Analysis of risk management disclosures by Australian publicly listed companies

In the aftermath of the global financial crisis, effective risk management (RM) and its communication to stakeholders are now considered essential components in corporate governance. However, despite the importance of RM communication, it is still unclear how and to what extent disclosures in financial reports can achieve effective communication of RM activities. The situation is hampered by the paucity of international RM Research that captures institution differences in corporate governance standards. The Australian setting provides an ideal environment in which to examine RM communication because the Australian Securities Exchange (ASX) has since 2007 recommended RM disclosures under its principle-based governance rules. The recommendations are contained in Principle 7 of the Corporate Governance Principles and recommendations (ASX CGPR). Accordingly, to assess the effectiveness of the AXS's RM governance principle, this study examines the nature and extent of RM disclosures reported by major ASX-listed firms. Using a mixed method approach (thematic content analysis and a series of regression analysis) we find widespread divergence in disclosure practices and low conformance with the Principle 7 recommendations. Certain corporate governance mechanisms appear to influence some categories of RM dislcosure but equity risk has surprisingly little explanatory power. These results suggest that the RM disclosures practices observed in the Australian setting may not be meeting the objectives of regulators and the needs of stakeholders.

Data as an asset : what the upstream oil & gas industry can learn about ‘big data’ from companies like Facebook

The upstream oil & gas industry has been contending with massive data sets and monolithic files for many years, but “Big Data”—that is, the ability to apply more sophisticated types of analytical tools to information in a way that extracts new insights or creates new forms of value—is a relatively new concept that has the potential to significantly re-shape the industry. Despite the impressive amount of value that is being realized by Big Data technologies in other parts of the marketplace, however, much of the data collected within the oil & gas sector tends to be discarded, ignored, or analyzed in a very cursory way. This paper examines existing data management practices in the upstream oil & gas industry, and compares them to practices and philosophies that have emerged in organizations that are leading the Big Data revolution. The comparison shows that, in companies that are leading the Big Data revolution, data is regarded as a valuable asset. The presented evidence also shows, however, that this is usually not true within the oil & gas industry insofar as data is frequently regarded there as descriptive information about a physical asset rather than something that is valuable in and of itself. The paper then discusses how upstream oil & gas companies could potentially extract more value from data, and concludes with a series of specific technical and management-related recommendations to this end.

Do Big-Four affilitates earn audit fee premiums in emerging markets?

The paper investigates whether Big-Four affiliated (B4A) firms earn audit premiums in an emerging economy context, using Bangladesh as a case. The joint determination of audit and non-audit service fees is also examined using a sample of 122 companies listed in the Dhaka Stock Exchange. Our findings reveal that although the B4A firms do not generally earn a fee premiumin Bangladesh, they charge higher audit fees for clients not purchasing non-audit services. This suggests that the B4A firms may actually lower audit fees to attract non-audit services, and cross subsidizes audit fees through non-audit-services fees. The lack of a B4A premium implies that there is lack of quality audit in emerging markets. We also document that audit and non-audit service fees are jointly determined in Bangladesh. Thus, we provide evidence of joint determination of audit and non-audit service fees in an emerging economy context.

Examining the implementation of ISO 9001 in Indonesian construction companies

Purpose To examine the implementation of quality management systems (QMSs) of Grade 7 (G-7) Indonesian construction companies. This includes the initial motives that have driven the development of QMSs, barriers to effective QMS implementation, the current practice and integration of QMS-ISO 9001 principles and elements, and the performance of contractors implementing such QMSs. Design/methodology/approach A survey was conducted involving 403 respondents (Quality Management Representatives, Managers, and Project and Site Engineers) from 77 G-7 as well as ISO 9001 certified Indonesian construction companies. Findings The main motive for G-7 contractors in establishing and implementing ISO 9001 based QMSs are identified as being to effectively and efficiently control project activities. Respondents apparently do not often experience problems related to QMS implementation. However, issues of management attitude and purpose are identified as barriers that may affect effective QMS implementation. The study highlights the ISO 9001 principles and elements that still require to be more critically applied by G-7 contractors in order to fully implement and improve their current QMS effectiveness. The findings also suggest that, although certified, many G-7 contractors have not yet achieved a satisfactory level of performance to be truly competitive in global markets outside Indonesia. Originality/value To date, only limited research has been conducted into the application of ISO 9001 in the Indonesian construction industry. The research findings reinforced the value of pursuing more effective QMS implementation. They also support current attempts to introduce ISO 9001 QMSs to a much wider base of Indonesian construction companies, particularly small and medium sized contractors and builders.

