The usefulness of fair values in improving the predictive ability of earnings: Evidence from international banks

One of the objectives of general-purpose financial reporting is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. The current focus on potentially increased relevance of fair value accounting weighed against issues of reliability has failed to consider the potential impact on the predictive ability of accounting. Based on a sample of international (non-U.S.) banks from 24 countries during 2009-2012, we test the usefulness of fair values in improving the predictive ability of earnings. First, we find that the increasing use of fair values on balance-sheet financial instruments enhances the ability of current earnings to predict future earnings and cash flows. Second, we provide evidence that the fair value hierarchy classification choices affect the ability of earnings to predict future cash flows and future earnings. More precisely, we find that the non-discretionary fair value component (Level 1 assets) improves the predictability of current earnings whereas the discretionary fair value components (Level 2 and Level 3 assets) weaken the predictive power of earnings. Third, we find a consistent and strong association between factors reflecting country-wide institutional structures and predictive power of fair values based on discretionary measurement inputs (Level 2 and Level 3 assets and liabilities). Our study is timely and relevant. The findings have important implications for standard setters and contribute to the debate on the use of fair value accounting.

The cost of carbon : capital market effects of the proposed emission trading scheme (ETS)

In March 2008, the Australian Government announced its intention to introduce a national Emissions Trading Scheme (ETS), now expected to start in 2015. This impending development provides an ideal setting to investigate the impact an ETS in Australia will have on the market valuation of Australian Securities Exchange (ASX) firms. This is the first empirical study into the pricing effects of the ETS in Australia. Primarily, we hypothesize that firm value will be negatively related to a firm's carbon intensity profile. That is, there will be a greater impact on firm value for high carbon emitters in the period prior (2007) to the introduction of the ETS, whether for reasons relating to the existence of unbooked liabilities associated with future compliance and/or abatement costs, or for reasons relating to reduced future earnings. Using a sample of 58 Australian listed firms (constrained by the current availability of emissions data) which comprise larger, more profitable and less risky listed Australian firms, we first undertake an event study focusing on five distinct information events argued to impact the probability of the proposed ETS being enacted. Here, we find direct evidence that the capital market is indeed pricing the proposed ETS. Second, using a modified version of the Ohlson (1995) valuation model, we undertake a valuation analysis designed not only to complement the event study results, but more importantly to provide insights into the capital market's assessment of the magnitude of the economic impact of the proposed ETS as reflected in market capitalization. Here, our results show that the market assesses the most carbon intensive sample firms a market value decrement relative to other sample firms of between 7% and 10% of market capitalization. Further, based on the carbon emission profile of the sample firms we imply a ‘future carbon permit price’ of between AUD$17 per tonne and AUD$26 per tonne of carbon dioxide emitted. This study is more precise than industry reports, which set a carbon price of between AUD$15 to AUD$74 per tonne.

Destination brand equity for Australia : testing a model of CBBE in short haul and long haul markets

The study of destination brand performance measurement has only emerged in earnest as a field in the tourism literature since 2007. The concept of consumer-based brand equity (CBBE) is gaining favour from services marketing researchers as an alternative to the traditional ‘net-present-value of future earnings’ method of measuring brand equity. The perceptions-based CBBE model also appears suitable for examining destination brand performance, where a financial brand equity valuation on a destination marketing organisation’s (DMO) balance sheet is largely irrelevant. This is the first study to test and compare the model in both short and long haul markets. The paper reports the results of tests of a CBBE model for Australia in a traditional short haul market (New Zealand) and an emerging long haul market (Chile). The data from both samples indicated destination brand salience, brand image, and brand value are positively related to purchase intent for Australia in these two disparate markets.

The health effects of temperature : current estimates, future projections, and adaptation strategies

Climate change is expected to be one of the biggest global health threats in the 21st century. In response to changes in climate and associated extreme events, public health adaptation has become imperative. This thesis examined several key issues in this emerging research field. The thesis aimed to identify the climate-health (particularly temperature-health) relationships, then develop quantitative models that can be used to project future health impacts of climate change, and therefore help formulate adaptation strategies for dealing with climate-related health risks and reducing vulnerability. The research questions addressed by this thesis were: (1) What are the barriers to public health adaptation to climate change? What are the research priorities in this emerging field? (2) What models and frameworks can be used to project future temperature-related mortality under different climate change scenarios? (3) What is the actual burden of temperature-related mortality? What are the impacts of climate change on future burden of disease? and (4) Can we develop public health adaptation strategies to manage the health effects of temperature in response to climate change? Using a literature review, I discussed how public health organisations should implement and manage the process of planned adaptation. This review showed that public health adaptation can operate at two levels: building adaptive capacity and implementing adaptation actions. However, there are constraints and barriers to adaptation arising from uncertainty, cost, technologic limits, institutional arrangements, deficits of social capital, and individual perception of risks. The opportunities for planning and implementing public health adaptation are reliant on effective strategies to overcome likely barriers. I proposed that high priorities should be given to multidisciplinary research on the assessment of potential health effects of climate change, projections of future health impacts under different climate and socio-economic scenarios, identification of health cobenefits of climate change policies, and evaluation of cost-effective public health adaptation options. Heat-related mortality is the most direct and highly-significant potential climate change impact on human health. I thus conducted a systematic review of research and methods for projecting future heat-related mortality under different climate change scenarios. The review showed that climate change is likely to result in a substantial increase in heatrelated mortality. Projecting heat-related mortality requires understanding of historical temperature-mortality relationships, and consideration of future changes in climate, population and acclimatisation. Further research is needed to provide a stronger theoretical framework for mortality projections, including a better understanding of socioeconomic development, adaptation strategies, land-use patterns, air pollution and mortality displacement. Most previous studies were designed to examine temperature-related excess deaths or mortality risks. However, if most temperature-related deaths occur in the very elderly who had only a short life expectancy, then the burden of temperature on mortality would have less public health importance. To guide policy decisions and resource allocation, it is desirable to know the actual burden of temperature-related mortality. To achieve this, I used years of life lost to provide a new measure of health effects of temperature. I conducted a time-series analysis to estimate years of life lost associated with changes in season and temperature in Brisbane, Australia. I also projected the future temperaturerelated years of life lost attributable to climate change. This study showed that the association between temperature and years of life lost was U-shaped, with increased years of life lost on cold and hot days. The temperature-related years of life lost will worsen greatly if future climate change goes beyond a 2 °C increase and without any adaptation to higher temperatures. The excess mortality during prolonged extreme temperatures is often greater than the predicted using smoothed temperature-mortality association. This is because sustained period of extreme temperatures produce an extra effect beyond that predicted by daily temperatures. To better estimate the burden of extreme temperatures, I estimated their effects on years of life lost due to cardiovascular disease using data from Brisbane, Australia. The results showed that the association between daily mean temperature and years of life lost due to cardiovascular disease was U-shaped, with the lowest years of life lost at 24 °C (the 75th percentile of daily mean temperature in Brisbane), rising progressively as temperatures become hotter or colder. There were significant added effects of heat waves, but no added effects of cold spells. Finally, public health adaptation to hot weather is necessary and pressing. I discussed how to manage the health effects of temperature, especially with the context of climate change. Strategies to minimise the health effects of high temperatures and climate change can fall into two categories: reducing the heat exposure and managing the health effects of high temperatures. However, policy decisions need information on specific adaptations, together with their expected costs and benefits. Therefore, more research is needed to evaluate cost-effective adaptation options. In summary, this thesis adds to the large body of literature on the impacts of temperature and climate change on human health. It improves our understanding of the temperaturehealth relationship, and how this relationship will change as temperatures increase. Although the research is limited to one city, which restricts the generalisability of the findings, the methods and approaches developed in this thesis will be useful to other researchers studying temperature-health relationships and climate change impacts. The results may be helpful for decision-makers who develop public health adaptation strategies to minimise the health effects of extreme temperatures and climate change.

