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Article
Publication date: 27 April 2020

Mazen Al-Mulla and Michael E. Bradbury

This paper is motivated by the Financial Markets Authority’s (FMA) investigation into reporting delays of New Zealand issuers. The purpose of this paper is to provide…

Abstract

Purpose

This paper is motivated by the Financial Markets Authority’s (FMA) investigation into reporting delays of New Zealand issuers. The purpose of this paper is to provide regulators with systematic evidence on firm specific characteristics associated with reporting delay. The paper examines the audit report lag (ARL), the financial report lag and the corresponding interim report lags for a large sample of New Zealand listed firms.

Design/methodology/approach

Because of the small sample we report bivariate correlations. Together with OLS regression, we examine the association between reporting delay and firm characteristics (e.g., size, complexity, governance) that capture the supply and demand for timely audited financial reports. We choose a period immediately prior to the FMA enforcement of reporting delays to capture the voluntary choice of reporting timeliness by managers.

Findings

The audit lag (i.e. balance date to preliminary announcement to the NZX) is longer than the report lag (i.e. preliminary announcement date to the issuance of the report to the NZX). We find that audit risk factors (leverage and finance firms) and busy reporting period are associated with longer audit lag. Whereas, having a Big 4 auditor and an interim review reduces annual audit lag. Investor demand factors are associated with a shorter report lag. Firms with a loss and more segments have a shorter report lag, while firms with high market to book ratio have a longer report lag. These are consistent with agency and proprietary cost explanations. The interim report lag is only seven days shorter than the annual lag. The determinants of annual report lag provide weak explanations for the interim report lags.

Research limitations/implications

Although all listed companies are sampled, the small sample size reduces the power of the analysis and may limit finding significant results at conventional levels.

Practical implications

The factors associated with reporting delays could be used by regulators as red flags to identify abnormal reporting delays. Interim reporting lags appear excessively relative to annual report lags. Therefore, regulators should investigate the reasons for the lack of timeliness of interim reports.

Social implications

Report timeliness is an important, but often overlooked, component of accounting quality. The major social implication is that timely reporting reduces information asymmetry between managers and shareholders and other stakeholders. Making better, timelier decisions ought to increase the wealth and welfare of investors and other stakeholders.

Originality/value

There are many studies on reporting delay. However, prior evidence on reporting delay in New Zealand is pre-IFRS and pre-recent regulatory reforms (such as the formation of the FMA). Hence, our contribution is to provide more contemporary-relevant evidence. We also distinguish between ARL and the financial report lag and found that different firm characteristics drive these lags. We also examine the interim reporting lag.

Details

Pacific Accounting Review, vol. 32 no. 3
Type: Research Article
ISSN: 0114-0582

Keywords

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Article
Publication date: 15 January 2020

Kim Mear, Michael Bradbury and Jill Hooks

This study aims to compare the value relevance of the recognised deferred tax elements under International Accounting Standard 12 (IAS 12): Income Taxes (balance sheet…

Abstract

Purpose

This study aims to compare the value relevance of the recognised deferred tax elements under International Accounting Standard 12 (IAS 12): Income Taxes (balance sheet method) relative to the taxes payable (flow through) method. It also investigates the value relevance of the IAS 12 deferred tax disclosures.

Design/methodology/approach

This study used standard valuation models to examine the association between share price and the recognised amounts and footnote disclosures of IAS 12. The Vuong (1989) test is then used to assess which information set is more value relevant. The sample includes 440 firm years over the period 2008-2012.

Findings

The results show that deferred tax amounts recognised under the balance sheet method provide no more information to investors than the taxes payable method (TPM). Deferred tax footnote disclosures, however, are more relevant than the amounts recognised under the balance sheet method. This study investigates potential reasons for the relevance of footnote disclosures.

Research limitations/implications

This study has not addressed whether the deferral method of deferred tax is relevant. In addition, while footnote disclosures look promising, further research is necessary.

Practical implications

The results suggest, given the complexity and cost of compliance with IAS 12, that the International Accounting Standards Board (IASB) should undertake a comprehensive re-think on the relevance of the balance sheet method in IAS 12 and revert to the TPM.

Originality/value

The IASB and the European Financial Reporting Advisory Group have expressed concerns over the balance sheet method under IAS 12. The IASB and the Financial Accounting Standards Board also have concerns over the cost and complexity of the deferred tax disclosures. The study’s results offer a perspective by examining whether the balance sheet method is value relevant. Prior research has addressed this issue using local data (i.e. pre-International Financial Reporting Standards). This study also provides suggestions for future research into deferred tax footnote disclosures.

Details

Pacific Accounting Review, vol. 32 no. 1
Type: Research Article
ISSN: 0114-0582

Keywords

Content available
Article
Publication date: 18 November 2013

Glenn Boyle, Michael Bradbury, Jill Hooks and Asheq Rahman

Abstract

Details

Pacific Accounting Review, vol. 25 no. 3
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 1 January 1997

Sonja Gallhofer, Jim Haslam and Steven Cahan

This paper reviews Pacific Accounting Review, 1988–96. Against the background of an historical overview of the journal's development, the paper includes analyses of…

Abstract

This paper reviews Pacific Accounting Review, 1988–96. Against the background of an historical overview of the journal's development, the paper includes analyses of publications and citations in the journal. The paper looks forward to the future progress of Pacific Accounting Review.

