Accounting convergence of intangibles : value relevance of R & D accounting treatment

The rapid globalization of markets has resulted in further acceleration of the worldwide convergence of accounting standards, including the development of high-quality and globally consistent accounting standards for both domestic and cross-border financial reporting. Prior studies report that earnings value relevance of U.S. companies is decreasing, and the decline is partially attributable to the immediate expensing of intangibles, like research and development (R&D). Being one of the areas of divergence, accounting for R&D was highlighted as one of the seven short-term convergence projects by the FASB and IASB. Australia's adoption of IFRS in 2005 presents an empirical setting to evaluate the value relevance of different accounting treatments for R&D, and ultimately assist financial accounting standard setters in the U.S. and abroad in finding an appropriate accounting treatment for R&D.

Environmental and cultural correlates of physical activity parenting practices among Latino parents with preschool-aged children: Niños Activos

Latino children are at high risk of becoming obese. Physical activity (PA) can help prevent obesity. Parents can influence children's PA through parenting practices. This study aimed to examine the independent contributions of (1) sociodemographic, (2) cultural, (3) parent perceived environmental, and (4) objectively measured environmental factors, to PA parenting practices.

Global profit split: An evolutionary approach to international income allocation

International taxation is concerned mainly with the equitable allocation of cross-border income between countries in which income-earning activities take place. Such allocation has traditionally been governed by the arm’s-length principle, which has been interpreted as requiring a comparable transactional pricing approach. This approach assumes that each member of a multinational enterprise (MNE) group is a separate entity and that the transactions between related parties can be separated and compared with arm’s-length transactions. It has, however, proved difficult to apply comparable transactional pricing to internationally integrated businesses, especially those involving intangibles and services, and formulary apportionment has been suggested as an alternative. Essentially, formulary apportionment treats the MNE group as a single economic entity. The group’s profit is allocated to members according to a formula that reflects the particular member’s contribution to the production of that profit. A rich academic literature exists which either defends or attacks this alternative approach. The OECD and national governments have rejected formulary apportionment mainly on the ground that it violates the arm’s-length principle. This article proposes a global profit split (GPS) method for allocating international income. The GPS would allocate the global profit of an integrated business to each country in accordance with the economic contributions made by components of the business located in that country. The allocation would be based on a formula that would reflect the economic factors that contribute to profit making. While the GPS draws on elements of the traditional formulary apportionment and profit split methods, it also differs from them. The author discusses in detail the key issues involved in designing the GPS. She also presents and evaluates the main policy and pragmatic justifications for the adoption of this innovative approach. The author argues that the GPS is not only theoretically and practically superior to traditional income allocation methods, but also consistent with the arm’s-length principle. On the basis of historical developments, interpretation of article 9 of the OECD model tax convention, and international tax policy considerations, the author establishes that the GPS is not a radical departure from the arm’s-length principle, but rather a natural development in its evolution. She concludes that the law of evolution ison the side of reform because the GPS would provide for a fair and effective allocation of income derived from globally integrated business activities.

The importance of intangible assets in initial public offerings

This paper follows Beatty and Ritter (1986), who argue that lower uncertainty about the value of an initial public offering (IPO) reduces the 'need' for the underpricing of an IPo. Australian IPOs often identify the existence of intangible assets such as goodwill, licenses, brand names, trademarks, patents and capitalized research and development costs in the prospectus. This paper analyses if IPOs identifying the existence of such intangible assets in the prospectus might reduce uncertainty about their valuation and hence allow a lower underpricing return. While the reporting of intangible assets such as goodwill and license costs in the prospectus are not significant ingredients in the level of underpricing, the identification and valuation of intangible assets such as brand names, trademarks, patents and capitalized research and development costs is significant in reducing the level of underpricing return. Our findings are also consistent with previous studies concluding that both the size of the new issue and the use of an underwriter are important in the level of underpricing return.

Intangible assets and the underpricing of industrial company initial public offerings

This study analyses 262 industrial company initial public offerings (IPOs) in Australia from 1994 to 1999. It finds that the identification and valuation of brand name, trademark, patent and capitalized research and development cost intangible assets in the prospectus significantly reduces underpricing. The identification of goodwill and license cost intangibles does not appear to be significant to underpricing. This paper supports the Beatty and Ritter (1986) argument that IPOs may display financial and nonfinancial characteristics that lower the uncertainty about the value of the lPO and hence lower the underpricing of that IPO. Our findings suggest implications for the issuer who wants to maximize the value of the firm at the time of the lPO, the underwriter who is required to guarantee the success of the capital raising and for the initial investors who are looking to reduce their uncertainty about the valuation of the lPO.

