volunteer for sport special events have different
motivations than that of other volunteers, citing that “Managers need to be prepared to address the variety
of motivations when seeking volunteers for special events” (p. 298). This cornerstone work models how
theories on volunteer motivation can be used for future human resources studies in sports organizations.
Strigas (2001) studied the development of a new and reliable scale to measure volunteer motivation in
sport setting. His research revealed there were a five-factor model described volunteer motivations for
sport events: 1) social/leisure (need for social interaction, interpersonal relationships and need for
relaxation and recreation); 2) material (pertaining to monetary value monetary or anticipated utility gain); 3)
egoistic (self-actualization and esteem); 4) purposive (contribution to sport event and community); 5)
external (the influence of others for volunteering).
2.2. Cultural Differences Among Sport Volunteers
In the studies of volunteerism, cultural differences relate specifically to the country’s attitude and
management of volunteerism (Pi, 2001). Cusick (2005) mentioned that the meaning of volunteering in Asia
such as China, Japan and Korea is influenced by cultural values as discussed by Fututake (1989),
whereby, the social structure of Asia was heavily group-oriented and hierarchical, based on mutual
obligation and personal relations. The concept of Inhwa, which is defined as harmony, has been
considered as the key principle of Korean Culture and influences the way to do business in South Korea
significantly (Lee, 2012). As a collectivist society, consensus is an important element in promoting and
maintaining harmony in Korea. In addition, Lee, Brett and Park (2012) discussed that Korea is a country
with higher power distance and hierarchy. Not like in the United States, for example, the elders and the
one with higher hierarchy rankings are expected to seat in the center and always get food first served.
Junior members and the lower positioned persons never address senior members by first names, as in
America, but their titles. Junior members even address their supervisors or senior members by their first
names, which is very rude in Korea.
While, America has been described as a diverse society, consisted of many nationalities, races, religions,
and creeds. There is no such concept like Inhwa in America. In the United States, people are not
considering that conflicts with others’ opinions are disturbing the harmonious environment. All believe that
everyone has the right and freedom to present their different opinions and feelings to others (Lee 2012).
Its culture has become increasingly international and is being embraced by countries around the world.
Most volunteer service transformed from individual involvement to organized programs. In other words,
volunteerism in America is represented by all segments of society which has led to manifestations such as
the self-help groups (Morrison, 1994).

36
3. METHOD
3.1. Instrument
From review of literature on sport volunteer motivation, the Motivation of Sport Volunteers questionnaire
was constructed. The following procedures has been completed to make the scale more powerful and
relevant in the purpose of this study: (a) all scales in previous studies related to sport volunteer motivation
were reviewed thoroughly, (b) several items were adapted and modified in order to reflect motivation for
sport volunteers in the LPGA tournaments, (c) a number of items were deleted which were not applicable
to the LPGA tournaments, and (d) new items were added to help identify motives relevant to the LPGA. A
panel of experts was asked to thoroughly examine the questionnaire for content validity. The panel of
experts includes two current volunteer administrators in the LPGA, three sport management professors,
and three volunteers who had experiences volunteering in the LPGA.
Since the study involved both American and Korean participants, the survey originally developed in
English was translated into Korean. The process of back translation was implemented, using two different
language experts who are fluent in both English and Korean (a professor in the Korean language
department and a doctoral student in Korean language major). The survey was translated into Korean
and translated back into English by the same individuals to uncover any meanings lost in translation.
There were no discrepancies.
3.2. Sample
A total of 560 survey questionnaires were distributed in America and Korea LPGA tournaments and the
same number was collected. From this total, 29 survey questionnaires were excluded because they were
not complete. A total of 521 (94%) questionnaires were used for the data analysis (179 from tournaments
in Korea and 342 from tournaments in the United States).
3.3 Data Analysis
The data were analyzed using the Statistical Package for the Social Science (SPSSPC) and Analysis of
Moment Structures (AMOS). Data received from the returned questionnaires were screened through
descriptive analysis. In order to assess psychometric properties of the measures, confirmatory factor
analyses (CFA) were conducted using the computer program Analysis of Moment Structures (AMOS). In
addition, a multivariate analysis of variance (MANOVA) was conducted by SPSS to investigate the cultural
differences of commitment between Korean and American volunteers in LPGA
4. RESULTS
test reliability of the scale, Cronbach’s Alpha was computed for the four bases of commitment and
Cronbach’s α coefficients of volunteer commitment scales ranged from .73 to .87. Based on the reliability
test, the items are internally consistent since the items are considered to be reliable when a Cronbach’s α
coefficient is more than .70 (Nunnally & Bernstein, 1994).
Confirmatory Factor Analysis (CFA) was used to confirm the multidimensionality of volunteer motivation
and a multivariate analysis of variance (MANOVA) was conducted to investigate the cultural differences
between Korean and American volunteers in the LPGA tournaments.
2
The results of the measurement models showed that the multidimensionality of volunteer motivation ( χ
2
ࠝ53ࠞ= 113.3153; p < .01; χ /df = 2.31; RMSEA= .053; CFI= .96; and PNFI= .62) were confirmed. Overall
MANOVA was statistically significant (Wilks’ ‫ = גּ‬.773, F= 3.302, p<.01). In a follow-up univariate test, there
were significant cultural differences in “Social/Leisure,” “Material” and Egoistic” and “Eternal Influence.”
factors. Korean volunteers were more motivated to “Social/Leisure” (F= 6.127, p<.01, ) and

37
“External Influence” (F= 8.203, p= .007, ) factors, while “Material” (F=7.122, p<.01, )
and Egoistic” (F=9.238, p<.01, ) were more important motivation for American volunteers in the
LPGA tournaments.
5. IMPLICATIONS AND FUTURE RESEARCH DIRECTIONS
Today, volunteers are the lifeblood of sport events, and much of the success depends on the motivation
and experiences of the volunteers (Cuskelly, 2008). Expectation for most sport event administrators is
recruiting and retaining enough volunteers to fulfill the wide range of roles which are needed for sport
event to achieve its goals. A common desire for a sport event organization is “if only we had more
volunteers.” Part of the solution to this problem (especially in international sport events) might be to strive
to be more effective at recruiting volunteers by better understanding their motivation in different cultures.
The current study contributes an integrated and detailed perspective to advance the knowledge of
volunteer motivation in different culture. It was indicated that Korean and American volunteers were
motivated on different sets of factors. For this reason, sport managers, especially volunteer coordinators,
should develop marketing strategies based on the composition of the target volunteer base focusing on
those motivation factors that resonate best with them. This is especially important to tournaments in
Korea as volunteerism for tournaments has yet reached the numbers demonstrated in American LPGA
events.
Sport event marketers and/or managers can monitor levels of volunteer motivation through surveys and
use the information as a basis for volunteer retention. Through clear understanding of the dynamics of
volunteer motivation to international sport events like LPGA tournaments, sport managers/marketers can
acquire critical resources for both managing and increasing the potential revenues of major sporting
events in the international sport environment.
This study provides preliminary evidence that volunteers at international sport events motivated in different
reasons. This is not conclusive evidence but further longitudinal research is required to ascertain the
impact of LPGA events on the motivation of volunteers. In addition, greater exploration of the motivation
construct over time may provide insight on possible stages and life cycle of the construct. Future research
with volunteers in international sport events is also needed in other contexts that focus on various
international events and different geographic regions. Finally, it would be useful for future studies to adopt
qualitative methods such as focus group and face-to-face interviews with volunteers to confirm more
clearly their motivations for volunteer participation. The qualitative approaches could help better to
explore the experiences of volunteers and impact on volunteers from volunteering in multinational sport
evets, specifically within LPGA tournaments.
REFERENCES
Abdreff, W. 2008. “Globalization of the Sports Economy”, Rivista Di Diritto Ed Economia Dello Sport. vol.
4. no. 4, pp. 13-32.
Cnaan, R. A. and Goldberg-Glen, R. S. 1991. “Measuring Motivation to Volunteer in Human Services”,
Journal of Applied Behavioral Science, vol. 27. no. 3, pp. 269-284.
Cusick, B. L. 2005. Higher Education: The Motivation, Organization, and Socialization of Japan
College Student Volunteers. Unpublished doctoral dissertation. Boston University, Boston.
Cuslelly, G. 2008. Volunteering In Community Sport Organizations: Implications For Social Capital. In M.
Nicholson & R. Hoye. (Eds), Sport and Social Capital (pp. 187-203). Oxford: Elsevier.
Daly, J. A. 1991. Volunteers in South Australian Sport: A study. Canberra: Australian Sport Commission.

38
Farrell, J. M., Johnston, M. E. and Twynam, G. D. 1998. “Volunteer Motivation, Satisfaction, and
Management at an Elite Sporting Competition”, Journal of Sport Management, vol. 12, no. 4, pp.
288-300.
FIFA. 2014. FIFA World Cups Volunteers. Retrieved July 22, 2014 from
http://www.fifa.com/worldcup/videos/y=2014/m=7/video=fifa-world-cup-volunteers-15-000-heroes-240
7340.html
Fukutake, T. 1989. The Japanese Social Structure. Trans. Ronald Dore. Tokyo: Tokyo University Press.
Giannoulakis, C., Wang, C. and Gray, D. 2008. “Measuring Volunteer Motivation In Mega-Sporting
Events”, Event Management, vol. 11, no. 4, pp. 191-200.
Han, K., Quarterman, J., Strigas, E., Ha, J. & Lee, S. 2013. “Committed Sport Event Volunteers”,
ICHPER-SD Journal of Research, vol. 8, no. 2, pp. 45-54.
Lee, C. 2012. “Korean Culture And Its Influence on Business Practice in South Korea”, The Journal of
International Management Studies, vol. 7, no. 2, pp. 184-191.
Lee, S., Brett, J. and Park, J. H. 2012. “East Asian’s Social Heterogeneity: Differences in Norms among
Chinese, Japanese and Korean Negotiators”, Negotiation Journal, vol. 28, no. 4, pp. 429-452.
Morison, E. K. 1994. Leadership Skills: Developing Volunteers for Organizational Success. Tucson: Fisher
Books.
Nunnally, J. C. and Bernstein, I. H. 1994. Psychometric Theory (3rd ed). New York, NY: McGraw-Hill.
Olympic. 2012. Volunteers: Helping to Make The Games Happen. Retrieved July 21, 2012 from
http://www.olympic.org/news/volunteers-helping-to-make-the-games-happen/168630
Peachey, J., Bruening, J., Lyras, A., Cohen, A. and Cunnigham, G. 2015. “Examing Social Capital
Development Among Volunteers of a Multinational Sport-for-Development Event’, Journal of Sport
Management. vol. 29, no. 1, pp. 27-41.
Pi, L. L. 2001. Factors Affecting Volunteerism for International Sport Events in Taiwan, Republic of China.
Unpublished doctoral dissertation, United States Sports Academy, Daphne.
Strigas, A. (2001). The Assessment of Motives and the Development of a Typology of Motivational Factors
for Volunteers in Marathon Running Events. Unpublished doctoral dissertation, Florida State
University, Tallahassee.
Warner, S., Newland, B. L., & Green, B. C. (2011). “More than Motivation: Reconsidering Volunteer
Management Tools”, Journal of Sport Management, vol. 25. no. 5, pp. 391-407.
AUTHOR PROFILE
Dr. Keunsu Han (Ph.D., Florida State University) is an Associate Professor of Sport Management at
Towson University. His research interest areas include Sport Volunteerism, Sport Fan Behaviors, and
Task Interdependence and Pay Dispersion in both Professional and College Sports. Dr. Han has
published his research in various peer-reviewed journals and made many research presentations at
professional conferences

39
IMPACT OF ONLINE SOCIAL NETWORKING ON ACADEMIC PERFORMANCE OF

UE STUDENT- USERS
Angelito C. Descalzo, University of the East, Manila, Philippines
ABSTRACT
Social networking sites are being used almost regularly by millions of people, especially students since
they offer new and faster ways of communicating, sharing and gathering information. Prolonged and
continued exposure, however, to these various websites might have a probable impact on the students’
academic performances. This is the main reason why numerous social science researchers as well as
academic commentators are becoming more and more interested in studying social networking services
like Google, Facebook, Twitter, and Instagram to name a few. In order to determine if there is relationship
that exists between the usage of social networking sites and academic performance, senior accountancy
students of the University of the East (UE) enrolled in the College of Business Administration who make
use social media were considered as respondents. Their general weighted averages (GWAs) from all the
previous semesters were used as a measure of their academic performances. Other factors such as time
spent in studying and in using social media, frequency of usage, and the span of having the personal
social networking accounts were also considered.
Keywords: online social networking, academic performance
1. INTRODUCTION
While the social networking sites have the same key aspects, the cultures and responses around them
that become apparent are varied. Most sites help strangers connect with other people based on shared
personal interests, political and economic views, or simply recreational activities. Some sites
accommodate distinct viewers, while others attract people based on similarities, such as common
languages or shared racial, sexual, religious or nationality-based identities. Nonetheless, social networking
sites have only one common goal that is to encourage new ways to communicate and share information.
Unlike the generations of students that predated the inception of the World Wide Web (www), students
today experience college life in both real and virtual communities. Compared to early users of internet
technology, today’s college students are more active in several online communities where they explore
new forms of self-expression, create connections that are in the past considered improbable, and make
the line between their real worlds and virtual worlds almost unrecognizable. They are, in a way, born into a
world where technology has already been well-established and made an integral part of everyday life.
Questions like, “What role does computer-mediated communication play in the lives of college students?”
and “What functions do social networking sites serve for college students and what meanings do students
make of these media?” are being asked by teachers and parents who seem to know little about how and
why students develop online social networks. There has not been a serious ethnographic exploration of
the role that virtual communities play in college student life.
2. THE PROBLEM AND ITS BACKGROUND
2.1. Background of the Study
In this time of digital era where everything is manipulated by our finger tips, sudden changes in the
environment and behavior of the people are depicted. The internet and some online social networking sites

