Corporate Governance and Disclosures on the Transition to International Financial Reporting Standards

For reporting periods ending on or after 30 June 2004, Australian companies were required to disclose the expected impact of applying Australian equivalents of International Financial Reporting Standards effective from 1 January 2005. The objective of this paper is to examine the association between the level of disclosure and corporate governance quality. Using a sample of listed companies with 30 June balance dates, we find that the quantity of disclosure was positively related to some aspects of superior corporate governance, such as the frequency of board and audit committee meetings and the choice of auditor.

[1]  Jere R. Francis,et al.  The Role of Big 6 Auditors in the Credible Reporting of Accruals , 1999 .

[2]  E. Fama,et al.  Agency Problems and Residual Claims , 1983 .

[3]  Pamela Kent,et al.  Governance structures, ethnicity, and audit fees of Malaysian listed firms , 2006 .

[4]  Gordon D. Richardson,et al.  The Voluntary Inclusion of Forecasts in the MD&A Section of Annual Reports , 1994 .

[5]  Separation of Ownership and Control , 1983, The Journal of Law and Economics.

[6]  H. N. Butler,et al.  Corporate Governance and the Board of Directors: Performance Effects of Changes in Board Composition , 1985 .

[7]  L. Eng,et al.  Corporate governance and voluntary disclosure , 2003 .

[8]  P. Smaglik.  Closing the gap , 2005, Nature.

[9]  J. Forker,et al.  Corporate Governance and Disclosure Quality , 1992 .

[10]  E. Fama,et al.  Separation of Ownership and Control , 1983, The Journal of Law and Economics.

[11]  Jilnaught Wong.  Economic incentives for the voluntary disclosure of current cost financial statements , 1988 .

[12]  Louis Braiotta.  The Audit Committee Handbook , 1994 .

[13]  Gopal V. Krishnan.  Does Big 6 Auditor Industry Expertise Constrain Earnings Management , 2003 .

[14]  Paul R. Milgrom,et al.  Good News and Bad News: Representation Theorems and Applications , 1981 .

[15]  E. Lawler,et al.  Appraising boardroom performance. , 1998, Harvard business review.

[16]  Madonna L. O'Sullivan,et al.  Australian evidence on corporate governance attributes and their association with forward-looking information in the annual report , 2008 .

[17]  Peter M. Clarkson,et al.  Chief Executive Officer Remuneration Disclosure Quality: Corporate Responses to an Evolving Disclosure Environment , 2006 .

[18]  Ronald C. Anderson,et al.  Board Characteristics, Accounting Report Integrity, and the Cost of Debt , 2004 .

[19]  P. Kent,et al.  Internal Governance Structures and Earnings Management , 2005 .

[20]  R. Gray,et al.  Constructing a research database of social and environmental reporting by UK companies , 1995 .

[21]  Michael C. Jensen,et al.  The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems , 1993, A Theory of the Firm.

[22]  D. W. Wright.  Evidence on the Relation Between Corporate Governance Characteristics and the Quality of Financial Reporting , 1996 .

[23]  P. Kent,et al.  Relation between External Audit Fees, Audit Committee Characteristics and Internal Audit , 2006 .

[24]  C. Deegan.  Stakeholder Influence on Corporate Reporting : An Exploration of the Interaction Between the World Wide Fund for Nature and the Australian Minerals Industry by , 2001 .

[25]  M. Darrough,et al.  Financial disclosure policy in an entry game , 1990 .

[26]  Peter M. Clarkson,et al.  Auditor conservatism and voluntary disclosure: Evidence from the Year 2000 systems issue , 2003 .

[27]  C. Deegan,et al.  Stakeholder influence on corporate reporting: An exploration of the interaction between WWF-Australia and the Australian minerals industry , 2006 .

[28]  N. Vafeas.  Board meeting frequency and firm performance , 1999 .

[29]  James Guthrie,et al.  Corporate social disclosure practice: a comparative international analysis , 1990 .

[30]  M. Beasley.  An Empirical Analysis of the Relation between Board of Director Composition and Financial Statement Fraud , 1998 .

[31]  Peter Collett,et al.  International Harmonization: Cautions from the Australian Experience , 2001 .

[32]  Arnold M. Wright,et al.  Corporate Governance and the Audit Process , 2002 .

[33]  Jere R. Francis,et al.  Professional Service Fees and Auditor Objectivity , 2004 .

[34]  Federica Ricceri,et al.  Italian annual intellectual capital disclosure: An empirical analysis , 2003 .

[35]  J. Guthrie,et al.  An Empirical Investigation of Annual Reporting Trends of Intellectual Capital in Sri Lanka , 2005 .

[36]  Jay W. Lorsch,et al.  A Modest Proposal for Improved Corporate Governance , 1992 .

[37]  Peter M. Clarkson,et al.  Evidence That Management Discussion and Analysis (MD&A) is a Part of a Firm's Overall Disclosure Package* , 1999 .

[38]  M. Zmijewski,et al.  Some economic determinants of accounting policy choice , 1979 .

[39]  Gary F. Peters,et al.  Audit Committee Characteristics and Restatements , 2004 .