Performing on boards: the link between governance and corporate reputation in nonprofit arts boards

This paper is built on the hypothesis that good governance and reputation are inextricably linked. It takes the governance of performing arts organizations in Queensland, Australia as a case study, and focuses on the role of the nonprofit arts board and its practices of governance and measures of effectiveness. Because of the financial constraints under which arts companies operate, their sustainability relies on audiences and on government or corporate support. The reputation of the company flows from the board's capacity to manage finances, stakeholders and mission. In-depth interviews with board chairs and general managers revealed that strong management systems and rigorous financial reporting are the drivers of good governance. Innovation in product development and artistic excellence are secondary in reputation to these measures. The paper proposes a model of good governance for arts boards.

Electronic markets and service delivery: requisite competencies for virtual environments

Electronic markets have a short but dynamic history. How an electronic market can be successfully developed remains in dispute. There is a clear need to better understand the nature of electronic markets themselves and, in particular, to review important developments in their conceptualisation. To enable a deeper understanding of these issues, we decided to restrict our investigation to electronic markets in the agricultural export sector. Agribusiness is a natural early adopter of digital marketplaces because of the industry’s traditional reliance on markets and current take-up of global supply chain management (Wilkins, Swatman and Castleman, 2002). We review two portals from this sector that aimed to simplify access to regulatory documentation. The earlier implementation had its funding withdrawn after one year, whilst the more recently established portal is rapidly becoming a showcase project for the stakeholders. We use a composite theory based on Bijker (1995) and Nowotny et al (2001) to establish a framework for analysing our data. We also refer to a body of literature characterising intangible services and their design and its implications for emarket implementations. Our findings indicate that governance style is in fact closely related to the success or failure of specific sites. We also found support for earlier research indicating that expectations and understanding of electronic markets are still evolving.

The factors influencing churn rates among season ticket holders : an empirical analysis

Season ticket holders (STHs) are vital to professional sport club revenue and are purported to be the most loyal and involved of fans. Nonrenewal (churn) rates among STHs, however, often exceed 20%. Low member satisfaction, poor onfield performance and low game attendance have all been posited as explanations of high churn rates, but rarely empirically examined. The research reported here employed a unique study of over 4,500 STHs, incorporating both survey research and measures of actual behavior, to determine which variables best explain and predict churn within two professional sport teams. A variety of analytical techniques all suggest that the key variables predicting churn are length of relationship and the number of games attended. New, low attending STHs are over five times more likely to churn than long-term, frequent attendees. Typical management practice is to run reward schemes designed to increase attendance and encourage renewal. The results of this study suggest that fundamental differences in the way new, low attending members evaluate the season ticket product may render those schemes ineffective. Shifting the focus of these STHs toward the intangibles of the product, such as stronger feelings of involvement, a sense of community and increased patron worth, could be more effective at reducing churn.

Relationship of osmosis : rise of Emirates, the airline and Dubai, the city

A relationship of economic osmosis is noticed between an airline and the country whose flag it flies. Economic impact studies prepared by government organisations and airline managements usually point out the economic benefits of setting up a new airline or flying a new route. These benefits arise for the airline’s home base by way of greater connectivity with the world and include a number of tangibles such as growth in tourism, increase in retail revenue from transit passengers, access to cargo transport for importers and exporters, employment opportunities and a host of indirect benefits that the local populace can gain from exposure to other countries and cultures. One also notices two very important intangibles associated with an airline and the nation of origin- national pride and national security. This paper analyses the remarkable success story of mutual growth shared by Emirates, the airline and Dubai, the city, over the past twenty-five years and the opportunities that the success of this duo signifies for others in the region.

What hispanic parents do to encourage and discourage 3-5 year old children to be active : a qualitative study using nominal group technique

Purpose : Hispanic preschoolers are less active than their non-Hispanic peers. As part of a feasibility study to assess environmental and parenting influences on preschooler physical activity (PA) (Niños Activos), the aim of this study was to identify what parents do to encourage or discourage PA among Hispanic 3-5 year old children to inform the development of a new PA parenting practice instrument and future interventions to increase PA among Hispanic youth.

Methods : Nominal Group Technique (NGT), a structured multi-step group procedure, was used to elicit and prioritize responses from 10 groups of Hispanic parents regarding what parents do to encourage (5 groups) or discourage (5 groups) preschool aged children to be active. Five groups consisted of parents with low education (less than high school) and 5 with high education (high school or greater) distributed between the two NGT questions.

Results : Ten NGT groups (n = 74, range 4-11/group) generated 20-46 and 42-69 responses/group for practices that encourage or discourage PA respectively. Eight to 18 responses/group were elected as the most likely to encourage or discourage PA. Parental engagement in child activities, modeling PA, and feeding the child well were identified as parenting practices that encourage child PA. Allowing TV and videogame use, psychological control, physical or emotional abuse, and lack of parental engagement emerged as parenting practices that discourage children from being active. There were few differences in the pattern of responses by education level.

Conclusions : Parents identified ways they encourage and discourage 3-5 year-olds from PA, suggesting both are important targets for interventions. These will inform the development of a new PA parenting practice scale to be further evaluated. Further research should explore the role parents play in discouraging child PA, especially in using psychological control or submitting children to abuse, which were new findings in this study.