40
dramatically changed the way the students perform in their studies.
Some students have been pointing out various social networking sites for their apparent poor performance
in school. This emergent phenomenon aroused curiosity to take a look into social networking sites, and
why and how they affect students’ academic performances.
The Bachelor of Science in Accountancy (BSA) program is composed of subjects in accounting audit,
administration, business laws and taxation. Its primary focus is not limited to business subjects, but to
other fields as well, such as banking and finance, government, social services, education, and more. The
program also instills in students the importance of computational and communication skills both in written
and oral English.
According to the Commission on Higher Education, the standards of admission to the program should be
sufficiently rigorous and demanding, that is why it has set a standard for accountancy schools to conduct a
selective admission policy. The BSA program is a tough course that requires a lot of discipline and
patience, and where the use of analytical and logical thinking is imperative. BSA students must be very
vigilant in setting up their strategies in order to earn the degree. However, many students end up shifting to
other courses because they cannot withstand the demands of accountancy course.
This study intends to discuss whether online social networking has an impact on the academic
performances of accountancy students who make use of them. It is for this reason that the target
respondents for this research are the senior accountancy students enrolled in the College of Business
Administration of University of the East who use social networking sites. The responses were gathered
through survey questionnaires distributed to them.
2.2. Theoretical and Conceptual Framework
In order to fully understand of online social media and why people make use of them the following major
theoretical frameworks were included.
2.3. Social Exchange Theory
Given that all social media are dependent on users providing content, an understanding of the motives of
why individuals participate appears fundamental. Social exchange theory originated from sociology studies
exploring exchange between individuals or small groups (Emerson 1976). The theory mainly uses
cost-benefit framework and comparison of alternatives to explain how human beings communicate with
each other, how they form relationships and bonds, and how communities are formed through
communication exchanges (Homans 1958). The theory states that individuals engage in behaviors they
find rewarding and avoid behaviors that have too high a cost. In other words, all social behavior is based
on each actor’s subjective assessment of the cost-benefit of contributing to a social exchange. They
communicate or exchange with each other contingent on reciprocal actions from the other communicating
party (Emerson 1976). The mutual reinforcement could be analyzed through a microeconomic framework,
though many times the rewards are not monetary but social, such as opportunity, prestige, conformity, or
acceptance (Emerson 1976).
Hence, the reasons why people engage in a social exchange have been posited as a) an expected gain in
reputation and influence on others; b) an anticipated reciprocity on the part of others; c) altruism; and d)
direct reward. Given that participation in the social media is not compensated, the first three reasons
appear to have particular relevance to why people participate in social media (Pan and Crotts, 2011).
Users of social media can be segmented into four main groups. They are: (1) watchers (79.8% of the US
social media users), who consume content only to help with their decision making; (2) sharers (61.2%),
who upload and forward information to others in order to help others and demonstrate knowledge; (3)
commenters (36.2%), who both review and rate products and comment on those who do in an effort to
participate and contribute; and (4) producers (24.2%), who create their own content in an effort to express
their identity and recognition. Watchers take but do not reciprocate from the exchange suggesting they

41
consider the cost of posting or commenting too high, or fear of offering their opinion or raising their profile
(Trends Stream Limited 2010; Li 2010).
2.4. Social penetration theory
Similar to social exchange theory, social penetration theory explains how human exchange forms
relationships (Altman and Taylor 1973). However, the latter focuses more on the individual and interaction
between two individuals while the former could explain behavior at aggregated and organizational levels. A
person must disclose him or herself through the continuing process of exposing one's inner self and
identity. It starts with public, visible, and superficial information, such as gender, clothing preferences, and
ethnicity; slowly, as the relationship progresses, a person starts to share his or her feelings; in the deepest
level, one will expose his or her goals, ambition, and beliefs (Altman et al. 1981).
2.5. Social Network Analysis
Social network theory views the community of individuals as connected actors, and uses mathematical
models to study its structure, development, and evolution (Wasserman and Faust 1994). This analysis
treats individual actors in a community as nodes; the communications between those actors are deemed
as ties, edges, links, or connections. Social networks can form in many levels, from individual people, to
families, communities, and nations. Those ties could be communication frequency, friendship, kinship,
financial exchange, sexual relationships, or common interests or beliefs.
FIGURE 1 CONCEPTUAL FRAMEWORK OF THIS STUDY
INPUT
• Online social networking PROCESS OUTPUT
- Period of time accounts • Quantified
• Data Analysis
are being maintained relationship among
Tools (Descriptive
- Frequency of usage variables.
Method and
- Time spent in using SNS • Determination of
Pearson’s
• General Weighted Chi-Squared Test) impact of online
Average (GWA) per social networking to
• Presentation of Data
semester of academic
(using tables and
student-users
graphs) of results performance of
• Other related student-users
• Interpretation of
researches • Conclusions and
results
recommendations
A set of questions regarding the online social networking will be prepared. The respondents will then be
given ample time to answer the survey questionnaire. The responses will be summarized into tables and
graphs and later analyzed using the Pearson’s Chi-Squared Test. Detailed interpretations of the data
gathered will be made to quantify the relationships among variables and determine the impact of the use
online social networking sites on the academic performance of student-users. Conclusions will then be
formed that will serve as bases for the recommendations.
2.6. Statement of the Problem
The primary question in this study is:
Is there a relationship that exists between the usage of social networking sites and the academic
performances of student-users?

42
Specifically, this study aims to answer the following hypotheses:
1. Whether the duration of time since social networking accounts have been created has a significant
effect on the academic performances of the student-users;
2. Whether the frequency of using social networking accounts has a significant effect on the academic
performances of the student-users; and
3. Whether the time spent in using the social networking accounts instead of studying has a significant
effect on the academic performances of the student-users.
2.7. Scope and Delimitation of the Study
This study is focused and limited on the determination if a relationship exists between the usage of social
networking sites and academic performance of senior accountancy students enrolled in the College of
Business Administration for the school year 2012. The general weighted averages (GWAs) from all the
previous semesters were used as a measure of the students’ academic performances.
2.8. Significance of the Study
This study intends to discuss the nature of social networking sites and its impact on the academic
performances of accountancy students who make use of them. Considering the difficulties being
encountered by students in finishing the accountancy course, the results of this study may not only serve
as encouragement for them to study harder but also as a guide on how they could possibly make better
use of social media platforms to improve their academic performances in school.
2.9. Definition of Terms
Online Social Networking – the practice of expanding the number of one's business and/or social contacts
by making connections through individuals using the internet or web-based groups or any social
media platforms to promote such connections.
Academic Performance – accomplishment or proficiency in a given skill or body of knowledge usually

designated as test scores or marks assigned by teachers. For this study, it refers to the general
weighted average grades of the student-users.
Social Networking Site – abbreviated as SNS or social media platform is the phrase used to describe any
website that enables users to create public profiles within and form relationships with other users
of the same website who access their profile.
Student-Users – BS Accountancy students to whom the study will focus on. They are the ones who create
profiles containing various information about themselves. Users upload pictures of themselves to
their profiles, post blog entries for others to read, search for other users with similar interests, and
compile and share lists of contacts.
3. REVIEW OF RELATED LITERATURE AND STUDIES
For a better perspective of the major problem of the study, in addition to the ones cited as part of the
theoretical frameworks, relevant literature and studies were also cited to provide valuable insights as
regards the topic.
In a study conducted by UST students entitled “Social Networking Sites Affect One’s Academic
Performance Adversely”, they concluded that social networking sites do affect one’s academic
performance adversely. In addition, they further stated that social networking directly causes the gradual
drop of grades of students. Thus, it directly affects a student’s academic performance if the student invests
his time in SNSs instead in his studies. It can be implied that social networking are highly addictive
particularly to those people who cannot control themselves - constantly using these sites, prioritizing

43
entertainment over schoolwork, and giving a high degree of importance to social acceptance and
affiliations (Banquil, Chua, et al., 2009).
Non-substance addiction like gambling and catch-all "behavioral addiction - not otherwise specified"
category meant to indicate, well, that people may become addicted to anything. This is noted
psychiatrically when a person seeks out an experience, ritual, or reward to the exclusion - and detriment -
of all other goals and activities. The measure of addictiveness is how absorbing, compelling, and harmful
to the person an involvement is. Nothing else matters (Peele, 2012). Addiction in the context of this study
may include the excessive use of online social networking account(s) by students for purposes other than
academics.
There was a significant relationship between heavy Facebook usage and lower grade point averages
(GPAs) of students (n = 3149) at 4 different institutions (Boogart, 2004). In response to the survey
statement “I feel addicted to Facebook,” 31.3% agreed or strongly agreed. Although heavy Facebook
usage is correlated with lower GPAs, this same usage helps build and maintain social connections and
creates a connectedness with the campus. The study was limited to students living in on-campus housing
at institutions listed in the Carnegie Classifications and who had access to university e-mail accounts
during the survey period. Though these technologies carry a potential negative effect of lowering a
students’ GPA, the positive effects of feeling grounded and connected to campus is dominant.
In contrast to recent sensational and unsubstantiated news reports that Facebook use lowers academic
performance, results from three studies indicate that the two variables are likely unrelated (Pasek and
Hargittai, 2009). There is no relationship in a representative study of first–year undergraduate students at
the University of Illinois at Chicago and a slight positive relationship in a nationally representative survey of
youth. Changes in academic achievement did not vary with Facebook use when demographic controls
were considered. Facebook simply does not seem to have a generalizable impact on grades.
The study found no correlation between heavy social media usage and grades. There was no significant
difference in grades between those considered to be heavy users of social media and those considered to
be light users. (Martin et al, 2009) For example, 63 percent of heavy users received high grades,
compared to 65 percent of light users. Researchers found similar results with lower grades. While 37
percent of heavy users of social media received what were defined as lower grades, 35 percent of light
users received fell into that same category. There also was no correlation between grades and the social
media platform used. For example, almost the same number of heavy and light users of both Facebook
and YouTube received the same category of high and low grades.
Findings showed that 79 percent of Facebook users claimed it did not have an impact on their academic
performance. Users claimed they did not use Facebook frequently enough to notice an impact, and
emphasized that academics were a priority for them. The results do not necessarily mean that Facebook
use leads to lower grades. There may be other factors involved, such as personality traits, that link
Facebook use and lower grades. (Karpinski and Duberstein, 2009).
However, in the study conducted by UE-Manila CAS Students entitled “Epekto ng Social Networking Sites
sa Pag-aaral ng mga Estudyante sa Kolehiyo ng mga Sining at Agham)”, the researchers found out that a
majority of their respondents viewed SNSs as a very effective means of communication. So effective, that
they viewed SNSs as a means by which they are able to broaden their relationships with other classmates
and teachers, and also enabled them in obtaining newfound knowledge in the fields of politics, economics,
science, arts, and other topics relevant to their respective courses. (Aquino, Del Finado, et al., 2010)
As published in “Manila Bulletin” on March 31, 2010, an article entitled “Philippine Internet by the
Numbers” by Michael Alan Hamlin, stated that entertainment is by far the most important reason Filipinos
go online, with 78% seeking some form of entertainment according to research firm comScore.

44
4. RESEARCH DESIGN AND METHODOLOGY
This study utilized the questionnaire survey approach to gather data and pertinent information from
respondents.
4.1. Research Design and Instrument
Descriptive research is used in this study to interpret the results and findings from the tabulated answers of
the respondents as well as interpreting the results from the Pearson’s Chi-squared test. The technique that
was used under descriptive method is the normative survey approach and evaluation, which is commonly
used to explore opinions of the respondents representing a whole population.
4.1.1. Research Subjects. The respondents of this study were 208 senior accountancy students
comprising of 96 males and 112 females with ages ranging from 19 to 21 years old. The sample size was
determined through the use of Sloven’s formula considering a margin of error of three percent (3%). This
was trimmed down to 203 after it was determined that 5 of the respondents do not have any online social
networking account.
4.1.2. Statistical Treatment. The data were analyzed by the use of the Pearson’s chi-square test. It is
used to assess the test of goodness of fit and test of independence, and to convey the existence or
nonexistence of the relationships between the variables investigated - online social networking and the
academic performance of student-users.
4.2. Research Procedure
As illustrated in the conceptual framework, a set of questions regarding the online social networking was
prepared. The respondents were then given ample time to answer the survey questionnaire. The
responses were summarized into tables and graphs and later analyzed using the Pearson’s Chi-Squared
Test. Detailed interpretations of the data gathered were made to quantify the relationships among
variables and determine the impact of the use online social networking sites on the academic performance
of student-users. It was followed by the formulation of conclusions which served as bases for the
recommendations.
5. DATA PRESENTATION, ANALYSIS AND INTERPRETATION
The following data are presented to highlight the responses given by the student-users based on the
questions in the research instrument:
FIGURE 2. THE PERCENTAGE OF RESPONDENTS WHO HAVE ONLINE SOCIAL NETWORKING

SITE ACCOUNTS
Figure 2 shows that out of the 208 respondents, 203 have online social networking site account(s) which

45
corresponds to 98%. Only five of them have no online social networking site account(s) which corresponds
to 2%.
FIGURE 3. ONLINE SOCIAL NETWORKING SITE ACCOUNTS MAINTAINED BY RESPONDENTS
200
Facebook
180
Instagram
160 Multiply
140 Plurk
120 Yahoo
100 Hotmail
Google
80
MySpace
60
Twitter
40 Tumblr
20 Others
0
Figure 3 shows the various accounts that are being maintained by the student-users. The account with the
highest frequency is Facebook with 25%; closely followed by Yahoo and Instagram with 24% and 20%,
respectively. Other online social networking site accounts cited included Mulitply, Twitter, Google,
MySpace, Tumblr, Plurk, Hotmail, Goodreads, Lockerz, Formspring.me, Crazy Chat, Game Spot, XIHA,
Animefreak.tv, Tagged, Flixter, Philmusic, Garena, Youtube, Blogspot, OMG Pop, Crunchy roll, Tutu, HI5
and Wordpress.
FIGURE 4. THE PROPORTION OF HOW LONG ONLINE SOCIAL NETWORKING SITE ACCOUNTS
ARE BEING MAINTAINED BY STUDENT-USERS
Figure 4 shows that majority of the student-users have maintained their online social networking site
account(s) for more than 6 years that corresponds to 35% of the total respondents. Followed by 5-6 years
for 26%, 3-4 years for 23%, 1-2 years for 13% and lastly less than 1 year for 3%.

46
FIGURE 5. THE STUDENTS' PERCEPTION ON HAVING AN ONLINE SOCIAL NETWORKING SITE

ACCOUNT
As shown in Figure 5., 61% of respondents agreed that they preferred maintaining their online social
networking site account(s) while 35% strongly agreed, and only 4% both disagreed and strongly
disagreed.
FIGURE 6. THE MOST FREQUENTLY USED ONLINE SOCIAL NETWORKING SITE ACCOUNTS
Figure 6 shows that Facebook is the most frequently used social networking site account with a 48.38%
(194) followed by Yahoo with 27.43% (110); Google - 6.23% (5), Twitter - 5.99% (24), Instagram - 4.99%
(20), Multiply - 3.74% (15), and Tumblr, Plurk, Hotmail, and others such as Gamespot, Philmusic, Blogspot,
Cruchy Roll with 3.24% (13).
FIGURE 7. THE FREQUENCY OF STUDENTS' USAGE OF ONLINE SOCIAL NETWORKING SITE

ACCOUNTS
Figure 7 explains that 24.14% of student-users opened and used their online social networking site

47
account(s) at least once a week, 23.65% everyday, 22.17% twice a week, 20.20% every other day, 3.94%
once a month, and others (such as weekdays, thrice a week, twice a month, whenever I have time and
want) with 5.91%.
FIGURE 8. STUDENTS' RESPONSE ON SURFING THE INTERNET FOR LEISURE RATHER THAN
FOR SCHOOL WORK
Figure 8 shows that 115 student-users or 56.65% of the total respondents with social networking accounts
often surfed the internet for leisure rather than for school work, 43 student-users or 21.18% responded
seldom, 41 student-users or 20.20% said always with only 4 student-users or 1.97% stated that they never
used the internet for leisure.
FIGURE 9. STUDENTS' RESPONSE ON BEING IN A SITUATION OF ATTENDING TO SOCIAL

NETWORKING ACCOUNTS INSTEAD OF STUDYING
This figure shows that out of 203 student-users, 87 often used social networking account(s) instead of
studying with an equivalent of 42.86%, 74 student-users or 36.45% - seldom, 29 student-users or 14.29% -
always, and 13 student-users or 6.40% - never.

48
FIGURE 10. THE PROPORTION OF THE TIME SPENT BY STUDENT- USERS IN ONLINE SOCIAL
NETWORKING SITE ACCOUNTS PER WEEK
150
100
50
0
Less than 1 -3 hours 4 - 6 hours 7 - 9 hours 10 - 12 More than Others
1 hour hours 12 hours
Figure 10 shows that 132 student-users or 65.02% spent 1-3 hours using social networking site account/s
weekly followed by 33 student-users or 16.26% for less than 1 hour, 28 student-users or 13.79% for 4-6
hours, 5 student-users or 2.46% for 7-9 hours, 3 student-users or 1.48% for 10-12 hours, 2 student-users
or 1% for others (one and one-half hours) and none of the student-users spend more than 12 hours online.
FIGURE 11. STUDENTS' RESPONSE ON BEING IN A SITUATION OF EXTENDING TIME ALLOTTED

FOR BROWSING ACCOUNTS DUE TO CHATTING AND OTHER NON-ACADEMIC ACTIVITIES
Figure 11 above shows that 46% of the total student-users are often in a situation of extending the time
allotted for browsing due to chatting and other non-academic activities, followed by seldom with 33%,
always with 13% and lastly never with 8.37%.