[40]  David B. Farber,et al.  Restoring Trust after Fraud: Does Corporate Governance Matter? , 2004 .

[41]  N. Vafeas,et al.  The Association between Corporate Boards, Audit Committees, and Management Earnings Forecasts: An Empirical Analysis , 2005 .

[42]  Sanford J. Grossman.  The Informational Role of Warranties and Private Disclosure about Product Quality , 1981, The Journal of Law and Economics.

[43]  Steven E. Salterio,et al.  The Effects of Corporate Governance Experience and Financial‐Reporting and Audit Knowledge on Audit Committee Members' Judgments , 2001 .

[44]  R. Heaney,et al.  Corporate Governance and the Prediction of the Impact of AIFRS Adoption , 2009 .

[45]  S. Brownie.  From the Chief Executive Officer , 2009, Australasian psychiatry : bulletin of Royal Australian and New Zealand College of Psychiatrists.

[46]  M. Hudaib,et al.  Corporate Governance Structure and Performance of Malaysian Listed Companies , 2005 .

[47]  M. Milne,et al.  Some determinants of social and environmental disclosures in New Zealand companies , 1996 .

[48]  J. Stewart,et al.  The Transparency of Derivative Disclosures by Australian Firms in the Extractive Industries , 2006 .

[49]  Sidney Leung,et al.  Director Ownership and Voluntary Segment Disclosure: Hong Kong Evidence , 2004 .

[50]  Ronald A. Dye,et al.  Proprietary and Nonproprietary Disclosures , 1986 .

[51]  Peter J. DaDalt,et al.  Earnings Management and Corporate Governance: The Roles of the Board and the Audit Committee , 2001 .

[52]  Patricia M. Dechow,et al.  Causes and Consequences of Earnings Manipulation: An Analysis of Firms Subject to Enforcement Actions by the SEC* , 1996 .

[53]  Kannan Raghunandan,et al.  Enhancing Audit Committee Effectiveness , 1996 .

[54]  Patricia M. Dechow,et al.  DETECTING EARNINGS MANAGEMENT , 1994 .

[55]  J. Jiambalvo.  Discussion of “Causes and Consequences of Earnings Manipulation: An Analysis of Firms Subject to Enforcement Actions by the SEC”* , 1996 .

[56]  J. Krishnan,et al.  Auditor Litigation Risk and Corporate Disclosure of Quarterly Review Report , 2005 .

[57]  Jere R. Francis,et al.  Accounting Accruals and Auditor Reporting Conservatism , 1999 .

[58]  Sanjeev Bhojraj,et al.  The Association between Outside Directors, Institutional Investors and the Properties of Management Earnings Forecasts , 2004 .

[59]  Dasaratha V. Rama,et al.  Recent Changes in the Association between Bankruptcies and Prior Audit Opinions , 2005 .

[60]  Joseph V. Carcello,et al.  Audit Committee Composition and Auditor Reporting , 2000 .

[61]  Paul A. Fadil,et al.  Top Management Team Tenure and Corporate Illegal Activity: The Moderating Influence of Board Size , 2005 .

[62]  C. Deegan,et al.  Australian Financial Accounting , 2000 .

[63]  R. Gray,et al.  Accounting and accountability : changes and challenges in corporate social and environmental reporting , 2003 .

[64]  Jerold L. Zimmerman,et al.  Voluntary Corporate Disclosure: The Case of Interim Reporting , 1981 .

[65]  D. Owen.  Accounting and Accountability , 1995 .

[66]  Ross L. Watts,et al.  Positive Accounting Theory , 2006 .

[67]  O. Moses.  INCOME SMOOTHING AND INCENTIVES: EMPIRICAL TESTS USING ACCOUNTING CHANGES , 1987 .

[68]  M. Firth,et al.  Auditor Conservatism, Asymmetric Monitoring, and Earnings Management* , 2003 .

[69]  A. Felo.  Improving the Effectiveness of Corporate Audit Committees , 2000 .

[70]  Bikki Jaggi,et al.  Association between independent non-executive directors, family control and financial disclosures in Hong Kong , 2000 .

[71]  Wendy Beekes,et al.  Do Better-Governed Australian Firms Make More Informative Disclosures? , 2006 .

[72]  I. Millstein.  Introduction to the Report and Recommendations of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees , 1999 .

[73]  K. Menon,et al.  The use of audit committees for monitoring , 1994 .

[74]  Peter M. Clarkson,et al.  Market Reaction to Takeover Rumour in Internet Discussion Sites , 2006 .

[75]  Ron Kasznik.  On the Association between Voluntary Disclosure and Earnings Management , 1996 .

[76]  A. Arbor.  Evidence on the relation between corporate governance characteristics and the quality of financial reporting , 1996 .

[77]  Stephen L Taylor,et al.  The Effect of Compensation Design and Corporate Governance on the Transparency of CEO Compensation Disclosures , 2001 .

[78]  Russell J. Lundholm,et al.  CROSS- SECTIONAL DETERMINANTS OF ANALYST RATINGS OF CORPORATE DISCLOSURES , 1993 .