Arthur, N, Cheng, M & Czernkowski, R 2010, 'Cash flow disaggregation and the prediction of future earnings', ACCOUNTING AND FINANCE, vol. 50, no. 1, pp. 1-30.
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We examine the incremental information content of the components of cash flows from operations (CFO). Specifically the research question examined in this paper is whether models incorporating components of CFO to predict future earnings provide lower prediction errors than models incorporating simply net CFO. We use Australian data in this setting as all companies were required to provide information using the direct method during the sample period. We find that the cash flow components model is superior to an aggregate cash flow model in terms of explanatory power and predictive ability for future earnings; and that disclosure of non-core (core) cash flows components is (not) useful in both respects. Our results are of relevance to investors and analysts in estimating earnings forecasts, managers of firms in regulators' domains where choice is provided with respect to the disclosure of CFO and also to regulators' deliberations on disclosure requirements and recommendations. © The Authors. Journal compilation © 2009 AFAANZ.
Brown, P, Ferguson, A & Sherry, S 2010, 'Investor behaviour in response to Australia’s capital gains tax', Accounting & Finance, vol. 50, no. 4, pp. 783-808.
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AbstractWe calibrate the effect of Australia’s Capital Gains Tax (CGT) on share prices and market activity. Based on a large sample drawn from all listed Australian companies for the years 1994–2007, we find significant tax‐loss selling (TLS) of shares that lost value over the financial year, which is reflected in unusually high trading volume and more sell orders in June and a rebound in July. There is some evidence that small mining stocks are particular targets for TLS. Interestingly, the 1999 CGT reforms, which introduced concessions for long‐term capital gains, did not reduce the incidence of TLS.
Bugeja, M & Rosa, RDS 2010, 'Capital gains taxation and shareholder wealth in takeovers', ACCOUNTING AND FINANCE, vol. 50, no. 2, pp. 241-262.
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Before December 1999, the capital gains of shareholders who sold their shares into Australian takeovers have been taxable irrespective of payment method. Subsequently, shareholders can elect to rollover capital gains in equity takeovers. We examine the effect of this change on the association between target shareholder capital gains and bidder and target firm shareholder wealth. The results indicate that prior to the regulatory change, cash consideration results in higher target shareholder returns for non-taxation reasons. After the introduction of capital gains tax rollover relief, we find that target and acquiring firm shareholders earn lower returns when cash consideration is offered to shareholders with greater capital gains.
Czernkowski, R, Green, W & Wang, Y 2010, 'The value of audit qualifications in China', Managerial Auditing Journal, vol. 25, no. 5, pp. 404-426.
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PurposeThe purpose of this paper is to determine whether audit opinions matter in China after the introduction of several key regulatory changes, specifically aimed at strengthening the confidence of investors in the audit function.Design/methodology/approachThe question is addressed by examining the market response to modified audit opinions of companies listed on the Shanghai Stock Exchange.FindingsIn contrast to earlier research, this paper does not find evidence that modified audit opinions have significant information value to Chinese investors, despite the regulatory changes. However, when partitioning the sample by year, there is weak evidence of a stock price response to modified audit opinions in 2003. Examination of the impact of different types of audit opinions shows no consistent results.Research limitations/implicationsThe results reported in this paper must be considered in light of the limitations inherent in empirical analyses. That is, the relationships identified in this paper are indicative of potential earnings management or audit opinion shopping, however, the paper cannot provide the actual reasons for these empirical results.Practical implicationsThe results suggest the Chinese market is beginning to value audit opinions in the same fashion way as more developed markets.Originality/valueThe paper refines market reaction models used in earlier studies through the introduction of additional e...
Giacobbe, F & Wakefield, J 2010, 'Corporate Embeddedness and Control Choices'.
Petroulas, E, Brown, D & Sundin, H 2010, 'Generational Characteristics and Their Impact on Preference for Management Control Systems', AUSTRALIAN ACCOUNTING REVIEW, vol. 20, no. 3, pp. 221-240.
