The Effects of Alternative Methods of Accounting for Leases – An Experimental Study

A report of an experiment testing analysts' reactions to alternative ways of reporting lease commitments. Results indicate that reporting methods affect the behaviour of financial analysts in projecting earnings, but not in share valuations.     

Corporate Dislosure in a Substantially Unregulated Environment

Corporate disclosure in the nineteenth and early twentieth centuries in New South Wales was substantially unregulated. Except for banks, insurance companies, companies receiving money on deposit and, after 1896, no liability mining companies, statutes regulating companies either contained no compulsory disclosure rules or were silent about the details of information to be disclosed. In almost all cases the statutes regulating companies were based on English counterparts or had English antecedents, while the capital maintenance rule limiting profits available for dividends came from English case law. However, some English statutes, notably the life insurance legislation of 1870 and the Companies Acts of 1879, 1900 and 1907, were not adopted in New South Wales.     

Evolution of a Lease Solution

The lease solution most frequently advocated in the literature, that in which the after-tax cash flows of leasing and borrowing are discounted by the after-tax borrowing rate, is invariably associated with Myers, Dill and Bautista (MDB; 1976). This article, while accepting the basic assumptions underlying this solution, attempts to identify its origin and the process by which it evolved. The finding is that Bierman and Smidt (1966) pioneered this approach which has its antecedents in the works of Gant (1959) and McEachron (1959). Post-MDB developments in this solution are analysed and a critique is offered of an alternative evaluation approach advocated in MDB's influential work.     

中国上市公司会计信息披露管制：现实考察与经验证据

中国资本市场在短短十多年的发展历程中设立了一系列守门人,从而构建了一个形式上较为完善的会计信息披露管制框架。本文以1993年至2003年4月底被证券管制机构处罚的272次会计信息披露违规事件作为研究样本,初步考察和评价了我国上市公司会计信息披露管制制度的整体有效性,并以此为依据,对上市公司管制框架的内部和外部各个制度环节———监事会、独立董事、外部审计、证监会及其派出机构、交易所———的有效性进行了检验和分析。     

上市公司会计信息披露质量探讨

上市公司的会计信息披露是证券市场的主要信息来源,本文探讨了我国证劵市场会计信息披露的标准与问题,分析了证券市场会计信息披露问题的原因,然后从微观和宏观角度提出了相关建议。     

保险上市公司会计信息披露:基于"四性"的研究

保险公司上市后,其会计信息的公开披露成为保险公司必须履行的一项强制性义务.现已颁布的相关法律和制度,对此提出了新的要求,而目前保险上市公司会计信息披露缺乏真实性、充分性、及时性和主动性.因此,应尽快推行新企业会计准则,提高会计信息披露的规范化建设,健全公司治理结构,强化对保险公司的监管和审计.     

上市公司治理对会计信息披露质量的影响因素分析

本文采用熵权法研究了我国上市公司治理对会计信息披露质量的影响因素,研究结果表明第一大股东的性质、机构投资者持股比例、管理层的持股比例、公司总资产的大小和第一大股东的持股比例对会计信息披露质量有较大影响;而独立董事比例、监事会人数、流通股比例以及资产负债率、净资产收益率和主营业务收入率等指标对会计信息披露质量影响很小。根据研究结果,提出了完善公司治理结构和提高会计信息披露质量的改进措施。     

Improved Accountability Disclosures by Canadian Universities*

Canadian university disclosures have been tracked from 1988 to 2000 using the modified accountability disclosure (MAD) index developed by Coy, Dixon, and Tower (1993) and Coy, Tower, and Dixon (1993) in their study of New Zealand universities. During the first eight years of the period under investigation, there was very little change in accountability disclosures. However, for the periods ending in 1997 through 2000, there has been a statistically significant annual improvement. This paper examines the reasons for these changes as indicated in the interviews with the presidents, or their designates, of Canadian universities. Factors include increased fund raising by the universities and pressures by the public and governments for universities to become more accountable, while a change in accounting pronouncements appears to have had little effect.     

