Business

Publication Search Results

Now showing 1 - 10 of 18
  • (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) 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.

  • (2017) Zhang, Xiaoyue
    Thesis
    Both international (ISA 240) and U.S. (SAS No. 99) accounting standard-setters require audit firms to organise a discussion session/ brainstorming session at the audit planning stage for each audit, in order to discuss how and where a company’s financial statements might be susceptible to material misstatement due to fraud. This study introduces a structured interacting electronic brainstorming platform into the audit context and examines whether it improves auditors’ fraud brainstorming performance in the fraud hypotheses generation task when compared with the non-structured interacting electronic brainstorming platform which has been investigated in prior literature. In the structured interacting electronic brainstorming platform, idea inputs are shown by categories rather than in chronological sequence on a computer screen. Understanding the comparative effect of different forms of electronic brainstorming and exploring the most appropriate interacting electronic brainstorming method are important since it is likely to improve the effectiveness of brainstorming sessions in audit firms. The structured interacting electronic brainstorming platform has been found to be useful in improving users’ productivity and creativity in psychology. However, this study finds that the structured interacting electronic brainstorming platform has no effect on the brainstorming performance of the three-person hierarchical audit groups. Moreover, the use of the structured interacting electronic brainstorming platform has no effect on fraud brainstorming performance and mental simulations of seniors, but it even has a negative effect on the fraud brainstorming performance and mental simulations of managers. Furthermore, this study finds that there is no significant correlation between auditors’ brainstorming performance in the fraud hypotheses task and changes in their fraud risk assessments.

  • (2017) McDaid, Emma
    Thesis
    Technologies of online ratings and reviews have recently emerged as mechanisms to facilitate transparency and accountability in the provision of goods and services. While online ratings have been shown to create trust in systems, trust in ratings by users has been largely neglected by researchers, despite the relationship between trust and reviews that has been posited in many accounts. Drawing on 30 field interviews with Airbnb guests and hosts and analysis of a range of secondary materials, I found that users are largely sceptical towards the information content of Airbnb s ratings and reviews. Scepticism is driven by initial perceptions of online ratings as being too high, and also by the face-saving practices adopted by users in the process of reviewing. Employing face-saving practices, users are found to adopt three distinct strategies (1) use of private messenger channels, (2) creation of tactful reviews that camouflage reality and (3) abstinence from reviewing entirely when leaving ratings and reviews on Airbnb. Trust in Airbnb s online ratings and reviews is found to be fragile, and users need support through other mechanisms to become informed. In addition to affecting trust, these three strategies combine to create illusory accountability in Airbnb s online ratings. This new form of accountability is conceptualised as crowd-sourced accountability and is found to survive without genuine engagement by users. These findings raise important questions about the efficacy of online ratings and reviews as a mechanism for self-regulation in the sharing economy.

  • (2015) Fu, Yi
    Thesis
    To better understand how audit firms are governed, Australia has mandated the preparation and release of transparency reports by audit firms in 2013 with a focus on the disclosure on audit firm internal governance systems. These reports promote increased transparency regarding issues which are believed to contribute to audit quality. My thesis includes two empirical studies based on transparency report disclosures. In the first study, using the first-time disclosures in audit firm transparency reports, I summarise the governance and other information for the 21 leading Australian audit firms as disclosed in their first-time 2013 transparency reports. I find that audit firms meet the minimum transparency report disclosure requirements, but have different approaches to governance in the areas which may impact audit quality. I identify specific areas where transparency reports may give rise to future research opportunities. In the second study, I use disclosures from first-time mandatory audit firm transparency reports to investigate the association between the design features of partner remuneration schemes and audit quality. Specifically, I examine the influence of four features of partner remuneration schemes: the inclusion of performance-based compensation components, whether partner remuneration is linked to internally assessed measures of audit quality, whether partner remuneration is linked to client retention and acquisition and the size of profit sharing pool. Using the issuance of going-concern opinion and discretionary accruals as audit quality proxies, I find evidence of differences in audit quality related to partner remuneration schemes. I find that the inclusion of a link between partner remuneration and internally assessed measures of audit quality is associated with higher audit quality proxied by the issuance of going concern report and discretionary accruals. I also document that the inclusion of client retention and growth in partner remuneration schemes is associated with higher audit quality. However, I find mixed evidence of the role of performance-based components in partner remuneration schemes and find no evidence that the size of the profit sharing pool is associated with audit quality. My findings inform regulators and the profession that partner remuneration design features are associated with differences in audit quality.

  • (2015) Saha, Amitav
    Thesis
    Despite the positive effects of the adoption of International Financial Reporting Standards (IFRS) noted in the literature, standard-setters have recently issued reports suggesting that the required disclosures in IFRS have become too burdensome and should be reduced. One such report, “Losing the Excess Baggage” (2011; also referred to as “Excess Baggage”), issued by professional accounting bodies from Scotland and New Zealand, classifies current IFRS disclosure requirements into three categories: retain; delete; and disclose only if the item is material. The thesis empirically examines whether the items targeted for deletion, retention or reduction based on materiality by Excess Baggage are disclosed differently, linked differently to firm characteristics, and have different value relevance in an Australian setting. Findings indicate that items marked retain are disclosed most, followed by material, then by delete items. Firm characteristics, such as US listing status, and ownership dispersion, are positively associated with disclosure levels. In addition, while only the material disclosure items are value relevant, the presence of disclosures based on all categories has a moderating effect on value relevance of book value of equity.