Australian stock indexes and the four-factor model

Stock indexes are passive 'value-weighted' portfolios and should not have alphas which are significantly different from zero. If an index produces an insignificant alphan, then significant alphas for equity funds using this index can be attributed solely to manager performance. However, recent literature sugests that US Stock indexes can demonstrate significant alphas, which ultimately raise questions regarding equity fund manager performance in both the US and abroad. in this paper, we employ the Carhart four-factor model and newly available Asian-Pacific risk factors to generate alphas and risk factor loadings for eight Australian stock indexes from January 2004 to December 2012. We ifnd that the initial full sample period analysis does not provide indication of significant alphas in the indexes examined. However, by carrying out 36-month rolling regressions, we discover at least four significant alphas in seven of the eight indexes and factor loading variability. As previously reported in the US, this paper confirms similar issues with the four-factor model using Australian stock indexes and performance benchmarking. In effectively measuring Australian equity fund manager performance, it is therefore essential to evaluate a fund's alpha and risk factors relative to the alpha and risk factors of the appropriate benchmark index.

Trial by media: An empirical investigation of corporate reputation and stock returns in Australia

This article examines whether investors are able to generate abnormal risk-adjusted returns in the Australian market based on media-specific firm reputational factors under market uncertainty between 2004 and 2012. The findings suggest that after controlling for crisis-centric time periods and market risk factors, contrarian trading strategies produce abnormal returns for poor corporate reputation firms but not for their good corporate reputation counterparts. Corporate reputation may be a driver of performance for poorly performing Australian firms and could be considered a stimulus for trading activity due to its explanatory capabilities.

Estimates of lost material stock of buildings and roads due to the great east Japan earthquake and tsunami

This article describes research conducted for the Japanese government in the wake of the magnitude 9.0 earthquake and tsunami that struck eastern Japan on March 11, 2011. In this study, material stock analysis (MSA) is used to examine the losses of building and infrastructure materials after this disaster. Estimates of the magnitude of material stock that has lost its social function as a result of a disaster can indicate the quantities required for reconstruction, help garner a better understanding of the volumes of waste flows generated by that disaster, and also help in the course of policy deliberations in the recovery of disaster-stricken areas. Calculations of the lost building and road materials in the five prefectures most affected were undertaken. Analysis in this study is based on the use of geographical information systems (GIS) databases and statistics; it aims to (1) describe in spatial terms what construction materials were lost, (2) estimate the amount of infrastructure material needed to rehabilitate disaster areas, and (3) indicate the amount of lost material stock that should be taken into consideration during government policy deliberations. Our analysis concludes that the material stock losses of buildings and road infrastructure are 31.8 and 2.1 million tonnes, respectively. This research approach and the use of spatial MSA can be useful for urban planners and may also convey more appropriate information about disposal based on the work of municipalities in disaster-afflicted areas.

Design intersection: The growth of community-led technology enabled companies

The sharing economy or collaborative consumption based firms have the potential to disrupt long-standing traditional industries. However, little is known on the topic, specifically the role of design in these successful community-led, technology enable firms. It is the proposition of this research that the intrinsic innovation of collaborative consumption firms is not merely a technological one. With successful firms being identified by being able to marry both technological advancement and human insight on product meaning. Therefore, the authors suggest the use of design as an effective way to capitalise and build on product meaning, not only technological advancements in order to foster the growth of a community. To explore this further, the research team decided to investigate two fast growing examples of industry disrupting, sharing economy businesses; Airbnb and Uber. Of the two cases, the use of design was found to be more evident within, Airbnb, due to wide profession of using design techniques. Each case study has been mapped on Guenther’s (2012) framework of techno-economic innovation to help illustrate this marriage of innovation agendas. This paper explored the role of design in community-led companies by presenting an argument for why they have succeeded due to an understanding of human need and key market trends, instead of only technological innovation alone. Findings and implication of these case studies suggest the future role of design as a method to achieve this success. Built on the core tenants of design thinking, these techniques rationalise technology, human needs and business viability to product innovative solutions. Upon these findings, the research team has created a new framework for understanding community-led technology enabled companies, one that builds upon the work of Guenther’s (2012) model of enterprise design innovation. This paper is the first step in a new research agenda.

