Business

Publication Search Results

Now showing 1 - 10 of 54
  • (2019) Khoo, Eunice
    Thesis
    This thesis examines the role of reputation on a firm’s financial and non-financial outcomes through three studies. The first study examines whether the reputation incentives of busy audit committee members improve their effectiveness in monitoring the financial reporting process. I find that firms with a larger proportion of audit committee members where the membership is the most prominent are associated with higher financial reporting quality and more effective monitoring of internal control. Additional analyses reveal that my results are driven by audit committee members’ reputation incentives rather than independent non-audit committee members’ reputation incentives. I conclude that audit committee member reputation is a strong incentive for audit committee members, such that it influences their monitoring effectiveness over the financial reporting process. The second study explores whether the reputation incentive offered by a firm’s directorship has an impact on a firm’s CSR performance. I find that firms with a larger proportion of independent directors where the directorship is the most prominent are associated with better CSR performance. The positive effect of independent directors’ high reputation incentives on CSR performance is driven by better performance in CSR strengths rather than CSR concerns, and by better performance in both stakeholder CSR and third-party CSR. The effect is more pronounced in an environment where firms face less external pressure to perform CSR, and in firms with a less diverse board. Overall, my results suggest that independent directors have incentives to develop their reputation as a socially responsible director. The third study investigates the role of corporate reputation in enhancing the timeliness of external audits and earnings announcements. Changes in audit and financial reporting regulations have resulted in longer audit delay, leading to an increase in firms that announce earnings prior to audit completion, both of which have implications on the quality of financial information. I find that corporate reputation is negatively associated with audit report lag and the likelihood of firms announcing earnings after audit completion. I document important benefits in the form of timelier audits and earnings announcements derived from developing and maintaining a good corporate reputation.

  • (2019) Yang, Fan
    Thesis
    This thesis investigates issues regarding the application of fair value accounting to investment properties. The thesis documents two inter-related studies conducted in the context of accounting for investment properties around the adoption of IAS 40 Investment Property. The first study examines lobbying on exposure drafts regarding the application of fair value accounting to investment properties. I analyse comment letters received by both the IASC and the FASB in response to their exposure drafts, that is, E64 Investment Properties and Topic 973 Investment Property Entities, respectively. I first use a content analysis method to understand attitudes and concerns of interested parties with respect to accounting for investment properties at fair value. Results show that the reliability of fair values and the relevance of unrealised gains and losses are the primary concerns expressed by respondents. I then investigate underlying factors driving interested parties’ preferences. Results show that respondents’ preferences are highly associated with their functional roles in accounting practice, their industries, and their institutionalized accounting practices. Using a sample of European real estate firms, the second study utilises a number of different approaches to investigate the value relevance of historical cost and fair value accounting information for investment properties. Using both a balance sheet model and a returns model, I examine the value relevance of balance sheet and income statement information separately. Results consistently show that balance sheet amounts for investment properties measured at fair value are more value relevant than those measured at depreciated cost. However, results regarding the value relevance of income statement information are mixed. Although fair value-based earnings are relatively more value relevant than historical cost-based earnings, the incremental value relevance of earnings components differs significantly depending on the permissibility of asset revaluations of the sample firms’ domestic GAAP. In particular, realised earnings are incrementally value relevant only for firms whose domestic GAAP strictly require historical cost accounting, whereas unrealised earnings are incrementally value relevant only for firms whose domestic GAAP permit revaluations prior to IFRS. This finding reinforces the argument that economic, cultural, and social forces can impact the value relevance of fair value information at the country-level.

