Sue Wright is Professor of Accounting and Head of Accounting Discipline Group in the UTS Business School. She has previously worked at University of Newcastle and Macquarie University. Sue’s research and higher degree supervision is primarily focused on corporate governance and financial reporting in Australia, their regulation, and their impact on performance and other market measures. Her work has been externally funded by Accounting and Finance Association of Australia and New Zealand, Centre for International Financial Regulation, Financial Literacy Australia, CPA Australia, ACCA and ANZ Bank.
Sue’s papers have been published in international journals including Accounting and Business Research, Corporate Governance An International Review, International Journal of Accounting, Journal of Business Ethics, Journal of Contemporary Accounting and Economics, and Multinational Finance Journal. She has also published in leading Australian journals including Accounting Auditing and Accountability Journal, Accounting and Finance, Australian Journal of Management, Abacus, Accounting Research Journal and Australian Accounting Review. Sue has authored a series of papers on ethics in the tertiary curriculum in a multicultural setting, which was motivated by her membership of the Consultative Advisory Group to the IFAC (International Federation of Accountants) board, IAESB (International Accounting Education Standards Board), from 2009 - 2013. She has also co-authored several Australian textbooks, on financial statement analysis, investments and introductory accounting.
Prior to entering academia, Sue worked in policy areas related to bank supervision and reporting with the Reserve Bank of Australia. Her PhD examined the comparative information content of accounting and share prices for Australian banks 1960-1990.
Sue is the current Australasian representative for the European Accounting Association. She holds the position of Associate Editor for Australian Journal of Management, and sits on the editorial board of Australian Research Journal. Sue has extensive experience in tertiary management and administration, which was recognised in a Dean’s Award for Service to Academia in 2013 and an Outstanding Service Award in 2007. She is a past Australian President and a Fellow of AFAANZ
Can supervise: YES
Corporate governance and financial reporting in Australia, their regulation, and their impact on performance and other market measures
CEO Changes in Australia
Diversification in International Banking
Reporting by Australian Banks
Enforcement of Regulations
Reporting by SMEs in Australia
Standard-setting in Australia
Fair Value Accounting in the Agricultural Industry
Managerial Discretion and Fair Value Accounting
© 2018 Accounting and Finance Association of Australia and New Zealand This paper compares shareholder and director perceptions since the financial crisis on what constitutes effective corporate governance. We find three issues on which they have differing perceptions of good corporate governance: multiple directorships, provision of non-audit services and CEO duality, and one issue on which shareholders express concern: directors' tenure. Our results highlight the need for regulations and recommendations to more subtly define good corporate governance practices in these areas. Our results also support the theory of director primacy, providing empirical evidence that this description of corporate power is accurate even for issues on which shareholders and directors differ.
Benson, K, Chang, M, Gray, P & Wright, S 2019, 'The enduring and evolving influence of Ball and Brown (1968)', Australian Journal of Management, vol. 44, no. 1, pp. 153-159.View/Download from: Publisher's site
Bhattacharyya, A, Wright, S & Rahman, ML 2019, 'Is better banking performance associated with financial inclusion and mandated CSR expenditure in a developing country?', Accounting and Finance.View/Download from: Publisher's site
© 2019 Accounting and Finance Association of Australia and New Zealand Motivated by legislation mandating CSR expenditure to improve social equality and economic development in India, we examine the association of CSR expenditure and financial inclusion with the performance of banking firms in the period after introduction of the legislation. We study whether mandated CSR expenditure and/or financial inclusion measures are associated with better financial performance, using both accounting and stock market measures of performance, for Indian banks during 2015–2017. Our results demonstrate that level of CSR expenditure and degree of financial inclusion is not associated with banks' financial performance when performance is measured in accounting terms. However, a significant negative association is found when performance is measured by stock market return. These results suggest that the current design of the legislation is unlikely to achieve its purpose. This is the first study to present clear evidence on the associations of mandatory CSR spending and firm-level financial inclusion with accounting-based and market-based bank performance.