49
FIGURE 12. STUDENTS’ RESPONSE IF SOCIAL NETWORKING SITES AFFECT THEIR STUDENT
HABITS AND STUDY
The figure above explains that 106 of the student-users or 52.22% responded that social networking sites
affected their study habits and study time, 26 students or 12.81% strongly agreed, while 58 students or
28.57% disagreed, and 13 students or 6.40% strongly disagreed.
FIGURE 13. STUDENTS' RESPONSE ON BEING IN A SITUATION OF HAVING A SCHEDULED

EXAMINATION AND YET SPEND MORE TIME SURFING THE NET
This figure shows that 105 student-users (51.72%) are seldom in a situation of having a scheduled
examination and yet spent more time surfing the internet, 54 student-users (26.60%) stated often, 34
student-users (16.75%) said never, and 10 student-users (4.93%) said always.
FIGURE 14. STUDENTS' RESPONSE ON EXPERIENCING LOW GRADES DUE TO USAGE OF

SOCIAL NETWORKING SITES
Figure 14 shows that 113 student-users or 55.67% disagreed that they have experienced low grades as a

50
consequence of using social networking sites, 39 student-users or 19.21% agreed, 38 student-users or

18.72% strongly disagreed, and 13 student-users or 6.40% strongly agreed.
2
6. CHI-SQUARED ( X )TEST RESULTS
The table below shows the computed critical values for T at 0.05 with the degrees of Freedom of 24, 30,
and 36 for hypotheses 1, 2 and 3, respectively.
TABLE 1. CRITICAL VALUES FOR T
(1) On whether the duration of time since social networking accounts have been created has a significant
effect on the academic performances of the student-users –
Null Hypothesis: There is no significant effect on the academic performance measured in terms of
grades per semester with the duration of time since social networking accounts have been
created.
Alternative Hypothesis: There is a significant effect on the academic performance measured in

terms of grades per semester with the duration of time since social networking accounts have
been created.
2
Degree of Freedom = 24 Level of Significance = 0.05 Critical Value of x = 2.0639
TABLE 2.1. COMPUTED VALUE
2
GWAs in the of x
st
First Year, 1 Semester 0.373391554
nd

51
st
Second Year, 1 Semester 0.227648191
nd
st
Third Year, 1 Semester 0.863058746
nd
st
Fourth Year, 1 Semester 0.280007802
nd
2 2
Table 2.1 shows that all the computed values of x are lower than the critical value of x which is equal to
2.0639. Therefore, reject the alternative hypothesis and accept the null hypothesis.
(2) On whether the frequency of using social networking accounts has a significant effect on the academic
performances of the student-users –
grades per semester with the frequency of opening or accessing social networking accounts.

terms of grades per semester with the frequency of opening or accessing social networking
accounts
2
2
GWAs in the of x
st
nd
st
nd
st
nd
st
nd
2 2
(3) On whether the time spent in using the social networking accounts instead of studying has a significant
effect on the academic performances of the student-users –
grades per semester with the number of hours spent in using online social networking sites.

terms of grades per semester with the number of hours spent in using online social networking
sites.
2

52
2
GWAs in the of x
st
nd
st
nd
st
nd
st
nd
2 2
7. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
7.1. Findings
There was no significant effect on the academic performance measured in terms of grades per semester
with the duration of time since social networking accounts have been created. Out of the 208 respondents,
203 have online social networking site account(s) and only five of them have no online social networking
site account(s). Although most of the senior accountancy students have had social networking account(s)
for an average of 4 years with 96% of them preferring to maintain their accounts, results showed that their
grades have not been significantly affected. From an educational standpoint, this means accountancy
student-users are able to manage the use of their time wisely. In spite of the fact that more than 65% of
the student-users admitted that being engaged into social networking sites has somehow affected their
study habits and study time, almost 75% of them disagreed that they have experienced any decrease in
grades as a consequence.
On the second hypothesis, it was found out that there was no significant effect on the academic
performance measured in terms of grades per semester with the frequency of opening or accessing social
networking accounts. Most student-users have either Facebook, Yahoo, and/or Instagram accounts. As
expected, Facebook came out to be the most frequently used social media platform with 194 student-users
accessing their accounts at least four (4) times a week. However, other than Facebook and Yahoo, there
was no significant difference in the amount of time spent accessing other sites. Based on the responses,
students use Facebook frequently because they are building their social connections, while others use
Yahoo for emails, academic researches, latest news, entertainment, and sports information.
Finally, there was little support for the third hypothesis since there was no significant effect on the
academic performance measured in terms of grades per semester with the number of hours spent in using
online social networking sites. Social networking tools, and hours spent on several of the sites did not
play a role in the general weighted averages of the student-users. As noted in figures 8 and 9, more than
half of the total respondents with social networking accounts admitted that they always or often surfed the
internet for leisure rather than for school work, thereby spending more time using their social networking
account(s) instead of studying. Furthermore, most student-users extend time using the internet for
chatting and other non-academic activities. Even though they confessed that social networking sites
have affected their study habits and study time, only a few (31.53%) claimed that they spent more time
surfing the internet instead of studying for a scheduled examination.

53
7.2. Conclusions
Based on the findings, it can be concluded that there is no direct relationship that exists between the
usage of social networking sites and the academic performances of student-users. As demonstrated
above, its current level of use has no impact on the grades of accountancy student-users. This may be
because those students who are in their senior year may have already adapted to the rudiments and
requirements of the accountancy program and basically go online to socialize with friends and
acquaintances for a limited period of time.
7.3. Recommendations
As new technologies continue to be available to college students, so will the need for them to exercise
prudence and restraint in the use of various social media platforms. Accountancy students and accounting
teachers alike should, therefore, be concerned about the possible negative impact of excessive use of (or
addictiveness to) social networking on learning –spending too much time online to the detriment of
academic performance.
It would be worth mentioning, however, that the findings are based on a relatively small sample at one
location. Similar findings may not exist in a larger sample of different courses from multiple locations.
Similarly, not all college year levels were considered in this study. A larger sample should be generated
with regard to all the courses taken up by college students.
7.4. Challenges for Future Researches
Based on the findings and conclusions, the following are the challenges for future research undertakings:
1. Consider factors that may affect students’ academic performance since the findings of the
research resulted in to no significant relationship between the academic performance measured
in terms of students’ General Weighted Averages (GWAs) and the use of online social
networking site account(s).
2. Test what online social networking sites are widely used by the student-users and determine
their effects on academic performances using correlation.
3. Assess the positive and negative effects of using online social networking sites to the academic
performance of student-users.
4. A comparative study of the academic performance of frequent users of online social networking
sites with those who do not maintain any social networking account at all should be considered.
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computer-mediated teacher self-disclosure on student motivation, affective learning, and classroom
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Peele, S. (2012). The Meaning of Addiction Has Changed: Addiction is not a drug trait, but a relationship in
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AUTHOR PROFILE
Angelito C. Descalzo is affiliated with University of the East, Manila, Philippines.

55
ENHANCING THESES RECORDING AND MONITORING USING A CUSTOMIZED

DATABASE MANAGEMENT SYSTEM (DBMS)
Eladio M. Avellanoza, Nueva Vizcaya State University, Bayombong, Nueva Vizcaya, Philippines
Marah Joy A. Nanglegan, Nueva Vizcaya State University, Bayombong, Nueva Vizcaya, Philippines
Marla A. Hernandez, Nueva Vizcaya State University, Bayombong, Nueva Vizcaya, Philippines
Caroline A. Angeles, Nueva Vizcaya State University, Bayombong, Nueva Vizcaya, Philippines
ABSTRACT
A Theses Management and Monitoring System (TMMS) was designed and implemented to enhance the
recording and monitoring system of undergraduate theses at the Research and
Development-Management Information Systems Office of the Nueva Vizcaya State University,
Bayombong, Nueva Vizcaya, Philippines. The TMMS is a customized Database Management System
(DBMS) using Microsoft Access.
The TMMS was able to solve the basic problems encountered during the use of manual and keyed-in
recording since it allowed its users to easily access and generate the needed information by just a few
clicks and simple type on a computer.
Keywords: Database management system
1. INTRODUCTION
Information Technologies have the potential to transform organizations through their capacity to gather
and store huge amount of data, manipulate, and transmit information efficiently with amazing speed.
Information technology have touched every part of people’s lives; the way they work, learn, live, and play.
Technological advancement revolutionized change in information management and monitoring scheme

that paved the way to the development of Database systems which provide an accurate means of record
keeping, monitoring and data processing. Scot Morton (1991) claimed that transforming organizations
through a customized database system is an important business objective because traditional structures
are often ineffective in attaining desired productivity. In the future, all organizations need to be transformed
with computer-based technologies to be effective.
Database Management System (DBMS) is a software system that enables users to define, create, and
maintain the database and provide controlled access to these databases. In a book by Post and Anderson
(1997), they stated that DBMSs provide abstractions by which the logical model of the data can be
separated from the way it is physically stored. DBMSs are designed to help users examine the data from a
variety of perspectives. Instead of simply printing one type of report, they enable users to ask questions
and create their own report.
Thus, DBMS is one of the most important tools in Management Information Systems (MIS). They have
changed the way that computer applications are developed and are changing the way that organizations
are managed.
Two important strengths of DBMSs are the ease of sharing data and the ability to search for data by any
criteria. In terms of creativity, a database can make a person more efficient and improves decisions. It
improves efficiency by providing easier and faster data processing and retrieval (Post & Anderson, 1997).
Record keeping becomes increasingly difficult to handle to any organization and business nowadays

56
because they continuously generate information. However, in a study conducted by Tolentino (2007), she
claimed that through computers and vast databases available today, keeping the large amount of
information seems to be a natural phenomenon to an organization requiring a proper place to store all
essential information. Through this, spoilage or misplacing records can be avoided and information can be
acquired instantly.
Hence, the Research and Development Management Information Services (RD-MIS) team of the Nueva
Vizaya State University came up with the computerization aiming to change and improve the existing
manual system. The use of a customized DBMS is the best solution that would answer the existing
problem in terms of theses recording, monitoring, data retrieval and report generation.
For the past years, the RD-MIS office used two methods which were manual file system and file-oriented
system. The manual file system used log book to store data then those data were keyed in using Microsoft
Word or Excel. Among the problems in the old system were redundancy, inconsistency and maintenance.
Data retrieval and processing was a big trouble.
Obviously, having manual access of record was a big problem. It required lots of efforts, time and patience
to produce the information needed. Files recorded in the manual system were difficult to access and
manipulate. Likewise some necessary records were lost when they were placed in the wrong storage.
Since manual documents were usually done with pen and paper, keeping bulky documents became a
major drawback.
On the other hand, keyed in system using Microsoft Word or Excel had improved the record keeping
process but it lack features that DBMS applications can offer. Thus, development of a DBMS is a great
help and solution to these problems.
The Thesis Management and Monitoring System (TMMS) can change the traditional system of
recording/monitoring and report generation processes. It can solve the basic problems encountered during
the use of manual recording. Information will be intact in a proper, organized and secured way. Through
TMMS, data will be stored digitally thereby information can be acquired instantly.
Generally, the project aimed to enhance the recording and monitoring system of undergraduate theses
using a customized Database Management System (DBMS).
Specifically, it aimed to design a system that enables easier and faster way of record keeping, data
processing and retrieval and implement this system to facilitate change in recording, monitoring, and
data generation.
1.1 Conceptual Framework
FIGURE 1. CONCEPTUAL FRAMEWORK

57
2. METHODOLOGY
Methodologies involved in this research were data collection and Theses Management and Monitoring
System (TMMS) development using Microsoft Access.
2.1 Data Collection
The team gathered and compiled the necessary information needed for the development of a TMMS such
as thesis title, thesis student, thesis adviser, major, commodity, etc. Sources of data were thesis
manuscripts and previous thesis reports.
2.2 System Design and Development
The team followed the database design methodology cited by Aripin (2006). Figure 2 shows the seven
steps of design flowchart:
FIGURE 2. THE SEVEN STEPS OF DESIGN FLOWCHART (ARIPIN, 2006)
2.3 Microsoft Access for TMMS Design and Development
In a study conducted by Aripin (2006), he described Access as a set of tools for end-user database
management. It has a table creator, a form designer, a query manager and a report writer. Access is also
an environment for developing applications. He further discussed that by using macros and modules to
automate tasks, user-oriented applications as powerful as those created with programming languages can
be created complete with the buttons, menus and dialog boxes.
The TMMS was developed using Microsoft Access 2002 application software. Guided by the capabilities of
this application, the team believes that through TMMS development, the drawbacks of using the old
system would be eliminated.
RESULTS AND DISCUSSION
Figure 3 presents the design and parts of the input interface of the TMMS.
PARTS OF THE THESES MANAGEMENT AND MONITORING SYSTEM
1. Find Record 5. Add Record 9. Close Form

2. Preview Report 6. Print Report 10. Name Preview
3. Run Query 7. Export to File 11. Data Fields
4. Previous/Next Record 8. Entry Guide/Help

58
FIGURE 3. THE INPUT INTERFACE OF THE TMMS.
3.1 System Analysis of the TMMS
Menus and functions
Find Report. To find thesis by name, course, commodity, major field of specialization, etc.
Preview Report. To preview report per parameter value. This menu designed to preview filtered
information based from various criteria set on the run query function such as the following: list by adviser;
list by major; list by commodity, etc.
Run Query. To run query per parameter value. The query is designed as a means of accessing and
displaying data from a single or multiple tables (Post & Anderson, 1997). In TMMS’ query, specific fields
can be selected, sorting orders can be defined, calculated expressions can be created, and criteria to
select desired records can be entered.
There are several queries developed in this system. Through these queries, information can be accessed
using the following criteria: Outline, Manuscript, Adviser Name, Classification, Major, Course, and
Commodity. Using those criteria to filter information inside the TMMS, the system has the capability to
generate various reports and format. Queries can be created and edited easily.
Print Report. To print a report in various list and formats. This menu was designed to print filtered
information based from various criteria set on the run query function. Reports can be formatted easily in
various styles using the report design function of the Access to fit the needed format of a particular report.
There are several report formats designed inside the TMMS. Those reports were formatted based from the
various report formats and they are just waiting to be clicked and printed.
Previous/Next Record. To navigate the record within the TMMS.
Add Record. To add record.
Export to File. This menu is used to export reports. Data or information stored in the TMMS can be
exported to Microsoft Word, Excel, Text and PDF formats using filters set on the query function.