  • (2018) Emanuel, Carmel
    Thesis
    This thesis investigates the factors associated with the quantity of related party transaction disclosures by large publicly listed firms in the emerging markets of Brazil, Russia, India and South Africa (BRIS) using a checklist of disclosure requirements from IAS 24 Related Party Disclosures across three years; 2001, 2006 and 2014. Using four proxies of disclosure, each measuring a different aspect of disclosure, the thesis addresses whether disclosure level is associated with: IFRS adoption; across-time learning effects; audit committee; auditor type; foreign listing; outstanding capital market debt; and ownership concentration. Data are hand-collected from the English-language annual reports of 151 constant firms (453 firm-years) in each of the three sample years. The results suggest that the firm-specific factors examined influence each country’s compliance in different ways. Overall, the findings show that in Brazil and South Africa, the level of related party disclosure is positively associated with the mandatory adoption of IFRS. Across-time learning effect and the existence of outstanding capital market debt matters only in India. In Brazil, a higher level of related party disclosure is associated with the existence of an audit committee whereas in Russia, a positive association exists if firms are audited by a big 4 or 5 auditor. Ownership concentration, on the other hand, is associated with related party disclosure in Russia, India and South Africa. When all countries are combined and controlled for, IFRS adoption, learning effect and the existence of an audit committee are the only factors systematically related to related party disclosure

  • (2019) Xu, Yang
    Thesis
    This thesis examines how audit partners change over their life cycle and how those changes affect audit quality. Study 1 investigates whether human capital investment changes as audit partners become more experienced and whether an increase in the partners’ career horizon can motivate them to invest more in human capital. I find that, as audit partners gain experience, both Big N and non-Big N partners charge a small fee premium for their experience but allow more accruals to be reported by clients. However, Big N partners are more likely to issue going concern opinions as they gain experience, while non-Big N partners are less likely to do so. I also find weak evidence for the effect of postretirement work on partner performance. Study 2 investigates how the incentive to invest in industry specialisation differs from general human capital and its implications for audit quality over partners’ life cycle. The results show that audit partners demand a fee increase for another year’s experience when they are industry specialists working within their specialisation (3.2% - 5.5% per annum), which is higher than when they work outside their specialisation (1.9% - 2.3% per annum). In comparison, nonspecialists receive an annual fee increase of 2.3% - 3.6%. The results show that audit partners allow clients to report higher levels of absolute value of accruals as they are more experienced, regardless of whether they have a specialisation or not, which is sensitive to the control of the GFC and its aftermath. The results also show that specialist partners are more effective at restraining their clients from earnings management as they become more experienced, but only when they work within their specialisation and not when they work outside their specialisation. Findings from the thesis have implications for practitioners and regulators. Audit firms may consider 1) costs and benefits of their partner early retirement policies and 2) providing additional support for less experienced partners to ensure high audit quality. Regulators from quality review programs may target engagements audited by less experienced partners and/or those audited by industry specialists working outside their specialisation as warranting their attention.

  • (2017) Chua Bun Pho, Debbie
    Thesis
    My thesis examines earnings quality (EQ) of Asian financial firms during the Asian financial crisis (AFC) 1997-1999 and the global financial crisis (GFC), 2008-2010. For these firms, I investigate: (a) whether EQ is higher during the GFC than the AFC; (b) whether EQ in high enforcement countries exceeds that of low enforcement countries in both crises; (c) in low enforcement countries, if international agency interventions occurred, whether EQ is higher during the GFC than if no interventions occurred. My sample consists of firms with SIC codes between 6000-6499 from 10 Asian countries (China, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand), comprising on average 880 and 1,124 firm-year observations for banks and other financial firms, respectively. Countries are pooled into high and low enforcement groups, consistent with legal institutions, both law and its enforcement, and financial development of a country affecting the quality of accounting numbers. I treat banks separately from other financial firms, and divide the latter into insurance companies and diversified financial services companies for some hypotheses, sample size permitting. Of the five EQ measures covered, I argue that, during times of financial crisis, conditional conservatism, cash flow predictability and accrual quality are superior EQ measures to earnings persistence and income smoothing. Collectively, the results suggest that banks and other financial firms (insurance and diversified financial services companies) do not learn from their AFC experience and that financial reforms instigated following the AFC are not effective in improving the earnings quality during the GFC, except for cash flow predictability by banks. Evidence further suggests that the financial sector in Asia puts more importance on earnings persistence rather than accounting conservatism during crisis periods, particularly in the regulated bank and insurance companies. However, a sensitivity analysis conducted on financial firms that survived the AFC to the GFC indicates that only financial firms belonging to the high enforcement group report conditionally conservative numbers during the GFC. Despite being rejected by accounting standard-setters as a desirable EQ attribute, conditional conservatism can be an indication of financial strength, especially during uncertain times.

  • (2017) Ding, Rui
    Thesis
    This dissertation consists of two empirical studies on the role of disclosure and financial reporting in mitigating information and agency problems. In the first study, I examine the relation between textual risk disclosures in IPO prospectuses and initial underpricing using data from Australian IPOs. I find that the quantity of disclosures in the risk factor section itself has no significant impact on initial underpricing. However, an increase in the informativeness of risk factor disclosures is associated with lower IPO underpricing. The result suggests that IPOs that provide informative risk factor disclosures have less ex ante uncertainty, in the sense that the disclosures help investors estimate the dispersion of secondary market value. The effect of informative risk factor disclosures on IPO underpricing is more pronounced for IPOs with less prestigious lead underwriters and is mainly driven by younger firms, smaller firms, and firms with poorer operating performance prior to their IPOs. In the second study, I examine how well the customer director is informed while serving on the supplier’s board and the association between customer board representation and the supplier’s accounting conservatism. I compare the returns earned by customer directors from trading the suppliers’ shares to those earned by supplier executives to indirectly measure the amount of inside information the customer director collects while serving on the board. I find that there is not a significant difference between the returns earned by customer directors and those earned by supplier executives in the 180 days after the open-market purchases. However, supplier executives earn higher returns than customer directors when making open-market sales for a subsample of suppliers with lower firm risks. To the extent that insiders are likely to sell shares when they have bad news about the firm and purchase when they have good news, the results suggest that customer directors are not less well informed relative to supplier executives about good news, but are less well informed about bad news. I find that customers use conservative accounting as a complementary source of information to assist them with effective monitoring of the suppliers when they have greater concerns with expropriation problems.

  • (2019) Li, Jingduan
    Thesis
    My thesis examines the changes to debt covenants associated with the mandatory adoption of International Financial Reporting Standards (IFRS). I first examine the change in the use of accounting covenants after the mandatory adoption of IFRS. Then I investigate whether other factors such as the differences between local Generally Accepted Accounting Principles (GAAP) and IFRS, and cross-country enforcement differences, can also affect the use of accounting debt covenants. I also examine the use of non-accounting covenants after the mandatory IFRS adoption. The sample I use is new private debt issues between 2001 and 2010 in 18 IFRS-adopting countries (treatment group) and in 16 non-IFRS countries (control group), consisting of 290 and 1,199 firm-year observations for IFRS and non-IFRS countries, respectively. Employing a difference-in-difference specification that controls for firm and debt issue characteristics, I find a significant decline in the use of accounting-based debt covenants in IFRS-adopting countries after IFRS adoption, but not in non-IFRS adopting countries. This reduction is more pronounced in countries with a high level of difference between IFRS and prior local GAAP. In addition, I find that among these high difference countries, the significant decrease only exists in strong enforcement countries. I also find that the use of non-accounting covenants increases after IFRS adoption. My results are robust with respect to a variety of tests. Collectively, the results suggest that the mandatory adoption of IFRS increases the uncertainty and volatility of accounting numbers in debt contracts, and thereby reduces debt contractibility. How extensively local GAAP and IFRS differ is the main reason for the uncertainty that is injected into accounting numbers in debt covenants. In addition, the results suggest that only in those countries with strong enforcement do the effects of IFRS in fact occur. Increased non-accounting covenants use suggests that lenders rely on other kinds of covenants to protect themselves when accounting covenants become less useful. Therefore, the observed reduction in accounting-based debt covenants is not due to increased transparency inherent in IFRS. The results suggest that financial statements prepared under IFRS have potential limitations for debt contracting.