Details

Pacific Accounting Review, vol. 9 no. 1
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 1 July 2005

Helen Bishop, Michael Bradbury and Tony van Zijl

We assess the impact of NZ IAS 32 on the financial reporting of convertible financial instruments by retrospective application of the standard to a sample of New Zealand…

Abstract

We assess the impact of NZ IAS 32 on the financial reporting of convertible financial instruments by retrospective application of the standard to a sample of New Zealand companies over the period 1988 ‐ 2003. NZ IAS 32 has a broader definition of liabilities than does the corresponding current standard (FRS‐31) and it does not permit convertibles to be reported under headings that are intermediate to debt and equity. The results of the study indicate that in comparison with the reported financial position and performance, the reporting of convertibles in accordance with NZ IAS 32 would result in higher amounts for liabilities and higher interest. Thus, analysts using financial statement information to assess risk of financial distress will need to revise the critical values of commonly used measures of risk and performance when companies report under NZ IAS

Details

Pacific Accounting Review, vol. 17 no. 2
Type: Research Article
ISSN: 0114-0582

Keywords

Content available
Article
Publication date: 13 September 2011

Glenn Boyle, Michael Bradbury, Jill Hooks and Asheq Rahman

Abstract

Details

Pacific Accounting Review, vol. 23 no. 2
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 18 November 2013

Michael Bradbury and Jill Hooks

In 2012, Pacific Accounting Review (PAR) completed its 25th year of existence. This paper aims to review all articles published in PAR as a report on the “stewardship” of…

Abstract

Purpose

In 2012, Pacific Accounting Review (PAR) completed its 25th year of existence. This paper aims to review all articles published in PAR as a report on the “stewardship” of the journal.

Design/methodology/approach

Research papers published in PAR are analysed by topic, research methodology, author and institutional affiliation. This approach follows prior reviews in PAR. A comparison is also made with PAR over the period 1988-1996 and Accounting and Finance over the period 1973-1999 and the “top accounting journals” over the period 1990-2007.

Findings

The analysis indicates that PAR publishes papers across a wide range of topics, but uses research methodologies that are consistent with mainstream accounting research (as undertaken by the “top accounting journals”). The authors of PAR are concentrated in New Zealand and Australia, as is the source data. No strong trends were perceived in the data. In conclusion, PAR can be characterised as a broadly based accounting and finance journal that is primarily competing in an Australasian context.

Practical implications

This review provides some insight as to how the journal has evolved and how the mission statement has been put into effect. The journal has maintained much of its original mission. The anticipated “dialogue between researchers and practitioners” has not developed, probably due to lack of sponsorship by the profession. The paper should also form a basis for informing how to further develop the journal.

Originality/value

The paper updates the last review of PAR which was completed in 1997.

Details

Pacific Accounting Review, vol. 25 no. 3
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 1 July 2006

Michael Bradbury, Y T Mak and S M Tan

This paper examines the relation between governance (as measured by board and audit committee characteristics) and accounting quality (as measured by abnormal accruals) in…

Abstract

This paper examines the relation between governance (as measured by board and audit committee characteristics) and accounting quality (as measured by abnormal accruals) in a setting where there is no a priori reason to suspect systematic management of earnings. Using data from Singapore and Malaysia, we find both board size and audit committee independence are related to lower abnormal working capital accruals. Furthermore, the relation between audit committee independence and higher quality accounting exists only when the abnormal accruals are income increasing. This suggests that audit committees are effective in the financial reporting process by reducing the level of income increasing abnormal accruals. The results also indicate that audit committees are effective only when all members are independent directors.

Details

Pacific Accounting Review, vol. 18 no. 2
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 14 September 2010

Warwick Stent, Michael Bradbury and Jill Hooks

The purpose of this paper is to examine the financial statement impacts of adopting NZ IFRS during 2005 through 2008.

Abstract

Purpose

The purpose of this paper is to examine the financial statement impacts of adopting NZ IFRS during 2005 through 2008.

Design/methodology/approach

The effects of NZ IFRS on the financial statements and ratios of first‐time adopters of NZ IFRS for a stratified random sample of 56 listed companies is analysed. In total, 16 of these were early adopters and 40 of which waited until adoption of NZ IFRS became mandatory. The analysis of the financial statement impact of NZ IFRS is conducted in the context of the accounting choice literature.

Findings

The results show that 87 per cent of firms are affected by NZ IFRS. The median and inter‐quartile ranges indicate that for most firms the impact of NZ IFRS is small. However, the maximum and minimum values indicate the impact can be large for some entities. The impact has considerable effects on common financial ratios.

Research limitations/implications

The usual limitations applicable to small samples apply.

Practical implications

The findings may be useful to regulators and policy makers reviewing financial reporting requirements.

Originality/value

This study is the first to offer a comprehensive empirical analysis of the effect of adopting IFRS on financial statements in New Zealand, as well as on selected key ratios of interest to financial analysts. The data used are more recent than most IAS or IFRS studies around the world and are stratified to allow for comparison between voluntary/early adopters and mandatory/late adopters.

Details

Pacific Accounting Review, vol. 22 no. 2
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 2 November 2015

Michael Bradbury and Tom Scott

The purpose of this paper is to investigate whether constituents respond to local government accounting data. Since 2006, New Zealand local authorities (councils) have…

Abstract

Purpose

The purpose of this paper is to investigate whether constituents respond to local government accounting data. Since 2006, New Zealand local authorities (councils) have been required to disclose long-term accounting data relating to forecast operating revenue and expenses.

Design/methodology/approach

The authors test whether the difference between the actual operating expenditure as reported in the annual report and as forecasted is associated with electoral outcomes.

Findings

The authors find that accounting performance and the sign of accounting performance (i.e. expenditure over-runs) are associated with greater councilor re-election. Furthermore, accounting performance is also associated with greater voter turnout.

Originality/value

The production and disclosure of council planning data is based on the perceived accountability of the council to its constituents. The authors find that accounting, in an electoral context, has both information content and conveys good/bad news about accounting performance to voters.

Details

Pacific Accounting Review, vol. 27 no. 4
Type: Research Article
ISSN: 0114-0582

Keywords

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