s2fieldsofstudy:
Business
Computer Science

text:
Evaluation of Efficiency of Accounting Information Systems: A Study on Mobile Telecommunication Companies in Bangladesh

The study evaluates the efficiency of Accounting Information Systems of the selected mobile telecommunication companies. The existing Accounting Information Systems which provide important sources of accounting information is viewed in the selected mobile telecommunication companies, more as the system for recording and reporting the business operations than as an information system for management decision making. Accounting Information Systems as a set of capital and human resources within an organization is responsible for the preparation of financial information and also of the information obtained from the collection and process of transaction data. The adequate accounting information is essential for taking every effective decision making process and adequate information is possible if the Accounting Information Systems run with efficiently. The efficient Accounting Information Systems is essential because it ensures that all levels of management get sufficient, adequate, relevant and true information for planning and controlling activities of the business organization. Accounting Information Systems cover a broad area in corporate world and produce quality information for the internal and external users to the business organization. The users of the Accounting Information Systems are satisfied about their systems. The study shows that the Accounting Information Systems of the selected mobile telecommunication companies are efficient since the examination of various indicators of efficiency showed favorable results and the responses of the surveyed respondents showed positive comments.

INTRODUCTION
Accounting Information System is a system that collects and processes data which is measured in terms of money. AIS process accounting transactions and supplies information for the interested users which is used to take effective decision making process, to help management for performing business activities properly and finally to measure the performance of the company. AIS are the oldest and most wide used information systems in business. AIS are based on the double entry bookkeeping concept and other more recent accounting concepts such as responsibility accounting and activity based costing. Accounting is primarily concerned with the design of the system of records, the preparation of reports based on the recorded data, and the interpretation of the reports to the both internal and external users for making decision. Accounting system is a recording process system like journal, ledger, worksheet, trial balance and procedures that are produced reliable and relevant information for preparing the financial statements and other accounting reports for the satisfaction of the different users to effective decision making. Modern world is the information world and every business organization makes it necessary to obtain proper information both for external and internal users for appropriate decision making. AIS are a combination of the study and practice of accounting with the design, implementation and monitoring of information systems. Accounting Information Systems of the mobile telecommunication companies in Bangladesh have computerized accounting systems. There are three phases like analysis, design and implementation. Successful system design depends to a large extent upon the creativity, imagination, and general capabilities of the designer, observance of the broad principles. The accounting system is an integral part of the internal control structure of an organization. Without the information generated by the AIS, management would lack the ability to plan and direct operations in achieving organizational goals. Although the availability of computer has made computerized processing of accounting data affordable to any organization, a thorough understanding of manual accounting system is essential. All computerized accounting systems include the concepts and principles inherent in a manual system; an understanding of a manual system allows managers to recognize more clearly the interrelationships which exist within accounting data and reports which are produced by Accounting Information Systems of the companies (Fess and Warren, 1990). Accounting information is economic information; it relates to the financial or economic activities of the business organization. AIS have to monitor the monetary dimension of economic activity in an organization by processing data according to requirements and delivering precise information that is useful to those who plan and manage the organizations activities and also to interested outsiders (Summers, 1989). AIS is vital to all organizations and perhaps, every organization either profit or non profit-oriented need to maintain the AIS and indicate an integrated framework within an entity that employs physical resources to transform economic data into financial information for conducting the firms operations and activities and providing information concerning the entity to a variety of interested users (Sori, 2009). An information system is an organized means of collecting, entering, and processing data and storing, managing, controlling, and reporting information so that an organization can achieve its objectives and goals. AIS are an information system that is designed to make the accomplishment of accounting function possible. AIS processes data and transaction to provide users with the information they need to plan, control, and operate their business (Romney et. al., 1997). Accounting information generated from an accounting information system can be effective in decision-making process, purchase; installation and usage of such a system are beneficial when the benefits exceed its costs. Effectiveness of Accounting Information Systems can be analyzed on three bases such as information scope, timeliness and aggregation. Information scope is considered as financial and non-financial information, internal and external information that is useful in prediction of future events. Timeliness quality is related to the ability of AIS to satisfy information needs by providing systematic reports to the user. Aggregation of information is considered as means of collecting and summarizing information within a given time period (Sajady et. al., 2008). The Accounting Information System is a component of administrative management in business organizations, which handles the collection, tabulation, data processing, financial information communicating and the amount needed to make decisions to users. This system provides accounting information on time to assist in preparing, monitoring and implementing the state budget. It also help in making decisions related to financing lending, making state financial policies, that means Accounting Information Systems serve the government administration in planning control and decision-making (Al-kasswna, 2012). Wilkinson noted that effective AIS perform several key functions throughout these various stages such as data collection, data maintenance, data management, data control and information generation. The main function of AIS of the selected companies is to analyze the past, present and future economics events and its produces the financial statements namely income statement, balance sheet, owner's equity statement and cash flow statement. Each statement is prepared according to Generally Accepted Accounting Principle, International Accounting Standards, International` Financial Reporting Standards, Bangladesh Accounting Standards as adopted by ICAB, the Companies Act 1994, the Securities and Exchange Rules, Income Tax Ordinance and others applicable rules. In order to measure the efficiency of Accounting Information Systems of the selected companies we have analyzed some indicators of efficiency of Accounting Information Systems such as effective internal control systems, security measures, good documentation, separation of operation from accounting, adequate disclosure, cost effectiveness and independent internal and external audit if the aforesaid indicators are prevalent in any Accounting Information Systems then we can comment that the Accounting Information Systems to be efficient. Before analyzing the vagarious indicators at first we have analyzed the opinions of the respondents regarding the various indicators to judge the efficiency of Accounting Information Systems of the selected companies and the opinions are given in the following table.

OBJECTIVE OF THE STUDY
The main objective of the study is to evaluate the efficiency of Accounting Information Systems of the selected companies in Bangladesh. For analyzing this objective researcher has selected and analyzed some indicators of efficiency of AIS such as existence of effective internal control system, cost effectiveness, existence of security measure, good documentation, separation of operation and accounting, adequate of disclosure and independent of internal and external audit. If the aforesaid indicators are prevalent in any Accounting Information Systems then it's to be efficient.

METHODOLOGY OF THE STUDY
Research methodology is a way to systematically solve the research problem. A scientific approach to the research methodology is very much essential to evaluate the research problem systematically.   -test is based on t-distribution and is considered an appropriate test for judging the significance of a sample mean or for judging the significance of difference between the means of face samples in case of small samples when population variance is not known. It is the technique to test the hypotheses about the mean of a normal population whose standard deviation is unknown. The formula of t-test is given below:

ANALYSES AND FINDINGS
Internal Control Systems: The Modern information age is fully dependent upon AIS but it has grown increasingly more complex and dependent on technology to meet our needs of information. This complexity and importance of AIS makes it necessary for business organizations to ensure their adequate control over their existing AIS. In different times, the business organization performs examinations of the system to ensure the adequacy of the control and its proper function. Actually control is the process of exercising influence over the activities of an object, organism or system. AIS involve processing of transactions as a means of maintaining financial records. Such systems identify, assemble, analyze, classify, record, summarize and report transactions and other events. Internal controls include all the policies and procedures adopted by the management of an entity to assist in achieving management's objective of ensuring, as far as practicable, the orderly and efficient conduct of its business, including adherence to management policies, the safeguarding of assets, the prevention and detection of fraud and error, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. Internal Control is a process, affected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives three categories like reliability of financial reporting, compliance with applicable laws and regulations and effectiveness and efficiency of operations. Effective internal control systems are essential for successful operation of business as well as accounting control and administrative control. It helps the Accounting Information Systems division to generate reliable and relevant information. Other qualitative characteristics of accounting information can also be maintained if there is sound internal control system in an organization. Internal controls are procedures to set up to protect assets, ensure reliable accounting reports, promote efficiency and encourage adherence to company policies. Internal controls are essential to achieve some objectives like efficient and orderly conduct of accounting transactions, safeguarding the assets in adherence to management policy, prevention of error and detection of error, prevention of fraud and detection of fraud and ensuring accuracy, completeness, reliability and timely preparation of accounting data. If good internal control exists in any organization, management can use information with greater reliance to maintain their business activities properly which provide AIS. But if internal control is not strong, management can not achieve its goal. The internal control system consists of two major categories such as accounting control and administrative control. From an overview of annual reports and companies executives of the selected companies it is evident that the selected companies have established an effective internal control system as a part of good corporate governance to maintain accountability, integrity and security of its assets as well as information. The internal control system guides the company with regard to processing of every transaction, authority level for approval of the transaction, documentation, access to the systems and related responsibilities. As the business of the company evolves continuously, the requirements for amendment and improvement of internal control systems are also a continuous process. The external auditors and the internal auditors review the company's internal controls on an annual basis. To ensure proper safeguarding of assets, physical verification of network assets is conducted periodically and all risks relating to these assets are properly insured both nationally and internationally. Internal control is a process, supported by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of company objectives in the areas of effectiveness and efficiency of operations, reliability of financial reporting and compliance with laws and regulations. The major characteristics of existing internal control systems of company # 1 are functional responsibilities are appropriated segregated, day to day transactions and recording thereof are supervised by responsible officials, existence of a system of authorization procedure that is adequate to provide accounting control over assets, liability, revenue and expenses, existence of a system of periodic comparison of record with actual assets and liabilities and action to correct differences and existence of a recording procedure which check that transaction to be recorded and processed have been authorized. The benefits of exiting internal control systems of company # 1 are assets are safeguard, transaction are properly processed and recorded, authority and responsibility become co-extensive, routine supervision of day to day transaction, assets are properly handled and accurate financial reporting and adequate disclosures. The characteristics of internal control systems of company # 2 are day to day transactions and recording thereof are supervised by responsible officials and existence of a recording procedure which check that transaction to be recorded and processed have been authorized. The benefits of existing internal control systems of company # 2 is transaction are properly processed and recorded. Internal control of company # 2 over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes policies and procedures such as pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transaction and dispositions of the assets, proceed reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition assets that could have a material effect on the financial statements. The problem of existing internal controls systems of company # 2 is all the areas are not duly covered by the internal control system and the suggestions of existing internal control systems are physical check should be regularly done and duties and responsibilities should be clearly divided. Researcher also collected the opinions of the respondents regarding the internal control of the selected companies and results given below:    Table # 3 shows that 32.00% of the respondents have opinioned that the internal control systems environment is helpful for achieving entity's specify objective, 50.67% of the respondents have opinioned that the internal control system ensures compliance with applicable laws and regulations, 61.33% of the respondents have opinioned that the internal control system is properly designed to handle transaction processing, safeguarding of assets, prevention of errors and frauds and detection of errors and frauds, 33.33% of the respondents have opinioned that the internal control system ensures separation of operations and custody of the assets and 20.00% of the respondents have opinioned that the all alternatives to measure the effectiveness of internal control system of the selected companies. The majority respondents have opinioned that the internal control system is properly designed to handle transaction processing, safeguarding of assets, prevention of errors and frauds and detection of errors and frauds as a factor to measure the effectiveness of the internal control systems of the selected companies. There are five essential components of internal control which are control environment, risk assessment, control activities, information and communication and monitoring. All of these five components of internal control are embedded in the control culture of the selected mobile telecommunication companies. The operational activities of the selected companies in the light of policies on procedures for ensuring an effective internal control, transparency and accountability and observe that the selected companies have control over cash payments and they have flexible internal control system that provides the opportunity for continuous improvement leads to increase in the efficiency of Accounting Information Systems of the selected mobile telecommunication companies.

Proper Securities Measure:
Securities measure is effective way to judge the efficiency of Accounting Information Systems of the selected companies. If there is any security measure in any business firm then its existence will augment the efficiency of the Accounting Information Systems. This efficiency of Accounting Information Systems is ensured because proper security measure safeguards assets of a firm. It also prevents unauthorized access by the users. Improper alteration of data can be prevented and reconstruction of lost data and prevention of breakdown of machinery can also be possible through installation of a goods security measure. Security measures cover all transaction cycles from inputs through procedures to outputs. It also extends to the organization, physical facilities and operations, management practices, and other aspects of the firm. Security measure is essential for any business organization because to safeguard the assets of a firm, protection from unauthorized access, protection from disasters, protection from breakdowns and interruptions, protection from undetected access, protection from loss or improper alteration and recovery and reconstruction of lost data. Assets such as cash and inventory may be stolen or lost, and facilities such as a copy machine may be damaged or stolen. Data or information may be accessed and read or even changed by unauthorized persons, with possible adverse consequences. To safeguard its resources, a firm should implement a variety of security measures. Adequate security measures enable a firm to provide on-going protection of its computer facilities and other physical facilities maintain the integrity and privacy of its data files, and avoid serious damage or disastrous losses. Certain security measures protect against acts of nature, whereas other s are intended to inhibit human actions. Some security measures are highly technical and sophisticated especially when providing security for centralized data bases and data communications networks. Other security measures are preventive in nature in that they prevent risk exposures from occurring. For instance a password could be used to prevent one of information age's bookkeepers from intentionally accessing unauthorized data such as the executive payroll file. Security measures focus on physical security and data or information security (Wilkinson et. al, 1997). From an overview of the opinions of the company executives we observe that there is a sufficient security measure in the selected companies. No unauthorized persons have access to the assets and the computer room. Physical handling of assets and maintenance of records relating to the assets are separate. Researcher also collected opinions of the respondents regarding the various security measures of the selected companies and results given below:  67% of the respondents have opinioned that the use of data backup and reconstruction procedure, 52.00% of the respondents have opinioned that the unauthorized tampering of data should be prevented and 26.67% of the respondents have opinioned that the all alternatives for proper security of information produced by the Accounting Information Systems of the selected mobile telecommunication companies. The majority respondents have suggested that the use of data backup and reconstruction procedure as a security measure for proper security of information produced by the Accounting Information Systems of the selected mobile telecommunication companies.

Good Documentation:
Documentation is another important factor to judge the efficiency of Accounting Information Systems of the selected companies. Good documentation is essential for providing reliable and relevant information which helps management to perform business activities properly. Good documentation is used as the basis for preparing the financial statements, which consists of income statement, balance sheet, cash flow statement, owner's equity statement and others statement. These accounting statements are then made available to both management and a variety of external users to help them reach better informed decisions. The accounting process begins with a transaction and completes with the preparation of financial statement. Documentation pertaining to transaction processing has one central purpose: to communicate the elements and procedures to those who are to use, design, or evaluate the transaction processing system. With respect to the users the documentation helps to ensure that they will perform procedures reliably, consistently, and efficiently. It also aids in the training of newly employed users. With respect to the systems analysts, accountants, and other designers, the documentation provides the means of visualizing the elements and flows of the newly designed system. It also enables the designers to spot redundant operations and other processing deficiencies in the current system. With respect to the auditors, managers, and other evaluators, the documentation provides the standard against which the actual operation of the system is to be evaluated. Documentation techniques can also be used to portray the actual operations in order to highlight control weaknesses for the evaluators (Wilkinson, 1986). Documents quite naturally originate in many different departments of a company, but copies of all of them are sent to the accounts department where they are summarized, analyzed, and then entered in the books of accounts. From an overview of the annual audited reports of the selected companies and opinions of the company executives and professional accountants, researcher observes that there is a sufficient document in the selected companies to maintain the various activities. Selected companies maintain various files such as master file, transaction file; reference file and history file for recording their business activities properly. Selected companies use accounting software to process all types of accounting cycle and preparing financial statements such as income statement, balance sheet, cash flow and owners' equity to record the result of all the transactions at the end of every accounting period. The Accounting Information Systems of the selected companies is fully computerized. They use accounting software for recording of transactions. The selected companies prepare financial statement on historical cost convention and going concern basis and management use these statements for decision making. The selected companies use giving number for codifying accounts and use audit trail for linking transaction processing. The selected companies preserve source documents by in a guard file at the initiating stage, in hard disk of the computer and in the network.

Separation of Operation from Accounting:
Separation of operation and accounting is an important way to judge the efficiency of Accounting Information Systems of the selected companies. Accounting information systems is a system of records a business keeps maintaining its accounting system. Its purpose is to accumulate data and provide decision makers such as investors, creditors, managers, and the information to make decision. The Accounting Information Systems provides efficient transfer of data that are necessary to be able to assist the information user, especially those who are no so adept to accounting and financial reporting. Correct and accurate information are necessary in order to arrive to a sound decision which would encourage shareholder value. One of the major purposes of Accounting Information Systems is to support the day to day business operations and many essential activities such as data collection, data management, data maintenance, data control and information generation for fulfilling this purpose consists of processing accounting transactions arising from external sources, monitoring internal physical operations, and preparing such outputs as operational documents and financial statements. The accountants that are engaged in the processing of transaction must be separated from cash collection procedure to ensure the prevention of manipulation of accounts. This activities increase the quality of accounting information produced by Accounting Information Systems.
From an overview of the selected companies they follow separation to record various activities like sale orders, purchase orders, receiving reports, employee time cards, deposit slips and checks and particular officer performs particular activities to achieve their aims. The selected companies maintain separate AIS department and maintain various documents for recording various business activities for various purpose such as reporting to interested users, decision making and control and generated various reports through AIS such as ratio analysis, working capital forecast, variance analysis and break-even analysis for internal decision making and control purpose. The selected companies take financing decision, investment decision, capital structure decision, working capital decision, pricing decision, servicing decision and outsourcing decision with the help of Accounting Information Systems and performing various managerial functions such as planning, coordinating, controlling, directing, budgeting, motivating and decision making. The selected companies have been improved AIS for changing growth of business activities and maintain news files.

Extent of Disclosure:
Extent of disclosure is another important indicator to judge the efficiency of Accounting Information Systems of the selected companies. Disclosure in financial reporting is the presentation of information necessary for the optimum operation of efficient capital market. As we know there are different users of accounting information. The users group needs accounting information to decide in their respective field of interest. For example the investor group requires information regarding investment feasibility. The creditors group requires information to form judgment regarding the credit worthiness of the borrows. Thus the needs for information of the different groups vary. So, a company has to meet the demand of users but it is a difficult task to meet the demand of all users because there are cost constraints. So, in the light of foregoing discussion disclosure means disseminating relevant financial information about the economic affairs of a business enterprise to the audience of interest. Disclosure means the dissemination of relevant, material, and understandable information, both financial and non-financial, from the private domain to the knowledgeable public domain on a consistent basis. The disclosure scores of the selected companies are given below:  Table 5 shows that the disclosure scores of the selected companies during the period under study. The table also shows that the disclosure score has increased tendency. The average disclosure scores of selected mobile telecommunication companies are 62.70 and 51.68 respectively. The standard deviations of disclosure scores of the selected mobile telecommunication companies are 1.43 and 0.94 respectively. The coefficients of variation of disclosure scores of the selected mobile telecommunication companies are 2.28 and 1.82 respectively during the period under study. The maximum and minimum value of disclosure scores of Company # 1 is 64.74 and 61.02 respectively and Company # 2 is 52.72 and 50.22 respectively during the period under study. The table also shows that the disclosure scores of Company # 1 is higher than Company # 2 during the study period. In order to see whether there is any significant difference between the sample means and conducted paired sample t test using SPSS 7.5. The result shows that t value is 37.269 which are significant at 0.000 levels. This indicates that there is significant difference between the disclosure scores of the selected mobile telecommunication companies during the period under study. The table shows that the disclosure scores are moderately satisfactory during the period under study. Researcher also made an opinion survey of the respondents regarding the adequacy of accounting information produced by AIS of the selected mobile telecommunication companies and developed a null hypothesis and conducted χ2 test and ANOVA test to test the null hypotheses.
Ho1: There is no significant difference of opinion among the respondents regarding the adequacy of accounting information produced by AIS of the selected companies Table # 6 shows that 30.00% of the respondents thought that the accounting information produced by AIS of the selected companies is greatly adequate, 57.00% of the respondents mentioned that the accounting information produced by AIS of the selected companies is moderately adequate, 9.00% of the respondents opined that the accounting information produced by AIS of the selected companies is slightly adequate, 3.00% of the respondents were neutral and 1.00% of the respondents opined that the accounting information produced by AIS of the selected companies is not adequate. The majority respondents thought that the accounting information produced by AIS of the selected companies is moderately adequate. But the opinions of the company executives are that the accounting information of company # 1 is greatly adequate produced by AIS and the accounting information of company # 2 is greatly adequate produced by AIS. In order to see whether there is any significant difference between the opinions of the respondents' regarding the adequacy of accounting information produced by AIS of the selected companies and conducted χ2 test using SPSS 7.5. Researchers observe that the value of χ2 is 6.643 which is significant at 0.880 levels. So, the null hypothesis is accepted which means that there is no significant difference of opinion among the respondents regarding the adequacy of accounting information produced by AIS of the selected companies. In order to find out the difference between groups and within groups we have conducted ANOVA test. The above table shows that there is no significant different of opinions on the adequacy of accounting information produced by Accounting Information Systems of selected mobile telecommunication companies among the different respondents groups.

Cost Effectiveness:
Cost effectiveness is another factor to judge the efficiency of Accounting Information Systems of the selected companies. AIS can lead to cost effectiveness because efficient AIS helps identify excess cost and those excess cost can be reduced by the management. Incorporating a control or security measure into a system involves a cost. Certain types of controls such as corrective controls, documentation controls, and moist security measures are quite expensive. In some cases, even controls that complement other controls may be found to be cost-effective, since they increase reliability by detecting errors that may be missed by the other controls. On the other hand, certain complementary controls may not improve reliability or reduce risks to a significant degree, and hence may not be desirable additions. Since controls form an interlocking framework, all controls should be reviewed and assessed by means of a cost-benefit analysis. Preferably, this review and assessment should take place during a systems development activity; however, it may be performed at any time (Wilkinson, J.W., 1986). The cost effectiveness can be measured with the help of operating ratio and. the operating ratio of the selected companies are given below:  Table 7 shows that the relation between total operating costs and operating revenues during the period under study. The table also shows that the operating ratios increasing and decreasing tendency. The average operating ratios of selected mobile telecommunication companies are 0.69 and 1.32 respectively. The standard deviations of operating ratios of the selected companies are 0.06 and 0.45 respectively. The coefficients of variation of operating ratios of the selected companies are 8.09 and 34.12 respectively during the period under study. The maximum and minimum value of operating ratios of Company # 1 is 0.75 and 0.63 million respectively and Company # 2 is 1.82 and 0.84 respectively during the period under study. The table also shows that the operating ratio of Company # 1 is satisfactory but Company # 2 is not satisfactory during the study period. In order to see whether there is any significant difference between the sample means and conducted paired sample t test using SPSS. The result shows that t value is (3.489) which are significant at 0.025 levels. This indicates that there is significant difference between the operating ratios of the selected mobile telecommunication companies during the period under study. Graph # 2: Graphical presentation of the operating ratio of the selected companies is given below: (Source: Audited Annual Reports of the Selected Companies from 2007-08 to 2011-12)

Independent Internal and External Audit:
Internal audit is an independent appraisal function established with an organization to examine and evaluate its activities as a service to the organization. The objective of internal audit is to assist members of the organization in the effective discharge of their responsibilities. To this end, internal audit furnishes them with analyses, appraisals, recommendations, counsel and information concerning the reviewed. Internal audit is any systematic investigation or appraisal of procedures or operations by an employee of the concerned entity for the purpose of determining conformity with prescribed criteria. As per paragraph 3 of BAS 610: considering the work on internal audit (ISA 610). Internal auditing means an appraisal activity established with an entity as a service to the entity. Its functions include, amongst other things, examining, evaluating and monitoring the adequacy and effectiveness of the accounting and internal control systems. External audit is one which is performed by chartered accountants (CAs) who are independent of the entity whose assertions or representations are being audited. All the companies registered under the Companies Act are subject to external audit by CAs in public practice. The selected companies have an internal audit department that monitors the operational activities of the companies in the light of policies on procedures set by the Board of Directors and the Management Team for ensuring an effective internal control, transparency and accountability in the organization. Thus from the statement of Board of Director we observe that both the selected companies have control over cash payments and they have flexible internal control system that provides the opportunity for continuous improvement leads to increase in the efficiency of Accounting Information Systems of the selected companies.

CONCLUSION
The present study evaluates the efficiency of Accounting Information Systems of the selected mobile telecommunication companies. The total Accounting Information System of the selected mobile telecommunication companies is computerized and all transactions are processed by the computer. The use of computerized AIS gives opportunities for the selected mobile telecommunication companies to perform the accounting functions more effectively and efficiently because the use of computerized AIS bears significant time and cost savings. The existing Accounting Information Systems help recording various accounting transactions, processing these transactions and prepare the financial statements like income statement, balance sheet, owner's equity statement, cash flow statement which are the snapshot of the financial position of the organization and the main outputs of the accounting system. Existence Company # 2 of internal control system increases the efficiency of AIS through ensuring safeguarding of assets, reliability of accounting information, accuracy of accounting information. Existence of effective internal control system also increases efficiency of AIS through the prevention of frauds. Separation of operation and accounting also increases the efficiency of AIS because the separation of operation from accounting ensures correct processing of transactions without manipulation of figure. Existence of proper security measure also increases the efficiency of AIS through safeguarding the assets of a firm, ensuring the accuracy and reliability of accounting data and information, providing efficiency in all of the firm's operations and encouraging adherence to managements' prescribed policies and procedures. Good documentation is increased the efficiency of Accounting Information Systems. Good documentation is essential for providing reliable and relevant information which helps management to perform business activities properly. Accounting Information Systems also provide information which support to all levels of management activity such as operational level, middle level and top level management. So, the study concluded that since the various users of financial statement is decision oriented the preparation of the financial statement must be more carefully done for ensuring the qualitative characteristics of accounting information produced by Accounting Information Systems so that in can help take effective decision making process which activities is possible then the existent accounting information systems is worked with efficient. So, it can concluded that Accounting Information System is absolutely necessary for decision making in every functional areas of an organization and every business organization should develop its Accounting Information Systems to avail its benefit.


extfieldsofstudy: Sociology Psychology

text:
Does Poor Neighbourhood Reputation Create a Neighbourhood Effect on Employment? The Results of a Field Experiment in the UK

There are substantial variations in labour market outcomes between neighbourhoods. One potential partial explanation is that residents of some neighbourhoods face discrimination from employers. Although studies of deprived areas have recorded resident perceptions of discrimination by employers and negative employer perceptions of certain areas, until now there has been no direct evidence on whether employers treat job applicants differently by area of residence. This paper reports a unique experiment to test for a neighbourhood reputation effect involving 2001 applications to 667 real jobs by fictional candidates nominally resident in neighbourhoods with poor and bland reputations. The experiment found no statistically significant difference in employer treatment of applicants from these areas, indicating that people living in neighbourhoods with poor reputations did not face ‘postcode discrimination’ in the labour market, at the initial selection stage.

Introduction
This article explores neighbourhood effects as an explanation for variations in employment rates between neighbourhoods within labour markets. It focuses on exploring one pathway as an explanation: 'stigma', or poor neighbourhood reputation. It exploits a field experiment methodology, supported by contextual qualitative and quantitative evidence, through case studies of three local labour markets (LLMs) and nine neighbourhoods in England and Wales. It focuses on one outcome: employment. The hypothesis it aims to test is that Residents of neighbourhoods with poor reputations fare worse when applying for relatively low-skilled jobs than residents of neighbourhoods in the same labour market with better reputations, all other things being equal.
If verification is found for this hypothesis, it is evidence of a neighbourhood effect operating through the 'stigma' pathway (although it is possible that neighbourhood effects might also be operating through other pathways). It would suggest that neighbourhood effects contribute to some extent to variation in employment rates between neighbourhoods.
The article begins by examining variations in employment rates at neighbourhood level and discussing explanations for such variations. The methodology used for the particular field experiment which is the focus of the article is then discussed. Next the results of the experiment are presented. The article ends with a discussion of what the results mean for the role of the 'stigma' neighbourhood effects pathway.

Variations in Employment Rates between Neighbourhoods within Labour Markets
There is longstanding academic and policy interest in the existence and persistence of geographical variations in employment, economic inactivity and unemployment rates. These concerns encompass a range of geographies-from regional, to LLM and neighbourhood scales (Green and Owen, 2006). This paper focuses on variations between neighbourhoods within LLMs. In the UK, the National Equality Panel (2010) highlighted that in the most deprived tenth of neighbourhoods only 55 per cent of adults were employed compared with more than 80 per cent in the least deprived half of neighbourhoods nation-wide.
Concerns about uneven employment rates between neighbourhoods and the (relatively) low absolute employment rates in some areas have been part of the motivation for successive generations of urban policy in the UK and elsewhere. Closing gaps in neighbourhood worklessness was a key objective of the National Strategy for Neighbourhood Renewal (in England) from 1998(Amion Consulting, 2010, the Working Neighbourhoods Fund (in England)  and the City Strategy Pathfinders (in Great Britain) (Green and Adam, 2011). Areas with high unemployment and low employment tend to overlap with areas with poor reputations.

Explaining Variations in Employment Rates between Neighbourhoods within Labour Markets
There are three broad categories of explanation for variation within labour markets: first, skills mismatch, largely as a result of residential sorting; secondly, spatial mismatch; and thirdly, neighbourhood effects. These explanations are not exclusive and could operate together for additive or interacting effects.
First, residential sorting and changes in skills requirements can result in spatial concentrations of individuals who are at greater risk of non-employment due to poor skills, lack of qualifications, ill health and lack of recent work experience (Houston, 2005;Green and Owen, 2006). Hence, spatial variations in employment and non-employment rates are a function of spatial differences in individual characteristics and a mismatch between the skills or attributes required or preferred by employers and those held by people in certain neighbourhoods. Skills mismatches could be reduced by improving individuals' relative skills (and other characteristics).
Secondly, the spatial mismatch hypothesis explains variations in non-employment through geographical disparities between the location of jobs and potential employees (see Kain, 1968;Holzer, 1991;Houston, 2005). Spatial mismatch can develop through residential sorting, the impact of housing policy and uneven geographical impacts of economic restructuring. For instance in a case study of an inner London borough, Watt (2003) described how many local authority tenants were in effect marooned over a 30-year period as the immediate area lost almost all its manual employment. Over time, those in employment travelled longer distances to work.
Thirdly, when applied in relation to employment outcomes, the neighbourhood effects hypothesis suggests that spatial variations in non-employment are not reducible to compositional effects (i.e. characteristics of residents) but rather that there is an additional area related effect on employment (or other outcomes) that results from spatial concentrations of individuals who are at greater risk of non-employment or who have other disadvantages (Syrett, 2008), or from other characteristics of the area (for example, Lupton, 2003a;van Ham et al., 2012). Potential pathways for neighbourhood effects may be either endogenous (i.e. internal to the neighbourhood) or due to the relationship between the neighbourhood and outside people or institutions. In a comprehensive typology of mechanisms, Galster (2012) prefers the categories of social interactive, environmental, geographical and institutional, with 14 sub-categories. Under 'institutional' mechanisms, he lists local institutional resources, the behaviour of local market actors and private services, and stigmatisation. Thus, the behaviour of employers and neighbourhood stigma are just two of numerous potential mechanisms.

