Business

Publication Search Results

Now showing 1 - 10 of 38
  • (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.

  • (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.

  • (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.

  • (2018) Wang, Kaiwei
    Thesis
    A primary objective of strategic performance measurement systems (SPMS) is to communicate strategies and guide managerial decisions and actions. However, SPMS are often incomplete and cannot capture all aspects of the strategy. In this dissertation, I investigate how the enabling use of SPMS can address two issues pertaining to SPMS that potentially compromise the usefulness of SPMS: 1) SPMS may lead employees to surrogate performance measures for their underlying strategy strategy surrogation; and 2) SPMS may constrain innovations due to the risk of over-commitment to the pre-defined performance outcomes. In Study 1, I conduct an experiment to examine the extent to which SPMS flexibility and environmental dynamism affect managers propensity to fixate on a performance measure at the expense of recognizing to a new innovation trend ( strategy surrogation ). The results indicate that, in the dynamic environment, the flexible SPMS result in lower strategy surrogation than the inflexible SPMS, and strategy engagement significantly influences strategy surrogation. In Study 2, I conduct a survey on middle managers to examine how the enabling use of SPMS can facilitate both exploratory and exploitative innovations. The results show that enabling SPMS enhance both exploratory and exploitative innovations, and strategy engagement is a key mediator through which enabling SPMS influence innovations. Although environmental dynamism does not moderate the effects of enabling SPMS on innovations, it positively moderates the mediation of strategy engagement. The results of this study contribute to the effective use of SPMS in reducing strategy surrogation and facilitating the pursuit of both exploratory and exploitative innovations, which has been a struggle for firms and an important inquest for academic research in the past two decades. Of equal importance, the studies fill the absence in the current literature by demonstrating the strategic significance of managers strategy engagement in influencing the strategic success of firms, including the pursuit of innovations.

  • (2018) Yang, Yitang
    Thesis
    This thesis addresses the informational value of auditing in charitable organisations. The practical significance and regulatory concern of the charity sector lead to the need to learn about charities’ activities and how charities are monitored and report to articulate their accountability to the public. Study One examines the value brought about by the audit by investigating the extent to which higher audit quality leads to higher reporting quality as evidenced by charities’ financial reporting framework choice. Study Two focuses on the auditor’s opinions expressed on charities’ financial reporting, in particular the propensity and consistency for auditors to issue a going concern modified opinion. Study Three explores the perceived informational value of audit from the perspective of financial capital providers by examining whether quality audits attract increased subsequent external funding from both public donors and grant providers. Finally, Study Four examines the cost associated with audit quality choice. The four archival studies examine the population of large charities registered with the ACNC for 2014 and 2015 and cover 7,654 charity-year observations, utilising data submitted to the ACNC, along with manually-collected accounting and audit data sourced from the charities’ financial reports. Recognising self-selection and endogeneity to be challenges inherent in the research design, several techniques including Heckman two-stage estimation process and propensity score matching are applied. Descriptive results reveal new information on the reporting errors and reporting choices among Australian charities. Empirical results indicate that higher audit quality brings about benefits to charities through identified association with certain proxies for reporting quality and increased future donation income. Also, the information content in the auditor’s report conveys incremental information to the users in making their resource allocation decisions. While there is a fee premium for quality auditors, Big 4 audit firms are also more likely to provide a full pro-bono audit service compared to non-Big 4 auditors. Furthermore, I report that some audit quality differentiation results are sensitive to the selection and specification of the proxies. These results provide empirical evidence of audit value in charities and provide a useful benchmark for the profession and regulators to inform standard-setting processes.