Unintended consequences of regulatory reporting requirements for small and medium size construction entities : Australian evidence

The Queensland Building Services Authority (QBSA) regulates the construction industry in Queensland, Australia, with licensing requirements creating differential financial reporting obligations, depending on firm size. Economic theories of regulation and behaviour provide a framework for investigating effects of the financial constraints and financial reporting requirements imposed by QBSA licensing. Data are analysed for all small and medium construction entities operating in Queensland between 2001 and 2006. Findings suggesting that construction licensees are categorizing themselves as smaller to avoid the more onerous and costly financial reporting of higher licensee categories are consistent with US findings from the 2002 Sarbanes-Oxley (SOX) regulation which created incentives for small firms to stay small to avoid the costs of compliance with more onerous financial reporting requirements. Such behaviour can have the undesirable economic consequences of adversely affecting employment, investment, wealth creation and financial stability. Insights and implications from the analysed QBSA processes are important for future policy reform and design, and useful to be considered where similar regulatory approaches are planned.

The impact of regulatory reforms on the earnings forecasting behaviour of IPO firms

Purpose – The purpose of this paper is to jointly assess the impact of regulatory reform for corporate fundraising in Australia (CLERP Act 1999) and the relaxation of ASX admission rules in 1999, on the accuracy of management earnings forecasts in initial public offer (IPO) prospectuses. The relaxation of ASX listing rules permitted a new category of new economy firms (commitments test entities (CTEs))to list without a prior history of profitability, while the CLERP Act (introduced in 2000) was accompanied by tighter disclosure obligations and stronger enforcement action by the corporate regulator (ASIC). Design/methodology/approach – All IPO earnings forecasts in prospectuses lodged between 1998 and 2003 are examined to assess the pre- and post-CLERP Act impact. Based on active ASIC enforcement action in the post-reform period, IPO firms are hypothesised to provide more accurate forecasts, particularly CTE firms, which are less likely to have a reasonable basis for forecasting. Research models are developed to empirically test the impact of the reforms on CTE and non-CTE IPO firms. Findings – The new regulatory environment has had a positive impact on management forecasting behaviour. In the post-CLERP Act period, the accuracy of prospectus forecasts and their revisions significantly improved and, as expected, the results are primarily driven by CTE firms. However, the majority of prospectus forecasts continue to be materially inaccurate. Originality/value – The results highlight the need to control for both the changing nature of listed firms and the level of enforcement action when examining responses to regulatory changes to corporate fundraising activities.

Book review : "Carbon Capture and Storage Emerging Legal and Regulatory Issues" edited by Ian Havercroft, Richard Macrory, Richard B Stewart, Oxford, Hart Publishing, 2011

As the international community struggles to find a cost-effective solution to mitigate climate change and reduce greenhouse gas emissions, carbon capture and storage (CCS) has emerged as a project mechanism with the potential to assist in transitioning society towards its low carbon future. Being a politically attractive option, legal regimes to promote and approve CCS have proceeded at an accelerated pace in multiple jurisdictions including the European Union and Australia. This acceleration and emphasis on the swift commercial deployment of CCS projects has left the legal community in the undesirable position of having to advise on the strengths and weaknesses of the key features of these regimes once they have been passed and become operational. This is an area where environmental law principles are tested to their very limit. On the one hand, implementation of this new technology should proceed in a precautionary manner to avoid adverse impacts on the atmosphere, local community and broader environment. On the other hand, excessive regulatory restrictions will stifle innovation and act as a barrier to the swift deployment of CCS projects around the world. Finding the balance between precaution and innovation is no easy feat. This is an area where lawyers, academics, regulators and industry representatives can benefit from the sharing of collective experiences, both positive and negative, across the jurisdictions. This exemplary book appears to have been collated with this philosophy in mind and provides an insightful addition to the global dialogue on establishing effective national and international regimes for the implementation of CCS projects...

