Issues arising with the implementation of AASB 139 financial instruments: recognition and measurement by Australian firms in the gold industry

This paper investigates the impact of AASB139: Financial Instruments, Recognition and Measurement on the financial reporting of Australian firms in the gold industry. At issue is whether firms are able to comply with the exacting requirements contained in AASB 139 for hedge accounting and how this impacts firms financial reports. Evidence is provided of hedging activities being restricted to larger firms, and for these firms only the larger firms were able to comply with the requirements of AASB 139 to account for these firms as cash flow hedges. Furthermore there is evidence that the income numbers for firms unable to account for their hedging activities as cash flow hedges having less relevance

Issues arising with the implementation of AASB 139 financial instruments: recognition and measurement by Australian firms in the gold industry

This paper investigates the impact of AASB139: Financial Instruments, Recognition and Measurement on the financial reporting of Australian firms in the gold industry. At issue is whether firms are able to comply with the exacting requirements contained in AASB 139 for hedge accounting and how this impacts firms financial reports. Evidence is provided of hedging activities being restricted to larger firms, and for these firms only the larger firms were able to comply with the requirements of AASB 139 to account for these firms as cash flow hedges. Furthermore there is evidence that the income numbers for firms unable to account for their hedging activities as cash flow hedges having less relevance

Determinants of board composition in Australia and the impact of corporate governance regulation

This study investigates the relation between firm characteristics and board composition in Australia for a sample of the same 432 listed firms in 2001 and 2007 and the impact of the Principles of Good Corporate Governance and Best Practice issued by the Australian Stock Exchange in 2003. Two feature of this regulation were (a) it recommended independent boards for all firms, without regard to firm characteristics (an approach commonly described as `one size fits all) and (b) it allowed non-compliance through `if not why not reporting. Using various designations of independence and firm size subsamples we find for `Top 100 firms in 2001 up to 49% (Adjusted R2 48.8) of variation in board independence may be explained by firm characteristics, but generally the explanatory power was much lower. Evidence is provided that although more firms had majority independent boards the relation between board composition and firm characteristics may have weakened over the period. This highlights a potential concern that the regulation has imposed unnecessary costs or inappropriate governance mechanisms on Australian firms

The association between busy directors and acquisition performance

This paper addresses the question of whether independent directors of the bidding firm are effective monitors during acquisitions and whether this effectiveness is impaired when the independent directors serve on multiple boards. The choice of the acquisition setting, where the board of directors is known to be engaged in active decision-making, facilitates a direct test of the role of independent directors as effective, external monitors of the boards activities. We employ three indicators of the bidding boards performance in making optimal acquisition decisions: the acquisition premium (benchmarked against subsequent performance), a new indicator comprising the conflicts of interest associated with the acquisitions (conflicted acquisitions), and the post-acquisition stock performance. The results suggest that more independent boards and busy independent directors on the bidding firms board are associated with more effective acquisition decisions by the board. However, busy independent directors are associated with less effective acquisition decisions when the bidding firm has higher free cash flows consistent with Jensen (1986). We also find that busy executive directors on the bidding firms board have no implications for the effectiveness of acquisition decisions unless the director is a busy chairperson or busy CEO both of whom are associated with less effective acquisition decisions. This paper contributes direct evidence on the effectiveness of bidding firm independent directors in their role as monitors and decision-makers

Economic determinants of group versus individual compensation schemes for senior executives

This paper investigates firm characteristics associated with the choice of individual versus group compensation schemes for senior executives below the CEO level. We define individual compensation schemes where senior executives are compensated independently from other senior executives, where incentive compensation is linked to individual performance. In contrast, group compensation schemes are defined where senior executive compensation is jointly determined with other senior executives, with compensation linked to common incentives. This paper is motivated by limited evidence on compensation schemes for senior executives beyond the CEO, limiting critical evaluation of senior executives compensation. Preliminary evidence using Australian data provides support that individual compensation schemes are adopted by firms where individual senior executive inputs (effort) and outputs are separable and observable. We also find support that group compensation schemes are adopted where there are efficiencies from senior executive co-operation and interdependencies between executives, such as in integrated firms. The empirical evidence suggest that there are important differences between how firms set changes in total compensation as apposed to the mix of long and short term incentive components. The findings contribute to the ongoing debate surrounding the determination of appropriate corporate governance mechanisms in the presence of agency conflicts, and especially executive compensation schemes