The Politics of Rule Development: A Case Study of Australian Pension Fund Accounting Rule-Making

Describing the politics surrounding accounting rule development may provide greater insights to such processes than analysing written submissions to rule-making bodies. Over a twenty-year period a rule-making contest evolved between the accounting profession and an alliance of pension industry interest groups over the introduction of different forms of regulation (accounting standards versus legislative-backed rules) relating to pension fund accounting. From the perspective of government, the debate about pension fund accounting reflects the outside-initiative model (Cobb and Elder, 1972; Cobb et al., 1976). Issues were created by the (accounting and actuarial) professions, expanded in the relevant (pension and life insurance) industry and then gained entrance to the formal agenda of both regulatory and government deliberations. In this case the accounting profession failed to gain acceptance of its professional rule-making activities. Alternative possible explanations as to why the alliance of interest groups eventually prevailed over the accounting profession are explored.     

Lessee Reactions to Regulation of Accounting for Leases

This study examines lessee firms’ responses to Australian Accounting Standard 17, Accounting for Leases (AAS 17, 1987) and Approved Accounting Standard ASRB 1008, Accounting for Leases (ASRB 1008, 1987). Both Standards required that lessees capitalize finance leases, thus bringing the finance leases of many firms‘on balance sheet’ and increasing reported leverage. If the capitalization requirement altered firms’ equilibrium contracting cost distributions sufficiently, firms would take actions to mitigate its effect, possibly by altering their capital structures. The study examines whether the capital structures of these firms did change in response to the requirement, and if so, how. The results indicate that firms responded to the Standards by reducing their reliance upon finance leasing and increasing their reliance upon non-lease debt and shareholders’ funds. Firms do not appear to have used definitional interpretations to classify leases as operating rather than finance leases. As expected, the firms previously disclosing finance leases in footnotes experienced increases in non-lease debt reliance while the control sample (firms that previously capitalized the lease obligations) experienced decreases. Differences between control firms’ and footnote disclosure firms’ reactions to the Standard are generally consistent with contracting theory predictions. Control firms reacted to the loss of the potential to off balance sheet finance. Footnote-disclosure firms reacted to the loss of an already utilized off balance sheet financing technique.     

The determinants of reserves disclosure in the extractive industries: evidence from Australian firms

This paper examines the determinants of reserves disclosure (RD) in the Australian extractive industries. Our regression results indicate that RD are positively associated with variables relating to corporate governance, foreign listing, existence of reserves in foreign jurisdictions, pledging of reserves in debt covenants, leverage and external (Big 4) auditor, after controlling for firm size, subindustry, shareholder concentration and development/production stage. Additional regression testing shows that the existence of reserves in foreign jurisdictions is the most important determinant of RD in Australia. This paper contributes to a better understanding of the extent and rationale behind the RD practices of Australian resource firms.     

Mandatory Environmental Disclosures by Companies Complying with IASs/IFRSs: The Cases of France,Germany, and the UK

This study investigates whether the adoption of a single set of accounting standards, such as IASs/IFRSs, guarantees the harmonization of accounting practices within a country and across countries, or whether differences in reporting practices persist because of dissimilarities in reporting habits and institutional settings. To this end, we investigate whether the level of environmental disclosure under IFRSs is related to the size of the reporting firm, and the strength of legal and regulatory constraints on environmental disclosures in the country where the firm is domiciled. Results indicate (1) that environmental disclosures imposed by IFRSs increase with firm size, and (2) that firms domiciled in countries with constraining environmental disclosure regulations (i.e., France and the UK) report more on environmental issues than firms domiciled in countries with weakly constraining regulations (i.e., Germany). This suggests a strong impact of national regulations on IFRS reporting. Taken as a whole, our results support the view that IFRSs are not applied consistently across firms and across countries, notably because of persistence of reporting traditions and discrepancies in national legal requirements.     

Voluntary Environmental Disclosures by Large UK Companies

Abstract:  This paper examines the patterns in voluntary environmental disclosures made by a sample of large UK companies. The analysis distinguishes between the decision to make a voluntary environmental disclosure and decisions concerning the quality of such disclosures and examines how each type of decision is determined by firm and industry characteristics. We find that larger, less indebted companies with dispersed ownership characteristics are significantly more likely to make voluntary environmental disclosures, and that the quality of disclosures is positively associated with firm size and corporate environmental impact. We find significant cross-sector variation in the determinants of both the participation and quality decisions. Furthermore, the manner of this variation differs between the two.     