Handley, K, Evans, E & Wright, S 2019, 'Understanding participation in accounting standard-setting: the case of AASB ED 192 Revised Differential Reporting Framework', Accounting and Finance.View/Download from: Publisher's site
© 2019 Accounting and Finance Association of Australia and New Zealand This paper explores the motives of participants in the standard-setting process, based on the premise that standard-setters strive for standards that are useful for decision-making by a wide range of financial statement users. Our setting is the development of a contentious but contained Australian accounting standard, Reduced Disclosure Requirements. A consultative process initiated by the Australian Accounting Standards Board to create a specific Australian accounting standard for differential reporting provided an opportunity for interested parties to participate. We analyse the motives of participants through semi-structured interviews with members of the Australian Accounting Standards Board and comment letter writers who responded to the relevant exposure draft. Our findings identify participants’ economic and political motivations and question the ability of the current standard-setting process to extract decision-making requirements from a wide range of users of financial statements and to reflect these in financial reporting standards. We find that the perspectives gathered are homogenised and that the process privileges the voices of powerful elites.
© 2018 AFAANZ. Operating cash flow (CFO) asymmetric timeliness occurs when CFO reflects bad news more quickly than good news. We examine the presence and determinants of CFO asymmetric timeliness in Australia, where substantial differences in reporting requirements of cash flow components, in characteristics of listed companies and in the degree of conservative financial reporting produce contrasting findings to those in the United States. We find supportive evidence for the novel 'sticky cost behaviour' explanation and also the product-pricing strategy, but not the life cycle hypothesis. These findings are useful for investors and analysts concerned with forecasting the future values of companies. Accounting and Finance
Potter, B, Pinnuck, M, Tanewski, G & Wright, S 2019, 'Keeping it private: financial reporting by large proprietary companies in Australia', ACCOUNTING AND FINANCE, vol. 59, no. 1, pp. 87-113.View/Download from: UTS OPUS or Publisher's site
Aman, H, Beekes, W, Berkman, H, Bohmann, M, Bradbury, M, Chapple, E, Chang, M, Clout, V, Faff, R, Han, J, Hillier, D, Hodgson, A, Howieson, B, Jona, J, Linnenluecke, M, Loncan, T, McCredie, B, Michayluk, D, Mroczkowski, N, Pan, Z, Patel, V, Podolski, E, Soderstrom, N, Smith, T, Tanewski, G, Walsh, K, Wee, M & Wright, S 2019, 'Responsible science: Celebrating the 50-year legacy of using a registration-based framework', Pacific-Basin Finance Journal, vol. 56, pp. 129-150.View/Download from: UTS OPUS or Publisher's site
Chen, X, Wright, S & Wu, H 2018, 'Exploration intensity, analysts’ private information development and their forecast performance', Accounting and Business Research, vol. 48, no. 1, pp. 77-107.View/Download from: UTS OPUS or Publisher's site
© 2016 Informa UK Limited, trading as Taylor & Francis Group. This study examines whether analysts in the extractive industries in Australia adjust their private information searching and processing in response to the complexity of information about a firm’s exploration and evaluation (E&E) activities. We find that both the proportion of private information in their forecasts and the accuracy of their forecasts increase with the intensity of E&E activities. Additional analyses reveal that this effect is more pronounced for firms with substantial E&E activities but limited production activities, and that analysts’ private information development activities are mainly related to the capitalized E&E expenditures. Our results provide guidance for both investors and future standard setters. They show that investors can benefit from analysts’ expertise in situations of high information asymmetry. They also provide evidence of the advantage of distinguishing successful from unsuccessful investments in resource exploration when accounting for E&E expenditures, which may inform future decisions about accounting for intangible assets.
Handley, K, Wright, S & Evans, E 2018, 'SME Reporting in Australia: Where to Now for Decision-usefulness?', Australian Accounting Review, vol. 28, no. 2, pp. 251-265.View/Download from: UTS OPUS or Publisher's site
© 2017 CPA Australia This paper develops recommendations for simplified decision-useful SME financial reporting in Australia – a country that has traditionally allowed a wide range of reporting standards to be used by these entities. Drawing on interviews and comment letters from a number of stakeholders, and data from a survey of users of financial statements of non-publicly accountable unlisted entities, we analyse stakeholder arguments for and against SMEs providing less detailed reports, and identify the line items that might be most useful to users for decision making.
