Recently completed PhDs
Brief outlines of some recently completed PhD research at the School of Accounting and Commercial Law
Capital Market Effects of Adoption of IFRS
Adoption of International Financial Reporting Standards (IFRS) is one of the most important changes to financial reporting in capital markets and one of the few research areas in accounting with direct policy implications. Solomon Opare’s research examines the impact of adoption of IFRS on aspects of the operation of capital markets. Firstly, he uses meta-analysis to examine the impact on financial statement comparability, market liquidity, and cost of capital and finds increased comparability, liquidity, and reduced cost of capital. However, the strength of the results differ across a number of dimensions. Secondly, he examines the impact on seasoned equity offering (SEO) underperformance and finds a reduction in underperformance but only for firms in countries with strong enforcement and credible implementation of standards.
His findings imply that investors should consider investing in firms with increased disclosure and encourage firms to issue SEOs in countries that enforce and implement accounting standards credibly.
Solomon’s supervisors were Professor Tony van Zijl and Associate Professor Noor Houqe. Solomon was also a Victoria PhD Scholarship and R W Steele Scholarship holder.
Effectiveness of the Extractive Industries Transparency Initiative
Natural resources contribute significantly to the revenue of resource-rich countries across the globe. Paradoxically, prevalent corruption in the management of natural resources revenue has hugely impeded its benefits to people living in countries endowed with an abundance of these resources but do not have good governance. Olayinka (Yinka) Moses’ research examined how implementation experience of the Extractive Industries Transparency Initiative (EITI) Standards reduces the perceived level of corruption in poor but resource-rich countries, and the economic value of EITI information disclosed under the EITI implementation regime.
Yinka’s study shows that the EITI has been relatively effective in lessening the level of perceived corruption in implementing countries in dire need of reform, particularly Sub-Saharan African countries. More importantly, his study illustrates that non-tax extractive companies financial information released under the EITI implementation regime has economic value both at initial release and subsequent continued release. Yinka’s research provides insight into the implication of the release of corporate information unilaterally by a government agency to third parties in the market, and thus, enriches the aspect of disclosure literature that is sparse on unilateral financial information release. The policy implication of his study infers that government disclosure of information can usefully add to the level of information resulting from voluntary disclosure.
Yinka's supervisors were Professor Tony van Zijl and Dr Noor Houqe. Yinka also won the prize for the best paper in his category at the 2018 African Accounting and Finance Association conference.
Stochastic Continuous-Time Cash Flows - A linear-quadratic model
Cash is often considered the lifeblood of a business, hence the want to predict and manage cash flows by employing models. Stochastic, continuous-time cash flow models are the objective of the study. Those models are considered the most advanced since they observe cash flows on an infinitely divisible timeline and incorporate uncertainty (randomness). This comes, however, at a price of considerable mathematical challenges. For instance, the analytical tools used, include stochastic differential equations.
John van der Burg's review shows that the following five specifications are commonly found in the literature: (i) a geometric Brownian motion, (ii) an arithmetic Brownian motion, (iii) a Vasicek process, (iv) a Cox, Ingersoll and Ross process, and (v) a Modified Square Root process. Each of these processes have, to a varying degree, shortcomings to model cash flows. Therefore, the question is posed if a model can be developed that a. addresses these issues, b. is sufficiently generic to include all prior five models as particular cases, and c. is compatible with empirical evidence.
This model is called the linear-quadratic model and forms the focal point of the dissertation. The corresponding stochastic differential equation consists of a linear drift function and a general quadratic diffusion function. It is shown how the linear-quadratic model can be developed from a number of well-known financial and economic premises. A major part of the study is devoted to examining and discussing solutions to the linear-quadratic model. In one of the final chapters, the results of parameter estimates, based on cash flow data from 5,202 listed North-American firms, are reported. To facilitate the analyses, a novel Approximated Likelihood Estimator was developed. Contingent on different parameter values, cash flow processes are categorised.
John' supervisors were Professors Mark Tippett and Tony van zijl.
An Empirical Study on Multiple Corporate Directorships in New Zealand: A New Interpretation of Selected Governance Theories
The recent debate surrounding the reasons for appointing multiple (busy) directors on the board as well as the diverse conclusions of prior studies on Multiple Directorships (MDS) draw attention to the fact that theoretically-informed possibilities of MDS are yet to be explored, especially in a setting where the higher incidence of MDS has been driven by a unique institutional environment. New Zealand is one example of such a setting.
Dr Asma Jahan’s study examines whether there are distinctions between MDS by categorising them into two groups: Prestigious MDS and Non-prestigious MDS. Having determined the better value of prestigious MDS, her thesis explores ‘why’ differences may exist between the two categories of MDS in terms of three corporate governance theories, namely, Resource Dependence, Agency and Managerial Hegemony. Her study contributes to the literature on multiple directorships by providing new evidence that prestigious MDS are value enhancing relative to non-prestigious in terms of facilitating access to critical resources and minimizing agency conflicts as well as CEO influence on board oversight. The findings have potential policy implications, especially in an export-oriented economy with geographic isolation and small scale of population, such as New Zealand.