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Research indicates that different macro-socialisation results in systematic differences in generational characteristics, which may in turn result in different generational workplace preferences for management control systems (MCS). An exploratory study w
Sundin, H, Granlund, M & Brown, DA 2010, 'Balancing Multiple Competing Objectives with a Balanced Scorecard', EUROPEAN ACCOUNTING REVIEW, vol. 19, no. 2, pp. 203-246.
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This paper investigates how multiple and competing objectives are managed within an organisation, and the role that the Balanced Scorecard (BSC) plays in balancing organisational objectives. The issue of achieving multiple objectives, those which represent the interests of various stakeholders, has come to the forefront of the corporate agenda, as companies are seen increasingly as more than a source of profit for shareholders, but rather as 'citizens' playing a broader role in society. This study adopts an exploratory case study approach to understand how the BSC is used in management decision and control processes to assist with the balancing of objectives. The case organisation is a state-owned electricity company, and provides a unique setting where multiple and equally important strategic objectives exist. The results demonstrate that the BSC has the potential to help in making trade-offs and balancing objectives, but there are certain requirements for this to succeed. The paper provides insights into issues of balanced strategic management, as it discusses 'balance' in terms of both process and outcomes.
Brown, PR, Ferguson, A & Lam, P 1970, 'Choice between Alternative Routes to Go Public: Backdoor Listing versus IPO', 2010 AFAANZ Conference Website Proceedings, Accounting and Finance Association of Australia and New Zealand Conference, AFAANZ, Christchurch, New Zealand, pp. 1-38.
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Going public is the dream of many private companies. It represents a major milestone in the development of a firm. The listing status brings a lot of advantages to a firm. Some of these advantages include (1) access to capital markets and lower cost of capital; (2) enhanced company reputation and profile; (3) providing liquidity for owners to cash out; and (4) use of stock to pay for acquisitions, among others. However, going public is also a costly process. The out-of-pocket costs for an IPO typically involve fees paid for investment banks, accountants, auditors, lawyers, other experts, underwriters and brokers. The IPO firm will also have to pay for the printing of a prospectus and listing fees and other compliance costs. Other hidden costs entail underpricing, more stringent disclosure and regulatory requirements and the time spent by senior management in preparing the company for public listing.
Bugeja, M & Rosa, RDS 1970, 'Capital gains taxation and shareholder wealth in takeovers', ACCOUNTING AND FINANCE, American Accounting Association Annual Meeting, WILEY-BLACKWELL, New York, pp. 241-262.
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Bugeja, M, Czernkowski, RM & Jain, R 1970, 'Information asymmetry and takeovers', American Accounting Association Conference on Teaching and Learning in Accounting, American Accounting Association (AAA), American Accounting Association, San Francisco, California.
Bugeja, M, Da Silva Rosa, R, Duong, L & Izan, H 1970, 'CEO compensation from M&As in Australia', 2010 AFAANZ Conference Website, Accounting and Finance Association of Australia and New Zealand Conference, AFAANZ, Christchurch, New Zealand, pp. 1-27.
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This paper investigates the extent to which Australian CEOs are compensated following the completion of mergers and acquisitions (M&A)with reference to the incentive alignment and managerial power perspective. Findings reveal that CEOs of acquiring ?rms receive signi?- cantly higher compensation in the year of completing M&As and one year after. This higher compensation is presented in all forms: bonus only, salary only, salary and bonus, and total compensation. It is also found that the incentive alignment and managerial power approach are not mutually exclusive and they both can have some degrees of explaining the variation of CEO compensation following mergers. We ?nd a positive correlation between CEO compensation and ?rm performance, and some measures of CEOs e?ort and skill in completing the deal. However, we observe that CEOs of bidding ?rms have signi?cantly lower bonus and total compensation if there is any entrenchment in the CEO governance process (i.e. CEO is also a chair of the board, or a member of the nominating committee). This result is sharply opposite to the US evidence (Gristein and Hribar (2004)) where CEO compensation after mergers is signi?cantly driven by CEO power. Overall our ?ndings are more consistent with the predictions of the incentive alignment theory rather than the managerial power theor
Czernkowski, RM, Bugeja, M & Jain, R 1970, 'Information asymmetry and takeovers', British Accounting Association Annual Conference 2010, British Accounting Association Annual Conference 2010, British Accounting Association (BAA), Cardiff City Hall.
