Do investors value disclosed versus recognised employee share options differently?

Prior research provides evidence consistent with footnote disclosures are being valued by investors. However, there are arguments as to whether the market would acquire and/or process disclosed versus recognised information in the same way. Prior studies have been inconclusive on the findings. This research provides evidence for the conditions under which differential valuation exist. Three factors are examined. First, I investigate whether the differential valuation is related to the reliability of the accounting estimates. Second, due to higher processing costs on disclosures relative to “recognised” information, I investigate whether sophistication of investors contributes to the differential valuation. Finally, I examine systematic biases arisen from how investors process information due to limited attention paid to disclosures. The results show that the market does process information in a complicated way. Investors discern the reliability of accounting estimates and value them differently when processing the information.

Ethical issues for internet use policy : balancing employer and employee perspectives

An organisational internet use policy (IUP) is a recognised deterrent to manage insider internet misuse. However, IUPs have proven ineffective against this threat, perhaps because of their neglect of the ethical issues involved. An important part of setting an IUP involves the resolution of key ethical dilemmas when employer and employee perspectives conflict. This paper explores the ethical issues that must be addressed when developing an organisational IUP. It draws on a conceptual analysis and an interpretive study of five medium-size and large organisations in Australia and North America. The paper provides a set of key ethical issues for an IUP and compares and contrasts the employer and employee perspectives. It highlights the need to balance the employer and employee perspectives when setting an IUP. Other implications for theory and practice are discussed.

Risk management, player welfare and privacy : player development managers and dilemmas for employee relations in Australian football league clubs

This paper reports on one aspect of a research project that was funded by the Australian Football League (AFL) to explore the emergence and evolution of a ‘professional identity’ for AFL footballers. The research was informed by Foucault's later work on the care of the Self to focus on the ways in which player identities are governed by coaches, club officials, and the AFL Commission/Executive; and the manner in which players conduct themselves in ways that can be characterised as professional - or not. The paper explores the roles of Player Development Managers (PDMs) in emerging processes of risk and player management. These roles increasingly involve PDMs in risk management practices and processes that can be seen as intrusive in players’ lives. These risk management processes raise a number of concerns about player privacy and the rights of Clubs to know what their employees are up to away from the workplace.

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.

Managerial share ownership and discretionary accruals in Australia : do independent and executive directors have different incentives?

We examine the relation between managerial share ownership (MSO) and discretionary accruals in Australia. We find a positive relation between MSO and discretionary accruals up to a certain level of MSO followed by a negative relation (inverse U-shaped). We suggest that these unique results are a result of certain Australian institutional features that are markedly different to those in the US and the UK and imply that the ownership-discretionary accruals relation is context specific with the wider corporate governance systems influencing the theorised incentive effects. We also posit that executive directors and independent directors have different ownership-discretionary accruals incentives and report results consistent with this proposition.

Using job strain and organizational justice models to predict multiple forms of employee performance behaviours among Australian policing personnel

The overall purpose of this investigation was to examine the relationship between stress-related working conditions and three forms of employee performance behaviours: in-role behaviours, citizenship behaviours directed at other individuals and citizenship behaviours directed at the organization. The potentially stressful working conditions were based on the job strain model (incorporating job demands, job control and social support) as well as organizational justice theory. A sample of Australian-based police officers (n = 640) took part in this study and the data were collected via a mail-out survey. Multiple regression analyses were undertaken to assess both the strength and the nature of the relationships between the working conditions and employee performance and these analyses included tests for additive, interactional and curvilinear effects. The overall results indicated that a significant proportion of the explained variance in all three outcome measures was attributed to the additive effects of demand, control and support. The level of variance associated with the organizational justice dimensions was relatively small, although there were signs that specific dimensions of justice may provide unique insights into the relationship between job stressors and employee performance. The implications of these and other notable findings are discussed.

A secure tag ownership transfer scheme in a closed loop RFID system

In this paper we propose a novel secure tag ownership transfer scheme for closed loop RFID systems. An important property of our method is that the ownership transfer is guaranteed to be atomic and the scheme is protected against desynchronisation leading to permanent DoS. Further, it is suited to the computational constraints of EPC Class-1 Gen-2 passive RFID tags as they only use the CRC and PRNG functions that passive RFID tags are capable of. We provide a detailed security analysis to show that our scheme satisfies the required security properties of tag anonymity, tag location privacy, forward secrecy, forward untraceability while being resistant to replay, desynchronisation and server impersonation attacks. Performance comparisons show that our scheme is practical and can be implemented on passive low-cost RFID tags.