Bachmann, RL & Spiropoulos, H 2021, 'Do females on boards affect acquisition outcomes and target selection: a replication and extension of Levi, Li and Zhang (2014)', Accounting & Finance, vol. 61, no. 2, pp. 3427-3441.
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AbstractWe replicate and extend the 2014 study by Levi, Li and Zhang in the Australian setting and examine whether female representation on corporate boards affects acquisition outcomes. Consistent with the original study, we find that bidders with female representation on their boards make fewer acquisitions and pay lower premiums, on average. We also document that bidders with female representation on their boards prefer to select target firms that also have female representation on their boards. These results are robust to propensity score matching and instrumental variable estimation.
Bedford, A, Bugeja, M & Grosse, M 2021, 'The choice of financial advisory and independent expert services in takeovers: evidence in a setting where the services are independent', Accounting & Finance, vol. 61, no. 2, pp. 3649-3683.
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AbstractThis study investigates the choice to obtain both financial advisory services and independent expert opinions during takeovers in Australia where these services are provided by independent firms. We find the use of both services increases when the target firm is offered a lower initial premium. We also document that engaging both services benefits target firm shareholders through a higher probability of a price revision and a greater likelihood of deal success. The results are robust to controlling for selection bias and suggest the use of both independent experts and financial advisors only adds value when different firms provide these services.
Bedford, A, Bugeja, M, Ghannam, S & Ma, N 2021, 'The quality of other assurance services supplied by accounting firms: Evidence from independent expert reports', International Journal of Auditing, vol. 25, no. 1, pp. 40-58.
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Recent concern has been expressed regarding accounting firms reducing the quality of their assurance services (statutory audit and other assurance services) to gain cross‐selling opportunities. While prior studies have focused on the quality of statutory audits, our study examines the quality of other assurance services, in the form of independent expert opinions provided to target firms in Australian takeovers. Specifically, this setting allows us to observe any dissent or consensus in opinions between the accounting firms and their clients regarding the fairness of a takeover offer price, the quality of the independent expert report (valuation range), and fees charged for their services. Our results are inconsistent with accounting firms providing lower quality independent expert reports. However, non–Big 4 accounting firms charge lower fees for their independent expert reports compared to other providers, consistent with potential incentives to cross‐sell future services.
Bedford, A, Ma, L, Ma, N & Vojvoda, K 2021, 'Patenting activity or innovative originality?', Accounting & Finance, vol. 61, no. 3, pp. 4191-4207.
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AbstractWe re‐examine the cross‐sectional stock return predictability of innovative originality documented in the 2018 paper by Hirshleifer et al. and introduce two measures of patenting activity: patent existence and patent counts. As firms with zero patents have zero innovative originality, we conjecture and find a high correlation between patenting activity measures and innovative originality. The findings of Hirshleifer et al. do not hold when we control for patenting activity. Our results highlight that simple patenting activity measures capture a significant portion of innovative originality, and hence need to be adequately controlled for in future innovation studies.
Bedford, A, Vojvoda, K, Ma, L & Ma, N 2021, 'Future profitability and stock returns of innovative firms: a pitch', Accounting Research Journal, vol. 34, no. 1, pp. 113-118.
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PurposeThis research letter outlines the “AFAANZ shark pitch 2020” research journey and reflects on the application of the pitch template to the authors’ research topic on innovation, future profitability and stock returns.Design/methodology/approachThis study begins by outlining how the research started, followed by the choice of authors’ replication study. This study then outlines the authors’ interactions with the corresponding author of the original study and the journal editor. The authors also detail their personal journey of using the pitch template.FindingsThe pitch template facilitated the identification of a replication study that has significant impact in informing Australian policy decisions. It allowed the authors to succinctly articulate and refine their research ideas.Originality/valueThis research letter highlights authors’ mistakes in using the pitch template and what they learned from interacting with the original authors and journal editor.
Bond, D, Clout, VJ, Czernkowski, RMJ & Wright, A 2021, 'Research productivity of Australian accounting academics', Accounting & Finance, vol. 61, no. 1, pp. 1081-1104.