Asma’s supervisors were Associate Professor Martien Lubberink and Professor Karen Van Peursem. Asma was also a Victoria PhD Scholarship holder.
An Evaluation of Market Responses to Corporate Disclosures in a Continuous Disclosure Environment
Researchers have been trying to better understand how capital markets respond to corporate disclosures. The Australian Continuous Disclosure Regime (CDR) provides an attractive environment to explore market consequences of disclosures, because listed companies have to disclose to the market as soon as they become aware of the information.
Dr Hanqiao Li’s study explored the extent to which the Australian stock market is sensitive to announcements, and the relationship between the frequency of announcements and the timeliness of price discovery. Specifically, her research examined whether the share price/trading volume is sensitive to certain types of announcements immediately after their release, and whether the increased frequency of announcements can accelerate the process by which share prices adjust to the firm value over the long-term. Her research found that the market reacts more to unexpected announcements (e.g. ASX Query, Progress Reports) than to expected announcements (e.g. Periodic Reports), but a higher volume of announcements slows down the long-term price discovery process. Her study provides a new prospective looking at the Australian Continuous Disclosure Regime, and reinforces the understanding of the short- and the long- term market effects of corporate disclosures.
Hanqiao’s supervisors were Dr Thu Phuong Truong and Ms Trish Keeper.
Assessing the Potential for Agonistic Engagement Among Accountants: A quasi-experimental repeated Q study of social and environmental reporting
A number of writers have recently criticised a perceived narrowness in accountants’ understanding of their profession. In particular, they claim that the predominant focus on shareholders and capital markets may be at the expense of wider public interests that accounting should serve. As accountants engage increasingly with a variety of complex and politically contentious issues, there is cause for concern regarding their capacity to represent and engage with non-financial interests. In this regard, Dr Matt Sorola's research sought to provide an empirical exploration of the potential for ‘broadening out and opening up’ accountants’ understandings.
To accomplish this, his research first aimed to explore accountants’ perspectives of a particularly complex and politically contentious issue: social and environmental reporting (SER). As in other areas of policy controversy, the capacity to engage with a plurality of perspectives is important because of its impact on, inter alia, the issues that are recognised, how problems are conceived and responded to, and which or whose perspectives are prioritised. Recognising the agonistic nature underpinning engagement with a plurality of perspective, his research then aimed to assess the impact of exposing accountants to divergent perspectives of SER within a space for agonistically pluralist discursive engagement: the SER Dialogue.
Broadly speaking, his research found that participation in the SER Dialogue led many participants to reframe their understandings into alignment with a more critical approach to understanding SER. Furthermore, many participants demonstrated the development of critically pluralist and reflexive understandings. These findings illustrated the potential for agonistic pluralist engagement to develop accountants’ capacity for pluralist engagement with perspectives surrounding complex and politically contentious issues, while also enabling resistance to the hegemony of BC perspectives within the field of accounting.
Matt's supervisors were Professor Judy Brown and Adjunct Professor Jesse Dillard.
The Impact of Intellectual Capital on Firm Performance Among R & D Engaging Firms
Intellectual capital is an important resource for business firms, despite the difficulty of measuring and managing it. Arifatul Husna Mohd Ariff (Arifatul)’s study examined the impact of intellectual capital on business performance and investigated the role research and development activity has on enhancing this impact. Arifatul’s findings provide evidence that both intellectual capital and research and development activity increase business performance. The findings should to help business stakeholders to understand the relationship between intellectual capital and research and development.
Arifatul’s supervisors were Professor Tony van Zijl and Dr Ainul Islam
Credit Markets, Microfinance Organisations, and Joint-liability Lending
Dr Hien Thi Thu Hoang reviewed theories about credit rationing, which examined the reasons of the failure of the credit market. She showed why commercial banks did not favour lending to poor people. The credit market for the poor nowadays is served by microfinance organisations. Therefore, her study used a case study about the historical development of microfinance organisations of a less developed country to examine how microfinance institutions have evolved over time. From this, her research developed a taxonomy of microfinance organisations based on their main characteristics. This showed that microfinance organisations were heterogeneous in terms of their sources of funding, legal status, and lending characteristics. Microfinance organisations have used joint liability lending or group lending to mitigate the asymmetric information problem. Group lending, where individuals borrow money from a microfinance organisation under a form of joint responsibility, exploits the information that borrowers have about each other, as well as the ability of borrowers to monitor, and to enforce repayment on each other, to help the lender to tackle the information problem.
Based on, and extending three theoretical models about joint liability lending, her study developed hypotheses on how joint liability lending can help microfinance organisations to mitigate the asymmetric information problem to achieve better repayment rates. It then tested the theories using a large dataset. Her research showed that joint liability lending should not be used in every circumstance, and not all microfinance institutions should apply this lending method. Nevertheless, under certain conditions, joint-liability lending is shown to increase repayment rates.
Hien's supervisors were Professor John Creedy and Associate Professor Martien Lubberink.