59
This function of the TMMS is very useful since it enables the RD-MIS team to send a particular report via
e-mail. Appendix figure 4 shows a list of thesis titles conducted by students exported in PDF format.
Entry Guide/Help. It contains some instructions, guidelines, and entry codes used for filling up the
TMMS. This feature is very important to ensure the uniformity of data entry.
Name Preview. To give a view of thesis student’s name. This facilitates faster identification and searching.
Close Form. To close the form.
Data Fields. To hold the necessary data in the database.
3.2 Data fields and their functions
R&D Contribution No. To serve as a primary key. It is used to relate a table to foreign keys in other
tables. In a book written by Post & Anderson (1997), they discussed that a primary key does not allow null
values and must always have a unique value.
Date. To serve as a reference when the thesis was indexed in the RD-MIS office.
Classification. To classify the titles to thesis manuscript and outline. This data field can be used to
filter and generate a list of theses by classification.
Course. To record the academic course of the thesis student. This data field can be used to filter and
generate a list of theses by course.
Major. To record the major field of the thesis student. This data field can be used to filter and generate a
list of theses by major.
Study title. To record the title of the thesis.
Name of Student. To record the name of the thesis student.
Commodity. To record the commodity being studied. This data field can be used to filter and generate a
list of theses by commodity.
Sector. To record the sector of the study/research. This data field can be used to filter the report and
generate a list of theses by sector.
Discipline. To record the discipline of the thesis/research. This data field can be used to filter and
generate a list of theses by discipline.
Adviser. To record the name of the adviser of the thesis student. This data field can be used to filter and
generate a list of theses by adviser.
Adviser data field was placed on a separate table and linked through relationships. The team linked the
R&D Contribution No. to Adviser ID to link information on Theses and the Thesis Adviser.
Filtering information can be a combination of two, three or more data fields. For example, list of theses by
classification by course and by major (Figure 4).

60
FIGURE 4. LIST OF THESES FILTERED BY CLASSIFICATION BY COURSE AND BY MAJOR.
3.3 Other Features of the TMMS
The TMMS made use of the Access’ data-validation rules to prevent inaccurate data regardless of how
data is entered. Every field in a table has format and default definitions for more productive data entry.
Multiple tables in the TMMS were linked by defining the relationships between each table. This relationship
can be used to create queries, forms, and reports to display information from several tables at once
(Figure 5).
As cited by Apirin (2006), a relationship works by matching data in key fields - usually a field with the same
name in both tables. In most cases, these matching fields are the primary key from one table, which
provides a unique identifier for each record, and a foreign key in the other table. This statement can be
illustrated in figure 5 which shows that Advisers Sansano, Ruby A and Espiritu, Orland P. is linked to
R&DContribNo (R&D Contribution Nos.) 07-AB009-M and 07-AS001, respectively.

61
FIGURE 5. TABLE SHOWING THE R&D CONTRIBNO KEYS LINKED TO ADVISER ID KEYS.
3.4 System Implementation
After a thorough testing and system improvements, the team decided to fully implement the TMMS.
Upon implementation, encoding of thesis manuscripts was done.
The system is now running in a standalone computer. Updating of data is done every time that a new
thesis title is submitted to the RD-MIS office. At present the TMMS holds 351 manuscripts (see figure 7 for
details) titles and 112 outline titles.
FIGURE 6. DISTRIBUTION OF THESES MANUSCRIPTS COLLECTED PER ACADEMIC COURSE OF

STUDENTS FROM 2007 TO 2013.

62
4. CONCLUSION AND RECOMMENDATIONS
4.1 Conclusion
The Thesis Management and Monitoring System (TMMS) enhanced the recording and monitoring system
of undergraduate theses. The system allows its users to easily have access with the records in a faster
and more convenient way. Instead of searching particular information in folders or logbooks, which is time
consuming; the users can readily access and generate the needed information by just a few clicks and
simple type on a computer.
With the TMMS, basic problems encountered in the traditional system of recording and monitoring, and
report generation processes were solved.
4.2 Recommendations
1. The RD-MIS team should collaborate with the IT department to come up with a more
comprehensive database.
2. Inclusion of thesis abstract to the system to make it more accessible.
3. All thesis students should be advised to have their thesis outlines indexed at the RD-MIS office.
REFERENCES
Aripin, S. 2006 Database Management Inventory System. [Online] Available From:

System6.Net/Database-Management-Inventory-System-Pdf-E129.Pdf.
Connolly, T. M. And Begg, C. E. 1999 Database Systems: A Practical Approach To Design,
Implementation And Management. Usa: Addison-Wesley.
Post, G.V. And Anderson, D.L. 1997 Management Information System: Solving Business Problems With
Information Technology. Burgin, Ky: The Mcgraw-Hill Companies.
Microsoft Corporation. 1992-2001 Microsoft ® Access 2002. Microsoft Corporation.
Ponniah, P. 2003 Database Design And Development: An Essential Guide For It Professionals. Usa: John
Wiley & Sons, Inc
Scot Morton, M.S. (Ed). 1991 The Corporation Of The 1990s: Information Technology And Organizational
Transformation. New York: Basic Books.
Tolentino, R.G. 2007 Computer-Based Inventory, Record Keeping And Monitoring System For The
Property And Equipment Of Tarlac State University College Of Computer Studies. [Online] Available
From
Http://Region3.Dost.Gov.Ph/Index.Php?Option=Com_Content&View=Article&Id=259%3acomputer-Based
-Inventory-Record-Keeping-And-Monitoring-System-For-The-Property-And-Equipment-Of-Tarlac-Stat
e-University-College-Of-Computer-Studies&Catid=23%3acomputer-Science&Itemid=45.

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