He, LYC, Wright, S & Evans, E 2018, 'Is fair value information relevant to investment decision-making: Evidence from the Australian agricultural sector?', AUSTRALIAN JOURNAL OF MANAGEMENT, vol. 43, no. 4, pp. 555-574.View/Download from: UTS OPUS or Publisher's site
Wright, S, Sheedy, E & Magee, S 2018, 'International compliance with new Basel Accord principles for risk governance', Accounting and Finance, vol. 58, no. 1, pp. 279-311.View/Download from: UTS OPUS or Publisher's site
© 2016 AFAANZ We assess international compliance with the Basel Committee's 2010 guidance on governance of banking organisations. Based on an extensive examination of regulatory documents in selected advanced economies, we find that reform is incomplete in jurisdictions most affected by the financial crisis, and with the largest financial centres. In contrast, other countries less affected by the financial crisis have enacted risk governance reforms as protection against potential future contagion. We provide insights for policy-makers charged with improving governance at banks, and a richer understanding for international regulators as they revise the guidelines and aim for greater compliance at the national level.
Adrian, C, Wright, S & Kilgore, A 2017, 'Adaptive conjoint analysis: A new approach to defining corporate governance', Corporate Governance: An International Review, vol. 25, no. 6, pp. 428-439.View/Download from: Publisher's site
© 2016 John Wiley & Sons Ltd Manuscript Type: Empirical. Research Question/Issue: The method introduced to the corporate governance literature by this paper captures the construct of corporate governance in a small number of attributes, using responses made by directors and shareholders to an adaptive conjoint analysis questionnaire. Research Findings/Insights: We demonstrate how to identify the key attributes of corporate governance from directors' and shareholders' relative preferences among a set of corporate governance attributes. The dominance of CEO duality as a relatively more important attribute is a key finding. Theoretical/Academic Implications: Adaptive conjoint analysis is a useful technique for research into governance issues characterized by constrained choice. For future researchers seeking to capture governance in a limited number of measures, we have identified four attributes considered by directors and shareholders to comprise effective corporate governance, with the single measure of CEO duality being the most important. Practitioner/Policy Implications: This parsimonious set of attributes can guide the design of future corporate governance regulations, to avoid costly over-regulation. We do not suggest that restrictions on multiple directorships or an appropriate board size should be added to current requirements, and the surprisingly low perceptions of audit partner tenure and audit committee size as important to good corporate governance suggest that these attributes could be excluded from future regulations.
Cummings, JR & Wright, S 2016, 'Effect of Higher Capital Requirements on the Funding Costs of Australian Banks', Australian Economic Review, vol. 49, no. 1, pp. 44-53.View/Download from: Publisher's site
© 2016 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research. The 2014 Murray Financial System Inquiry recommends that Australian banks be required to have higher capital levels. This article examines the arguments about the impact of higher capital requirements on banks' funding costs and assesses their relevance to the Australian banking sector. Based on scenario analysis, we estimate that higher capital requirements will result in a modest increase in the borrowing costs faced by bank customers (in the order of 20 basis points annually for a 5 percentage point increase in the ratio of equity capital to bank assets). We discuss other consequences of higher capital requirements for the Australian banking sector.
Dyball, MC, Wang, AF & Wright, S 2015, '(Dis)engaging with sustainability: Evidence from an Australian business faculty', Accounting, Auditing and Accountability Journal, vol. 28, no. 1, pp. 69-101.View/Download from: Publisher's site
© 2015, Emerald Group Publishing Limited. Purpose: The purpose of this paper is to explore how the lack of staff engagement with a university's strategy on sustainability could be an enabling lever for organisational change. It examines the attitudes and views of employees of a business faculty at an Australian metropolitan university as it attempts to adopt a holistic approach to sustainability.Design/methodology/approach: The paper opted for a case study using data from an on-line survey, semi-directed interviews with key management personnel and archival material. Responses were analysed using Piderit's (2000) notion of ambivalence.Findings: The paper provides empirical insights into why staff lacked engagement with the university's strategy on sustainability. It suggests that staff were ambivalent, displaying dissonance in their personal beliefs on sustainability, the university's strategy and the extent of their intentions to support the university. Staff were willing to offer ideas on how the university could, in the future, change towards sustainability. These ideas allow the possibility for the university to learn to adjust the scope of the implementation of its sustainability strategy.Research limitations/implications: The research results may lack generalisability. Therefore, researchers are encouraged to further examine staff attitudes on sustainability in higher education using Piderit's notion of ambivalence. In-depth interviews and focus group discussions could allow a better understanding of harmony and dissonance in cognition of and intention for university sustainability strategies and initiatives by academic, professional and sessional staff.Practical implications: The paper includes implications for staff engagement with sustainability in higher education.Originality/value: This paper fulfils an identified need to study how staff engagement with sustainability in higher education can be enabled for organisational learning.