Grassland management activity data : current sources and future needs

Estimates of potential and actual C sequestration require areal information about various types of management activities. Forest surveys, land use data, and agricultural statistics contribute information enabling calculation of the impacts of current and historical land management on C sequestration in biomass (in forests) or in soil (in agricultural systems). Unfortunately little information exists on the distribution of various management activities that can impact soil C content in grassland systems. Limited information of this type restricts our ability to carry out bottom-up estimates of the current C balance of grasslands or to assess the potential for grasslands to act as C sinks with changes in management. Here we review currently available information about grassland management, how that information could be related to information about the impacts of management on soil C stocks, information that may be available in the future, and needs that remain to be filled before in-depth assessments may be carried out. We also evaluate constraints induced by variability in information sources within and between countries. It is readily apparent that activity data for grassland management is collected less frequently and on a coarser scale than data for forest or agricultural inventories and that grassland activity data cannot be directly translated into IPCC-type factors as is done for IPCC inventories of agricultural soils. However, those management data that are available can serve to delineate broad-scale differences in management activities within regions in which soil C is likely to change in response to changes in management. This, coupled with the distinct possibility of more intensive surveys planned in the future, may enable more accurate assessments of grassland C dynamics with higher resolution both spatially and in the number management activities.

Essays on irrigation development, farm production and unaccounted costs : theory and empirical evidence

A review of the literature related to issues involved in irrigation induced agricultural development (IIAD) reveals that: (1) the magnitude, sensitivity and distribution of social welfare of IIAD is not fully analysed; (2) the impacts of excessive pesticide use on farmers’ health are not adequately explained; (3) no analysis estimates the relationship between farm level efficiency and overuse of agro-chemical inputs under imperfect markets; and (4) the method of incorporating groundwater extraction costs is misleading. This PhD thesis investigates these issues by using primary data, along with secondary data from Sri Lanka. The overall findings of the thesis can be summarised as follows. First, the thesis demonstrates that Sri Lanka has gained a positive welfare change as a result of introducing new irrigation technology. The change in the consumer surplus is Rs.48,236 million, while the change in the producer surplus is Rs. 14,274 millions between 1970 and 2006. The results also show that the long run benefits and costs of IIAD depend critically on the magnitude of the expansion of the irrigated area, as well as the competition faced by traditional farmers (agricultural crowding out effects). The traditional sector’s ability to compete with the modern sector depends on productivity improvements, reducing production costs and future structural changes (spillover effects). Second, the thesis findings on pesticides used for agriculture show that, on average, a farmer incurs a cost of approximately Rs. 590 to 800 per month during a typical cultivation period due to exposure to pesticides. It is shown that the value of average loss in earnings per farmer for the ‘hospitalised’ sample is Rs. 475 per month, while it is approximately Rs. 345 per month for the ‘general’ farmers group during a typical cultivation season. However, the average willingness to pay (WTP) to avoid exposure to pesticides is approximately Rs. 950 and Rs. 620 for ‘hospitalised’ and ‘general’ farmers’ samples respectively. The estimated percentage contribution for WTP due to health costs, lost earnings, mitigating expenditure, and disutility are 29, 50, 5 and 16 per cent respectively for hospitalised farmers, while they are 32, 55, 8 and 5 per cent respectively for ‘general’ farmers. It is also shown that given market imperfections for most agricultural inputs, farmers are overusing pesticides with the expectation of higher future returns. This has led to an increase in inefficiency in farming practices which is not understood by the farmers. Third, it is found that various groundwater depletion studies in the economics literature have provided misleading optimal water extraction quantity levels. This is due to a failure to incorporate all production costs in the relevant models. It is only by incorporating quality changes to quantity deterioration, that it is possible to derive socially optimal levels. Empirical results clearly show that the benefits per hectare per month considering both the avoidance costs of deepening agro-wells by five feet from the existing average, as well as the avoidance costs of maintaining the water salinity level at 1.8 (mmhos/Cm), is approximately Rs. 4,350 for farmers in the Anuradhapura district and Rs. 5,600 for farmers in the Matale district.

Corporate governance mechanisms and earnings management in transitional countries – evidence from Chinese listed firms

The objective of this thesis is to investigate whether the corporate governance practices adopted by Chinese listed firms are associated with the quality of earnings information. Based on a review of agency and institutional theory, this study develops hypotheses that predict the monitoring effectiveness of the board and the audit committee. Using a combination of univariate and multivariate analyses, the association between corporate governance mechanisms and earnings management are tested from 2004 to 2008. Through analysing the empirical results, a number of findings are summarised as below. First, board independence is weakened by the introduction of government officials as independent directors on the boards. Government officials acting as independent directors, claim that they meet the definition of independent director set by the regulation. However, they have some connection with the State, which is the controlling shareholder in listed SOEs affiliated companies. Consequently, the effect of the independent director’s expertise in constraining earnings management is mitigated as demonstrated by an insignificant association between board expertise and earnings management. An alternative explanation for the inefficiency of board independence may point to the pre-selection of independent directors by the powerful CEO. It is argued that a CEO can manipulate the board composition and choose the "desirable" independent directors to monitor themselves. Second, a number of internal mechanisms, such as board size, board activities, and the separation of the roles of the CEO and chair are found to be significantly associated with discretionary accruals. This result suggests that there are advantages in having a large and active board in the Chinese setting. This can offset the disadvantages associated with large boards, such as increased bureaucracy, and hence, increase the constraining effects of a large and resourceful board. Third, factor analysis identifies two factors: CEO power and board power. CEO power is the factor which consists of CEO duality and turnover, and board power is composed of board size and board activity. The results of CEO power show that if a Chinese listed company has CEO duality and turnover at the same time, it is more likely to have a high level of earnings management. The significant and negative relationship between board power and accruals indicate that large boards with frequent meetings can be associated with low level of earnings management. Overall, the factor analysis suggests that certain governance mechanisms complement each other to become more efficient monitors of opportunistic earnings management. A combination of board characteristics can increase the negative association with earnings management. Fourth, the insignificant results between audit committees and earnings management in Chinese listed firms suggests that the Chinese regulator should strengthen the audit committee functions. This thesis calls for listed firms to disclose more information on audit committee composition and activities, which can facilitate future research on the Chinese audit committee’s monitoring role. Fifth, the interactive results between State ownership and board characteristics show that dominant State ownership has a moderating effect on board monitoring power as the State totally controls 42% of the issued shares. The high percentage of State ownership makes it difficult for the non-controlling institutional shareholders to challenge the State’s dominant status. As a result, the association between non-controlling institutional ownership and earnings management is insignificant in most situations. Lastly, firms audited by the international Big4 have lower abnormal accruals than firms audited by domestic Chinese audit firms. In addition, the inverse U-shape relationship between audit tenure and earnings quality demonstrates the changing effects of audit quality after a certain period of appointment. Furthermore, this thesis finds that listing in Hong Kong Stock Exchanges can be an alternative governance mechanism to discipline Chinese firms to follow strict Hong Kong listing requirements. Management of Hong Kong listed companies are exposed to the scrutiny of international investors and Hong Kong regulators. This in turn reduces their chances of conducting self-interested earnings manipulation. This study is designed to fill the gap in governance literature in China that is related to earnings management. Previous research on corporate governance mechanisms and earnings management in China is not conclusive. The current research builds on previous literature and provides some meaningful implications for practitioners, regulators, academic, and international investors who have investment interests in a transitional country. The findings of this study contribute to corporate governance and earnings management literature in the context of the transitional economy of China. The use of alternative measures for earnings management yields similar results compared with the accruals models and produces additional findings.

Communications materials on methods of development of revenue and cost estimates to non-technical audiences

This CDROM includes PDFs of presentations on the following topics: "TXDOT Revenue and Expenditure Trends;" "Examine Highway Fund Diversions, & Benchmark Texas Vehicle Registration Fees;" "Evaluation of the JACK Model;" "Future highway construction cost trends;" "Fuel Efficiency Trends and Revenue Impact"

Full compensation no longer sacrosanct : reflections on the past and future economic loss ‘cap’ for high income earners

The civil liability provisions relating to the assessment of damages for past and future economic loss have abrogated the common law principle of full compensation by imposing restrictions on the damages award, most commonly by a “three times average weekly earnings” cap. This consideration of the impact of those provisions is informed by a case study of the Supreme Court of Victoria Court of Appeal decision, Tuohey v Freemasons Hospital (Tuohey) , which addressed the construction and arithmetic operation of the Victorian cap for high income earners. While conclusions as to operation of the cap outside of Victoria can be drawn from Tuohey, a number of issues await judicial determination. These issues, which include the impact of the damages caps on the calculation of damages for economic loss in the circumstances of fluctuating income; vicissitudes; contributory negligence; claims per quod servitum amisit; and claims by dependants, are identified and potential resolutions discussed.

Using photography in ‘The Restaurant of the Future’. A useful way to assess portion selection and plate cleaning?

Laboratory-based studies of human dietary behaviour benefit from highly controlled conditions; however, this approach can lack ecological validity. Identifying a reliable method to capture and quantify natural dietary behaviours represents an important challenge for researchers. In this study, we scrutinised cafeteria-style meals in the ‘Restaurant of the Future.’ Self-selected meals were weighed and photographed, both before and after consumption. Using standard portions of the same foods, these images were independently coded to produce accurate and reliable estimates of (i) initial self-served portions, and (ii) food remaining at the end of the meal. Plate cleaning was extremely common; in 86% of meals at least 90% of self-selected calories were consumed. Males ate a greater proportion of their self-selected meals than did females. Finally, when participants visited the restaurant more than once, the correspondence between selected portions was better predicted by the weight of the meal than by its energy content. These findings illustrate the potential benefits of meal photography in this context. However, they also highlight significant limitations, in particular, the need to exclude large amounts of data when one food obscures another.

Frontier Techniques for Measuring and Estimating Airport Efficiency : An Empirical Review with Practical Guidelines for Analysis and Future Research

Airport efficiency is important because it has a direct impact on customer safety and satisfaction and therefore the financial performance and sustainability of airports, airlines, and affiliated service providers. This is especially so in a world characterized by an increasing volume of both domestic and international air travel, price and other forms of competition between rival airports, airport hubs and airlines, and rapid and sometimes unexpected changes in airline routes and carriers. It also reflects expansion in the number of airports handling regional, national, and international traffic and the growth of complementary airport facilities including industrial, commercial, and retail premises. This has fostered a steadily increasing volume of research aimed at modeling and providing best-practice measures and estimates of airport efficiency using mathematical and econometric frontiers. The purpose of this chapter is to review these various methods as they apply to airports throughout the world. Apart from discussing the strengths and weaknesses of the different approaches and their key findings, the paper also examines the steps faced by researchers as they move through the modeling process in defining airport inputs and outputs and the purported efficiency drivers. Accordingly, the chapter provides guidance to those conducting empirical research on airport efficiency and serves as an aid for aviation regulators and airport operators among others interpreting airport efficiency research outcomes.

A neurofuzzy approach to future intelligent driver support systems

This paper reviews a variety of advanced signal processing algorithms that have been developed at the University of Southampton as part of the Prometheus (PROgraMme for European Traffic flow with Highest Efficiency and Unprecedented Safety) research programme to achieve an intelligent driver warning system (IDWS). The IDWS includes: visual detection of both generic obstacles and other vehicles, together with their tracking and identification, estimates of time to collision and behavioural modelling of drivers for a variety of scenarios. These application areas are used to show the applicability of neurofuzzy techniques to the wide range of problems required to support an IDWS, and for future fully autonomous vehicles.

Sampling frequency affects estimates of annual nitrous oxide fluxes

Quantifying nitrous oxide (N(2)O) fluxes, a potent greenhouse gas, from soils is necessary to improve our knowledge of terrestrial N(2)O losses. Developing universal sampling frequencies for calculating annual N(2)O fluxes is difficult, as fluxes are renowned for their high temporal variability. We demonstrate daily sampling was largely required to achieve annual N(2)O fluxes within 10% of the best estimate for 28 annual datasets collected from three continents, Australia, Europe and Asia. Decreasing the regularity of measurements either under- or overestimated annual N(2)O fluxes, with a maximum overestimation of 935%. Measurement frequency was lowered using a sampling strategy based on environmental factors known to affect temporal variability, but still required sampling more than once a week. Consequently, uncertainty in current global terrestrial N(2)O budgets associated with the upscaling of field-based datasets can be decreased significantly using adequate sampling frequencies.

Wear Next: An Exploration into the Future of Wearable Technology

Technology is increasingly infiltrating all aspects of our lives and the rapid uptake of devices that live near, on or in our bodies are facilitating radical new ways of working, relating and socialising. This distribution of technology into the very fabric of our everyday life creates new possibilities, but also raises questions regarding our future relationship with data and the quantified self. By embedding technology into the fabric of our clothes and accessories, it becomes ‘wearable’. Such ‘wearables’ enable the acquisition of and the connection to vast amounts of data about people and environments in order to provide life-augmenting levels of interactivity. Wearable sensors for example, offer the potential for significant benefits in the future management of our wellbeing. Fitness trackers such as ‘Fitbit’ and ‘Garmen’ provide wearers with the ability to monitor their personal fitness indicators while other wearables provide healthcare professionals with information that improves diagnosis. While the rapid uptake of wearables may offer unique and innovative opportunities, there are also concerns surrounding the high levels of data sharing that come as a consequence of these technologies. As more ‘smart’ devices connect to the Internet, and as technology becomes increasingly available (e.g. via Wi-Fi, Bluetooth), more products, artefacts and things are becoming interconnected. This digital connection of devices is called The ‘Internet of Things’ (IoT). IoT is spreading rapidly, with many traditionally non-online devices becoming increasingly connected; products such as mobile phones, fridges, pedometers, coffee machines, video cameras, cars and clothing. The IoT is growing at a rapid rate with estimates indicating that by 2020 there will be over 25 billion connected things globally. As the number of devices connected to the Internet increases, so too does the amount of data collected and type of information that is stored and potentially shared. The ability to collect massive amounts of data - known as ‘big data’ - can be used to better understand and predict behaviours across all areas of research from societal and economic to environmental and biological. With this kind of information at our disposal, we have a more powerful lens with which to perceive the world, and the resulting insights can be used to design more appropriate products, services and systems. It can however, also be used as a method of surveillance, suppression and coercion by governments or large organisations. This is becoming particularly apparent in advertising that targets audiences based on the individual preferences revealed by the data collected from social media and online devices such as GPS systems or pedometers. This type of technology also provides fertile ground for public debates around future fashion, identity and broader social issues such as culture, politics and the environment. The potential implications of these type of technological interactions via wearables, through and with the IoT, have never been more real or more accessible. But, as highlighted, this interconnectedness also brings with it complex technical, ethical and moral challenges. Data security and the protection of privacy and personal information will become ever more present in current and future ethical and moral debates of the 21st century. This type of technology is also a stepping-stone to a future that includes implantable technology, biotechnologies, interspecies communication and augmented humans (cyborgs). Technologies that live symbiotically and perpetually in our bodies, the built environment and the natural environment are no longer the stuff of science fiction; it is in fact a reality. So, where next?... The works exhibited in Wear Next_ provide a snapshot into the broad spectrum of wearables in design and in development internationally. This exhibition has been curated to serve as a platform for enhanced broader debate around future technology, our mediated future-selves and the evolution of human interactions. As you explore the exhibition, may we ask that you pause and think to yourself, what might we... Wear Next_? WEARNEXT ONLINE LISTINGS AND MEDIA COVERAGE: http://indulgemagazine.net/wear-next/ http://www.weekendnotes.com/wear-next-exhibition-gallery-artisan/ http://concreteplayground.com/brisbane/event/wear-next_/ http://www.nationalcraftinitiative.com.au/news_and_events/event/48/wear-next http://bneart.com/whats-on/wear-next_/ http://creativelysould.tumblr.com/post/124899079611/creative-weekend-art-edition http://www.abc.net.au/radionational/programs/breakfast/smartly-dressed-the-future-of-wearable-technology/6744374 http://couriermail.newspaperdirect.com/epaper/viewer.aspx RADIO COVERAGE http://www.abc.net.au/radionational/programs/breakfast/wear-next-exhibition-whats-next-for-wearable-technology/6745986 TELEVISION COVERAGE http://www.abc.net.au/radionational/programs/breakfast/wear-next-exhibition-whats-next-for-wearable-technology/6745986 https://au.news.yahoo.com/video/watch/29439742/how-you-could-soon-be-wearing-smart-clothes/#page1