Analyst Coverage,Market Liquidity and Disclosure Quality: A Study of Fair-value Disclosures by European Real Estate Companies Under IAS 40 and IFRS 13

Disclosures in notes have been criticized by practitioners for being unwieldy and contributing little to the quality of the financial information. This study presents evidence on the association between disclosure quality, analyst following and liquidity in the real estate sector. More specifically, we study the disclosure of the methods and significant assumptions applied in determining fair values of investment properties under IAS 40 and IFRS 13. We find that disclosure quality is significantly higher under IFRS 13. Furthermore, we show that the quality is associated with analyst following and bid-ask spreads. However, the improved disclosures following the adoption of IFRS 13 are not associated with any significant positive economic consequences. This result indicates that the revised disclosure requirements in IFRS 13 did not solve any market imperfections.     

An Experimental Market's Investigation of Discretionary Financial Disclosure

The extent to which market forces can induce full financial disclosure by managers has long been an issue of interest to regulators. Investigating this phenomenon with naturally occurring data produces a major obstacle: since managers' private information sets are unknown, it is necessary to make assumptions about them in order to interpret the nature (e.g., favourable or unfavourable, income increasing or income decreasing) of the information that is disclosed. The validity of the inferences relies critically on the validity of these assumptions. The present study uses a laboratory experiment to test three hypotheses derived from prior analytical and empirical research: (H1) When disclosure costs are zero, managers voluntarily disclose all (good and bad) news; (H2) When disclosure costs are positive. managers only disclose news which exceeds some threshold: and (H3) The mandatory disclosure of non-proprietary information induces an increase in the disclosure of correlated. proprietary information. One hundred and fifty-six subjects participated in markets with one firm manager and three investors. Over thirteen independent periods, the managers decided whether to truthfully disclose the liquidation value of the asset under their stewardship, and the investors submitted competing bids for the asset. With costless disclosure. investors price-protected themselves when managers withheld information, but the price penalty that they imposed was insufficient to induce full disclosure. With positive disclosure cost, investors reduced the price penalty that they imposed for non-disclosure, and managers disclosed proportionally fewer of the less extreme good news. Finally, mandatory disclosure of information had no significant impact on the voluntary disclosure of correlated proprietary information. Discussion centres on our failure to support the (equilibrium) prediction from analytical research that full disclosure should obtain when disclosures are costless. Several limitations of the study are examined. and it remains an open question whether additional trials (periods) in the present study might have provided full disclosure.     

上市公司会计信息失真的原因分析和治理

以上市公司本身、会计师以及会计师事务所为分析目标,对会计信息失真的动机和原因进行了分析,并从建立产权清晰、权责明确的现代企业制度、逐步培育完善经理人市场、完善注册会计师制度等方面提出了具体的解决对策。     

Australian Financial Graphs: An Empirical Study

The use of graphs to disclose financial information in corporate annual reports represents a significant dimension of financial disclosure management. This study replicates and extends previous research into financial graphs by documenting the nature and extent of graph use and departures from representational neutrality among the 1991 corporate annual reports of the top one hundred companies listed on the Australian Stock Exchange. Eighty-nine per cent of companies use graphs; the mean number is 9.4, with diversified companies using the most graphs. The most commonly graphed financial variables are sales, profit, EPS and DPS. Evidence is found that graph use is contingent upon favourable performance. In addition, material measurement distortion is found in 34 per cent of all key financial graphs. Eighty-six per cent of companies have slope parameters which depart more than 10° from the optimum, thus impairing communicative effectiveness. A range of design strategies are employed which are consistent with the adoption of an impression management schema. No persistent systematic differences between forms of distortion and industry group are found. Comparison with prior single-country studies reveals that graphs are used more extensively in Australia than in the U.S.A., the U.K. or Canada, but that there is less evidence of impression management. This latter finding is consistent with the view that there are fewer short-term and capital-market pressures in Australia.     

The Royal Mail Case: A Legal Analysis

This paper examines the legal issues raised in the celebrated Royal Mail Case and the implications of the case for the practice today. It is argued, contrary to the literature, that the case was not about the utilization of secret reserves, but about the non-disclosure of repayments by the Inland Revenue of overprovisions for tax and that defence counsel for the auditor succeeded because of the weak factual case presented by the prosecution. The paper then argues that whilst the factual basis of the prosecution's case was extremely weak, they had missed three fundamental points: the going concern concept, the materiality concept, and the point at which an overprovision for taxation should be recognized. Various minor issues in the case are also analysed, together with the effect they had on the outcome of the case. The implications of the case are then examined and in particular, the duties of auditors where compliance with statutory disclosure provisions conflicts with the requirement to show a true and fair view and whether cases involving technical accounting issues should be heard by specialist judges and assessors.