Accounting Research
The Accounting program's research falls into two distinct areas
that cross the boundaries of accounting, corporate finance, market
microstructure and corporate governance. The first involves the
economic forces that shape managers' decisions to disclose or not
disclose certain accounting and related information, and the second,
the effect of corporate governance on financial reporting. Both
have significant implications for business valuation.
Search Database
for Accounting Research
Research Program
Accounting Database Information
SIRCA has negotiated access to annual report data via Aspect Financial
Pty Limited. This data is available to support research activities
at SIRCA member universities.
The data covers around 1,100 to 1,200 companies (the actual number
reduces as the database goes back in time) commencing in 1987. Whilst
the actual number of data items varies from one company to another,
as a guide the database covers on average around 45 Balance Sheet
items, 25 Profit and Loss items and 25 Cashflow Statement items.
Companies covered by the database include listed companies on the
ASX and will be augmented by data covering companies listed on the
New Zealand Stock Exchange in the near future.
 Objectives
- Analysis of the economic consequences of the financial reporting
and disclosure requirements of the ASX (Australian Stock Exchange),
ASIC (Australian Securities and Investment Commission) and AASB
(Australian Accounting Standards Board).
- Examine the underlying economic reasons for accounting and financial
reporting choices made by corporations.
- Identify the value relevance of accounting data and financial
and non-financial disclosures.
- Contribute to CLERP proposals for converging Australian and
international accounting standards.Examine the cost-benefit trade-offs
on accounting regulations.
- Investigate the role of accounting and financial reporting in
the broader context of corporate governance.
To achieve these objectives the program is pursuing funds and/or
sponsorship to purchase and develop a specialised database on accounting
and disclosure related proxies to undertake this research.
Current
& Future Research Programmes
- Develop an understanding of the factors that drive choices of
accounting and disclosures and likely valuation implications.
For example, by examining the relation between archival share
price and accounting data, we can address the questions such as:
do regulated accounting practices for unidentifiable intangible
assets enhance the value of financial statements; what factors
motivate or discourage management to provide additional information
on identifiable intangible assets.
- Link the choice of governance mechanisms to choice of accounting
methods and related disclosures to assess the likely valuation
implications of these choices.
- Identify the extent to which "timely" information
about expected earnings is revealed to the market and whether
this varies between "good" and "bad" news.
- Assess the extent to which earnings figures prepared in accordance
with Australian GAAP are "managed" in response to significant
financial events such as take-overs, equity raisings and buy-backs.
Impact
on Industry
- The program was responsible for the empirical investigation
of what effects the introduction of the enhanced disclosure (ED)
regime had on disclosure practices of listed Australian companies.
The results suggest that both the total volume of material disclosed
and the amount of "forward-looking" information disclosed
increased substantially post-ED. There is some indication of an
increase in disclosures classified by the Australian Stock Exchange
as price sensitive, although this is confined to smaller firms
and to those that performed poorly. See P. Brown, S. Taylor and
T. Walter, "The Impact of Statutory Sanctions on the Level
and Information Content of Voluntary Corporate Disclosure",
Abacus, Vol. 35, No. 2, 1999, pp. 138--162.
- The program was also responsible for measuring changes in four
indicators of share market efficiency, following the introduction
of the enhanced disclosure (ED) regime. While there is some limited
evidence of an increase in market efficiency, not all the results
support this view. See P. Brown, S. Taylor and T. Walter, "The
Impact of Statutory Sanctions on the Level and Information Content
of Voluntary Corporate Disclosure", Abacus, Vol. 35, No.
2, 1999, pp. 138--162.
- Examining how investors value disclosures conditional on the
governance mechanisms employed by a firm.
- Provide a routine approach by which accounting setters can assess
the economic consequence of proposed standards available to firms,
using as a proxy their impact on equity values.
Partnerships
The Accounting Research program is newly established and is actively
seeking partnerships with accounting firms and related associations.
In the interim, the program will continue to work closely with industry
and regulatory bodies such as the Australian Securities and Investment
Commission (ASIC) and Australian Stock Exchange (ASX).
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