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Corporate governance determinants on Australian resource companies' financial instrument disclosure practices

Grantley Taylor (School of Accounting, Curtin School of Business, Curtin University of Technology, Perth, Australia)
Greg Tower (School of Accounting, Curtin School of Business, Curtin University of Technology, Perth, Australia)
Mitchell Van Der Zahn (School of Accounting, Curtin School of Business, Curtin University of Technology, Perth, Australia)
John Neilson (School of Accounting, Curtin School of Business, Curtin University of Technology, Perth, Australia)

Asian Review of Accounting

ISSN: 1321-7348

Article publication date: 16 May 2008

Abstract

Purpose

This paper seeks to investigate the corporate governance determinants of financial instrument disclosure (FID) practices of Australian listed resource firms in their annual reports for the 2005 financial year. This is an important time period to explain FID patterns for Australian resource companies leading up to formal adoption of the Australian equivalents to the International Financial Reporting Standards (IFRS).

Design/methodology/approach

The extent of FID was measured using a Financial Instrument Disclosure Index (FIDI) comprised of 120 items of both mandatory and discretionary financial instrument information. Hypothesis testing used empirical data from a representative sample of Australian listed resource firms.

Research limitations/implications

The results of regression analysis demonstrate that corporate governance characteristics of firms are significant determinants of FID patterns. Univariate and multivariate results showed that FIDs were significantly and positively associated with strength of corporate governance structure and the control variables – leverage, firm size and industry.

Originality/value

This paper contributes to an emerging paradigm that emphasises the link between firms' governance structures and their disclosure responses to financial instruments and in particular, financial derivatives.

Keywords

Citation

Taylor, G., Tower, G., Van Der Zahn, M. and Neilson, J. (2008), "Corporate governance determinants on Australian resource companies' financial instrument disclosure practices", Asian Review of Accounting, Vol. 16 No. 1, pp. 56-73. https://doi.org/10.1108/13217340810872472

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited