Post Asian financial crisis : a survey of Thai hedging practices

This thesis examines how companies in Thailand coped with exchange rate volatility post Asian Financial Crisis. Findings indicate businesses quickly adjusted to the transition from a fixed to floating regime. However, Thai businesses appear to be less rigorous in their internal control of currency hedging activities. The thesis recommends strategies to overcome this risk.

Accountability structures and management relationships of internal audit : an Australian study

Purpose – The purpose of this study is to examine the accountability structures and the management relationships of internal audit. In particular, related issues such as the predominant internal audit objectives and the related functions, the extent to which internal audit addresses any financial reporting risks and the manner in which internal auditors in Australia perform their tasks, are identified. The study also looks at the extent of compliance with the Institute of Internal Auditors (IIA) Standards.
Design/methodology/approach – Based on a survey of the chief audit executives in Australia, the study identifies the reporting mechanisms, functions and relationships of internal audit, including the contributions made towards good corporate governance. There is, however, some misalignment between the aspirations of internal auditors and their relationships with management.
Findings – While internal audit objectives have been established with a focus on controls, risks and governance, the study has highlighted the fact that there is a lack of correlation between the tasks performed by internal auditors and the important internal audit objectives, with the exception of internal control and risks. The results also suggest that internal auditors have been providing an internal consulting and advisory role in matters concerning IT systems, strategic risks and financial issues. If internal auditors are to proactively contribute to good corporate governance, they need to define how, and in what way, this can be done. In regard to corporate governance processes, the results of the research indicate that issues surrounding internal control, risk assessment and management processes are regarded as the key factors for internal audit to contribute to good corporate governance.
Originality/value – This study complements and contributes to the existing literature in providing insights into the evolving role of the internal audit function in terms of accountabilities and relationships with management. It also provides a valuable insight into how the internal audit profession can build upon its inherent strengths and address any apparent areas of concern. This will assist both the profession and policy makers alike, in better understanding and improving the role of the internal audit process.

Does the change of accounting regulation on employee share options give rise to greater scope for earnings management?

Purpose – The purpose of this paper is to address the concern about the impact of accounting regulatory change pertaining to employee share options (ESOs) on earnings management. Following Australia’s adoption of International Financial Reporting Standards (IFRS) in 2005, companies are required to recognise the fair value of ESOs as expenses. Due to inherent imprecision in the estimate of ESO’s fair value, the regulatory change from disclosure to recognition was widely claimed to potentially give rise to an alternative mechanism to manage earnings. This study provides empirical evidence on whether the regulatory change leads to earnings management problems.

Design/methodology/approach – This study uses the regulatory change in accounting for ESOs to provide a direct test of earnings management between disclosed versus recognised regimes for the same sample of firms. The sample consists of Australian firms from S&P/ASX300 for the period from 2003 to 2006.

Findings – The results show that, although the accounting regulatory change from disclosure to recognition may provide an alternative earnings management vehicle, there is no evidence of this occurring. There could be several reasons for this finding. First, the statistical tests lack power. Second, there are stricter audit tests on recognised amounts than on disclosed amounts. Third, given the concern of excessive pay and the close scrutiny of compensation, managers may have already understated ESO values in the disclosure regime. Finally, managers have limited time and resources and the effort involved in the adoption of IFRS in 2005 could have restricted the time available to manage earnings via the ESO reporting channel.

Originality/value – This study adds to the limited research on whether a change in accounting regulation for employee share options from disclosure to recognition gives rise to greater scope for earnings management. One reason for the lack of empirical evidence in the research is due to the problem of designing a test. Bernard and Schipper suggest that within-firm studies have limitations for comparing the effects of recognition versus disclosure when the change is driven by an estimate becoming more reliable. A cross-sectional study is also problematic due to self-selection bias if firms can choose between disclosure versus recognition. This study circumvents potential design problems raised by Bernard and Schipper by setting a test using regulatory change which allows the test to be compared directly using the same company.

From design for ecologically sustainability to facilities management through building intelligence and knowledge management

Ecological sustainability basically concerns environmental protection and social benefits. An ecologically sustainable development is based upon reduced energy usage, increased efficiency, and upheld social responsibility; and it should be properly evaluated by financial, environmental and social aspects. Council House 2 (CH2) is claimed to change the way of Australia approaches in ecologically sustainable design and construction. This is the ‘Six-Star design and built’ green star facility assessed by the Green Building Council of Australia (GBCA), and the 10-story city council building was completed and opened in 2006, totally A$11.3 million was invested for the sustainability features. CH2 protects the environment, when it compares with the old council house, and is expected to reduce electricity consumption by 85%; reduce gas consumption by 87%; produce only 13% of the emissions; and reduce water mains supply by 72%. In this paper, the author examines its design reports and the researches paper, in the form of knowledge base, to case-study how the sustainability, effectiveness and efficiency of CH2 work. By leveraging the existing CH2 sustainability knowledge, design and building professions can learn and imitate it in further ‘green’ design without ‘re-inventing the wheel’; facilities executives can also use the existing knowledge to identify steps to boost up the facilities’ operating efficiency.

The 1947 bank nationalisation scheme : a prehistory of issues management?

Industry-wide crises emanating from legislative proposals are rare in Australia, and can be classed as once in a generation events, and so merit consideration and research. Currently, there is one such debate over the Mineral Resources Rent Tax, proposed by Prime Minister’s Julia Gillard’s government. Prior to this, the closest comparable event was the 1974 proposal for the establishment of a universal health insurance scheme. The 1947 proposal, by the Ben Chifley-led Labor Government, aimed to nationalise Australia’s banks, and it brought a crisis of massive proportions to Australia’s conservative financial service industry. Although the High Court of Australia finally found Chifley’s proposed legislation unconstitutional, the banks realised they must win in the court of public opinion, generate press coverage in favour of their position, and help defeat the Labor Government at the 1949 election. At the time, and for some decades to come, this was the most expensive and largest public relations campaign waged in Australia. After such a campaign there could be few Australians who could claim that they had not been exposed to the powers of public relations in a modern world. This paper looks at what can be learned from the banks’ collective response to the proposed nationalisation. It does so by applying contemporary issues management evaluation techniques.

Cost effectiveness of a general practice chronic disease management plan for coronary heart disease in Australia

Background. The cost effectiveness of a general practice-based program for managing coronary heart disease (CHD) patients in Australia remains uncertain. We have explored this through an economic model.

Methods. A secondary prevention program based on initial clinical assessment and 3 monthly review, optimising of pharmacotherapies and lifestyle modification, supported by a disease registry and financial incentives for quality of care and outcomes achieved was assessed in terms of incremental cost effectiveness ratio (ICER), in Australian dollars per disability adjusted life year (DALY) prevented.

Results. Based on 2006 estimates, 263 487 DALYs were attributable to CHD in Australia. The proposed program would add $115 650 000 to the annual national heath expenditure. Using an estimated 15% reduction in death and disability and a 40% estimated program uptake, the program’s ICER is $8081 per DALY prevented. With more conservative estimates of effectiveness and uptake, estimates of up to $38 316 per DALY are observed in sensitivity analysis.

Conclusions. Although innovation in CHD management promises improved future patient outcomes, many therapies and strategies proven to reduce morbidity and mortality are available today. A general practice-based program for the optimal application of current therapies is likely to be cost-effective and provide substantial and sustainable benefits to the Australian community.

What is known about this topic? Chronic disease management programs are known to provide gains with respect to reductions in death and disability among patients with coronary heart disease. The cost effectiveness of such programs in the Australian context is not known.

What does this paper add? This paper suggests that implementing a coronary heart disease program in Australia is highly cost-effective across a broad range of assumptions of uptake and effectiveness.

What are the implications for practitioners? These data provide the economic rationale for the implementation of a chronic disease management program with a disease registry and regular review in Australia.

General medical practitioners’ knowledge and beliefs about osteoporosis and its investigation and management

Summary This qualitative study explored beliefs and attitudes regarding osteoporosis and its management. General medical practitioners (GPs) were ambivalent about osteoporosis due to concern about financial barriers for patients and their own beliefs about the salience of osteoporosis. GPs considered investigation and treatment in the context of patients' whole lives.

Purpose We aimed to investigate barriers, enablers, and other factors influencing the investigation and management of osteoporosis using a qualitative approach. This paper analyses data from discussions with general medical practitioners (GPs) about their beliefs and attitudes regarding osteoporosis and its management.

Methods Fourteen GPs and two practice nurses aged 27–89 years participated in four focus groups, from June 2010 to March 2011. Each group comprised 3–5 participants, and discussions were semi-structured, according to the protocol developed for the main study. Discussion points ranged from the circumstances under which GPs would initiate investigation for osteoporosis and their subsequent actions to their views about treatment efficacy and patient adherence to prescribed treatment. Audio recordings were transcribed and coded for analysis using analytic comparison to identify the major themes.

Results The GPs were not particularly concerned about osteoporosis in their patients or the general population, ranking diabetes, osteoarthritis, cardiovascular disease, and hypertension higher than concern about osteoporosis. They expressed confidence in the efficacy of anti-fracture medications but were concerned about the potential financial burden on patients with limited incomes. The GPs were unsure about guidelines for investigation and management of osteoporosis in men and the appropriate duration of treatment, particularly for the bisphosphonates in all patients.

Conclusions The GPs' ambivalence about osteoporosis appeared to stem from structural factors such as financial barriers for patients and their own beliefs about the salience of osteoporosis. GPs considered the impact of investigating and prescribing treatment in the context of patients' whole lives.

Innovative approaches to land acquisition and conservation management : the case of Fish River Station, Northern Territory

There has been a dramatic increase in the area that is within the National Reserve System since 2000 – from around 60 million hectares to around 100 million in 2008. This dramatic increase can be attributed to Indigenous Protected Areas and the acquisition of private or leasehold land for either addition to the public protected area estate or management as private protected areas. This growth has also been strategic, increasingly the reservation status of the most underreserved bioregions. However, the reality is the land acquisition has slowed since the global financial crisis of the late 2000s and this has led to new models with different partners coming to the fore. This chapter highlights one of those new models – the acquisition of Fish River Station in the Northern Territory for conservation.

Thai hedging practices post-Asian financial crisis

This paper provides survey evidence captured from a sample of 113 respondents to a 2008 questionnaire sent to 344 companies in Thailand. The study examines Thai hedging practices following the Asian Financial Crisis of 1997. Thai companies, like their international counterparts, rely predominantly on matching and forward contracts to hedge transaction exposure. Thai companies, however, appear to be less rigorous when it comes to internal control and supervision of derivative activity. It is recommended that Thai companies improve their risk management practices by putting into place a documented hedging policy, which includes a requirement that senior staff be actively engaged in the risk management activities of the firm.

Exploring the moderating role of growth options on the relation between board characteristics and management earnings forecasts

Manuscript Type
Empirical
Research Question/Issue
This study examines whether director independence, reputation, and financial expertise are related to management earnings forecast (MEF) activity. In particular, we examine whether such a relationship is moderated by firms’ growth options.
Research Findings/Insights
Using Australian archival data for 1,928 firm-years between 1999 and 2006, we find several board characteristics have a significant positive relationship with: (1) the likelihood of firms issuing MEFs; (2) their specificity; (3) their accuracy; and (4) a negative relationship with their bias. For (1), (2), and (3) we show that these relationships are accentuated for firms with high growth options.
Theoretical/Academic Implications
While the theory of voluntary disclosure suggests firms will disclose information that is favorable to them or their managers, well-governed firms issue informative MEFs that potentially reduce information asymmetries in capital markets. We extend the prior literature by showing that such a relation is enhanced in the presence of information asymmetry and moral hazard associated with growth options.
Practitioner/Policy Implications
Our results have strategic implications for nomination committees by showing that independent directors and those with strong reputations and financial expertise enhance the governance of high growth firms. We also inform the regulatory debate by showing that good corporate governance enhancing disclosure quality is context-specific – it is not a case of “one size fits all”.

Student perceptions of environmental management : profiling the future environmental manager

Large growth is expected in the environment industry in coming decades; especially in Australia where the government's new price on carbon began in July 2012. This growth inevitably raises the question of who will fill new environmental management roles. This article presents the perceptions and expectations of students who are beginning to think about a possible career in this sector; what influences their decision-making and how do they view a career as an environmental manager? Without this information the environment sector will be under prepared for the expectations of incoming recruits and may lose valued students, graduates and employees. We found that prospective environmental managers are passionate and committed individuals who express a desire to help create a better world. They fail, however, to adequately articulate what environmental management entails, and have a poor understanding of the industry. They appear to be worried about financial security in what they see as a growing, but not yet fully mature, industry. The environment sector must therefore take the opportunity to engage these future environmental managers, and to communicate where the field will lead and how it can help this next generation achieve their aspirations to ‘save the planet’.

Agency issues surrounding A-REITS and the global financial crisis

 This thesis examines the optimal balance of debt and equity undertaken by Australian Real Estate Investment Trusts, the incentive-driven pay structure utilized to compensate management, and the factors of A-REIT composition and performance that appeal to large, powerful shareholders who are able to influence market prices.