Explaining Variations in Employment Rates between Neighbourhoods within LLMs through Neighbourhood Effects
Much research into neighbourhood effects has used multivariate analysis of quantitative data on the characteristics of, and outcomes for, residents of different neighbourhoods (Kleinhans, 2004;Joseph et al., 2007;Galster, 2007). Qualitative research (for example, with employers and intermediaries), although sometimes overlooked, is particularly important in generating hypotheses and in developing and testing ideas about pathways (Lupton, 2003a). Another approach with potential is the use of randomised control trials or experimental methods.
Each of these methods is independently valid. However, combinations of methods offer the potential to confirm and accumulate evidence. While econometric analysis is broadly seen as the 'gold standard' within neighbourhood effects research, in the field of employer preferences, this kind of data analysis is seen as secondary to experimental studies (Riach and Rich, 2004). Research into neighbourhood effects so far has tended to explore neighbourhood effects without focusing on specific mechanisms (Galster, 2012).
This paper explores neighbourhood effects as an explanation for variations in employment rates between neighbourhoods within labour markets. It focuses on exploring one pathway as an explanation: 'stigma', or poor neighbourhood reputation. It exploits a field experiment methodology, supported by contextual qualitative and quantitative evidence, through case studies of three LLMs and nine neighbourhoods in England and Wales. It focuses on one outcome: employment.
The hypothesis it aims to test is that Residents of neighbourhoods with poor reputations fare worse when applying for relatively low-skilled jobs than residents of neighbourhoods in the same labour market with better reputations, all other things being equal.
If verification is found for this hypothesis, it is evidence of a neighbourhood effect operating through the 'stigma' pathway (although it is possible that neighbourhood effects might also be operating through other pathways). It would suggest that neighbourhood effects contribute to some extent to variation in employment rates between neighbourhoods.

Evidence for the Role of Neighbourhood Reputation in Explaining Variations in Employment Rates through Neighbourhood Effects
Evidence that some neighbourhoods have worse reputations than others is ubiquitous in urban studies (for example, Wilson, 1987;Tilly et al., 2001;Waquant, 1993;Hastings and Dean, 2003;de Souza Briggs et al., 2010). Neighbourhoods with poor reputations often are the same neighbourhoods that have low rates of employment and high rates of non-employment and unemployment. This brief review focuses on evidence from the UK. Relatively poor reputations may be held by outsiders including the general public, key public-and private-sector decisionmakers and service providers, or potential residents. These reputations may affect the behaviour of all these groups towards the neighbourhoods-for example in decisions to provide services or to employ residents. Existing residents are likely to be aware of these poor external reputations and this in itself may affect their attitudes and behaviours, including, for example, decisions to apply for jobs and their behaviour in the job application process. Poor reputation may also affect the provision of private and public services (for example, Christie and Rolfe, 1992).
Over 30 years ago, McGregor (1977) used multivariate analysis, now established as the core approach to investigating neighbourhood effects, to explore the role of stigma in explaining variations in employment rates between neighbourhoods within labour markets through neighbourhood effects. He examined unemployment rates and unemployment duration for men in Scotland, including Ferguslie Park, a neighbourhood with a poor reputation, controlling for age, skill, industry, marital status, length of time in previous job, preference for light, medium or heavy work, preferences for local or more distant work, and preferences for day or any hours, and concluded that although the Ferguslie Park sample would experience relatively high unemployment duration no matter where they lived, the fact of their residence in Ferguslie Park significantly adds to the disadvantages associated with their individual characteristics (McGregor, 1977, p. 311).
To date, no other studies appear to have used such techniques to explore the stigma pathway for neighbourhood effects on employment.
Studies using other methods have added important information. Although employer statements may not fully reflect practice and do not preclude unconscious preferences, several studies provide insights into potential neighbourhood preferences from an employer perspective (Pager and Quillian, 2005). Writing about four US metropolitan areas, Tilly et al. noted that each manager forms his or her own mental map of .
A majority of employers in this study thought there were systematic differences between urban and suburban workers (across neighbourhoods) within a labour market, although in the US context it should be noted that spatial differences are also heavily racialised. Negative attitudes about particular groups of workers could feed into spatial mismatch, if they affect employers' location decisions and the pattern of employment opportunities.
In the UK, some studies have found at least some self-reported preference for individuals not from areas with poor reputations (for example, Hastings and Dean, 2003;Aleksandraviciene et al., 2005). Interviews with employers, with recent experience of recruitment in less skilled occupations in various cities in Great Britain, about their selection and recruitment procedures suggested that employers preferred workers from areas without poor reputations, but the effect was only at the margin and in specific conditions (Nunn et al., 2010). Employers generally talked of individuals' personal characteristics as the main factor in recruitment decisions. Address could be an issue, but this mainly related to travel-to-work considerations, particularly where jobs involved anti-social hours. A few indications of a lack of willingness to employ applicants from certain areas, or an intention to subject them to special attention, emerged. In their study of Nottingham, Green et al. (1991, p. 273) found evidence of a preference amongst some employers for local workers, regardless of neighbourhood reputation: '' [they] preferred their employees to be locally based, since this was thought to make them more reliable''. Zenou (2002) and Lupton (2003b) uncovered similar preferences. This suggests a potential 'spatial match' effect or positive neighbourhood effect for people in neighbourhoods close to employment.
Qualitative research can contribute to understanding of how pathways for neighbourhood effects may work and the circumstances in which they may not operate. Nunn et al. (2010) suggested that neighbourhood effects via area reputation required 'local knowledge' amongst employers, discretion and ability to deviate outside automated or rigid processes amongst those involved in recruitment. Like the exercise of other forms of employer preference or discrimination, this may have been influenced by the state of the labour market, with economic circumstances offering more choice for employers resulting in more screening.
Another source of information is interviews with job applicants and those working with them. This is a weaker source, as these informants have only indirect insight into employer preferences and no oversight of aggregate patterns. However, numerous studies have recorded the belief that 'postcode discrimination' is taking place in the UK (for example, Lawless and Smith, 1998;SEU, 1998;Taylor, 1998;Fieldhouse, 1999;Roberts, 1999;Dean and Hastings, 2000;Speak, 2000;Mellor, 2002;Hastings and Dean, 2003;Taylor, 2003;Aleksandraviciene et al., 2005;Sanderson, 2006;Green and White, 2007;Fletcher, 2007;Bates et al., 2007;Fletcher et al., 2008) and beyond (for example, in France (Waquant, 1993;Recchia, 2008), in Australia (Atkinson and Jacobs, 2008) and in the US (Tilly et al., 2001)). More specifically, some social housing tenants interviewed in four different areas about employment in 2008 thought that there was postcode discrimination against them (Fletcher et al., 2008). In a study of workingclass women in Scotland and northern England, Taylor (2003, par. 7.4) reported: ''Several . explained their long-term unemployment by having specific, devalued postcodes''. Bates et al. (2007) found at least one such allegation in a study of employment in rural areas. A study of high unemployment areas in Coventry reported Although they could not easily always provide evidence for it, many project workers felt that 'postcode discrimination' against people from areas of high unemployment who are stereotyped as unreliable workers undoubtedly operated (Aleksandraviciene et al., 2005, pp. 64-65). In the evaluation of the 12 Working Neighbourhood Pilots covering areas of high unemployment and inactivity, interviewees said Employers tar everyone with the same brush. It's just not fair. The area definitely goes against you [and] if you put [this area] as your address on your application that puts employers off (Dewson et al., 2007, p. 32).
In a rare example of direct evidence, albeit second-hand and for a single case, Speak (2000) reported that a resident from Benwell in Newcastle upon Tyne had been interviewed for a job but was not given it and was told: ''It's not you, we think you'd do the job fine . but if you live in [Benwell] you either know a villain or you are a villain''.
In summary, existing evidence from the UK on the role of stigma in explaining variations in employment rates between neighbourhoods within labour markets through neighbourhood effects was described recently as ''thin' .
Houston summed up the situation for the UK as follows: ''direct evidence of 'postcode discrimination' is difficult to find'' (2005, p. 229). The pattern appears similar at least for France, the US and Australia.

