The Impact of Voluntary Disclosures on Sell-Side Analyst Stock Recommendations: Australian Experience

This paper investigates the impact of voluntary disclosures on sell-side analyst stock recommendations. It uses content analysis method to measure quality of information disclosures and emphasis on particular themes. The focus of this study is on changes in analyst recommendations and the new information disclosures that have been made public since the previous revision of recommendation. The proxies for voluntary disclosures are information released by firms via company announcements and associated media reports. The characteristics of these disclosures are examined to explore their impact on the changes in analystsÌ stock recommendations. Based on a sample of over 200 recommendation revisions of 40 listed Australian companies, the results suggest that voluntary disclosures do contribute to analyst stock revisions. The findings reveal that the quantity of disclosures is positively associated with the number of recommendation revisions, and that disclosures with favourable signals or with price-sensitive contents are significantly related to the direction and type of analyst revisions. In addition, disclosure of specific themes (e.g., dividend and product) in company announcements and news are significantly associated with the recommendation change. This has implications for both the formulation of accounting policies and the regulation of financial disclosure. Acknowledgements: The authors acknowledge the support of Thomson Financial in the conduct of this research through their provision of data from the Institutional Brokers Estimate System (I/B/E/S) service. This data has been provided as part of a broad academic program to encourage earnings expectation research. The authors acknowledge the helpful comments from participants at the BAA Annual Conference (2004), University of York.Thai takeovers, bidding firms, control portfolios, bootstrapped t-tests

The capability and competency requirements of auditors in today's complex global business environment.

In 2013 ICAS and the UK Financial Reporting Council (FRC) commissioned two international teams of researchers to undertake studies to investigate what mix of attributes, competencies, professional skills and qualities need to be combined in an audit team in order for it to perform a high quality public interest audit in a modern and complex global business environment. This report is one of the two independent research reports published as a result of this call for research. This report explores the views of key audit stakeholders in Australia, South Africa and the UK. The researchers conducted interviews with individuals who are directly involved in the audit process (engagement partners, chairs of audit committees, chief financial officers, chief audit executives (internal audit) and experts) in six of the largest listed companies in Australia, South Africa and the UK. Individuals who have some oversight, public policy or educative role with regard to audit, in each of the three countries, were also interviewed, giving a total of 84 interviews

How do auditors navigate conflicting logics in everyday practice?

Historically professional logic has shaped accountancy, increasingly it has been shaped also by commercial logic. This study moves beyond these distinctions for a better and more nuanced analyses of how actors (Big 4 auditors) navigate conflicting logics in their everyday practice. The study follows a qualitative approach and is based on views of multiple role players in the audit process of complex companies in Australia, South Africa and the United Kingdom. The study examines auditors’ decision-making involving experts, rotating partners/firms and meeting regulatory inspection requirements. The study adds to the emerging debate around logic multiplicity at the institutional ‘coalface’ by showing that auditors use balancing mechanisms (segmenting, assimilating, bridging and demarcating) to navigate and make sense of coexisting (professional, commercial and accountability) logics. Views of non-auditor role players, mostly overlooked in by institutional research at micro-levels, challenge the institutionalisation of connected logics and question the influence on audit quality

Achievement matters: external peer review of accounting learning standards

This report documents the findings and outcomes of a national study focused on external peer review of accounting learning standards that enhances and assures quality course learning outcomes and develops a model that is transferable to other disciplines

Enhancing assessment feedback practices in accounting education : issues, obstacles and reforms

[Extract] Good practice in assessment feedback is a process in which students are actively involved and where teacher/peer dialogue is encouraged (Juwah, Macfarlane & Nicol, 2004). Clear, constructive feedback reduces the gap between present and desired performance and is considered to be a jointly owned system that is reflexive, flexible and dynamic. Results of Course Experience Questionnaires show that Australian university accounting students are generally very dissatisfied with the feedback they receive in their courses. The findings of the present study reveal that many accounting students feel that they receive poor quality feedback on their assessment, as evidenced by the most typical form of feedback being only the mark. Moreover, this feedback is often provided too late to be useful to them. A lack of adequate feedback leads to students feeling disempowered. They consider feedback to sometimes be de-motivating and intimidating. These findings point to something of a crisis in feedback quality in the discipline that needs urgent attention

Who should teach what? Perceptions of the roles of universities and practice in the education of professional accountants