The accrual anomoly: Australian evidence

This paper investigates whether the accrual anomaly identified by Sloan (1996), whereby investors overestimate the impact of accruals on the persistence of earnings exists within an Australian context. While there is general support for the existence of the anomaly in Australia there are a number of idiosyncrasies in the results. First, there is evidence that in Australia investors underestimate the persistence of earnings. Second, there are greater errors in assessing the impact of cash flows on the persistence of earnings than accruals (i.e., a cash flow anomaly rather than an accruals anomaly). Third, returns to the hedged portfolio trading strategy are increasing over the three year period subsequent to portfolio formation. Analysis of these results indicates that they are primarily attributable to a limited number of firm year observations in the extreme positive tail of returns. Additionally, a range of sensitivity tests were undertaken to address the robustness of these results

A practical comparison of firm valuation models: cash flow, dividend and income

Our research, based on a sample of listed Australian firms, indicates that the residual income model provides better estimates of firm value than two other commonly used models. It also provides advantages in that there is less need to forecast returns as far into the future and, with this model, a terminal value based upon a constant future return (or relatively low growth rates) can be used. This obviates the need to estimate an expected long-term growth rate, which is always problematic

CO2 signaling mediates neurovascular coupling in the cerebral cortex

Neurovascular coupling is a fundamental brain mechanism that regulates local cerebral blood flow (CBF) in response to changes in neuronal activity. Functional imaging techniques are commonly used to record these changes in CBF as a proxy of neuronal activity to study the human brain. However, the mechanisms of neurovascular coupling remain incompletely understood. Here we show in experimental animal models (laboratory rats and mice) that the neuronal activity-dependent increases in local CBF in the somatosensory cortex are prevented by saturation of the CO2-sensitive vasodilatory brain mechanism with surplus of exogenous CO2 or disruption of brain CO2/HCO3− transport by genetic knockdown of electrogenic sodium-bicarbonate cotransporter 1 (NBCe1) expression in astrocytes. A systematic review of the literature data shows that CO2 and increased neuronal activity recruit the same vasodilatory signaling pathways. These results and analysis suggest that CO2 mediates signaling between neurons and the cerebral vasculature to regulate brain blood flow in accord with changes in the neuronal activity

Ancient Migratory Events in the Middle East: New Clues from the Y-Chromosome Variation of Modern Iranians

Knowledge of high resolution Y-chromosome haplogroup diversification within Iran provides important geographic context regarding the spread and compartmentalization of male lineages in the Middle East and southwestern Asia. At present, the Iranian population is characterized by an extraordinary mix of different ethnic groups speaking a variety of Indo-Iranian, Semitic and Turkic languages. Despite these features, only few studies have investigated the multiethnic components of the Iranian gene pool. In this survey 938 Iranian male DNAs belonging to 15 ethnic groups from 14 Iranian provinces were analyzed for 84 Y-chromosome biallelic markers and 10 STRs. The results show an autochthonous but non-homogeneous ancient background mainly composed by J2a sub-clades with different external contributions. The phylogeography of the main haplogroups allowed identifying post-glacial and Neolithic expansions toward western Eurasia but also recent movements towards the Iranian region from western Eurasia (R1b-L23), Central Asia (Q-M25), Asia Minor (J2a-M92) and southern Mesopotamia (J1-Page08). In spite of the presence of important geographic barriers (Zagros and Alborz mountain ranges, and the Dasht-e Kavir and Dash-e Lut deserts) which may have limited gene flow, AMOVA analysis revealed that language, in addition to geography, has played an important role in shaping the nowadays Iranian gene pool. Overall, this study provides a portrait of the Y-chromosomal variation in Iran, useful for depicting a more comprehensive history of the peoples of this area as well as for reconstructing ancient migration routes. In addition, our results evidence the important role of the Iranian plateau as source and recipient of gene flow between culturally and genetically distinct population