The role of law in responding to climate change : emerging regulatory, liability and market approaches

Climate change presents as the archetypal environmental problem with short-term economic self-interest operating to the detriment of the long-term sustainability of our society. The scientific reports of the Intergovernmental Panel on Climate Change strongly assert that the stabilisation of emissions in the atmosphere, to avoid the adverse impacts of climate change, requires significant and rapid reductions in ‘business as usual’ global greenhouse gas emissions. The sheer magnitude of emissions reductions required, within this urgent timeframe, will necessitate an unprecedented level of international, multi-national and intra-national cooperation and will challenge conventional approaches to the creation and implementation of international and domestic legal regimes. To meet this challenge, existing international, national and local legal systems must harmoniously implement a strong international climate change regime through a portfolio of traditional and innovative legal mechanisms that swiftly transform current behavioural practices in emitting greenhouse gases. These include the imposition of strict duties to reduce emissions through the establishment of strong command and control regulation (the regulatory approach); mechanisms for the creation and distribution of liabilities for greenhouse gas emissions and climaterelated harm (the liability approach) and the use of innovative regulatory tools in the form of the carbon trading scheme (the market approach). The legal relations between these various regulatory, liability and market approaches must be managed to achieve a consistent, compatible and optimally effective legal regime to respond to the threat of climate change. The purpose of this thesis is to analyse and evaluate the emerging legal rules and frameworks, both international and Australian, required for the effective regulation of greenhouse gas emissions to address climate change in the context of the urgent and deep emissions reductions required to minimise the adverse impacts of climate change. In doing so, this thesis will examine critically the existing and potential role of law in effectively responding to climate change and will provide recommendations on the necessary reforms to achieve a more effective legal response to this global phenomenon in the future.

Embracing Sharia-Compliant products through regulatory amendment to achieve parity of treatment

This article recognises the potential importance of Islamic finance products in Australia, along with the current regulatory impediments preventing Australia from becoming a leader in the Asia-Pacific Islamic finance market. Taking into account the potential importance of, and impediments to, Islamic finance, this article highlights, through the historical development and contemporary state of Islamic finance, its economic, social and political benefits to Australia. Once a case for embracing Islamic finance is made, the main current regulatory impediments to Australia becoming a key player in the Islamic finance market within the Asia-Pacific region are highlighted. This article then argues that, rather than requiring any separate regulatory regime, the current regulatory impediments may be overcome through amendments to existing laws to ensure parity of treatment in Australia between the Islamic finance market and the conventional finance market. The Australian income tax regime is utilised as a case study demonstrate how parity of treatment could be achieved via amendment by taking two frequent and separate Islamic finance transactions. This article concludes that the economic, social and political benefits potentially warrant Australia embracing Islamic finance and that, with the right regulatory measures, Australia could lay the foundation to become a leader in the Asia-Pacific Islamic finance market.

Health Workforce Governance: Improved Access, Good Regulatory Practice, Safer Patients

With increasing recognition of the international market in health professionals and the impact of globalism on regulation, the governance of the health workforce is moving towards greater public engagement and increased transparency. This book discusses the challenges posed by these processes, such as improved access to health services and how structures can be reformed so that good practice is upheld and quality of service and patient safety are ensured.

Subcellular localization of proteasomes and their regulatory complexes in mammalian cells

