Accounting - Research Publications
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ItemWho pays attention to sustainability reports and why? Evidence from Google search activity(Wiley, 2023-09)We introduce country-level Google search activity as a direct measure of the level of stakeholder attention directed towards sustainability reports. We validate this measure by establishing that search activity for sustainability reports is correlated with temporal patterns in firms' supply of these reports. To frame the economic magnitude of this search behaviour, we then show that the level of attention directed towards sustainability reports is very low compared to the level of attention directed towards financial and accounting information. Next, we examine two related research questions. First, we identify who pays attention to sustainability reports. We find, consistent with the environmental Kuznets curve, that attention towards sustainability reports is strongly associated with economic development. Consistent with findings in prior research that suggest citizens in stakeholder-oriented countries have stronger preferences for firms to act prosocially, we also find that search activity for sustainability reports relative to search activity for financial performance metrics is greater in civil law countries than in common law countries. Finally, we then explore the question of why individuals pay attention to sustainability reports and find evidence that suggests sustainability reports are used for two primary purposes: evaluating the societal impacts of firms' actions; and, firm valuation.
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ItemSuperstar Productivity and Pay: Evidence from the Australian Football League(WILEY, 2022-06)We use game‐level data from the Australian Football League (AFL) to examine superstar workers' productivity and pay. By exploiting teams' injury‐induced line‐up changes between games, we show that, compared with replacement‐level players, superstars increase their teams' likelihood of winning away games by approximately 15 percentage points. While we then show that betting markets appear to appropriately price superstars' marginal productivity, we present back‐of‐the‐envelope calculations that suggest that teams underpay superstar players by at least 30 per cent. We discuss how inaccurate performance evaluations, labour market regulations, long‐term back‐loaded contracts, clubs' attempts to reduce harmful intra‐team pay disparities and on‐field success as a form of payment‐in‐kind may explain our findings.
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ItemFrequency and nature of the reporting of going concern by auditors in the financial statements of Australian listed companies(Australian Accounting Standards Board, 2022-11-01)This report presents descriptive statistics on the reporting of going concern in the audit reports of financial statements of ASX listed companies. Analysis is presented for Australia and the World (hereafter referred to as RoW) based on the financial statements for the financial year 2021 and across the 2010-2020 period. The objective is to provide a ‘stocktake’ of the current reporting of going concern by auditors which may provide some useful background information for identifying areas of economic importance for further investigation and the policy deliberations.
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ItemAnnual benchmark and analysis research report on the reported financial performance and position of Australian Listed Companies(CAANZ (Chartered Accountants Australia and New Zealand), 2023-06)This annual benchmark research report provides benchmarks of normal, high and low values for the primary drivers of performance and the values of financial reporting line-items in an Income Statement and Balance Sheet for Australian listed companies. The benchmarks are produced for each Global Industry Classification Standards Sector (GICS) and for four company size categories (large, medium, small and micro) within each Sector.
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ItemAustralian Listed Entities: Recognised intangible assets and key audit matters(Australian Accounting Standards Board and Auditing and Assurance Standards Board, 2023)The AASB-AUASB published a joint research report (with Professor Matthew Pinnuck and Dr Mark Willis) that aims to understand the significance of recognised intangible assets on the balance sheets of Australian listed entities. This Report explores the frequency, magnitude and nature of intangible assets recognised by the Australian Securities Exchange (ASX) listed entities on their balance sheets. This Report also identifies the frequency of key audit matters (KAMs) related to intangible assets in auditor’s reports to provide insights into the areas that auditors are focusing on, possibly due to the complexity of the accounting requirements. Through a review of the financial statements from 2010 to 2021, this Report finds that: • with the exception of micro-mining entities, the majority of Australian entities recognised some intangible assets on their balance sheets; • the level of investment in intangibles for the majority of entities, as a percentage of total assets, is relatively low. However, there are some entities that recognised a significant level of intangibles as a percentage of total assets; • there is a wide variety of category descriptions used to present intangible assets, possibly impeding both comparability and a precise understanding of the nature of the intangible asset; • intangibles are the most frequent KAM subject matter, suggesting a substantial fraction of auditors' resources to assure such information, despite the relatively low level of recognised intangibles.
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ItemInsights into Key Audit Matters 31 December 2022 to 30 September 2023 reporting in Australia(CAANZ Chartered Accountants Australia and New Zealand, 2024)A report on the frequency and nature of the reporting of key audit matters (KAM) in auditors’ reports of Australian Stock Exchange (ASX) listed entities that issued financial statements in 2023
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ItemSubmission to the Australian Competition and Consumer Commission (ACCC) Supermarkets Inquiry 2024-25( 2024)The ACCC supermarkets inquiry has an interest in whether there is effective competition between supermarkets and the broader competitive dynamics. If competition is effective then supermarkets should be making ‘normal’ profits. However, very little evidence has been provided as to what normal profits should be. To provide a benchmark we analyse the profitability of Australian supermarkets against the largest supermarkets in OECD countries across the 3-year period 2021 to 2023.
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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.
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ItemThe Effect of Organizational Climate on Sell-side Analyst Turnover and Performance(Wiley, 2023)This paper investigates whether and how organizational climate (OC) in brokerage firms affects analyst turnover and performance. We find that firms with a lower-rated OC have a higher likelihood of analyst turnover. Also, when analysts leave and switch brokerage firms, they are more likely to move to a firm with a higher-rated OC and will deliver more accurate forecasts after switching firms. However, the performance improvements in better-rated OC firms are significant only for the initial years of the analysts’ employment in the new firms. We also show that OC-related analyst turnover negatively affects the performance of incumbent analysts, especially for those non-All-Star incumbent analysts, while these adverse performance effects are also transitory and last for two years only. Thus, our findings indicate that OC only has a short-lived effect on the behaviour of both leaving and remaining analysts, which challenges the long-held assumption that investments in a positive OC will always be associated with lower employee turnover and higher individual performance. We explain our results as arising from the high levels of labour mobility within the brokerage industry and the transparency of analyst forecasts as a public performance measure.
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ItemDoes stock market liberalization improve stock price efficiency? Evidence from China(Wiley, 2022-07)In this study, we examine whether liberalization of the stock market improves stock price efficiency using China's market liberalization pilot program as a shock. We find that investible firms exhibit a significant increase in price efficiency, as proxied by stock price non-synchronicity, after stock market liberalization. The results are robust to a series of tests and remain unchanged after we address the issue of endogeneity. We identify two channels through which price efficiency can be improved: better disclosure by firms and the incorporation of more information into stock prices through the trading activities of foreign investors. We also find that investment becomes more sensitive to prices, further indicating that stock prices have become more efficient. Finally, we find that stock price informativeness also increases.