Exploring the Role of Neighbourhood Reputation in Variations in Employment Rates through Neighbourhood Effects Using an Experimental Method
Given the difficulties establishing direct evidence of neighbourhood effects linked to a particular pathway through multivariate analysis, or through interviews alone, the study used an experimental method, supported by contextual quantitative and qualitative research. This permits testing the hypothesis set out earlier, through establishing (1) variations in employment rates between neighbourhoods; (2) variations in reputation between neighbourhoods; (3) employers' awareness of neighbourhood reputations, attitudes to different neighbourhoods, assessment of neighbourhood reputation as a factor in decision-making; and (4) variations in success in applying for employment amongst residents of neighbourhoods with different reputations, all other factors being equal (same jobs; equivalent applicant characteristics).
There is very limited experimental evidence on neighbourhood effects. There are ethical, legal, political and cost problems in creating experimental policy design in urban and social policies (Stafford et al., 2001). In a few cases policy design has enabled randomised control trial methods in housing and urban policy, most notably the Moving to Opportunity (MTO) programme for the relocation of public housing residents in the US (de Souza et al., 2010). This is amongst the most quoted studies in reviews of evidence on neighbourhood effects. There has been some use of randomised assignment to different treatment groups in welfare-towork interventions (Eardly and Thompson, 1997;Kornfeld et al., 1999;Rangarajan and Novak, 1999;Walker, 2000;Stratford et al., 2005;Purdon et al., 2006;Burns et al., 2007).

The Field Experiment Method
The experimental method we used was the 'correspondence test', involving sending out multiple applications to real jobs, differing as far as possible only in terms of the variable being tested; here, the reputation of the applicant's neighbourhood. This has been used before in studies of employer preferences or discrimination in employment by ethnicity, age, gender and disability status (Jowell and Prescott-Clarke, 1970;Riach and Rich, 2004;Pager, 2007;McGinnity et al., 2009;Wood et al., 2009). It has some inevitable limitations: it cannot be used to research that part of the labour market where jobs are not formally advertised, or the parts of the recruitment process that involve face-to-face interactions.
There is evidence that recruitment through informal networks tends to mean recruitment of people similar to existing staff (Marsden, 1994). It focuses on employer behaviour. Applicant behaviour-for example in response to belief about employer prejudice-may also play a role in explaining employment variations between areas.

Labour Market and Neighbourhood Case Studies
Three LLMs 1 across the UK were selected (see Table 1). The criteria for selecting them were that -each should have at least some neighbourhoods with markedly poor local reputations; -each should be large enough to generate sufficient vacancies but small enough that local neighbourhoods within them might be known to employers; -they should include 'weak', 'medium' and 'strong' LLMs in terms of unemployment rates, in case competition for vacancies affected the neighbourhood effects; and -each should have low minority ethnic populations, to rule out any effects from employer preference for different ethnic groups (Fieldhouse, 1999;Tilly et al., 2001).
Three neighbourhoods were selected in each LLM using the following criteria, based on desk research on local identity and reputations; analyses of secondary sources on deprivation levels, ethnic mix and accessibility indicators; and field visitsincluding street interviews (discussed in more detail later) which were used to confirm the poor reputation and bland reputation of shortlisted areas -two particularly deprived neighbourhoods with well-established 'poor' reputations (five out of the six neighbourhoods were in the top 5 per cent of Indices of Multiple Deprivation [IMD] scores and one was in the top 15 per cent) and one not particularly deprived neighbourhood (all three neighbourhoods were in the middle 40-60 per cent of neighbourhoods on IMD scores) with a 'bland' reputation, to serve as a comparator; -each had relatively strong local identities, linked to identifiers including neighbourhood name, main street name or postcode; -each had relatively small minority ethnic populations (the White British population share was around 97 per cent in the neighbourhoods in the 'weak' LLM, 93 per cent in the 'medium' and 90 per cent in the 'strong' LLM); -all were at a similar distance and public transport travel time from the city centre, to limit (although not exclude) any effect of employer preference for more accessible employees (Green et al., 1991;Zenou, 2002;Lupton, 2003b;Nunn et al., 2010).

Field Visits and Street Interviews
The field visits included interviews with 81 members of the public, providing what appears to be the first, although small scale, evidence of the perceptions of the general public on potential neighbourhood reputation effects. In each LLM, members of the public identified the worst reputation two or three neighbourhoods with remarkable consistency. This was used to confirm the selection of the 'poor reputation' and 'bland reputation' neighbourhoods from desk research. In each of the three LLM areas, just over half of those interviewed (53 per cent) thought that the 'poor reputation' case study neighbourhoods were undesirable places to live. The same proportion thought it was 'very' or 'fairly likely' that local employers would look less favourably on people from these or similar areas. Only a minority (23 per cent) thought that it was 'very' or 'fairly unlikely' that employers would look unfavourably on applicants from these neighbourhoods.

Interviews with employers
To provide insights into employers' awareness of neighbourhood reputations, attitudes to different neighbourhoods, assessment of neighbourhood reputation as a factor in decision-making, and to confirm our understanding of employers' recruitment methods and the realism of the applications used in the experimental method (discussed later), we interviewed 14 employers and 11 labour market intermediaries (i.e. employment agencies and job seekers' advisors). Employers interviewed were based in the three case study LLMs and had recently recruited people to one or more of the job types examined in the experiment (see later). They encompassed different establishment sizes and industries, predominantly from the private sector but also from the public and voluntary sectors. All employers and labour market intermediaries interviewed were aware of certain neighbourhoods with poor reputations. Again, there was consistency between interviewees and their views overlapped closely with the assessment of the general public and desk research. Three of the 11 labour market intermediaries thought that neighbourhood reputation effects on employment might exist. One intermediary in the medium LLM reported some cases of applicant perceptions of neighbourhood reputation effects There have been instances where people have said: 'Because of where I live, I won't get a job. They won't trust me'.
Another, from the weak LLM, said that he believed in neighbourhood reputation effects strong enough to promote action We used to take address off applications . we remove address to remove a stigma.
In the strong LLM, another said Employers would say 'no' to the idea that they discriminate on area-but privately the answer is 'yes'.
This respondent subsequently significantly amended the point, ''it's not necessarily about prejudice, but the majority of people have barriers to entry''. While this evidence is strong enough to support the hypothesis that neighbourhood reputation effects might form a partial and subsidiary explanation for variations in employment rates, and encourages further exploration, it is not in itself strong enough to support a hypothesis that they are a major explanation.
Almost all employers stated unambiguously that they looked equally on applications from all areas. However, one private-sector employer from the strong LLM explicitly showed awareness of the potential for discrimination, but claimed that he would not apply it in practice, at least up to interview stage I am not going to be that prejudiced on areas . So you get 'em in, and see what they're like . (emphasis added).