Proteasomes can exist in several different molecular forms in mammalian cells. The core 20S proteasome, containing the proteolytic sites, binds regulatory complexes at the ends of its cylindrical structure. Together with two 19S ATPase regulatory complexes it forms the 26S proteasome, which is involved in ubiquitin-dependent proteolysis. The 20S proteasome can also bind 11S regulatory complexes (REG, PA28) which play a role in antigen processing, as do the three variable c-interferoninducible catalytic b-subunits (e.g. LMP7). In the present study, we have investigated the subcellular distribution of the different forms of proteasomes using subunit speci®c antibodies. Both 20S proteasomes and their 19S regulatory complexes are found in nuclear, cytosolic and microsomal preparations isolated from rat liver. LMP7 was enriched approximately two-fold compared with core a-type proteasome subunits in the microsomal preparations. 20S proteasomes were more abundant than 26S proteasomes, both in liver and cultured cell lines. Interestingly, some signi®cant differences were observed in the distribution of different subunits of the 19S regulatory complexes. S12, and to a lesser extent p45, were found to be relatively enriched in nuclear fractions from rat liver, and immuno¯uorescent labelling of cultured cells with anti-p45 antibodies showed stronger labelling in the nucleus than in the cytoplasm. The REG was found to be localized predominantly in the cytoplasm. Three- to six-fold increases in the level of REG were observed following cinterferon treatment of cultured cells but c-interferon had no obvious effect on its subcellular distribution. These results demonstrate that different regulatory complexes and subpopulations of proteasomes have different distributions within mammalian cells and, therefore, that the distribution is more complex than has been reported for yeast proteasomes.

Regulatory infrastructure for nonprofit organisations

The Australian economy has been transformed by bold federal government initiatives over the last decade. The political rhetoric is that without these reforms, the Australian economy will falter and be uncompetitive in a global market place. Despite the electoral disquiet that rapid systemic change brings, both sides of politics have adopted the broad starting point that it is imperative that our economy be transformed or Australian living standards will dramatically plummet...

Globalization, media policy and regulatory design : rethinking the Australian media classification scheme

This paper considers the debate about the relationship between globalization and media policy from the perspective provided by a current review of the Australian media classification scheme. Drawing upon the author’s recent experience in being ‘inside’ the policy process, as Lead Commissioner on the Australian National Classification Scheme Review, it is argued that theories of globalization – including theories of neoliberal globalization – fail to adequately capture the complexities of the reform process, particularly around the relationship between regulation and markets. The paper considers the pressure points for media content policies arising from media globalization, and the wider questions surrounding media content policies in an age of media convergence.

Regulatory responses to auditor independence dilemmas – who takes the stronger line?

A key part of corporate governance reforms in Australia, as represented by CLERP 9, addresses concerns over the audit function and the role of independent auditors in monitoring managers and providing useful information to stakeholders about the financial position of the company. In comparing the regulatory responses to auditor independence dilemmas, there have been claims that CLERP 9 is less ‘stringent’ than the reforms imposed by the Sarbanes Oxley Act in the US. This paper looks at three particular situations that have been the subject of recent reform to strengthen independence: the mandatory rotation of auditors, recruitment of former auditors as board members, and provision of non-audit services to clients. In each case, we compare the similarities and differences of the regulatory response between Australia and US, to distil the efficacy of the CLERP 9 approach.

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.

The relationship between cognitive ability, insight and self-regulatory behaviors: Findings from the older driver population

Self-regulation is often promoted as a coping strategy that may allow older drivers to drive safely for longer. Self-regulation depends upon drivers making an accurate assessment of their own ability and having a willingness to practice self-regulatory behaviors to compensate for changes in ability. The current study explored the relationship between older drivers’ cognitive ability, their driving confidence and their use of self-regulation. An additional study aim was to explore the relationship between these factors and older drivers’ interest in driving programs. Seventy Australian drivers aged 65 years and over completed a questionnaire about their driving and a brief screening measure of cognitive ability (an untimed Clock Drawing Test). While all participants reported high levels of confidence regarding their driving ability, and agreed that they would continue driving in the foreseeable future, a notable proportion performed poorly on the Clock Drawing Test. Compared to older drivers who successfully completed the Clock Drawing Test, those who failed the cognitive test were significantly less likely to report driving self-regulation, and showed significantly less interest in being involved in driving programs. Older drivers with declining cognitive abilities may not be self-regulating their driving. This group also appears to be unlikely to self-refer to driving programs.