Were regulatory changes in reporting "abnormal items" justified? : evidence of intra-period classificatory earnings management practices in Australia

Purpose Managers generally have discretion in determining how components of earnings are presented in financial statements in distinguishing between ‘normal’ earnings and items classified as unusual, special, significant, exceptional or abnormal. Prior research has found that such intra-period classificatory choice is used as a form of earnings management. Prior to 2001, Australian accounting standards mandated that unusually large items of revenue and expense be classified as ‘abnormal items’ for financial reporting, but this classification was removed from accounting standards from 2001. This move by the regulators was partly in response to concerns that the abnormal classification was being used opportunistically to manage reported pre-abnormal earnings. This study extends the earnings management literature by examining the reporting of abnormal items for evidence of intra-period classificatory earnings management in the unique Australian setting. Design/methodology/approach This study investigates associations between reporting of abnormal items and incentives in the form of analyst following and the earnings benchmarks of analysts’ forecasts, earnings levels, and earnings changes, for a sample of Australian top-500 firms for the seven-year period from 1994 to 2000. Findings The findings suggest there are systematic differences between firms reporting abnormal items and those with no abnormal items. Results show evidence that, on average, firms shifted expense items from pre-abnormal earnings to bottom line net income through reclassification as abnormal losses. Originality/value These findings suggest that the standard setters were justified in removing the ‘abnormal’ classification from the accounting standard. However, it cannot be assumed that all firms acted opportunistically in the classification of items as abnormal. With the removal of the standardised classification of items outside normal operations as ‘abnormal’, firms lost the opportunity to use such disclosures as a signalling device, with the consequential effect of limiting the scope of effectively communicating information about the nature of items presented in financial reports.

Management strategies to harness cultural diversity on Australian constructions sites : a social identity perspective

Construction sites around the world employ large numbers of people from diverse cultural backgrounds. The effective management of this cultural diversity has important implications for the productivity, safety, health and welfare of construction workers and for the performance and reputation of firms which employ them. The findings of a three year, multi-staged study of cultural diversity management practices on construction sites are critiqued using social identity theory. This reveals that so called "best-practice" diversity management strategies may have an opposite effect to that intended. It is concluded that the management of diversity on construction projects would benefit from being informed by social identity research.

Determining the optimal proportion of design in design-build request for proposals (RFPs)

The design-build (DB) system is a popular and effective delivery method of construction projects worldwide. After owners decide to procure their projects through the DB system, they may wish to determine the optimal proportion of design to be provided in the DB request for proposals (RFPs), which serve as solicitations for design-builders and describe the scope of work. However, this presents difficulties to DB owners and there is little, if any, systematic research in this area. This paper reports on an empirical study in the USA entailing both an online questionnaire survey and Delphi survey to identify and evaluate the factors influencing owners’ decisions in determining the proportion of design to include in DB RFPs. Eleven factors are identified, i.e. (1) clarity of project scope; (2) applicability of performance specifications; (3) desire for design innovation; (4) site constraints; (5) availability of competent design-builders; (6) project control requirements; (7) user group involvement level; (8) third party requirements; (9) owner experience with DB; (10) project complexity; and (11) schedule constraints. A statistically significant agreement on the eleven factors was also obtained from the (mainly non-owner) Delphi experts. Although some of the experts hold different opinions on how these factors affect the proportion of design, these findings furnish various stakeholders with a better understanding of the delivery process of DB projects and the appropriate provision of project information in DB RFPs. As the result is mainly industry opinion concerning the optimal proportion of design, in addition and for completeness, future studies should be conducted to obtain a big picture of the optimal proportion of design by means of seeking owners’ inputs.

A holistic blended design studio model : a basis for exploring and expanding learning opportunities

While the studio environment has been promoted as an ideal educational setting for project-based disciplines, few qualitative studies have been undertaken in a comprehensive way (Bose, 2007). This study responds to this need by adopting Grounded Theory methodology in a qualitative comparative approach. The research aims to explore the limitations and benefits of a face-to-face (f2f) design studio as well as a virtual design studio (VDS) as experienced by architecture students and educators at an Australian university in order to find the optimal combination for a blended environment to maximize learning. The main outcome is a holistic multidimensional blended model being sufficiently flexible to adapt to various setting, in the process, facilitating constructivist learning through self-determination, self-management, and personalization of the learning environment.

Privacy by design : Does it matter for social networks?

Privacy is an important component of freedom and plays a key role in protecting fundamental human rights. It is becoming increasingly difficult to ignore the fact that without appropriate levels of privacy, a person’s rights are diminished. Users want to protect their privacy - particularly in “privacy invasive” areas such as social networks. However, Social Network users seldom know how to protect their own privacy through online mechanisms. What is required is an emerging concept that provides users legitimate control over their own personal information, whilst preserving and maintaining the advantages of engaging with online services such as Social Networks. This paper reviews “Privacy by Design (PbD)” and shows how it applies to diverse privacy areas. Such an approach will move towards mitigating many of the privacy issues in online information systems and can be a potential pathway for protecting users’ personal information. The research has also posed many questions in need of further investigation for different open source distributed Social Networks. Findings from this research will lead to a novel distributed architecture that provides more transparent and accountable privacy for the users of online information systems.