Julie Cotter

Board and Monitoring Committee Independence

This study focuses on the composition of boards of directors and their monitoring committees (audit and compensation) for large Australian companies. For firms whose boards use a committee structure, much of the monitoring responsibility of the board is expected to rest with the independent committee members. We document a positive association between the proportion of independent directors on the full board and its monitoring committees, and a greater proportion of independent directors on both audit and compensation committees than the full board. Our hypotheses tests involve an examination of the impact of other mechanisms used to control agency conflicts on full board and committee independence, and the association between this independence and firm value. We find that full board independence is associated with low management ownership and an absence of substantial shareholders. Audit committee independence is associated with reduced monitoring by debtholders when leverage is low. While we predict a positive relationship between board and monitoring committee independence and firm value, our results do not support this conjecture.

Institutional Investor Influence on Global Climate Change Disclosure Practices

Using a stakeholder engagement perspective, we investigate the collective influence of institutional investors on a comprehensive set of climate change disclosures for a global sample of large companies. The proposition tested in this paper is that the influence of these powerful stakeholders is positively associated with climate change disclosure via corporate communications channels. We find the extent and quality of climate change disclosures to be associated with three indicators of corporate responsiveness to institutional investor expectations about the disclosure of this information. These are completion and publication of the Carbon Disclosure Project (CDP) questionnaire on CDP’s website, indications in corporate communications that CDP activities have influenced climate change disclosures, and the extent and quality of climate change information provided in CDP questionnaire responses.

Utilisation and restrictiveness of covenants in Australian private debt contracts

This paper investigates the accounting based covenants typically contained in the private debt contracts of listed Australian firms. In particular, cross sectional determinants of variation in covenant utilisation and restrictiveness are investigated. The primary source of data presented in the paper is a questionnaire completed by senior corporate managers of banks lending to listed Australian firms. In addition, standard and actual bank loan agreements are analysed. The survey results indicate that there is considerable cross-sectional variation in the utilisation and restrictiveness of covenants included in Australian private debt contracts, with this variation being partially explained by firm size and industry membership. The covenants most likely to be included are leverage, interest coverage, current, and prior charges ratios.

Standardized reporting of climate change information in Australia

Purpose – This paper seeks to explore the gaps between regulatory requirements and authoritative guidance regarding climate disclosure in Australia; reporting practices; and the demands for increased disclosure and standardization of that disclosure.Design/methodology/approach – The Draft Reporting Framework of the Climate Disclosure Standards Board (CDSB) is used to develop a scoring system against which the climate disclosures of one large Australian company that has received awards for its disclosure record are assessed. Relevant theories of voluntary disclosure are used to explain the findings.Findings – The results of this analysis indicate an inadequate amount of disclosure in this companys reports about some aspects of climate change impacts and their management. Further, the disclosures that are made tend to lack technical detail and are somewhat skewed towards the more positive aspects of climate change impacts and management.Research limitations/implications – These findings are based on just o...

Does the market price the nature and extent of earnings management for firms that beat their earnings benchmark

This study investigates whether the abnormal returns at the quarterly earnings announcement date varies according to the market’s expectations of the nature (informative vs opportunistic) and extent of discretionary accruals for firms that meet or beat expectations (MBE). In doing so, this study introduces an innovative model that measures the market’s expectation of the informativeness of earnings at the earnings announcement date and assesses the impact on the abnormal return for the interaction between the nature and expected extent of earnings management. A large sample of Standard & Poor’s (S&P) 500 firms that meet or exceed their earnings expectation over the period of 1998 to 2007 is analyzed. The results reveal that the expected extent of earnings management has a positive (negative) relation with the abnormal return when earnings management is informative (opportunistic).

Corporate climate change disclosure practices and regulation: The influence of institutional investors

Purpose This chapter reviews the influence that institutional investors have on corporate climate change disclosures and related reporting regimes. Approach We overview recent research undertaken by the authors that provides evidence of the influence of institutional investors on voluntary reporting of climate change information in annual and sustainability reports. In addition, this chapter considers the influence of institutional investors on climate change disclosure regulation and the use of climate change information by investors. Findings The material presented in this chapter indicates that institutional investor coalitions have been internationally influential in determining the extent and content of climate change disclosures of large

The influence of non-state actors on corporate climate change disclosure

Disclosure of information about corporate activities relevant to the climate change phenomenon has increased substantially over the past decade. Climate change disclosures include those about greenhouse gas (GHG) emissions intensity and energy use; participation in emissions trading schemes; corporate governance and strategy in relation to climate change; performance against GHG emissions reduction targets; and regulatory, physical and other risks and opportunities of climate change. While various regulatory requirements to disclose information about GHG emissions and risks related to climate change are emerging in some jurisdictions, climate change-related disclosure in annual and/or sustainability reports or on company websites remains largely voluntary.