The quality of financial information in the extractive industries: a value relevance analysis

The extractive industry is characterized by high levels of risk and uncertainty. These attributes create challenges when applying traditional accounting concepts (such as the revenue recognition and matching concepts) to the preparation of financial statements in the industry. The International Accounting Standards Board (2010) states that the objective of general purpose financial statements is to provide useful financial information to assist the capital allocation decisions of existing and potential providers of capital. The usefulness of information is defined as being relevant and faithfully represented so as to best aid in the investment decisions of capital providers. Value relevance research utilizes adaptations of the Ohlson (1995) to assess the attribute of value relevance which is one part of the attributes resulting in useful information. This study firstly examines the value relevance of the financial information disclosed in the financial reports of extractive firms. The findings reveal that the value relevance of information disclosed in the financial reports depends on the circumstances of the firm including sector, size and profitability. Traditional accounting concepts such as the matching concept can be ineffective when applied to small firms who are primarily engaged in nonproduction activities that involve significant levels of uncertainty such as exploration activities or the development of sites. Standard setting bodies such as the International Accounting Standards Board and the Financial Accounting Standards Board have addressed the financial reporting challenges in the extractive industry by allowing a significant amount of accounting flexibility in industryspecific accounting standards, particularly in relation to the accounting treatment of exploration and evaluation expenditure. Therefore, secondly this study examines whether the choice of exploration accounting policy has an effect on the value relevance of information disclosed in the financial reports. The findings show that, in general, the Successful Efforts method produces value relevant information in the financial reports of profitable extractive firms. However, specifically in the oil & gas sector, the Full Cost method produces value relevant asset disclosures if the firm is lossmaking. This indicates that investors in production and non-production orientated firms have different information needs and these needs cannot be simultaneously fulfilled by a single accounting policy. In the mining sector, a preference by large profitable mining companies towards a more conservative policy than either the Full Cost or Successful Efforts methods does not result in more value relevant information being disclosed in the financial reports. This finding supports the fact that the qualitative characteristic of prudence is a form of bias which has a downward effect on asset values. The third aspect of this study is an examination of the effect of corporate governance on the value relevance of disclosures made in the financial reports of extractive firms. The findings show that the key factor influencing the value relevance of financial information is the ability of the directors to select accounting policies which reflect the economic substance of the particular circumstances facing the firms in an effective way. Corporate governance is found to have an effect on value relevance, particularly in the oil & gas sector. However, there is no significant difference between the exploration accounting policy choices made by directors of firms with good systems of corporate governance and those with weak systems of corporate governance.

In two minds about screening: an investigation of cervical cancer prevention among Irish women

Cervical cancer is the second most common female cancer worldwide. Cervical screening programmes can reduce the incidence of cervical cancer by up to 80 percent if the invited women participate. Previous Irish research has associated screening attendance with subjective norms, anticipated regret, higher socio-economic status and education. Greater perceived screening barriers and lacking knowledge were associated with avoidance. These findings support a variety of expectancy-value theories of behaviour. They also suggest that expectancy-value theories could benefit from the inclusion of affective predictors of behaviour, like anticipated regret. In 2008 the Republic of Ireland introduced the National Cervical Screening Programme (NCSP). This research seeks to identify the predictors of participation in the NCSP. A systematic review of reviews showed that predictors of screening participation clustered into environmental and psychological influences. There is a gap in the evidence synthesis of associations with personal characteristics and health beliefs. Thematic analysis of focus group interviews confirmed the validity of many screening predictors identified by the systematic review and expectancy-value theories. A survey of these predictors suggested that reduced screening barriers might encourage first-time participation, while regular attendance requires greater endorsement of screening benefits and stronger subjective norm and intention. Positive attitude, rather than knowledge, appeared to be crucial for strong intention, so the final study piloted an experiment comparing the utility of positive attitude in strengthening intention to the utility of information provision. Despite lacking significant differences between conditions, content analysis of participant comments suggested that a full trial would be worthwhile, given purposive sampling and improved sample retention. These findings agree with previous Irish research on the importance of screening intention, although its association with attitude appeared to be stronger in the present research. The findings further indicate that future screening promotion should consider interventions based on patients’ experiences of screening.