Czernkowski, RM, Jain, R & Bugeja, M 1970, 'Impact of information asymmetry on takeovers', 33rd Annual Congress European Accounting Association Programme, European Accounting Association (EAA), Istanbul, Turkey.
Giacobbe, F, Wakefield, JA & Booth, PJ 1970, 'Challenges and controls associated with establishing a wholly owned foreign subsidiary in a transition economy', 33rd Annual Congress European Accounting Association Programme, European Accounting Association (EAA), Istanbul, Turkey.
Loyeung, AL, Matolcsy, ZP & Wells, PA 1970, 'The association between talent and compensation: the case of Australian chief financial officers', American Accounting Association Conference on Teaching and Learning in Accounting, American Accounting Association (AAA), American Accounting Association, San Francisco, California.
Loyeung, AL, Matolcsy, ZP & Wells, PA 1970, 'The association between talent and compensation: The case of Australian chief financial officers', 2010 AFAANZ Conference Program, AFAANZ, AFAANZ, Christchurch, New Zealand.
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The purpose of this paper is to determine whether CFOs are remunerated for their talent, where CFO talent is characterised by the CFOs ability to successfully manage the adoption of new accounting standards (i.e., convergence to the IFRS). This paper is motivated by the lack of evidence on the determinants of CFO compensation and the global controversy surrounding executive compensation. The results are based on sample of 280 Australian firms from 2005 to 2006. Results reveal a positive association between CFO talent and CFO compensation levels and a positive relation between CFO talent and cash bonuses in the subsequent. Further, a talented CFO is more likely to be retained by the firms. Additional analyses suggest that the compensation levels of other executives such as the CEO are not affected by errors in the accounting numbers. Overall the results are consistent with the efficient labour market view, that CFOs are remunerated in manners that attracts, retains, motivates talent and reduces overall costs to the firm.
Shan, Y, Taylor, SL & Walter, TS 1970, 'Errors in estimating unexpected accruals in the presence of large changes in net external financing', American Accounting Association Conference on Teaching and Learning in Accounting, American Accounting Association (AAA), American Accounting Association, San Francisco, California.
Shan, Y, Taylor, SL & Walter, TS 1970, 'Errors in estimating unexpected accruals in the presence of large changes in net external financing', Annual Conference of the Multinational Finance Society, Barcelona, Spain.
Sivabalan, P, Brown, DA, Wu, C & Malmi, T 1970, 'Annual budgets, rolling forecasts and competitive strategy', 2010 AFAANZ Conference Program, AFAANZ 2010, AFAANZ, Christchurch, New Zealand.
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This study investigates relationships between the importance of four operational budget reasons and the intensity of the cost leader/differentiator strategy in business units. The study considers this relationship for both annual budgets and rolling forecasts. Using data collected from a survey of 331 medium to large Australian business units, we find that more intensive adopters of differentiator strategies appear to regard annual budgets and rolling forecasts as more important for both operational planning and performance evaluation reasons - this represented a broader range of reasons than that observed for cost leader business units, which have been traditionally argued to be more sensitive to formal financial controls.
Wakefield, JA, Giacobbe, F & Booth, PJ 1970, 'Challenges and controls associated with establishing a wholly owned foreign subsidiary in a transition economy', British Accounting Association Annual Conference 2010, British Accounting Association Annual Conference 2010, British Accounting Association (BAA), Cardiff City Hall.