  • (2018) Pare Plante, Maude
    Thesis
    This thesis explores the social construction of financial value in everyday life. The main objective of this thesis is to understand valuation practices and how they relate to accounting. This thesis draws on extensive participant observation and 77 interviews with actors actively conducting valuation. Valuation practices for two objects are explored. The first object explored in this thesis is artwork. The study of valuation practices for artwork suggests that the recognised cultural contribution of the object is a major value driver. Practices to value artwork are articulated to manage uncertainty that artwork offers a cultural contribution. The second object studied in this thesis is real estate property. Tracing efforts to negotiate real estate transaction prices demonstrate that valuation is relational. Relationships actors have regarding an object will dictate their evaluation. This thesis highlights that accounting and valuation are nearly indistinguishable; valuation practices condition the existence of accounts, and through valuation, accounting constitutes the social sphere.

  • (2019) Dhillon, Rina
    Thesis
    This thesis examines the role of accounting in everyday life by undertaking case studies of accountability through ranking, rating and reviewing within the Australian and Singaporean education sectors. This thesis is motivated by the incessant demands for accountability and transparency in everyday life, exemplified by the explosion of online facilities for ranking, rating and reviewing everyday decisions and activities. While accounting researchers have recently taken interest in the rise of rankings, ratings and reviews in various domains, we know little about the everyday calculative agencements that are mobilised by ranking, rating and reviewing practices, and the accounting assemblages that underpin such practices. This thesis consists of two qualitative studies that draw on semi-structured interviews with a variety of stakeholders within the Australian and Singaporean education sectors, and a netnographic study of stakeholder participation on various online educational websites. The first study examines accounting assemblages that drive ranking, rating and reviewing practices within the Australian and Singaporean school sectors. By tracing these assemblages, the first study sheds light on the (i) diffusion of centres of calculations; (ii) ‘accounting intimacy’; and (iii) cascading translation of governmentality, that mobilises a chain of accounting and accountability calculations in the form of rankings, ratings and reviews, in everyday life. The second study builds on the first by exploring contemporary developments in the exercise of everyday accountability, with a focus on how the increasing online availability of information about student and school performance has facilitated more participatory and multifaceted form of accountability (which this thesis terms citizen accountability) within the Australian education sector. Specifically, it traces the myriad of accounting calculations (often formalised as rankings, ratings and reviews) that are produced and used by parents, students, teachers, principals, and others in exercising and responding to stylised forms of accountability. In doing so, this study contributes to furthering our knowledge of (i) the distinguishing features and characteristics of citizen accountability; (ii) the strategic and calculative practices performed by stakeholders in the name of citizen accountability; and (iii) the effects and ramifications of the growing exercise of citizen accountability in everyday life.

  • (2018) Ko, John
    Thesis
    In recent years, investors have been increasingly incorporating nonfinancial performance information alongside financial performance information into their investment decision-making. While this has been a prevalent trend complemented by companies growing emphasis on reporting nonfinancial performance externally, research examining how investors evaluate and process nonfinancial performance remains surprisingly limited. Specifically, the current reporting setting is one where managers have discretion as to how they convey the relationships between nonfinancial and financial performance, both visually (such as through different presentation formats), and narratively (by explaining the causal relations between nonfinancial performance and financial performance). Given that investors have limited attention and use different information processing strategies contingent on key characteristics of the decision environment, in this dissertation, two experimental studies are conducted to examine how presentation formats and causal explanations affect investors information processing and judgments. Using eye-tracking technology, Study One examines whether performance information presented based on either stakeholders or strategic themes influences the information processing patterns of investors with directional investment preference. The results show that a stakeholder format causes investors in a long investment position to focus more (less) attention on evaluating negative financial (positive nonfinancial) information compared to investors in a short investment position. However, investment position makes no difference when the same information is presented in a strategic theme format. Moreover, faced with negative financial information, investors exert greater effort towards integrating the performance information when they are in a long (versus short) position or when the information is presented in a stakeholder (rather than a strategic theme) format. Study Two examines the effects of management s causal explanations of the relationships between nonfinancial and financial information and the direction of the causal explanations (either in a predictive or in a diagnostic manner) on investors evaluations and judgments. The results reveal that when a predictive causal explanation is presented, investors perceive management as less trustworthy, evaluate company earnings negatively and are less likely to invest in the company than when no causal explanations are presented. The findings of this dissertation have important implications for external reporting entities, standard setters and analysts.