One of the employers interviewed in the medium LLM admitted to 'thinking twice' about applicants from some neighbourhoods
There are areas where you sort of think, hmm, you know, not too sure about that . where you have a large number of unemployed people, where you have council accommodation.
Some of the employers stated preferences on other grounds such as distance to work, clothing and accent.

The Experiment
The jobs search and application strategy of fictional job applicants. In the experimental phase of the study, we searched for and applied to real jobs in the three LLMs that fitted the following criteria -jobs advertised on www.direct.gov.uk, 2 gumtree.com and aggregator sites; -advertised August 2010-June 2011; -the job location appeared to be within the TTWA boundary; -selected job types (office admin, cleaner, security guard, sales assistant, accounts clerk, kitchen hand and chef jobs). These job types did not require degrees, vocational qualifications or substantial experience, but were prevalent enough to give a good overview of the low-and medium-skilled labour market and included jobs principally held by men, by women and either gender.
From this subset, we selected jobs that met the requirements of the experimental method -for which main recruitment and selection decision-maker appeared to be based in the LLM, and was likely to be aware of local neighbourhood reputations; -could be applied to without face-toface or phone contact (i.e. via email, upload to website or post); and -for which the closing date was at least 2-3 days hence, to allow time to make three applications that did not arrive simultaneously.
The jobs applied to. Between August 2010 and June 2011, 2001 applications were made to 667 jobs (i.e. three applications in each case). There were 197 applications to office admin jobs, 139 to retail jobs, 97 to chef jobs, 75 to cleaner jobs, 74 to kitchen hand jobs, 73 to accounts clerk jobs and 12 to security guard jobs, reflecting the incidence of vacancies and variations in the extent to which jobs fitted experimental constraints. Of the jobs applied for, 246 were in the strong LLM, 261 in the medium LLM and 159 in the weak LLM; 76 per cent of jobs applied for did not offer a traditional full-time '9am-5pm' work schedule. This largely reflects the type of jobs available via www.direct. gov.uk in the three LLMs. Fifty-four per cent of the jobs for which wage data were available paid at the minimum wage level.
The characteristics of the fictional job applicants. 'Personas' were created for each of the job types applied to, with fictional names, addresses, dates of birth, educational and work histories and real phone numbers and email addresses, which were used as the basis of CVs and covering letters. These were then slightly tailored to individual jobs. It is possible that employers might be more likely to express neighbourhood reputation discrimination against less attractive candidates. This has been found in the case of ethnic discrimination (Dovidio and Gartner, 2000). However, the personas were intended to represent people who would be relatively attractive candidates for jobs that required limited education and skills. The aim was to limit the number of cases in which none of the three applicants was successful, which would hinder investigation of discrimination, while ensuring applications were realistic. To obviate any employer preference for other characteristics, all three applicants for any one job had the same gender. All had names chosen to avoid signalling minority ethnicity (see Wood et al., 2009, for further discussion). All were in their early 20s.
One of the three applicants for each job appeared to be living in each of the three local neighbourhoods selected. The applicant address, including a fictional numbered home in a real major street in the area likely to be well known, the area name and the postcode were prominently stated at the top of each CV. Applicants differed in their exact qualifications and work experience, and CV typeface and layout used, in order to maintain as much similarity between candidates as possible without raising the suspicions of employers. Addresses in each of the three neighbourhoods were allocated randomly to the three prepared CVs and covering letters as the final stage of the process in application to every job. CVs' contents were placed on one of three CV templates with different fonts and layouts, which were made similarly attractive. Age, qualifications and work experience were rotated between CV templates at intervals throughout the experiment. This random allocation ensured that any differences in employers' responses to candidates living in different neighbourhoods could not be attributed to their age, the style of their CV, exact qualifications or minor differences in work experience.
Most other applicant characteristics were largely determined by job type and were intended to create candidates for the various jobs who were promising but not exceptionally overqualified. In 286 (43 per cent) of the jobs, all three applicants were male; in the remainder, all were female. Jobs were allocated by gender in accordance with the gender profile of employment revealed by secondary data sources. The slight predominance of female applicants in the experiment overall reflects the availability of job types advertised and the availability of jobs which we could apply to using our methods.
Applicants were allocated academic and vocational qualifications of the types commonly held by young people in the LLMs and relevant to the post they were applying for. All of the applicants had continual work records since they had completed education and some were given Saturday job experience before this.
Wherever a job required a car and a clean driving licence, they were given to all three applicants, and likewise to candidates for any jobs with unsocial hours in order to distinguish between any discrimination by employers based on 'travelability' rather than discrimination against people from areas with poor reputations. Hence the candidates had a higher rate of private transport mobility than might be typical for applicants for these types of jobs.
Making applications. The majority of applications took the form of a CV or a CV and covering letter. Covering letters were used in many cases, even if they were not explicitly demanded by employers, in order to maximise positive response. Over 85 per cent of applications were made via the Internet. We used local assistants to put the remainder of applications in the post, to achieve local postmarks. In most of these cases, we avoided sending all the applications on the same day in order to reduce employer suspicion. In most cases, applications were made very rapidly after advertisements were first posted on the Internet. More than half were sent within three days of the advert first appearing.
Recording the results for the fictional candidates. After sending off three matched applications to any one job, we monitored specially established email and voicemail accounts to receive employer responses. We were not able to monitor any employer responses that might have been made by post to applicants' home addresses, but employer and intermediary interviews suggested that communication by post was exceptional. As the addresses used were false ones, any employer writing to one of our candidates would have had mail returned and could then have tried another means to get in touch, but we did not learn of any such experiences.
Some 620 applications (31 per cent) resulted in responses from potential employers. When we received a positive response, we responded as fast as possible via email to withdraw the applicant from consideration, stating that the candidates had already accepted another offer or that their circumstances had changed. Where more than one application for the same job received a positive response from employers, the style and content of our responses to employers were varied. One month after the application, we stopped monitoring for responses.
The experiment was concerned with positive responses at the first selection stage. Thus the experimental results cannot be applied directly to subsequent stages, such as interviews, or to the selection process as a whole.

Results of the Field Experiment 'First-stage' Positive Response Rates
A total of 17 per cent of the 2001 applications received one of a range of first-stage positive responses. This share of positive responses is higher than that achieved in another recent experimental study (Wood et al., 2009). This may reflect differences in the mix of jobs applied for, the LLMs studied or the quality of experimental applications.
Three applicants were offered a post right away. Most first-stage positive responses did not lead directly or with any certainty to job offers. Thirteen per cent of applicants were invited to meet employers and 2 per cent were asked for further information-for example, what days and hours they might be able to work. Thus fewer than one in five of the experimental candidates got through the first round of selection for jobs that required relatively limited skills and experience, and which generally paid close to the minimum wage. Young people with fewer labour market advantages would be likely to experience lower first-stage positive response rates when applying for the same sorts of jobs. Thirteen per cent of applications received one of a range of responses we classified as negative, including an acknowledgement of application but no further correspondence, or notice they had been unsuccessful; 69 per cent of applications received no response of any kind.
Previous studies using an experimental method to test for discrimination in employment have discussed several possible methods of conceptualising discrimination and analysing results (for example, Riach and Rich, 2004). The key issue is how to deal with jobs in which none of the candidates received a positive response, and those in which all of the candidates did. The first case suggests none met some minimum standard, or that no appointment was actually made, and offers no sign of preference between the experimental candidates. Wood et al. (2009) who conducted the most recent experiment of this type in the UK, and Bovenkerk (1992), who has prepared a manual for the conduct of these tests and analyses, argue that non-response to all candidates should not be treated as positive evidence of non-discrimination by employers. In the second case, all met some minimum standard and, while all appear to have been preferred over any other real candidates applying, there is no sign of preference between them.
In 475 (71 per cent) of the 667 jobs applied for, none of the three candidates received a first-stage positive response. In the remaining 192 (29 per cent) of jobs, employers gave a positive response to one or more of our candidates for the same post. These are the cases used to explore employer preferences and discrimination, following Bovenkerk (1992) and Wood et al. (2009).

