Recently completed PhDs
Brief outlines of some recently completed PhD research at the School of Accounting and Commercial Law
The Relationship between Default Risk and Earnings Management
Loan Nguyen's thesis examines the relationship between default risk and earnings management. It documents a non-monotonic pattern between default risk and both real earnings management and total earning management. Initially, there is an increase in real and total earnings management as default risk rises, followed by a subsequent decline with further increases in default risk. Accrual earnings management has a convex relationship with default risk. It shows that the relative use of accrual and real earnings management is complimentary, but the impact of default risk dampens the increase in real earnings management for a given rise in accrual earnings management. It identifies the negative impact of the global financial crisis on earnings management, highlighting the challenges and changes in earnings management strategies in firms during economic crises.
The research contributes significantly to the field of earnings management. First, it provides insights into the non-monotonic relationships between default risk and earnings management. Second, it compares different approaches to identifying earnings management, enhancing our knowledge of the methodologies used. Third, it demonstrates the moderating effect of default risk on the relative use of actual and real earnings management, deepening our understanding of firms’ strategic behaviour.
Loan Nguyen’s supervisors are Professor Tony van Zijl and Associate Professor Thu Phuong Truong.
Accountability for refugee resettlement in New Zealand
With the growing complexity of public management, accountability relationships between different parties in governance networks became problematic because it is challenging to identify who has contributed in what way.
Thuy Tran's study examines the nature of accountability and evaluates the discharge of accountability in the provision of public services in practice, using a case study of refugee resettlement in New Zealand. Her research finds that the tensions between a bureaucratic need for control and a more devolved governance model that allows for the recognition of multiple contributions to both policy formation and implementation are still strong.
The key academic contribution of Thuy's study is in adding an important piece to the nearly “empty land” of horizontal accountability research, providing an understanding of how accountability mechanisms are used in practice, and raising the voices of less powerful stakeholders about the discharge of accountability by social service providers. Regarding its practical contributions, Thuy's study provides a typical case study for research on accountability of non-government organisations (NGOs) in an NPG context, which can be valuable for policymakers wishing to develop policies that lead to an improvement in the appropriate expectations in NPG and accountability relationships between different parties in the delivery of social services. It also provides recommendations for the government, NGOs, and refugee communities for achieving greater accountability.
Thuy's supervisors were Dr Rodney Dormer, Associate Professor Carolyn Fowler, and Professor Rachel Baskerville".
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.
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