The 'NZ' in 'NZ IFRS': Public Benefit Entity Amendments

In 1992, New Zealand adopted a sector-neutral approach to standard setting – where the difference in accounting treatment is driven by differences in the nature of transactions and not by ownership or the objectives of the reporting entity. This study reviews the impact of adaptations of International Financial Reporting Standards (IFRS) to ensure their successful application in a sector-neural environment. A fundamental question of the move to IFRS is whether the public benefit entity amendments in NZ IFRS have contaminated the IFRS for profit-orientated entities or diluted the available guidance for public benefit entities. This suggests that it is worthwhile for Australia and New Zealand to monitor and reconsider their sector-neutral approach to adopting IFRS.     

Key issues in global supply base management

Developing effective business relationships with suppliers is hard work, especially when suppliers are located in different parts of the globe. Doing business with a supplier in China entails a very different set of fundamental elements than with one in the United States or Europe. As such, managers cannot rely on information systems to conduct business with global suppliers, but in many cases must travel to the location and visit with the supplier face to face to build an effective business relationship. In this article, 11 key issues that buying organizations should consider in their efforts to manage a global supply base are presented. These issues focus on the need for the “human factor” in establishing positive supplier relationships and the development of a high-performing global supply base.     

Influence of purchaser perceptions and intentions on price for forest land parcels: A hedonic pricing approach

A hedonic model was developed to analyze the market for undeveloped forest land in Minnesota. Variables describing in situ conditions, locational characteristics, buyer perceptions and intentions, and transactional terms were tested for their influence on sale price. The independent variables explained 67% of the per hectare sale price variation. Water frontage, road access and density, absentee ownership, future intentions, and financing arrangements had large, positive influences on price. Lack of a real-estate agent and agricultural land in the vicinity of the parcel had negative influences. A parcel's merchantable timber volume was not a significant predictor of price.     

Fashion sensitive young consumers and fashion garment repair: Emotional connections to garments as a sustainability strategy

Where clothing consumption has continued to rise around the world, a deeper understanding of how and why garments are disposed of is critical in regard to addressing the issue of textile waste by consumers. The purpose of this study was to explore the garment management processes of young, fashion sensitive consumers, examining their disposal behaviours as well as motivations towards garment end‐of‐life extension through maintenance or repair of damaged fashion clothing. A survey of 161 South Korean young consumers (18–34 years) was conducted, utilizing a fashion sensitivity scale to measure impact on unsustainable garment disposal practices and garment repair behaviour. Further, general recycling behaviour of these individuals was examined, as linked to garment repair propensity. Results indicate that fashion sensitive consumers dispose of garments more rapidly, and with less ethical consideration. However, these same consumers are motivated to repair items that support their fashion identity. The study contributes some useful insight into encouraging garment life extension practise among heavy consumers of fashion, thus extending what is known about fashion garment disposal in the sustainability context.     

RUMORS AND SOCIAL NETWORKS

This article studies the transmission of rumors in social networks. We consider a model with biased and unbiased agents. Biased agents want to enforce a specific decision and unbiased agents to match the true state. One agent learns the true state and sends a message to her neighbors, who decide whether or not to transmit it further. We characterize the perfect Bayesian equilibria of the game, show that the social network can act as a filter, and that biased agents may have an incentive to limit their number.     

It’s all about audit quality: Perspectives on strategic-systems auditing

We discuss the antecedents of and rationale for what has become known as Strategic-Systems Auditing (SSA). We also describe the conceptual foundation and key elements of SSA. We observe that the auditor employing SSA conceives the audit as a process of evidence-driven, belief-based, risk assessment. We also illustrate facets of this process, including how the auditor, by acquiring a rich understanding of how and how well management is executing its business-model, develops rich (e.g., distributional) expectations of future financial-statement amounts and disclosures. These expectations form a benchmark against which the auditor later compares and investigates management’s asserted financial-statement amounts and disclosures. Finally, we pose and respond to some of the more common questions about elements of SSA and complete the paper by suggesting some educational innovations and high-value targets for research.One salient message is that SSA first emerged in the 1990s as an attempt to enhance audit quality in response to changes in the audit environment. Another salient message is that SSA continues to equilibrate, adapting to more recent environmental changes, especially society’s demand for greater protection from financial-statement fraud. Such adaptation requires ongoing, significant intellectual investments by audit practitioners and audit scholars/educators.     

Bonuses and Non-Public Information in Publicly Traded Firms

Recent research in accounting explores how firms use “individual” or “non-financial” measures of performance in executive compensation contracts. We model a firm that conditions bonus payments to executives on information that is not available to those outside the firm. This raises two issues. First, market participants may use the magnitude of such payments to infer the non-public information. Second, because information that is non-public is, by extension, non-verifiable, the firm cannot write explicit contracts based on it. Combining the relational incentive contracts and financial signaling literatures, we examine equilibria of a signaling game in which bonus payments from a firm to a manager convey non-public information regarding the firm’s future cash flows. Our main result is that increases in corporate myopia can, under some conditions, lead to increased profits. This finding is contrary to that typically found in financial signaling models.