This paper examines analysts' earnings forecasts during the period of uncertainty following a change of chief executive officer (CEO). It distinguishes between forced and non-forced CEO changes, and examines whether analysts utilize their information advantage to reduce the heightened uncertainty of a forced change of CEO. Examining a sample of Australian companies followed by analysts between 1999 and 2009, we find that forecasting accuracy is lower and earnings forecasts are more optimistic for firms experiencing forced CEO turnover compared to firms not undergoing such a change. However, dispersion is not statistically different. The results suggest that forced CEO turnover events provide a challenge to the forecasting environment for analysts. During CEO changes, investors should be aware that forecasts are less accurate and have an optimistic bias. © 2014 Accounting Foundation, The University of Sydney.
Chugh, S, Fargher, N & Wright, S 2014, 'Cross-listing as a Global Depository Receipt: The influence of emerging markets, regulation, and accounting regime', Journal of Contemporary Accounting and Economics, vol. 10, no. 3, pp. 262-276.View/Download from: Publisher's site
© 2014. This paper examines factors influencing international firms' decisions to cross-list as Global Depository Receipts (GDRs). We focus on differences in regulatory and accounting requirements between exchanges and the economic clustering that has arisen with increasing globalization. An important economic influence on this decision is the home country, reflecting trade ties. Higher US regulation and governance requirements influence firms from emerging markets to issue GDRs rather than ADRs on a US exchange. Using local GAAP or IFRS also tends to deter firms from listing as an ADR, suggesting that the cost of US GAAP reconciliation is an important consideration in the decision to list as a GDR or an ADR.
Adrian, C, Wright, S & Kilgore, A 2013, 'Good corporate governance: What matters most to directors?', JASSA, vol. 2013, no. 3, pp. 17-21.
Over the past decade, corporate governance codes have been strengthened in many countries in response to large and high-profile corporate collapses. This paper examines directors' views on the relative importance of corporate governance mechanisms or attributes. The results of this study provide feedback to regulators which may help to inform any potential future amendments of corporate governance codes in Australia.
Potter, B, Ravlic, T & Wright, S 2013, 'Developing Accounting Regulations that Reflect Public Viewpoints: The Australian Solution to Differential Reporting', Australian Accounting Review, vol. 23, no. 1, pp. 18-28.View/Download from: Publisher's site
In this paper, we analyse the factors that have shaped the approach taken by the Australian Accounting Standards Board (AASB) in addressing the issue of differential reporting in Australia. In contrast to its early adoption of International Financial Reporting Standards in 2005, the AASB has signalled an independent approach to differential reporting. Still in progress at the time of writing, we show how the AASB's approach has been shaped by feedback from key stakeholder groups, as well as by influential individuals and key events. In the face of strongly held views on both sides of the debate, the Board has moved from reliance on discursive techniques to develop and justify proposed policies to embracing to a greater extent, the use of more objective research evidence to resolve the empirical questions presented in the public debate. © 2013 CPA Australia.
Tweedie, D, Dyball, MC, Hazelton, J & Wright, S 2013, 'Teaching Global Ethical Standards: A Case and Strategy for Broadening the Accounting Ethics Curriculum', Journal of Business Ethics, vol. 115, no. 1, pp. 1-15.View/Download from: Publisher's site
This paper advocates inclusion of a wider set of ethical theories into the accounting canon. We find that the mainstream accounting curriculum does not adequately engage with non-Western ethical theories or contemporary Western ethical thought, as evidenced by the ethics content of core accounting texts and the International Federation of Accountants' ethics publications. We suggest adopting a 'thematic' approach to teaching ethics as an integrated part of accounting curricula. This approach addresses two competing principles implicit in International Education Standard 4: (i) that all accountants need to be educated to meet global ethical standards, and (ii) that teaching ethics should accommodate ethical traditions and practices that could vary between nations and cultures. The thematic approach we propose requires less additional space within existing accounting curricula and less additional preparation by accounting educators than the alternative approach of teaching substantive ethical theories from a sufficiently diverse range of cultures and traditions. The paper also provides exemplars of this thematic approach to teaching ethics in accounting. © 2012 Springer Science+Business Media B.V.
Wright, S, Dyball, MC, Byers, P & Radich, R 2012, 'Preparing students for an international career: The case for contextualizing and integrating ethics education', Asian Social Science, vol. 8, no. 14, pp. 97-108.View/Download from: Publisher's site
A key aim of IFAC (International Federation of Accountants)'s International Education Standard 4 (IES4) is to raise the ethical awareness of candidates preparing for careers as accounting professionals. This paper reports the results of a survey of undergraduate accounting students at an Australian university, and develops an approach for the implementation of IES4 in business schools with culturally diverse student populations. The survey asks students at different stages of their programs about the contribution of tertiary education to their ethical ideas, drawing conclusions based on their culture, year of study, career intentions, age and gender. It then suggests ways of teaching ethics that value and integrate students' diverse experiences and cultural backgrounds, as well as their existing knowledge. Such initiatives could expand the horizons of students from all cultural backgrounds by increasing their cultural sensitivity and awareness of ethics as an issue of relevance to their professional careers.
Kang, WS, Kilgore, A & Wright, S 2011, 'The effectiveness of audit committees for low- and mid-cap firms', Managerial Auditing Journal, vol. 26, no. 7, pp. 623-650.View/Download from: Publisher's site
Purpose: The purpose of this paper is to investigate the effectiveness of recommendations made by the Australian Stock Exchange (ASX) relating to audit committees in Australia, and whether they have improved financial reporting quality for low- and mid-cap listed firms. Design/methodology/approach: The authors examine the relation between characteristics of the audit committee and financial reporting quality for listed companies not mandated to comply with these requirements, i.e. low- and mid-cap firms. For a sample of 288 firms, the authors regress measures of audit committee independence, expertise and activity and size on alternative measures of earnings management. Findings: A significant association is found between all three characteristics and lower earnings management. The significant measure for independence is the proportion of independent directors on the audit committee; for expertise, it is that at least one member of the audit committee has an accounting qualification; and for activity and size, it is the frequency of audit committee meetings. Practical implications: The results provide support for the mandatory establishment of audit committees for the top 500 (high- and mid-cap) firms introduced by the ASX and suggest those audit committee characteristics which could improve financial reporting quality for low- and mid-cap firms. Originality/value: The paper examines low- and mid-cap firms in order to complement previous similar studies done for high-cap firms. It identifies the effects on financial reporting quality of voluntarily choosing to have an audit committee and of the choice of audit committee characteristics, in the period after substantial corporate governance reform. It includes a new measure among audit committee characteristics, industry expertise, which is required in Australia and is new to the literature. © Emerald Group Publishing Limited.
Wright, S, Byers, P, Dyball, M, Hazelton, J & Radich, R 2011, 'Engaging staff in curriculum change: Reflections from an accounting ethics initiative', Asian Social Science, vol. 7, no. 11, pp. 93-99.View/Download from: Publisher's site
This paper identifies the challenges associated with engaging staff in curriculum change, using the context of systematic inclusion of ethics in the accounting curriculum of a major Australian metropolitan university, and offers some suggestions as to how these challenges might be overcome. We characterize the inclusion of ethics in the accounting curriculum as 'pluri-disciplinary' following the typology of Davies and Devlin (2007) and draw on 22 interviews with accounting academics to examine curriculum change in a pluri-disciplinary context. We find that key staff concerns are the impact on broader accounting discourse, assignment of teaching responsibilities, curriculum content, and identification of who is ultimately responsible for the curriculum change. The responses indicate that staff would like to be equipped to confidently deliver ethics content and to have material relevant to a technically-focused student cohort. One means of achieving this might be to involve ethics experts in developing and delivering foundational material early in the curriculum and having accounting staff teach applications of this material in the latter stages. Our observations might also be of interest to those seeking to embed other 'soft' skills (such as communication, critical thinking and sustainability) within a technical curriculum.
