Australian Accounting Review最新文献

Many companies present their selected auditor to shareholders for ratification. In this study, we use auditor ratification voting results to examine whether shareholders view the type of auditor and the timing of the engagement as indicative of audit quality. The auditor ratification literature has yet to explicitly examine these research questions. Our study is unique in that we focus on the auditor switch setting and test how shareholders view a newly hired auditor. We find that shareholders are less likely to approve a non-Big N auditor than a Big N auditor. We also document that shareholders view late auditor engagements (i.e., during or after the fourth quarter) more negatively, consistent with the argument that late appointment of new auditors should be viewed with caution. The timing effect is particularly acute for non-Big N firms; however, shareholders do not seem to mind late engagements of Big N auditors.

I provide empirical evidence that labour market frictions have an adverse effect on the quality of analyst research. Using the staggered, voluntary adoption of the Protocol for Broker Recruiting (Protocol) since 2004, I show that, without non-compete agreements, financial analysts produce more accurate forecasts and exert greater efforts in updating their research more frequently. Consistent with the notion that information asymmetry in the capital market are lower in the post-Protocol period, I provide empirical evidence and argue that the research coverage by Protocol members enables managers to access capital and extend their investment opportunities. My findings suggest that analyst coverage by Protocol members has a favourable effect on investment in innovative projects, production capacity and acquisitions.

This paper examines whether the readability (and hence informative value) of key audit matters (KAM) varies according to the audit firm and the KAM type disclosed, a question of vital importance for stakeholders, whose effective decision-making depends on the quality of information received. Our analysis shows that the informative value of KAM matter and KAM audit procedures varies according to the audit firm responsible. This informative value also depends on whether the KAM is related to entity- or accounting-level risks. This study contributes to the KAM and audit quality literature by showing how these factors impact on the informative value of the expanded audit report. Furthermore, in the context of the agency, institutional and self-presentation theories and the real effects hypothesis, we discuss auditors’ incentives to increase or decrease the informative value of the expanded audit report.

Building on the Bayesian Theorem, we propose a multi-period market microstructure model to understand how Bayesian investors underact new information and the duration of market underreaction. Applying the model to post-earnings-announcement drifts, our simulation and regression analyses show that the duration of the post-announcement price adjustment process and the post-announcement drifts can be explained by the new measure of belief updating speed that quantifies the uncertainties faced by Bayesian investors when incorporating new information into prices. Our study highlights the importance of incorporating the belief uncertainties of uninformed investors in explaining market underreaction in the Bayesian framework.

With the modern corporation investing more in intangible assets, the issue of appropriate accounting for these assets is very much at the fore and formally on the agendas of accounting standards boards. Some commentators advocate that internally generated intangible assets should be booked to the balance sheet, just like tangible assets. This paper explains that this apparently straightforward solution is not so simple. There are subtleties that, when recognised, indicate that such accounting would often make both balance sheets and income statements less informative. In response, the paper outlines an accounting for intangible assets that preserves, indeed enhances, the information conveyed by both the balance sheet and the income statement and satisfies the financial reporting objective of providing information to investors about ‘the amount, timing, and uncertainty of future cash flows’.

Based on new public management, information processing theory and contingency theory, this study investigates the impact of the COVID-19 pandemic on budgeting in public hospitals, focusing on budget use. The research hypotheses were tested using a survey of 82 responses from hospital CFOs. The results show that the organisations that were most affected by the pandemic increased their use of budgets for planning, resource allocation and control, compared to those that were less affected. This study also highlights the moderating role of cost accounting information quality in the relationship between crises and budget use. We find that public hospitals that have been most affected by the pandemic and have simultaneously better cost accounting information have increased their use of budgets for planning, resource allocation and cost control more than those whose costing system does not provide superior cost data.

The United Kingdom (UK) Financial Reporting Council (FRC) introduced expanded audit reports to improve audit report disclosures and render audits more transparent to financial statement users. This study examines audit materiality threshold disclosures, providing descriptive evidence of how auditors disclose materiality information in UK audit reports. This research uses manual content analysis (i) to assess auditors’ benchmarks and the percentages auditors apply to those benchmarks. The analysis examines (ii) auditors’ use of non-GAAP benchmarks, including non-recurring and recurring item exclusions and (iii) auditors’ rationales for their benchmark choices. The research finds that auditors choose a wide variety of benchmarks and apply a wide range of percentages to the chosen benchmarks. Non-GAAP adjustments are pervasive. Auditors’ rationales for benchmark choices include that the benchmark is a financial statement performance measure, and the benchmark eliminates volatility. The authors question whether the FRC's expanded disclosures have met its transparency objectives and concludes that ‘more (disclosure) is less’.

IFRS 9 was introduced by the IASB in 2014 with a mandatory application in 2018. Three years later the IASB started a post-implementation review project. Major concerns at a political level and from the (insurance) industry were raised about long-term investment strategies that appear less favourable due to new measurement categories and impairment rules. Furthermore, it was expected that the new rules on categorisation would create more profit or loss (P/L) volatility. We show that concerns about banks' decreasing maturity investment behaviour and increased profit or loss volatility since the publication of IFRS 9 in 2014 could not be verified until 2020. Additionally, banks hardly use the fair value option in practice, which suggests it can be abolished. Finally, the paper finds that the fair value through other comprehensive income option for equity instruments has almost no importance for banks. The IASB should, therefore, abolish this category as well. Hence, the measurement categories could be reduced by two categories reducing complexity and increasing the decision usefulness of financial instruments accounting rules for investors.

As editors we are proud to compile the papers for this issue of Australian Accounting Review, the third for 2022. We have included five research papers, a review paper and a commentary and perspectives paper.

The review paper, Zhou (2022), is the second paper in this issue. The research team provides AAR readers with a literature review of archival research papers on climate-related information and other sustainability information. It is helpful for practitioners to have a summary of the research findings on these popular topics, to ingest now for more informed conversations, and to return to in the future as questions arise. It is helpful for academics to get a snapshot of the current literature, to inform teaching and future research.

The commentary and perspectives paper, Chua et al. (2022), is the final paper in this issue. Based on the inaugural Australian Accounting Standards Board (AASB) Dialogue in March 2022 (part of the AASB Dialogue Series), this commentary provides an overview of progress to date by the AASB on climate-related financial disclosures in Australia, and recounts the dialogue between expert researchers and practitioners on the implementation of the work of the Task Force on Climate-related Financial Disclosures (TCFD). The commentary finishes with many suggestions for future research on this topic, including fact-finding reports, forward-looking analyses and evaluations of stakeholder choices. We are sure that AAR readers will appreciate the three appendices provided by the AASB. They include the FRC/AASB/AUASB Position Statement on Extended External Reporting and Assurance, the AASB Position Statement on Extended External Reporting Framework from March 2022, and an AASB Project insights Report on Developing Sustainability-related Financial Reporting Standards in Australia.