The equity and efficiency of the Australian share market with respect to director trading

Purpose – The purpose of this paper is to investigate the extent of directors breaching the reporting requirements of the Australian Stock Exchange (ASX) and the Corporations Act in Australia. Further, it seeks to assess whether directors in Australia achieve abnormal returns from trades in their own companies. Design/methodology/approach – Using an event study approach on an Australian sample, abnormal returns for a range of situations were estimated. Findings – A total of 13 (seven) per cent of own‐company directors trades do not meet the ASX (Corporations Act) requirement of reporting within five (14) business days. Directors do achieve abnormal returns through trading in shares of their own companies. Ignoring transaction costs, outsiders can achieve abnormal returns by imitating directors' trades. Analysis of returns to directors after they trade but before they announce the trade to the market shows that directors are making small but statistically significant returns that are not available to the market. Analysis of returns to directors subsequent to the ASX reporting requirement up to the day the trade is reported shows that directors are making small but statistically significant returns that should be available to the market. Research limitations/implications – Future research should investigate the linkages between late reporting by directors and disadvantages to outside shareholders and the implementation of internal policies implemented to mitigate insider trading. Practical implications – Market participants should remain vigilant regarding the potential for late/non‐reporting of directors' trades. Originality/value – Uncovering breaches of reporting regulations are particularly important given that directors tend to purchase (sell) shares when the price is low (high), thereby achieving abnormal returns.

European audiovisual production companies adapting to strategic challenges

These are turbulent times for audio- visual production companies. Radical changes, both inside and outside the organizations, reach across national markets and different genres. For instance, production methods are changing; the demand from audiences and advertisers is changing; power relations between the actors involved in the value chain are changing; and increasing concentration makes the market even more competitive for small independent players. From a perspective of the structure–conduct– performance paradigm (Ramstad, 1997) it is reasonable to expect that these changes on a structural level of the industry will cause the production companies to adapt their strategic behaviour. The current challenges for media companies are a combination of rising complexity and uncertainty in the market (Picard, 2004). The increasing complexity can for instance be observed in the growing number of market segments and in the continuing trend towards cross- media strategies where media companies operate in multiple markets and on multiple platforms...

Linking spatial stock dynamics and economics: Evaluation of indicators and fishery management for the travelling eastern king prawn (Melicertus plebejus)

Reduced economic circumstances havemoved management goals towards higher profit, rather than maximum sustainable yields in several Australian fisheries. The eastern king prawn is one such fishery, for which we have developed new methodology for stock dynamics, calculation of model-based and data-based reference points and management strategy evaluation. The fishery is notable for the northward movement of prawns in eastern Australian waters, from the State jurisdiction of New South Wales to that of Queensland, as they grow to spawning size, so that vessels fishing in the northern deeper waters harvest more large prawns. Bioeconomic fishing data were standardized for calibrating a length-structured spatial operating model. Model simulations identified that reduced boat numbers and fishing effort could improve profitability while retaining viable fishing in each jurisdiction. Simulations also identified catch rate levels that were effective for monitoring in simple within-year effort-control rules. However, favourable performance of catch rate indicators was achieved only when a meaningful upper limit was placed on total allowed fishing effort. Themethods and findings will allow improved measures for monitoring fisheries and inform decision makers on the uncertainty and assumptions affecting economic indicators.

Stock-recruitment relationships of the tiger prawns (Penaeus esculentus and Penaeus semisulcatus) in the Australian Northern Prawn Fishery

This paper investigates the stock-recruitment and equilibrium yield dynamics for the two species of tiger prawns (Penaeus esculentus and Penaeus semisulcatus) in Australia's most productive prawn fishery: the Northern Prawn Fishery. Commercial trawl logbooks for 1970-93 and research surveys are used to develop population models for these prawns. A population model that incorporates continuous recruitment is developed. Annual spawning stock and recruitment indices are then estimated from the population model. Spawning stock indices represent the abundance of female prawns that are likely to spawn; recruitment indices represent the abundance of all prawns less than a certain size. The relationships between spawning stock and subsequent recruitment (SRR), between recruitment and subsequent spawning stock (RSR), and between recruitment and commercial catch were estimated through maximum-likelihood models that incorporated autoregressive terms. Yield as a function of fishing effort was estimated by constraining to equilibrium the SRR and RSR. The resulting production model was then used to determine maximum sustainable yield (MSY) and its corresponding fishing effort (f(MSY)). Long-term yield estimates for the two tiger prawn species range between 3700 and 5300 t. The fishing effort at present is close to the level that should produce MSY for both species of tiger prawns. However, current landings, recruitment and spawning stock are below the equilibrium values predicted by the models. This may be because of uncertainty in the spawning stock-recruitment relationships, a change in carrying capacity, biased estimates of fishing effort, unreliable catch statistics, or simplistic assumptions about stock structure. Although our predictions of tiger prawn yields are uncertain, management will soon have to consider new measures to counteract the effects of future increases in fishing effort.

