Figure 5-3 shows the screen cuts from NVivo 9 for the structure and nodes of the second round of coding.
Figure 5-3: Nodes in the tree structure – second round of coding24
The second round of coding and data analysis is based largely on the model of reflective analysis developed by Embree (2007), which was illustrated in Figure 3-4 in Chapter Three. The essential theme of reflective analysis lies in the ‘intentionality’ of people, i.e. all experiences are regarded as ‘intentive processes’. By deeming the performance of audit committee members to be intentional, the second round of coding, i.e. the reflective analysis, will discuss and analyse the reasons for the participants’ responses, which were identified in the first round of coding.
According to Embree (2007), one’s encounters include broad categories of ‘experiencing’, ‘believing’, ‘valuing’, and ‘willing’. To facilitate the data analysis, the interview data that are of
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an ‘experiencing’ nature are coded as ‘descriptive accounts’, because they describe what happens. The descriptive accounts are classified further into ‘perceptional’ and ‘pictorial’.
Perceptional accounts were represented by ‘expecting’, a perception of future encounters; ‘perceiving’, a perception of current encounters; and ‘remembering’, a perception of a past experience. ‘Remembering’ accounts are the closest description to a factual incident, whereas ‘perceiving’ accounts usually represent the interviewee’s general perception of ‘how things should be’. Perceptional accounts may or may not indicate a factual incident. The ‘expecting’ accounts however, represent an anticipated outcome rather than a factual incident. Using the participant’s description of audit committee meetings as an example, a typical ‘remembering’ account is represented by interviewee 05 referring to his audit committee meeting papers and describing the audit committee meeting as: ‘…that meeting was as a result of a review by the incoming chief executive of aspects of the loan book. A recommendation was that we required… the company required additional provisioning on a particular loan book…’ Interviewee 01 provided a ‘perceiving’ account about the audit committee meetings in his company, saying: ‘Right, this is where we are probably a wee bit weak. (smiling) As I said, we don’t say “Hey, next Tuesday morning is the audit committee meeting”. We just say, “oh, okay we will discuss it in our general meeting”. I will probably say, “Okay, I will take note of that and talk to the accountant”, because, we know our compliance rules.’ An ‘expecting’ account was identified in the transcript of interviewee 03, (who, when discussing the possible outcome of a particular audit committee meeting, said: ‘If, for instance, the Securities Commission thought that the other finance companies had transactions that looked different in general, and our one looks out of line, I have got no doubt that, either with or without a request from the shareholders to have a look at that, they will come and want some information of how that transaction was arrived at, and certainly will be looking at the auditors and the auditors’ comfort around it.’
Pictorial accounts were originally designed to capture either descriptions of the contextual information about the particular organisation or a particular incident, coded either under the node ‘organisational context’, or, coded under the node ‘procedural’ describing the procedural settings of the audit committee. Interviewee 10 provided a typical ‘organisational context’ account, saying: ‘we don’t have internal audit. It’s only a small company. Hum… we are probably close enough… well… yeah… close enough to know the accounting and control very well.’ An example of a procedural account described by interviewee 09 is: ‘what I always did was when I received my audit committee papers; I always flicked them through very quickly to see what was
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coming up.’ As shown in Figure 5-3, an additional node ‘anecdotal’ was created for the pictorial accounts. This is because when the tree structure in Figure 3-5 (in Chapter Three) was
established, it was expected that participants would describe only the usual settings of their audit committees, as documented by the existing audit committee literature. During the interviews, participants revealed several incidents which were significantly different to the ‘expected’ incidents. A typical example of such an anecdotal account is when interviewee 04 described how one of his fellow directors negligently sold shares which was prohibited by the insider trading regulations, so his audit committee quickly became involved in dealing with immediate remedial procedures and in liaising with the regulatory body to make sure that the company would not suffer any adverse impacts from this incident.
The interview data of an ‘intentionality’ nature that are coded as ‘explanatory accounts’ describe the participants’ reasons for their responses. The intentional factors are filtered out from the explanatory accounts and classified further into ‘willing’, ‘valuing’, and ‘believing’. The key difference between ‘believing’, ‘valuing’, and ‘willing’ is that ‘believing’ (something to be true) more likely ‘comes from what others have communicated to us’ (Embree 2007, p. 183), whereas ‘valuing’ something to be either right or wrong is closer to a deduction from past experience; ‘willing’ to do or not to do something can be regarded as an intended realisation of ‘believing’ and ‘valuing’ in the future. If audit committee effectiveness is intended by the committee members, the participants’ value laden accounts are therefore relevant to this research.