Category Archives: Accounting & Finance

Director awards and board effectiveness

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Abstract

We explore the impact of prestigious director awards on effectiveness in setting CEO compensation. Consistent with the positive announcement effect for firms with awardees, CEO compensation aligns more closely with shareholder interest and includes enhanced risk-taking incentives for boards with awardees. The effect is most pronounced when the awardee is on the compensation committee or a committee chair, and results are robust to a 2SLS estimation using an instrumental variable based on connections to prior award winners. We find evidence that both additional prestigious board appointments and enhanced scrutiny of firms with awardees are channels for improvements in CEO compensation.

Business strategy and strategic deviation in accounting, finance, and corporate governance: A review of the empirical literature

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Abstract

We review the empirical archival literature on the consequences of business strategy and strategic deviation on accounting, finance, and corporate governance outcomes. We use Miles and Snow's (Organizational strategy, structure, and process. McGraw-Hill, 1978; Organizational strategy, structure and process. Stanford University Press, 2003) strategy typology that has been quantified using financial statement data by Bentley et al. (Contemporary Accounting Research, 2013, 30, 780). Research has used this strategy score to investigate the consequences of firms following two distinct strategies namely, prospectors versus defenders, on various organisational outcomes. Our survey provides mixed evidence on the relationship between business strategy, financial reporting quality, finance outcomes, and corporate governance including corporate social responsibility (CSR) activities. We offer some suggestions for future research.

Comments of the AFAANZ Auditing and Assurance Standards Committee on the Proposed Standard on Assurance Engagements over GHG Emissions Disclosure

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Abstract

The New Zealand External Reporting Board (XRB) issued for public comment a standard on Assurance Engagements over GHG Emissions Disclosure. The Auditing and Assurance Standards Committee of AFAANZ prepared a submission, based on the findings reported in published research, responding to a number of the questions asked by the XRB. This technical note presents the formal submission made to the XRB.

More on the relationship between interdisciplinary accounting research and citation impact

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Abstract

Using multiple indicators of interdisciplinarity (variety, balance, and disparity), this study examines 1613 references cited in articles published between 1976 and 2018 in six highly regarded accounting research journals (Accounting, Auditing and Accountability Journal (AAAJ), Accounting, Organisations and Society (AOS), Management Accounting Research (MAR), Journal of Accounting and Economics (JAE), Journal of Accounting Research (JAR), and The Accounting Review (TAR)). The findings are threefold: the interdisciplinarity of cited references is low compared with the reported findings in the non-accounting disciplines; there is no discernible change in the level of diversity during the sample period; and the level of citations is negatively related with the dimensions of diversity.

Do venture capitalists with foreign experience drive corporate social responsibility better? Evidence from China

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Abstract

Using a manually collected dataset, we examine the effects of venture capitalists with foreign experience on firms' corporate social responsibility (CSR) engagement. By analysing firm-, deal- and venture capitalist-level samples, we find that venture capitalists with foreign experience significantly improve their portfolio firms' CSR; this finding holds across extensive robustness tests. Venture capitalists with foreign experience promote CSR more significantly if they join the board of directors or invest in the firm's early stages. Our results suggest that venture capitalists with foreign experience transplant the client demands, management practices and social norms they have experienced abroad to their firms.

Labour marketisation level and corporate labour investment efficiency: Evidence from China

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Abstract

This study investigates the effect of labour marketisation level on corporate labour investment efficiency. Using a sample of Chinese listed firms, we provide evidence that higher labour marketisation level is associated with higher corporate labour investment efficiency. Firms with higher labour marketisation level reduce over-investment and under-investment in labour. In the cross-sectional tests, we discover that this effect is more prominent for private enterprises and firms with stronger product market competition, more financing constraints, and higher labour adjustment costs. We eliminate the impact of other non-labour investments and ensure that our results are not driven by these investments.

Mandatory inclusive finance policy and small banks’ operating performance: Evidence from China

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Abstract

We take the mandatory establishment of the Inclusive Finance Division in large state-owned banks as a quasi-experiment to explore the impact of inclusive finance policy on operating performance and risk-taking behaviours of small regional banks. Using financial information for Chinese banks from 2013 to 2019, we find that small regional banks' performance deteriorated, and they engaged in more risk-taking activities after the policy shock. Moreover, there are even much sharper performance declines in subsets of city commercial banks, and banks face high competition from large state-owned banks.

How impact investing firms use reference frameworks to manage their impact performance: An industry‐level study

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Abstract

Using meaning-oriented content analysis, we show how impact investing firms use various reference frameworks (e.g., International Finance Corporation (IFC) Performance Standards, Impact Management Project framework, UN Sustainable Development Goals) to manage their impact performance throughout the investment lifecycle. Our study provides an industry-level picture of the various roles that different reference frameworks play to help impact investors attain their impact goals. We also discuss the potential industry effects on management accounting practice, that is, how reference frameworks used in performance management in the impact investing industry differ from those used in some other industries.

Accounting for waste: Waste reporting in Australian metals and mining companies

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Abstract

Australian metals and mining companies are the focus of this study because mining activities are a significant source of waste products on a global scale, and to date, there has been no systematic review or comparison of how these companies report their waste management practices. Recognising that waste management is an important issue with future implications, this study is guided by one primary research question: What is the nature and extent of waste management disclosures by the top metals and mining companies in Australia?

Comments of the AFAANZ Auditing and Assurance Standards Committee on Proposed International Standard on Auditing 500 (Revised) Audit Evidence

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Abstract

The International Auditing and Assurance Standards Board (IAASB) issued for public comment Proposed International Standard on Auditing 500 (Revised) Audit Evidence. The Australian Auditing and Assurance Standards Board (AUASB) and New Zealand Auditing and Assurance Standards Board (NZAuASB) also called for comments. The Auditing and Assurance Standards Committee of AFAANZ prepared a submission, based on the findings reported in extant research, responding to a number of the questions asked by the IAASB (and AUASB/NZAuASB). This technical note presents the formal submission made to the IAASB.