Cheung, E, Evans, E & Wright, S 2010, 'An historical review of quality in financial reporting in Australia', Pacific Accounting Review, vol. 22, no. 2, pp. 147-169.View/Download from: Publisher's site
© 2010, © Emerald Group Publishing Limited. Purpose – Australia's early adoption of international financial reporting standards (IFRS) in 2005 was influenced by the argument that the quality of financial reporting would be improved as a result. The purpose of this paper is to provide an historical review of quality in relation to financial reporting in Australia by investigating how the qualitative characteristics of relevance, reliability, comparability and understandability developed in Australia between 1961 and 2004. Design/methodology/approach – This paper reviews the relevant academic and professional literature during the period as well as reporting on a survey of academics and others who contributed to debates about the characteristics of accounting. Findings – In Australia the notion of “quality” can be captured by relevance, reliability, comparability and understandability although the names and descriptions of these elements have been debated over a 40-year period. The paper contends that the exact meanings of those elements in relation to financial reporting remain unresolved, in spite of their adoption by the AASB Framework (2004) as the qualitative characteristics of accounting information. Research limitations/implications – Future research into the qualitative characteristics in Australia, which include questions such as the extent to which certain reporting practices or standards meet the requirements of one or more of the qualitative characteristics could be based on the historical development of these characteristics, as described in this paper. This paper also identifies critical areas that require further dialogue between researchers, standard setters and users of general purpose financial statements. Originality/value – This paper describes links between a comprehensive list of attributes of accounting information that have been considered important over the past 40 years, and the four qualitative characteristics adopted by the AASB Framewor...
Wu, H, Fargher, N & Wright, S 2010, 'Accounting for investments and the relevance of losses to firm value', International Journal of Accounting, vol. 45, no. 1, pp. 104-127.View/Download from: Publisher's site
Recent research has documented investment in research and development as a key driver of the market value of currently unprofitable firms (hereafter loss firms) in a knowledge-based economy. We broaden this argument to consider the influence of accounting for investments in general on the relation between current profitability and firm value for loss firms. Specifically, in the context of a resource-based economy, we find that exploration costs, cash flow measures of investment, and research and development costs help to explain the value of loss firms and reduce the negative relation between current profitability and firm value. © 2010.
Chen, R, Dyball, MC & Wright, S 2009, 'The link between board composition and corporate diversification in Australian corporations', Corporate Governance: An International Review, vol. 17, no. 2, pp. 208-223.View/Download from: Publisher's site
Manuscript Type: Empirical Research Question/Issue: This study investigates the association between the composition of the board of directors and corporate diversification, to explore the role of the board in corporate strategic choice. Research Findings/Results: Based on a sample of 101 Australian publicly listed firms in 2005, this study finds that there is no link between corporate decisions on product and/or geographic diversification and two aspects of board composition - board independence and institutional representation. However, there is a positive link between total diversification and a third aspect of board composition - the proportion of directors who have ties to boards of corporations in other industries. Theoretical Implications: The results provide support for the managerial hegemony and the resource dependency theories. Corporate strategic decisions regarding diversification are more likely to be made by management than boards of directors, and to be encouraged by interlocking directors with extra-industry ties. Practical Implications: Contrary to the requirement or recommendation in many jurisdictions that boards be more independent, these results indicate that shareholders' interests, represented by lower levels of diversification, are not promoted under such circumstances. Interlocking directors appear to effectively link the corporation to the external business environment and to encourage diversification. Existing recommendations and regulations to align management with shareholders' interests through independent boards should be revised. Board composition should also consider directors' knowledge, relevant expertise, availability, and length of tenure. © 2009 Blackwell Publishing Ltd.
Purpose - The purpose of this paper is to determine what aspects of board independence, in terms of board structure and characteristics of non-executive directors (NEDs), are associated with effective monitoring of management, as evidenced through lower levels of earnings management. Design/methodology/ approach - This paper examines the effectiveness of board independence requirements under the 2003 Australian Stock Exchange (ASX) Principles of Good Corporate Governance and Best Practice Recommendations (POGCG) for a sample of 231 firms listed on the ASX in the financial year 2005. The associations of board composition, share ownership and compensation of NEDs with the level of earnings management are estimated. To explore the characteristics of NEDs that are important for effective monitoring, NEDs are separated into "grey" (affiliated) directors and independent directors and compensation is separated into variable and fixed components. Findings - The results of the paper indicate a positive relation between earnings management and share ownership of NEDs, particularly that of grey directors. There is a negative relation between NED compensation and the level of earnings management, particularly the fixed compensation component for independent directors. Practical implications - This paper is important to shareholders, academics and policy makers because it shows the type of remuneration and ownership levels for NEDs that are consistent with good corporate governance. NEDs are more effective monitors when independent directors are compensated more as a fixed amount that is not related to the firm's performance. The compensation of grey directors is not associated with the level of earnings management. On the other hand, NEDs are less effective monitors as share ownership by grey directors increases. The share ownership of independent directors is not associated with the level of earnings management. To ensure the independence of the board and enhance its abilit...
Lau, J, Sinnadurai, P & Wright, S 2009, 'Corporate governance and chief executive officer dismissal following poor performance: Australian evidence', Accounting and Finance, vol. 49, no. 1, pp. 161-182.View/Download from: Publisher's site
This paper investigates the association between corporate performance and the probability of chief executive officer (CEO) dismissal for large corporations in Australia. Consistent with prior US and UK studies, corporate performance is negatively related to the probability of CEO dismissal, using both accounting and market-based performance measures. This paper also investigates whether key corporate governance characteristics affect the likelihood of CEO dismissal, by examining their effect on the strength of the negative association between corporate performance and CEO dismissal. The only significant variable is size of the board. Although its effect is opposite to that hypothesized, this paper provides a plausible explanation. Overall, the results are consistent with shareholder wealth considerations dominating board behaviour in Australia. © 2009 AFAANZ.
Cheung, E, Evans, E & Wright, S 2008, 'The adoption of IFRS in Australia: The case of AASB 138 (IAS 38) intangible assets', Australian Accounting Review, vol. 18, no. 3, pp. 248-256.View/Download from: Publisher's site
AASB 138 Intangible Assets, adopted by reporting entities in Australia for annual reporting periods beginning on or after 1 January 2005, required derecognition of internally generated intangible assets. Prior to its adoption, the standard was widely expected to have a substantial impact on the reports of affected listed entities. On the basis of information available in the 2004-05 annual reports, this paper projects the expected effects of AASB 138 on reported intangible assets and on key financial measures. It compares these projected measures to the realised measures, reported under both Australian GAAP and AIFRS in the 2005-06 reports. While reported intangible assets and the debt to equity ratio were expected to change significantly as a result of AASB 138, the reported AIFRS results show a significant change in only the debt to equity ratio. The paper considers reasons why the pre-adoption expected changes did not eventuate, and also how the actual changes were reported to stakeholders in the management discussion sections of the annual reports. The conclusion draws implications regarding the transparency of communication in annual reports. © 2008 CPA Australia.
Lau, B, Proimos, A & Wright, S 2008, 'Accounting measures of operating performance outcomes for Australian mergers', Journal of Applied Accounting Research, vol. 9, no. 3, pp. 168-180.View/Download from: Publisher's site
Purpose The purpose of this paper is to analyse success at the corporate level for 72 Australian mergers between publicly listed firms during the period 1999-2004, and to reassess evidence in earlier Australian studies that contrasts findings from other countries which report a decline in post-merger operating performance. Design/methodology/approach A number of accounting operating performance measures for profitability, cash flow, efficiency, leverage and growth are used to proxy for the success of the merger, which is defined in terms of an improvement in each merged firm's industry-adjusted operating performance between the pre and post-merger period. Both non-parametric and parametric comparisons of these measures are presented. Findings Some evidence that mergers improve the operating performance of the post-merger firm is found. Industry adjusted profitability, cash flows, efficiency and leverage measures were higher in the post-merger period. Research limitations/implications The findings of this study are limited by the small sample size, the focus on listed firms, and the use of only operating financial measures of merger success. Future research could examine more mergers over a longer time period, use alternative methods of performance benchmarking, and use alternative measures of merger success, such as share price performance. Originality/value Australian mergers led to improved corporate performance during the period 1999-2004. This result is consistent with findings in other countries but has not been found in prior Australian research. © 2008, Emerald Group Publishing Limited
Magennis, D, Watts, E & Wright, S 1998, 'Convertible notes: The debt versus equity classification problem', Journal of Multinational Financial Management, vol. 8, no. 2-3, pp. 303-315.
This paper tests the Kim (Journal of Financial and Quantitative Analysis, 25 (2) (1990) 229-243) 'Informative Conversion Ratios' hypothesis. The Kim theory predicts that the conversion price of a convertible note issue will determine whether the issue is similar to debt or similar to equity. A convertible note with a low conversion price is similar to equity under the Kim theory whilst a convertible note with a high conversion price is similar to debt. Expected time to at-the-money was used throughout this paper as an adjusted conversion price. Observation of a strong positive relation between announcement period abnormal returns and expected time to at-the-money for a sample of Australian convertible note issue announcements supports the Kim theory.