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AbstractIn recent decades, substantial changes have impacted the global academy, such as the increasing use of key performance metrics for academics. This study provides recent evidence of Australian accounting academics’ performance in publishing in A/A* journals during the period 2010–2018. We find that the top 25 percent of Australian academics produce approximately 60 percent of published journal articles through an analysis of the A/A* Australian Business Deans′ Council (ABDC) accounting journal listing. The majority of published Australian co‐authored research output in the sample is in A ranked journals (80 percent), with only 20 percent observed in A* ranked journals.
Bugeja, M, Govendir, B, Matolcsy, Z & Pazmandy, G 2021, 'Is there an association between Vice‐Chancellors’ compensation and external performance measures?', Accounting & Finance, vol. 61, no. 1, pp. 689-726.
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AbstractWe provide evidence on the pay for performance relation between Australian university Vice Chancellors’ compensation and independent measures of university teaching, research and other performance indicators provided by external ranking bodies. Our results show limited association between university rankings and Vice Chancellors’ compensation, but confirm that Vice Chancellors’ compensation is predominantly driven by size measures based on the different components of revenue. Further, we find that few universities offer performance‐based bonus payments. Our results are robust with respect to a number of sensitivity tests.
Bugeja, M, Lu, M, Shan, Y & To, TY 2021, 'The Probability of Informed Trading and Mergers and Acquisitions', Accounting and Finance, vol. 61.
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© 2019 Accounting and Finance Association of Australia and New Zealand This paper investigates the role of the probability of informed trading (PIN) in mergers and acquisitions (M&A). We show that acquirers with higher PINs use more cash to finance their deals due to their higher cost of equity, and acquirers use more equity financing when acquiring targets with higher PINs to share the information risk with the target shareholders. We also find that acquirers and targets with higher PINs both experience higher announcement returns when cash financing is used, indicating that PINs are priced in the M&A market.
Bui, T, Ferguson, A & Lam, P 2021, 'CEO compensation in early‐stage firms: Rewards for prospectivity and survival', Journal of Business Finance & Accounting, vol. 48, no. 5-6, pp. 895-928.
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AbstractPrior studies on chief executive officer (CEO) compensation focus mainly on large firms. This paper aims to suggest new factors associated with CEO compensation for small, homogeneous firms, specifically, Australian early‐stage mining exploration entities (MEEs). We document a set of predictors of CEO compensation proxying for economic performance, including geological prospectivity components of the exploration and evaluation (E&E) asset account and proceeds from equity raisings that enhances survival probabilities. We find positive associations between these predictors and CEO remuneration. In terms of CEO pay mix, we find that E&E asset acquisitions and equity proceeds are both positively associated with the proportion of option value in CEO total compensation. This suggests MEEs allocate their cash resources to investment opportunities, rather than CEO compensation. Overall, these findings, coupled with a significant and positive pay‐performance relation, provide evidence supporting efficient compensation practices in the MEE context.
Cao, Y, Feng, Z, Lu, M & Shan, Y 2021, 'Tax avoidance and firm risk in China: a pitch', Accounting Research Journal, vol. 34, no. 1, pp. 119-124.
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PurposeThis paper aims to provide a critical discussion of the application of the research pitching template developed by Professor Robert Faff to a research topic of tax avoidance and firm risk. This letter provides a brief commentary on using the pitching template and discusses personal reflections on the pitching process.Design/methodology/approachThis pitching research letter applies Faff’s pitching template and provides a critical commentary of the pitching process.FindingsThe team found that Faff’s pitching template is a valuable tool for conceiving research ideas. It helped the authors to identify, develop and articulate key aspects of the project. Further, they believe that completing the template was a beneficial and rewarding exercise, especially for early-career researchers.Originality/valueThis pitching research letter is tied to the team’s research idea that was pitched at the 2020 AFAANZ “Shark Tank” event. It provides original commentary on the use of Faff’s pitching template. It is not meant to retrofit published papers.
Cao, Y, Feng, Z, Lu, M & Shan, Y 2021, 'Tax avoidance and firm risk: evidence from China', Accounting & Finance, vol. 61, no. 3, pp. 4967-5000.
