Board behaviour and the global financial crisis : time for a holistic approach to governance

The heightened focus on corporate governance in the aftermath of the financial crisis and in particular the failure of boards to protect their corporations indicates the timeliness of this paper. Although corporate governance has been traditionally linked to control and compliance, the complexities of the 21st Century have focused attention on the need for more holistic approaches. This paper picks up these developments and using interpretive research, analyses thirteen in-depth interviews conducted with board members and senior management, before and after the crisis. The longitudinal data provides valuable insight into the role of boards, their behaviour, culture and decision-making structures.

Globalising water accounting : lessons from the globalisation of financial reporting

Water management is a matter of global concern. To underpin sound management of water scarcity and quality issues requires high quality, consistent, understandable and credible information. In a world first, accounting and water industry experts in Australia have developed a system of water accounting as an accounting sub-discipline, analogous to financial accounting to guide national and intra-national decision-making. With a conceptual framework and a Preliminary Australian Water Accounting Standard in place, Australia’s approach is being evaluated internationally within the water and mining industries. Its fate as a discipline will depend upon regulatory politics as well as the intellectual and practical rigour of the system and the rate of its adoption. In this paper, we explore the application to water accounting of regulatory theories that have been valuable to gaining an understanding of financial accounting standards development. We predict the international path of the water accounting a sub-discipline of accounting, as an outcome of political forces.

Post global financial crisis international business strategies

International business strategies are affected by economic conditions, although the resource-based view would suggest that company resources are a more significant factor. This paper identifies differences in the international strategy behaviours of companies located in countries which, as a result of the GFC, entered either a deep recession, a shallow recession or no recession at all. Empirical evidence is provided for companies with home country markets with each of these conditions. The ability of international strategy theories to explain these behaviours is considered. Based on observations of international businesses with home country markets in each of these categories, it is suggested that determinants of international strategy during financial crises (and immediately after) are influenced by the strength of the home country market, foreign market government protectionist behaviour, international exchange rate variations and local levels of rivalry.

Theory and accountability : the case of government consolidated financial reporting

The objective in this study is to examine the existing literature regarding the antecedents to public sector accountability performance by including a new variable: preparer-commanders’ beliefs about the usefulness of whole-of-government consolidated financial reporting. Goldberg’s (1965) Commander Theory was used as a relevant theoretical framework. Survey results provided insights into the beliefs of preparer-commanders as to the usefulness of whole-of-government consolidated financial reports for the discharge of accountability. While there appears to be a view that such reports may be useful for decision-making purposes, there is relatively less evidence to suggest that this type of information is suitable for the purposes of government resource allocation decisions.

Market liquidity risk factor and financial market anomalies : evidence from the Chinese stock market

The Chinese stock market is an order-driven market and hence its characteristics are structurally different from quote-driven markets. There are no studies that consider the role of the market liquidity risk factor in determining cross-sectional stock returns in a model including financial market anomalies for order-driven markets. Our aim is to test whether financial market anomalies such as firm size, the book-to-market ratio, the turnover rate, and momentum both with and without the inclusion of the market liquidity risk factor in the case of the Chinese stock market can explain cross-sectional stock returns. The empirical framework is based on the model proposed by Avramov and Chordia (AC, 2006). Our main finding is that the AC model can capture financial market anomalies except momentum when we include the market liquidity risk factor on the Chinese stock market.

Thai hedging practices : post Asian financial crisis

This paper provides survey evidence captured from a sample of 113 respondents to a 2008 questionnaire that was sent to 344 listed non-financial companies in Thailand. The study examines how Thai companies manage their exchange rate exposure post Asian Financial Crisis.

Thailand is an interesting case study because it was a country at the core of the 1997 financial meltdown and was one of the first forced by the crisis to move from a fixed to a floating exchange rate regime. It is therefore constructive to examine how businesses in Thailand have coped with a shift from a fixed to floating exchange rate and to examine how they manage their exchange rate exposure post 1997.

Findings indicate that companies that use currency derivatives do so to reduce volatile cash flows are less risky and tend to be more profitable than companies that do not use currency derivatives. This is consistent with the theory that hedging increases the value of the firm.

The type of instruments that companies in Thailand use and how they are used is similar to what other studies find in other countries. Matching and the use of forward contracts are the most common ways that companies manage transaction exposure. The study also confirms that companies with higher levels of international business engagement are more likely to use currency derivatives.

What is unique in Thailand is that Thai businesses are less rigorous in their internal control of their currency hedging activities. It is therefore recommended that companies consider a documented hedging policy and that senior management actively monitor the policy and currency hedging activity.

Extractive industry financial accounting : where to from here?

By far the most important, difficult and complex policy issue to resolve in the context of the extractive industry concerns the accounting for preproduction costs and mineral reserves, and the disclosure of relevant supplementary data about them. The accounting profession has been unable to settle this particular issue, except in the most contrived of senses. Indeed, many consider the issue to be unresolvable. This paper focuses on the primary financial statements and proposes a partial solution to the issue. The Proposed Method describes a set of new procedures and primary financial statements that are intended to be more serviceable and possess greater predictive power than is currently the case.

Post Asian financial crisis : a survey of Thai hedging practices

This thesis examines how companies in Thailand coped with exchange rate volatility post Asian Financial Crisis. Findings indicate businesses quickly adjusted to the transition from a fixed to floating regime. However, Thai businesses appear to be less rigorous in their internal control of currency hedging activities. The thesis recommends strategies to overcome this risk.

An investigation on asset allocation and performance measurement for unit trust funds in Malaysia using multifactor model : a post crisis period analysis

This study examines the pattern of asset allocation and the performance of unit trust in Malaysia over the post crisis period by using risk-adjusted performance measures and multi-factor model from the year 2000 to 2004. Evidence from the statistics suggests that an active asset allocation strategy had been observed among Malaysian fund managers during the post Asian financial crisis. It is also suggested that investment allocation in equity remained a dominant vehicle for investment and asset allocation. Findings from multifactor model suggest that all funds of different objectives registered positive alphas except for income funds, with growth funds being among the top. While balanced funds registered highest diversification effectively, diversifying away about 70%-80% of unsystematic risk, the momentum factor is not among the important elements to explain unit trust performance in Malaysia.

A brief review of recent research trends on applications of computational and statistical techniques in financial and business intelligence

Artificial neural networks and statistical techniques like decision trees, discriminant analysis, logistic regression and survival analysis play a crucial role in Business Intelligence. These predictive analytical tools exploit patterns found in historical data to make predictions about future events. In this paper we have shown some recent developments of a few of these techniques in financial and business intelligence applications like fraud detection, bankruptcy prediction and credit rating scoring.