Accounting - Research Publications
Permanent URI for this collection
Search Results
1 - 10 of 12
-
ItemNo Preview AvailableXBRL and the qualitative characteristics of useful financial information(Emerald, 2017-05-02)Purpose: eXtensible Business Reporting Language (XBRL) is an internet-based interactive form of reporting language that is expected to enhance the usefulness of financial reporting (Yuan and Wang, 2009). In the UK and the USA, XBRL is mandatory, and in Australia, it is voluntarily adopted. It has been reported that in the not too distant future, XBRL will be the standard format for the preparation and exchange of business reports (Gettler, 2015). Using an experimental approach, this study assesses the usefulness of financial reports with XBRL tagged information compared to PDF format information for non-professional investors. The authors investigate participants’ perceptions of usefulness in relation to the qualitative characteristics of relevance, understandability and comparability. Design/methodology/approach: This paper uses an experimental approach featuring a profit-forecasting task to determine if participants perceive XBRL-tagged information to be more useful compared to PDF-formatted information. Findings: Results reveal that financial information presented with XBRL tagging is significantly more relevant, understandable and comparable to non-professional investors. Originality/value: The authors address a gap in the literature by examining XBRL usefulness in Australia where XBRL adoption will be mandated within the not too distant future. Currently, the voluntary adoption of XBRL by preparers and users is low, possibly, because of a lack of awareness about XBRL and its potential benefits. This study yields significant implications for the accounting regulators in creating more awareness on the benefits of using XBRL and to create an impetus for XBRL adoption.
-
ItemCEO talent: A dime a dozen, or worth its weight in gold?(Wiley, 2018-06-01)Very little sophisticated research exists on the size, quality, and efficiency of the labor market for CEO talent. This paper sheds light on this labor market by considering the perspectives of directors directly responsible for hiring and firing the CEOs of the largest publicly traded corporations in the United States. We find that directors overwhelmingly believe that the CEO job is exceptionally challenging and only a handful of executives are qualified to run their company and others in their industry. This suggests that the labor market for outstanding CEO talent is significantly tighter and more competitive than governance experts might realize.
-
ItemLinguistic Complexity in Firm Disclosures: Obfuscation or Information?(WILEY, 2018-03)ABSTRACT Prior research generally interprets complex language in firms’ disclosures as indicative of managerial obfuscation. However, complex language can also reflect the provision of complex information; for example, informative technical disclosure. As a consequence, linguistic complexity commingles two latent components—obfuscation and information—that are related to information asymmetry in opposite directions. We develop a novel empirical approach to estimate these two latent components within the context of quarterly earnings conference calls. We validate our estimates of these two latent components by examining their relation to information asymmetry. Consistent with our predictions, we find that our estimate of the information component is negatively associated with information asymmetry while our estimate of the obfuscation component is positively associated with information asymmetry. Our findings suggest that future research on linguistic complexity can construct more powerful tests by separately examining these two latent components of linguistic complexity.
-
ItemGetting to Know You: Trust Formation in New Interfirm Relationships and the Consequences for Investments in Management Control and the Collaboration(Wiley, 2017-06)Abstract Trust is often posited to substitute for management control in interfirm transactions. However, this raises questions of how trust arises in new relationships, and whether trust that is not based on prior experience transacting together is sufficient to persuade managers to forgo investments in management controls. We use an experiment to test whether two features of the early stage of an interfirm relationship influence a buyer's initial trust in a supplier and have consequences for subsequent investments in management controls and in the collaboration. These two features are the autonomy of the buyer's manager to choose a supplier (i.e., delegation of decision‐making authority) and the supplier's willingness to share information with the buyer. We find that the buyer manager's initial trust in the supplier is associated positively with both the autonomy to choose the supplier and the supplier's willingness to share information. Information content and supplier characteristics are held constant, so these results are novel and distinct from prior studies of the antecedents of trust. We find that higher initial trust is associated with reduced expenditures for management controls and increased investments in the collaboration. Thus, we conclude that delegation of decision‐making authority and supplier information‐sharing behavior in the early stages of a relationship influence the formation of initial trust, which has real consequences for investments in management control and in the collaboration.
-
ItemAudit Quality for US-listed Chinese Companies(WILEY, 2017-07)PCAOB Staff Audit Practice Alert No. 6 raised concerns regarding the quality of audit reports on financial statements filed by issuers with substantially all of their operations outside of the US. An area of specific concern is the audit of companies with operations predominantly based in mainland China. Using a sample of Chinese companies listed in the US, we examine whether measures of audit quality are affected by the location of the auditor. We find some evidence of higher levels of discretionary accruals when a US‐listed Chinese firm is audited by a small US auditor.
-
ItemThe Tone from Above: The Effect of Communicating a Supportive Regulatory Strategy on Reporting Quality(Wiley, 2018-05-01)ABSTRACT In collaboration with the Authority for the Financial Markets in the Netherlands, we manipulate the content of official letters that instruct financial intermediaries to submit a mandatory self‐assessment. As part of the Registered Report Process, we submitted our hypotheses, experimental procedure, and planned statistical analyses before data collection. We predicted that a request indicating a supportive regulatory attitude has a positive effect on reporting quality on average. We also predicted this effect to be stronger for small firms and for firms with a long‐term orientation, and to become negative for firms with a short‐term orientation. Planned analyses show that a supportive letter reduced reporting quality unless firms had a long‐term orientation, supporting the moderating influence of time horizon, but providing no support for the expected average effect or for moderation by firm size.
-
ItemShareholder Litigation and Corporate Disclosure: Evidence from Derivative Lawsuits(Wiley, 2018-06-01)Using the staggered adoption of universal demand (UD) laws in the United States, we study the effect of shareholder litigation risk on corporate disclosure. We find that disclosure significantly increases after UD laws make it more difficult to file derivative lawsuits. Specifically, firms issue more earnings forecasts and voluntary 8-K filings, and increase the length of management discussion and analysis (MD&A) in their 10-K filings. We further assess the direct and indirect channels through which UD laws affect firms' disclosure policies. We find that the effect of UD laws on corporate disclosure is driven by firms facing relatively higher ex ante derivative litigation risk and higher operating uncertainty, as well as firms for which shareholder litigation is a more important mechanism to discipline managers.
-
ItemPhilanthropy: Toward a Better Practice Model(Asia Pacific Social Impact Centre, 2018)Philanthropy is an important catalyst for social change and plays a pivotal and instrumental role in supporting communities and ameliorating disadvantage. The Trust Company’s Engaged Philanthropy Model suggested five key pillars of a good practice grant making framework: 1. Grant making philosophy 2. Capacity building and not-for-profit resilience 3. Scaling, replication and collaboration 4. The strength of the relationship between grant makers and grant seekers 5. Approaches to evaluation and social impact Building on these pillars, this project developed a survey tool to establish a framework for thinking about philanthropic practices and supporting better practice models. These results are substantiated by thirty interviews with grant makers and grant seekers. In general there is optimism about the future of philanthropy in Australia and a genuine desire to continue to develop best practice approaches to social impact by both grant makers and grant seekers. All those interviewed were united in their commitment to address serious social problems and work collaboratively to support social change. However, our findings revealed a disconnect between Australian grant seeker and grant maker perceptions around these issues, with philanthropists having a far more favourable view of the state of practices and relationships in the sector than their not-forprofit (NFP) counterparts. Interview respondents from throughout the sector identified multiple causes for the mismatch between grant maker and grant seeker and experiences and impressions, and broadly felt that the responsibility and power to continue to enhance philanthropic impact lay with the continued development of more strategic relationships between the NFPs and philanthropy. An important catalyst is a greater focus on the strategic impact of philanthropic initiatives and a higher priority by philanthropic decision makers, namely the philanthropists themselves, and the Boards and Trustees responsible for governance of philanthropic entities, to clarify their strategic intent and measure their performance against this strategy. The insights from this report establish a benchmark for the current state of play in Australia. It presents challenges, but also enormous opportunity for changes that will build towards better practice models and increased impact of Australian philanthropy. The NFP sector is seeking stronger, more strategic relationships with grant makers in order to make that happen.
-
ItemSustainability Reporting to Improve Organizational Performance(Network for Business Sustainability, 2017-10-11)
-
ItemSustainability Reporting Playbook(Network for Business Sustainability, 2017-10-11)Sustainability reporting can allow internal stakeholders to be more effective in their roles. It can increase employee engagement and inform management decision-making, among other benefits. Yet companies often fail to connect sustainability reporting to the core operations of the business, and so fail to realize the potential benefits. This playbook identifies opportunities for enhancing the effectiveness and impact of sustainability reporting.