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AbstractPrior literature documents puzzling evidence revealing that tax avoidance activities do not affect firm‐specific risk. Using an extended US sample, we find that lower cash effective tax rates (ETRs) are associated with higher future return volatility, supporting the traditional view of tax risk–return trade‐off. In sharp contrast to the US evidence, our analysis of Chinese firms suggests that Chinese state‐owned enterprises (SOEs) with lower cash and GAAP ETRs tend to have lower future risk. In addition, we adopt a difference‐in‐differences approach based on the variations generated by two exogenous, anti‐tax avoidance regulations in China but find no evidence suggesting a causal relationship between tax avoidance and firm risk. Overall, our results suggest that the relationship between tax avoidance and risk varies across countries, sample periods and tax aggressiveness measures, and we highlight the importance of addressing the endogenous nature in future research.
Chen, X, Lu, M & Shan, Y 2021, 'Changes in marginal tax rates over the past three decades in the United States', Accounting & Finance, vol. 61, no. S1, pp. 2601-2624.
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AbstractThis paper investigates changes in corporate marginal tax rates (MTRs) in the United States over the past three decades. Similar to effective tax rate, MTR exhibits a significant but much more modest decline over time, even after accounting for tax‐related firm characteristics and industry variations. In contrast to Dyreng et al., we find that MTR declines more rapidly for purely domestic firms than for multinationals. Our findings highlight the puzzling evidence in Dyreng et al. and call for future research to study possible drivers that explain the sustained and differential decline in corporate tax rate over time between domestic and multinational firms.
Chen, X, Lu, M, Shan, Y & Zhang, Y 2021, 'Australian evidence on analysts' cash flow forecasts: issuance, accuracy and usefulness', Accounting & Finance, vol. 61, no. 1, pp. 3-50.
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AbstractThis study examines the factors affecting the issuance, accuracy and usefulness of analysts' cash flow forecasts (CFFs) in Australia. Given the economic importance of the mining industry in Australia, we find that analysts are likely to provide CFFs for mining firms with poor financial health and high default risk. In contrast, analysts' provision of CFFs increases with the degree of financial health for non‐mining firms. The determinants of the issuance and accuracy of analysts' CFFs also differ in pre‐ and post‐IFRS adoption periods. Our results add new evidence on the effect of IFRS adoption on analysts' cash flow forecasting behaviours.
Clout, V, Ghannam, S, Loyeung, A & Yang, JS 2021, 'Eyes on the prize: CEO and director retirement preferences and acquisitions', Accounting & Finance, vol. 61, no. S1, pp. 1345-1361.
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AbstractWe examine whether the age of CEOs and independent directors impacts the likelihood of receiving a successful takeover offer. First, we replicate and confirm the results of Jenter and Lewellen and find that retirement age CEOs (age 64–66) are more likely to receive successful takeover offers. Second, we extend their study by investigating the retirement preferences of independent directors. We find that the likelihood of receiving a successful takeover offer increases when a higher proportion of independent directors are at retirement age. This finding suggests that independent directors have similar retirement preferences to CEOs.
Curtis, K, Sivabalan, P, Bedford, DS, Considine, J, D’Amato, A, Shepherd, N, Fry, M, Munroe, B & Shaban, RZ 2021, 'Implementation of a structured emergency nursing framework results in significant cost benefit', BMC Health Services Research, vol. 21, no. 1.
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Abstract Background Patients are at risk of deterioration on discharge from an emergency department (ED) to a ward, particularly in the first 72 h. The implementation of a structured emergency nursing framework (HIRAID) in regional New South Wales (NSW), Australia, resulted in a 50% reduction of clinical deterioration related to emergency nursing care. To date the cost implications of this are unknown. The aim of this study was to determine any net financial benefits arising from the implementation of the HIRAID emergency nursing framework. Methods This retrospective cohort study was conducted between March 2018 and February 2019 across two hospitals in regional NSW, Australia. Costs associated with the implementation of HIRAID at the study sites were calculated using an estimate of initial HIRAID implementation costs (AUD) ($492,917) and ongoing HIRAID implementation costs ($134,077). Equivalent savings per annum (i.e. in less patient deterioration) were calculated using projected estimates of ED admission and patient deterioration episodes via OLS regression with confidence intervals for incremental additional deterioration costs per episode used as the basis for scenario analysis. Results The HIRAID-equivalent savings per annum exceed the costs of implementation under all scenarios (Conservative, Expected and Optimistic). The estimated preliminary savings to the study sites per annum was $1,914,252 with a payback period of 75 days. Conservative projections estimated a net benefit of $1,813,760 per annum by 2022–23. The state-wide projected equivalent savings benefits of HIRAID equalled $227,585,008 per annum, by 2022–23. ...