  • (2012) Wang, Grace
    Thesis
    I study how investor sentiment affects the speed in which analysts issue their earnings forecasts. Based on psychological phenomena, I find that deviations from a steady level of economy-wide sentiment are associated with more timely analysts' earnings forecasts. I also find that analysts' earnings forecasts are more timely for firms with higher sentiment. However, I find that analysts' earnings forecasts are more timely only during bust periods. This is consistent with representativeness bias during periods of downturns. When analysts' earnings forecasts are decomposed into upwards and downwards forecast revisions, I find there are differences in the timeliness of upward and downward forecast revisions during boom and bust periods. I then examine the impact the timeliness of analysts' earnings forecasts has on the cost of equity capital. I find that as the timeliness of analysts' forecasts increases, the cost of equity capital reduces. However, there appears to be a maximum point where the most timely analysts' forecasts increase the cost of equity capital. My research provides evidence on analysts' information production processes during periods of both normal and extreme economy-wide sentiment.

  • (2019) Stepankova, Sarka
    Thesis
    Professional scepticism is a central focus of the audit profession and a key determinant of audit quality. Audit research and standard setters have recently raised concerns that the current wording of audit standards may not be effective in inducing auditors to exercise sufficient levels of professional scepticism. This study experimentally tests whether using verbs suggested to encourage more thoughtful information processing (i.e. linguistically less concrete verbs) in audit instructions affects auditors’ mindset and attitudes and thus their levels of professional scepticism. It draws on construal level theory, mindset theory, and prior linguistic research to develop its expectations that auditors instructed with linguistically less concrete verbs will adopt a more sceptical mindset and form more sceptical attitudes towards audit evidence and management’s assertions relative to auditors instructed with linguistically more concrete verbs as currently used in audit standards. Forty-eight experienced auditors from Big 4 Australian accounting firms participated in this 2 x 1 controlled experiment where the level of linguistic concreteness of verbs was manipulated between subjects at two levels: ‘linguistically more concrete verbs’ versus ‘linguistically less concrete verbs’. The results of the study show that using linguistically less concrete verbs in audit instructions affects auditors’ cognitive processing and leads to a greater breadth of information selection (mindset). However, the findings do not show that linguistically less concrete verbs influence auditors’ beliefs regarding the sufficiency of audit evidence and their feelings of comfort with respect to management’s assertions (attitudes). The study responds to the call for research by Nolder and Kadous (2018) to explore whether revising language (verbs) in audit instructions leads to the adoption of a more sceptical mindset and provides empirical evidence on their model of professional scepticism.

  • (2017) Chiu, Yi-Hsuan
    Thesis
    This thesis examines the association between auditor quality and the likelihood of financial restatements for Australian listed companies. I focus on two types of restatements: error-based restatements, which are financial restatements to correct a prior-period error-based misstatement, and stealth restatements, which are restatements made without qualitative disclosures required by the regulation. I document that 32%, 23% and 1.9% of Australian listed companies made restatements, stealth restatements and error-based restatements respectively in my sample of 1,465 Australian listed companies in the 2012/2013 reporting period. I construct an Error Restatement Model and a Stealth Restatement Model to examine the effects of auditor quality and auditor quality changes on the likelihood of different types of restatements. I find some evidence that prior-period auditor quality, measured by whether an auditor is a Big 4 audit firm, is associated with a lower likelihood of a current-period error-based restatement. However, a change in auditor to a Big 4 audit firm (or to an industry specialist audit firm) is associated with a higher likelihood of an error-based restatement arising from the first year audit engagement. I find evidence that higher auditor quality, measured by whether an auditor is an industry specialist audit firm, is associated with a lower likelihood of a stealth restatement and that a change in auditor increases the likelihood of a stealth restatement, but no evidence that higher quality auditors are more effective at detecting or deterring client restatements without qualitative disclosures in first year audit engagements.

  • (2015) Simmons, Shaun
    Thesis
    This study experimentally examines the effect of two factors, the type of budgetary process and the level of perceived interpersonal trust by subordinates towards their superiors, on subordinates’ propensity to include slack in their budgets and the amounts of slack they individually create. I propose that, where the budget preparation process includes an option to rollover existing budgetary information, subordinates have greater propensity to create slack, although in smaller amounts, than where a rollover option is absent from the process. I further propose that subordinates who perceive a low level of interpersonal trust towards their superiors have greater propensity to create slack, and create it in higher amounts, than where their perception of interpersonal trust is high. I also propose that the two factors interact, so that the difference in propensity to create slack and the difference in the amounts created between the two treatments of budgetary process, are greater where subordinates perceive a low level of interpersonal trust towards their superiors than where this perception is high. In order to mitigate social desirability bias, participants are asked, as third party observers, to predict whether subordinates would create budgetary slack in the experimental scenario. I find that subordinates have greater propensity to create slack where the budgetary process includes a rollover option and smaller amounts are created, than where a rollover option is absent. I did not find any difference in subordinates’ propensity to create slack that was associated with the perceived level of interpersonal trust towards their superiors. However, subordinates create greater amounts of slack where their perceived interpersonal trust is low. I did not find support for the predicted interaction effect. These findings suggest that the antecedents of the propensity to create budgetary slack can differ from the antecedents of the amounts created, and therefore, in practice, each may require differing forms of mitigation. The finding that rollover options increase the propensity to create slack suggests a point of caution for practitioners of rolling budgets. This study extends prior literature by finding that perceived interpersonal trust did not affect the propensity to create slack, just the amount created.