Spawning stock dynamics of two penaeid prawns, Metapenaeus bennettae and Penaeus esculentus, in Moreton Bay, Queensland, Australia

Spawning stock dynamics of 2 commercially important penaeid prawns, Metapenaeus bennettae and Penaeus esculentus, from 9 stations in Moreton Bay (27°15'S, 153°15'E), southeast Queensland, Australia, were examined. An egg production index (EPI), based on the relative abundance, proportion that were mature or ripe, and size of adult females, was used as a measure of egg production in the 2 populations. Egg production by M. bennettae was 20 to 30 higher than that by P. esculentus, extended over 7 to 8 mo each year and peaked from February to March (late summer to early autumn). Monthly patterns in egg production by M. bennettae varied between years. In contrast, P. esculentus produced most of its eggs in a single, clearly defined peak in October (spring), although production continued to March (early autumn) each year. The seasonal onset and subsequent decline in maturation in P. esculentus were rapid. Egg production by M. bennettae was several times higher at the 5 northern stations than at the 4 southern stations and negatively correlated with salinity during the main spawning period. Egg production by P. esculentus was less varied among stations and positively correlated with depth. P. esculentus appeared more likely than M. bennettae to experience recruitment overfishing because (1) the peak spawning period for P. esculentus was dependent on relatively few adult females spawning over a short period, and (2) the selectivity of trawl nets used in the bay was much higher for P. esculentus spawners than for those of M. bennettae. Compared with more northern populations, P. esculentus in Moreton Bay matured at a larger size, had lower incidences of insemination and mature or ripe females, and had a shorter spawning period. These results suggest the likelihood of recruitment overfishing in P. esculentus increases with increasing latitude.

Stock assessment of the Queensland-New South Wales tailor fishery (Pomatomus saltatrix)

Data on catch sizes, catch rates, length-frequency and age composition from the Australian east coast tailor fishery are analysed by three different population dynamic models: a surplus production model, an age-structured model, and a model in which the population is structured by both age and length. The population is found to be very heavily exploited, with its ability to reproduce dependent on the fishery’s incomplete selectivity of one-year-old fish. Estimates of recent harvest rates (proportion of fish available to the fishery that are actually caught in a single year) are over 80%. It is estimated that only 30–50% of one-year-old fish are available to the fishery. Results from the age-length-structured model indicate that both exploitable biomass (total mass of fish selected by the fishery) and egg production have fallen to about half the levels that prevailed in the 1970s, and about 40% of virgin levels. Two-year-old fish appear to have become smaller over the history of the fishery. This is assumed to be due to increased fishing pressure combined with non-selectivity of small one-year-old fish, whereby the one-year-old fish that survive fishing are small and grow into small two-year-old fish the following year. An alternative hypothesis is that the stock has undergone a genetic change towards smaller fish; the true explanation is unknown. The instantaneous natural mortality rate of tailor is hypothesised to be higher than previously thought, with values between 0.8 and 1.3 yr–1 consistent with the models. These values apply only to tailor up to about three years of age, and it is possible that a lower value applies to fish older than three. The analysis finds no evidence that fishing pressure has yet affected recruitment. If a recruitment downturn were to occur, however, under current management and fishing pressure there is a strong chance that the fishery would need a complete closure for several years to recover, and even then recovery would be uncertain. Therefore it is highly desirable to better protect the spawning stock. The major recommendations are • An increase in the minimum size limit from 30cm to 40cm in order to allow most one-year-old fish to spawn, and • An experiment on discard mortality to gauge the proportion of fish between 30cm and 40cm that are likely to survive being caught and released by recreational line fishers (the dominant component of the fishery, currently harvesting roughly 1000t p.a. versus about 200t p.a. from the commercial fishery).

Evidence for a stock discontinuity of snapper (Pagrus auratus) on the east coast of Australia

Allozyme electrophoresis was used to investigate the genetic stock structure of snapper, Pagrus auratus (Bloch and Schneider) on the east coast of Australia. Spatial variation in allele frequency was examined at nine polymorphic loci. The results support a single, relatively weak genetic disjunction among the P. auratus populations north of Sydney (latitude 33°52?) but south of Forster (latitude 31°58?) on the central coast of New South Wales. There was also evidence for genetic isolation by distance on the east coast. The influence of the East Australian Current (EAC) in transporting larvae to the south, coupled with the general northward migration pattern of adult snapper is believed to be responsible for maintaining a panmictic snapper population on much of the east coast of Australia.