Curtis, K, Sivabalan, P, Bedford, DS, Considine, J, D'Amato, A, Shepherd, N, Elphick, T, Shaban, RZ & Fry, M 2021, 'Treatments costs associated with inpatient clinical deterioration', Resuscitation, vol. 166, pp. 49-54.
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AimsThis study aimed to quantify the health economic treatment costs of clinical deterioration of patients within 72 h of admission via the emergency department.MethodsThis study was conducted between March 2018 and February 2019 in two hospitals in regional New South Wales, Australia. All patients admitted via the emergency department were screened for clinical deterioration (defined as initiation of a medical emergency team call, cardiac arrest or unplanned admission to Intensive Care Unit) within 72 h through the site clinical deterioration databases. Patient characteristics, including pre-existing conditions, diagnosis and administrative data were collected.Results1600 patients clinically deteriorated within 72 h of hospital admission. Linked treatment cost data were available for 929 (58%) of these patients across 352 Australian Refined Diagnosis Related Groups. The average (standard deviation) treatment costs for patients who deteriorated within 72 h was $26,778 ($34,007) compared to $7727 ($12,547). The average hospital length of stay of the deterioration group was nearly 8 days longer than patients without deterioration. When controlling for length of stay and Australian Refined Diagnosis Related Group codes, the incremental cost per episode of deterioration was $14,134.ConclusionClinical deterioration within 72 h of admission is associated with increased treatment costs irrespective of diagnosis, hospital length of stay and age. Implementation of interventions known to prevent patient deterioration require evaluation.
Jeganathan, D, Ghannam, S & Bugeja, M 2021, 'Practice makes perfect? The effect of CEO and director experience on acquisition performance', Accounting & Finance, vol. 61, no. 2, pp. 3781-3796.
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AbstractThis study replicates and extends the results of Field and Mkrtchyan, who find that independent directors’ prior acquisition experience improves succeeding acquisition performance. First, using both the original and an extended sample period, we confirm their findings. Second, we extend their study by considering the effect of prior acquisition experience gained by the CEO as an executive or independent director. Similar to the effect documented for independent directors, we find that CEOs’ acquisition experience is positively associated with subsequent acquisition performance. Consistent with CEO learning, we document a greater effect on subsequent takeover performance when acquisition experience is negative.
Lanis, R, Richardson, G, Govendir, B & Pazmandy, G 2021, 'The effect of board of directors’ expertise and tax avoidance on corporate debt', Accounting & Finance, vol. 61, no. 3, pp. 4475-4511.
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AbstractThis study examines the effect of board of directors’ expertise and tax avoidance on corporate debt. We find that there is no association between financially expert outside directors on the board and corporate debt, which is contrary to some prior research findings. However, we do find a positive association between the proportion of financially expert inside directors on the board and debt. We also find that the debt substitution effect is significantly intensified by the presence of outside directors on the board with financial expertise, which suggests that the advice offered by these directors better informs managers to make decisions about the trade‐off between the benefits and costs of debt and non‐debt tax shields. We find no such effect for inside directors. Overall, this study extends the literature on corporate governance, tax avoidance and corporate debt.
Liang, Q, Li, Q, Lu, M & Shan, Y 2021, 'Industry and geographic peer effects on corporate tax avoidance: Evidence from China', Pacific-Basin Finance Journal, vol. 67, pp. 101545-101545.
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This study examines industry and geographic peer effects on tax avoidance as well as their mechanisms and economic consequences in an emerging market, China. Using an instrumental variable approach and after considering a variety of robustness tests, we document causal evidence that a firm's degree of tax avoidance is positively affected by the average degree of tax avoidance of its peer firms in the same industry or province. Further analyses show that both industry and geographic peer effects are driven by the motives of information learning and market competition and depend on the degree of local tax enforcement and executive tax expertise. We also document preliminary evidence that both industry and geographic peer effects benefit firms by improving their investments, dividend payouts, and future performance.
Ma, L, Onie, S, Spiropoulos, H & Wells, PA 2021, 'An Evaluation of the Impacts of the Adoption of IFRS 15 Revenue From Contracts With Customers'.