'First-stage' Positive Response Rates Where Employer Showed A Preference for One or More Candidates
In accordance with the experimental methodology deployed, in each of the 192 sets of applications with at least one first-stage positive response, one of the applications was for a candidate from a bland reputation neighbourhood. Of these, 140 (62.5 per cent) applications received a first-stage positive response ( Table 2). The other two applications in each of the 192 sets were from candidates from poor reputation neighbourhoods, totalling 384 applications. Of these, 230 (59.9 per cent) applications received a positive response. The 2.6 percentage point difference between the success percentages for the two neighbourhood types provides a measure of aggregate net 'postcode discrimination'. However, the net preference was small and it was not statistically significant at the 1 per cent, 5 per cent or 10 per cent level.
In each of the three LLMs, there was a difference between the positive response rates for the neighbourhood types, with applications from the bland reputation neighbourhood having a slightly higher positive response rate. The level of net preference found was highest in the medium LLM, at 4.5 percentage points, but in no area was it statistically significant.
We examined subsets of the results for evidence of 'postcode discrimination' in any particular job or employer type. In some cases, there was evidence of a small amount of net preference, but in no case was the difference in positive responses between those from neighbourhoods with different reputations statistically significant.
In summary, we do not find statistically significant evidence that employers prefer those living in neighbourhoods with bland reputations to those living in neighbourhoods with poor reputations, in the case of attractive candidates looking for work in selected jobs requiring limited education and skills, in three contrasting LLMs. There was some net preference for candidates from neighbourhoods with bland reputations but it was small in size and not statistically significant.

The 'Stigma' Neighbourhood Effects Pathway and Variation in Employment between Neighbourhoods
Based on this evidence, the hypothesis that residents of neighbourhoods with poor reputations fare worse when applying for relatively low-skilled jobs than residents of neighbourhoods in the same labour market with better reputations was not proven.
It remains possible that, in a larger correspondence test study, the net preferences found would achieve statistical significance. It also remains possible that poor neighbourhood reputation might create neighbourhood effects on employment in parts of these LLMs or parts of the recruitment and selection process that were outside the scope of this experiment, in particular for unpromising candidates and for jobs applied to face-to-face.
As it stands, this is a different result from that found through multivariate analysis by McGregor (1977). One interpretation is that the earlier study's method was not able to take account of all hidden variables. Another, perhaps more important one, however, is that the market for male manual labour in Glasgow in the 1970s differed from the market for low-skilled service employment for both genders across England and Wales in 2010-11.
The size of the net preferences is small in relation to the differences in employment rates between neighbourhoods. It is not so small in relation to the typical size of neighbourhood effects, one explanation for differences in employment rates, as revealed in empirical studies (for example, Lupton, 2003a;Syrett, 2008;van Ham et al., 2012).

Reviewing the Sources for the Ideas about the 'Stigma' Neighbourhood Effects Pathway
The idea that poor neighbourhood reputation might provide a pathway through which neighbourhood effects might operate appears to have developed through qualitative research which indicates variations in reputation coinciding with variation in employment, and the presence of beliefs about neighbourhood effects amongst at least some residents and LLM intermediaries. One of the irreplaceable functions of open-ended qualitative work is to explore new areas of social enquiry and to generate hypotheses. However, not all such hypotheses are the same and the strength of evidence behind them, and the indications of the prevalence and salience of the processes they identity may vary. Most existing qualitative studies which have produced evidence of potential or perceived neighbourhood reputation effects on employment have not been focused on neighbourhood reputation effects (Lawless and Smith, 1998;SEU, 1998;Taylor, 1998;Fieldhouse, 1999;Roberts, 1999;Dean and Hastings, 2000;Speak, 2000;Mellor, 2002;Taylor, 2003;Aleksandraviciene et al., 2005;Sanderson, 2006;Green and White, 2007;Fletcher, 2007;Fletcher et al., 2008). Many have not asked explicitly or directly about neighbourhood reputation effects, but have recorded references that emerged in open-ended enquiries or as interesting by-products of research into other issues. Thus they have tended to record mentions of potential neighbourhood reputation effects without taking into account their prevalence or salience as potential explanations for individual employment status or neighbourhood employment rates, or the extent to which direct experience is reported.
In a study of young unemployed people in Newham in London, Roberts (1999) found that almost a third of young people from the most deprived parts of the borough thought that employers were put off by the area in which they lived. The converse finding was that a majority of residents did not think that poor neighbourhood reputation might create neighbourhood effects on employment. The evaluation of Working Neighbourhood Pilots found that just over one in ten residents thought that 'employers don't want to employ local people' . The converse is that almost nine in ten did not agree with this idea. In both cases, the context of the research might have encouraged respondents to point to barriers to employment other than their own characteristics and behaviour. Like Roberts (1999) and , we found that only a minority of interviewees supported the neighbourhood reputation effects hypothesis. Members of the public were most likely to think that neighbourhood reputation effects on employment might exist, but they were also the group least likely to have direct experience or evidence of neighbourhood reputation effects.
It is possible that neighbourhood effects may be specific not only to national or neighbourhood contexts, but also to particular time-periods. Over the past five years, employers even for low-skilled, low-paid and manual work, have switched from paper and mail to electronic applications. This practice was reflected amongst employers interviewed for this project, with the partial exception of those employing kitchen hands. This has meant that circumventing any poor reputation neighbourhood effect by using a false postal address is both virtually costless and practically redundant.

Conclusions
In summary, this paper has found evidence to contradict the hypothesis Residents of neighbourhoods with poor reputations fare worse when applying for relatively low-skilled jobs than residents of neighbourhoods in the same labour market with better reputations, all other things being equal.
The result suggests that relatively wellqualified candidates from areas with poor reputations should not fear postcode discrimination, at least up until the interview stage of the recruitment process. It remains possible that poor neighbourhood reputation might create neighbourhood effects on employment in parts of these LLMs or parts of the recruitment and selection process that were outside the scope of this experiment. However, centralised and electronic recruitment may be reducing the scope for these effects in large parts of the labour market.
On the basis of this evidence, there is no argument for policy interventions, including policies to reduce sorting or to address this neighbourhood effect pathway more directly, on the grounds of neighbourhood effects on employment. Nonetheless, there may be other arguments for these policies on area reputations; for example, that residents of areas with poor reputations suffer discrimination in the provision of services, or face unequal treatment or recognition.
The paper demonstrates the value of investigating the sources of ideas about neighbourhood effects pathways, and the factors necessary for pathways to operate, as well as for testing pathways themselves. It demonstrates the value of experimental methods in exploration of neighbourhood effects. It also demonstrates how mixed methods approaches may add to the value of individual elements of research. As existing evidence on neighbourhood effects suggests that the size of the effects is relatively small compared with differences in employment rates between neighbourhoods, the results of this work do not rule out a possible contribution of area reputation to neighbourhood effects on employment rates.