Universities have traditionally been criticised for not producing 'work ready' accountants and the role and responsibilities of universities in educating professional accountants continues to be debated. This paper reviews the literature in accounting and other professions regarding the respective roles of universities and employers in the development of both technical and non-technical skills of accounting practitioners. The literature review suggests that critics of university based education fail to recognise (a) the changes that have occurred in the roles and responsibilities of accounting practitioners and (b) the opportunity costs necessarily associated with providing generalist accounting degrees. The literature also suggests that universities and employers have comparative advantages for the development of different types of professional skills and knowledge. The paper reports the insights provided from a series of interviews with accounting practitioners and students about their perceptions of the respective responsibilities and roles of universities and employers. In general, although some interviewees recognised that universities cannot be 'all things to all people', there was a tendency to expect universities to have the major responsibility for the development in accounting graduates of both technical and non-technical knowledge and skills. Such perceptions tended to understate the responsibilities and comparative advantage of employers and result in unrealistic expectations about the outcomes of a university education. Employers need to be made more aware of the resource and other limitations associated with university programs and more attention should be provided to developing meaningful opportunities for learning and reflection within work place contexts

Academic standards and challenges for accounting educators

A recent paper on Transforming Australia's Higher Education System identifies a number of significant reforms for the sector including the establishment of a Tertiary Education Quality and Standards Agency (TEQSA). The paper also foreshadows the development of competency based standards for universities for all degree awards in Australia. TEQSA will then be responsible for checking compliance with such standards in a similar fashion to the Association to Advance Collegiate Schools of Business (AACSB) accreditation panel. An article in The Australian Financial Review reported that accounting will be the first discipline to set minimum standards as required by the new Australian Qualifications Framework regime as 'Standards set for accounting' Accounting was chosen because we have a very strong level of engagement with both the profession and industry in relaion to the discipline

Accounting for the future: more than numbers: a collaborative investigation into the changing skill set for professional accounting graduates over the next ten years and strategies for embedding such skills into professional accounting programs: Vols.1 and 2

This project is a collaborative investigation into the changing skill set deemed necessary for professional accounting graduates over the next ten years and the strategies for embedding such skills into professional accounting programs. The goals for the 12- month project were to: 1. Identify whether there is a consensus as to the relative importance of key technical and non-technical skills for graduates of professional accounting programs to meet the challenges of the profession over the next ten years. 2. Identify the range of non-technical skills required of professional accountants over the next ten years. 3. Identify examples of best practice for the embedding of relevant non-technical skills in professional accounting programs. 4. Widely disseminate findings to accounting academics for use in accounting programs in the higher education sector and to other stakeholders, with presentations at seminars in each mainland state and at AFAANZ conferences. In the first stage of the project, data were collected from interviews with these key stakeholders: employers of accounting graduates, including all Big 4, some mid-tier /niche and small accounting firms; the three professional accounting bodies; large and small companies; and the public sector across Australia. The project team also interviewed recent graduates and conducted focus group sessions with current accounting students. Interviews were transcribed and analysed, with the identity of individual participants concealed. Common themes that emerged across the country were: 1. The technical skills required of graduates were essentially basic accounting skills, like debits and credits, although this varied by size of employers. 2. Non-technical skills were deemed to be very important in accounting graduates, particularly by employers in large organisations; communication, teamwork and self-management were regarded as the most desirable. 3. Graduates’ skills deemed by stakeholders to be the most inadequate were communication and problem solving; their deficiency was also seen to be the most restricting to graduates in their career development. Volume 2 documents the strategies collected as part of the Accounting for the future: more than numbers ALTC study. The project team distributed a survey to all 38 public universities seeking information about how non-technical skills were being developed and assessed in all the relevant subjects required for accreditation by the professional accounting bodies. Further, respondents were invited to share with the project team initiatives they had implemented for the developments of these non-technical skills. After consultation with contributors, the strategies described in this volume are described in a common format that illustrates the strategy, non-technical skills addressed, learning and teaching rationale, assessment methods, length of time being used, and any evidence of success plus contact details of the author. However, the format of the presentation has been varied where contributors were not able to supply all details

Finance as social history: understanding the discipline through memory and experience

Chapters in this section of the book provide examples of effective use of qualitative research in the finance context and in this chapter, we combine our experience based on our published social histories of finance. One project investigated the legacy of a seminal finance research paper while indirectly addressing its authors’ careers. The second project more directly investigated the legacy of a particular individual, the first woman professor of finance appointed in Australian or New Zealand universities. We describe the genesis of our respective research questions, and the key moments in the development of our research using qualitative data and analysis. In doing so, we establish the similarities and differences in our social history projects, to provide a basis for reflection on what went well and the challenges we faced. One key similarity is that both projects required data to be collected via interviews with peers as experts, involving the researchers’ and interviewees' experience and memory of the events under investigation. One generalisable key message from our experience is that the researcher needs the confidence and experience to present themselves as an expert in the field to collect and analyse research data obtained from expert participants