Sutton, N & Brown, DA 2021, 'Beyond the decision to ally: Constraints on adapting to emergent control risks', Management Accounting Research, vol. 52, pp. 100756-100756.
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Sutton, N, Ma, N, Yang, JS, Rawlings-Way, O, Brown, D, McAllister, G, Parker, D & Lewis, R 2021, 'Considering the new minimum staffing standards for Australian residential aged care', Australian Health Review, vol. 46, no. 4, pp. 391-397.
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Objective To compare the historical staffing patterns and organisational characteristics of Australian residential aged care facilities (RACFs) against the new minimum staffing standards recommended by the Royal Commission into Aged Care Quality and Safety (RCACQS). Method Retrospective data analysis was used to compare the staffing levels and characteristics of 1705 RACFs (for 4 years, 2016–19) with the three new mandatory staffing requirements. De-identified datasets were provided by the RCACQS, obtained under its legal authority. Results Only 3.8% of RACFs have staffing levels at or above all three requirements. Although many (79.7%) already meet the requirement to have a registered nurse (RN) on-site for morning and afternoon shifts, few have staffing levels above requirements for total direct care per resident per day (10.4%) or care provided by an RN per resident per day (11.1%). Historical levels of on-site RNs, total direct care, and RN care vary significantly across facilities of different size, location and provider scale. Conclusion The new staffing standards, to be mandatory by 2023, prescribe minimum requirements significantly higher than existing levels, particularly in care per resident per day. Each of the three requirements will likely have a differential effect for different types of RACFs. What is known about the topic? International evidence suggests that introducing mandatory minimum staffing standards tends to increase the amount of care provided by staff in residential aged care facilities (RACFs). However, the impact of staffing standards is influenced by the stringency of the minimum threshold relative to existing staffing levels, the capacity of organisations to increase their staffing levels, and the specific way the regulation is formulated. What does this paper add? This paper explores the potential implications of the three national minimum staffing standards, to be in force by October 2023, specifyi...
Taylor, SL & Tong, A 2021, 'How Important Are Semi-Annual Earnings Announcements? An Information Event Perspective'.
White, A 2021, 'May you live in interesting times: a reflection on academic integrity and accounting assessment during COVID19 and online learning', Accounting Research Journal, vol. 34, no. 3, pp. 304-312.
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PurposeThe purpose of this paper is to reflect on the shift of assessments online and the potential impact on academic integrity and misconduct. The rapid pivot to online teaching as a result of COVID19 and our experiences in the accounting academy is the embodiment of the phrase “may you live in interesting times”. As teaching and learning activities shifted online, so did assessment of student learning. A topic of great discussion amongst faculty is whether accounting exams should be invigilated online and whether exams should be used at all to assess student learning.Design/methodology/approachThis paper uses personal reflections and experiences to analyse the tensions between the risk of academic misconduct, maintaining assessment security and accreditation requirements of professional accounting bodies during the shift of assessment tasks online in 2020. These tensions are analysed using the fraud triangle framework (Cressey, 1973).FindingsStudents face incentives and pressures to engage in misconduct, opportunities that arise from online learning and assessment, and hold complex perceptions around their attitudes towards academic integrity and rationalisations of misconduct behaviour.Originality/valueSuggestions are made as to how the accounting academy can move forward, taking advantages of online assessment, while still ensuring that our graduates are meeting the competencies required to join the accounting profession.
Zhai, H, Lu, M, Shan, Y, Liu, Q & Zhao, Y 2021, 'Key audit matters and stock price synchronicity: Evidence from a quasi-natural experiment in China', International Review of Financial Analysis, vol. 75, pp. 101747-101747.
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The recent requirement to disclose key audit matters (KAMs) in audit reports aims to improve audit quality and provide extra information to external users. Using a quasi-natural experiment in China and the difference-in-differences approach, we document causal evidence that KAM disclosures provide incremental firm-specific information and reduce stock price synchronicity. The effect of KAM disclosures is more pronounced in firms with controlling shareholders and fewer institutional shareholders. Overall, the findings suggest that KAM disclosures reduce information acquisition costs and facilitate firm-specific information impounded in price, especially when such information is less accessible to outside shareholders.
