Darren Henry

Disclosure compliance with national accounting standards by listed companies in South Asia

Abstract This paper empirically examines the level of compliance with disclosure requirements mandated by 14 national accounting standards for a large sample of companies within the three major countries in South Asia, namely India, Pakistan and Bangladesh, and evaluates the corporate attributes which influence the degree of compliance with these standards. Using a scoring system to develop a total compliance index (TCI) for each sample company, the results indicate significant variation in total disclosure compliance levels across countries and different national accounting standards. Compliance levels are found to be positively related to company size, profitability and multinational-company status, and unrelated to leverage levels and the quality of external auditors.

Corporate Governance Structure and the Valuation of Australian Firms: Is There Value in Ticking the Boxes?

This paper provides an investigation of the valuation and agency consequences of corporate governance policy. This is achieved by examining variation in voluntary adoption by Australian listed firms, during the period from 1992 to 2002, of corporate governance frameworks representative of the governance code of practice introduced by the Australian Stock Exchange in 2003. The findings indicate benefits for firms from overall corporate governance structuring, but not in isolation, in line with the requirements now in place, and a significant role played by institutional and external shareholders as alternative agency mechanisms. Corporate governance structure is found to be important, however, the likely impact of disclosure of governance practice or compliance on valuation is less clear.

Accounting conservatism and voluntary corporate governance mechanisms by Australian firms

This study examines the relationship between voluntary adoption of selected corporate governance mechanisms and accounting conservatism for a sample of firms listed on the Australian Securities Exchange (ASX) over the 11‐year period prior to the promulgation of the ASX Corporate Governance Council Good Governance Principles and Best Practice Recommendations in 2003. Using four accounting and market‐based accounting conservatism measures, our results provide evidence of both conditional and unconditional conservatism in accounting reporting for Australian firms. We find that voluntary audit committee formation, increasing board independence and decreasing board size are positively associated with unconditional accounting conservatism and negatively related to the degree of conditional conservatism. Our results support the contention that firms voluntarily adopting perceived best practice corporate governance mechanisms employ unconditional accounting conservatism as a complimentary agency control device and are consistent with the observed negative association between the unconditional and conditional forms of accounting conservatism practice.

Stock Market Mispricing, Executive Compensation and Corporate Investment: Evidence from Australia

This paper empirically investigates the relation between stock mispricing, the compensation of executives and directors, and corporate investment using Australian data. We find no significant relation between investment level and stock mispricing as measured by the nonfundamental component in the firms Q ratio. We also document a significant positive relation between the magnitude of equity-based compensation, measured as the percentage of the market value of a firms equity, and the investment level. The results suggest that managers make investment decisions that do not cater to stock market mispricing but rather that concern their equity-based compensation.

Harmonization of accounting measurement practices in South Asia

This study examines the extent of harmonization of selected accounting measurement practices in three South Asian countries, India, Pakistan and Bangladesh. The study is based on a sample of 566 non-financial companies for the financial year 1997–1998. The degree of harmonization is measured using Van der Tass (1988) I index and Archer, Delvaille, and McLeays (1995) modified C index. The values of the I index and the C index show a relatively higher degree of harmonization in the areas of property, plant and equipment, foreign currency translation and long-term investment, and a lower level of harmonization in the areas of inventory, amortization of goodwill and leases. The results suggest that low harmonization levels are both due to the degree of flexibility available in selecting benchmark treatments in some International Accounting Standards (IAS) and also to non-compliance by companies with IAS-mandated requirements. Significant further work is required by South Asian Federation of Accountants and the other regional accounting bodies if the goals of regional and international accounting harmonization are to be achieved.

The Role of Ownership and Governance Structure in Raising Capital: An International Study

This paper investigates whether the ownership and the governance structure of firms affects the decision to raise funds, and subsequently the choice of the capital instrument. We hypothesize that the choice of capital instrument depends on the relative riskiness of the source of funds ranging from equity to debt finance including bonds, sukuk or bank loans. Using a sample from 2000-2015 of 1,565 firms from countries including Malaysia, Indonesia, Singapore and Pakistan, we find the evidence that ownership concentration is associated with higher control motives and restricts equity financing to avoid ownership dilution. CEO-Chair duality also coincides with fewer instances of raising external funds and relative risk sharing. On the other hand, lower information asymmetry, observed by analyst coverage and firm size, generally accompanies more issuances of debt-like products, such as bank loans and bonds. Finally, some of the prominent financial ratios such as market-to-book value, leverage and macroeconomic factors significantly drive firms in their decision to raise funds and share risk.

Publication Records of Australian Accounting and Finance Faculty Promoted to Full Professor, Set within an International Context

Australian accounting and finance faculty promoted to full professor required a median 15 papers in ABDC-listed journals, with 7 at the highest A*/A quality levels. Promotees were typically 44 years old, with 14 years’ academic experience including 9 years post-PhD. Neither gender nor whether promotion was internal/external seemed to affect promotion requirements. Finance professors typically had more publications than accounting professors, though not at the higher quality levels; however, accounting promotees had greater academic experience but a shorter period post-PhD. Female promotees were typically older than males. Both the volume and quality of pre-promotion publications have increased over time.

Long-Term Price Reaction to Dividend Reduction in an Imputation Environment – Evidence from Australia

This article empirically investigates the information content and signalling power of decreases and omissions of cash dividend payments in an imputation tax environment. Consistent with prior literature We find significantly negative long term abnormal returns subsequent to dividend reductions, with some support for less negative long term abnormal returns arising in the case of unfranked dividend reductions Overall, our study shows conclusively that dividend reductions in Australia constitute a strong signal regarding the future prospects of the firm and, as such, our results are at variance with the results obtained in the U.S. The tax system in Australia differs from that in the U.S. and we do find some evidence of differential tax effects across the franking status of dividends.

The Influence of National Culture on the Capital Structure of SMEs

Variations in entrepreneurial attitudes towards risk and control imply a link between the capital structure of SMEs and national culture. We investigate this unexplored relationship, using two of Schwartz’s latest cultural dimensions (Hierarchy and Embeddedness) and a large panel data sample from seven countries, covering the period 2006 to 2008. Our results show that Hierarchy is negatively related to debt levels not only for the full sample, but also across the sub-samples of micro, small and medium firms. This suggests that managers who operate in cultures where wealth, social power, and authority are important cultural values use less debt. Embeddedness is also negatively related to debt levels of small and medium firms. This suggests that relatively-smaller companies in cultures which inter alia value family security and self-discipline tend to use less debt. Further testing shows that national culture can affect long-term, short-term debt, and the choice between the two differently. While the results for Hierarchy show a consistent, negative relationship between this dimension and both types of debt, the results for Embeddedness vary depending on the size of the firm and the duration of the debt source. Our findings contribute to prior literature by providing empirical evidence of national culture’s influence on the capital structure of SMEs through the manager’s behaviour towards risk and control.