Massey Documents by Type

Permanent URI for this communityhttps://mro.massey.ac.nz/handle/10179/294

Browse

Has files: YesSubject: search.filters.subject.Disclosure (Accounting)

Search Results

Now showing 1 - 9 of 9
  • Thumbnail Image
    Item
    An empirical analysis of the usefulness of the Basel II Pillar 3 disclosures on bank risk management to monitor bank performance and forecast bank profitability during periods of economic instability : a thesis presented in partial fulfilment of the requirements for the degree of Master of Management in Banking at Massey University, Manawatu, New Zealand
    (Massey University, 2012) Ainsworth, Rachel
    The third pillar of the Basel II capital adequacy framework requires banks to disclose risk information to the market to supplement regulators’ monitoring. It is expected that this “allows market discipline to work earlier and more effectively” (BCBS, 1998, pp. 6). The expectation that the pillar 3 disclosures will lead to market discipline is supported in the theoretical literature but not demonstrated in the empirical literature. The purpose of this thesis is to determine if the information contained in banks’ disclosures is useful to monitor bank performance and to explain bank profitability as this is a precondition for effective market disclosure. The usefulness of information in the pillar 3 disclosures was examined for twenty of the largest global banks from 2008 and 2009. It was found that pillar 3 disclosures are useful to analyse and monitor the performance of banks as the disclosures can be used to identify banks for which key risk metrics are inconsistent with other metrics. The pillar 3 variables did not however significantly improve the explanatory ability of earnings models over models containing only financial information, although this may be due to the small sample size. These results show that there is valuable information contained within pillar 3 disclosures which could be used by the market to provide market discipline as expected in the Basel II framework.
  • Thumbnail Image
    Item
    An investigation into the performance reporting practices and accountability of Malaysian local authorities : a thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Accountancy at Massey University (Wellington) New Zealand
    (Massey University, 2010) Basnan, Norida
    Within the context of New Public Management (NPM), the research aims to investigate the practices of annual reporting of performance-related information and accountability of Malaysian local authorities and whether such practices meet the local authorities' stakeholders' expectations of information necessary for assessing and monitoring the performance of local authorities. The aim is to make recommendations about the future direction of external performance reporting of Malaysian local authorities. To achieve this and associated aims, the research addresses the following research questions: (1) What do stakeholders of Malaysian local authorities understand by the term 'accountability' with regards to local authorities? (2) What type of information do the stakeholders expect and consider necessary for assessing and monitoring the performance of local authorities? (3) How important is it for each informational item to be disclosed in annual reports of local authorities to the stakeholders? (4) What type of information items do expert stakeholders agree is necessary for assessing and monitoring the performance of local authorities and what is the importance of such items for disclosure? (5) How can the information and its importance for disclosure, as agreed by the experts, be organised as a disclosure index for assessing the extent and quality of information disclosure? (6) What is the extent and quality of disclosure of information within the annual reports of Malaysian local authorities? (7) Does the information being disclosed in the annual reports meet the expectations of stakeholders? (8) To what extent is accountability being discharged through annual performance reporting of local authorities? The research employs a questionnaire survey, a Delphi exercise (a means of seeking consensus of expert opinions), and a content analysis of annual reports. Both descriptive and analytical approaches are employed to support the analysis of the results. The findings of the research indicate that despite a strong interest amongst stakeholders for greater accountability of Malaysian local authorities, a standard definition and scope of accountability has not emerged. The need to give an account has been recognised by the stakeholders with an emphasis on performance reporting within the context of NPM. The findings also show that the extent and quality of annual reports of Malaysian local authorities is relatively low in that the information disclosed lacks detailed information and is insufficient for the assessment and monitoring of the performance of such authorities. Further, the findings suggest the discharge of accountability by local authorities through external annual performance reporting should and could be improved. The findings contribute to our understanding of accountability as interpreted by key stakeholders of local authorities located within the context of a developing country. In addition, the findings contribute to the body of literature that documents aspects of NPM, namely performance reporting, accountability for performance and public accountability. With regards to Malaysia specifically, the findings could potentially assist public sector administrators and will be of significance to policy makers interested in improving the performance management of Malaysian public entities, particularly that of local authorities.
  • Thumbnail Image
    Item
    Determinants of voluntary disclosure by New Zealand life insurance companies : a thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Accountancy at Massey University
    (Massey University, 1996) Adams, Michael Bryan
    Surveys carried out in international insurance markets, including New Zealand, indicate that there is considerable diversity in the levels of voluntary disclosure made by companies in their annual reports. Critics argue that such disparity diminishes the stewardship and decision-usefulness value of annual reports for users such as policyholders, shareholders and industry regulators. However, a major deficiency with the prior surveys is that they do not explain the different reporting practices observed in insurance markets. Drawing a framework from the managerial-discretion hypothesis, this thesis thus seeks to explain the level of information voluntarily disclosed in the annual reports of New Zealand-based life insurance companies. The managerial-discretion hypothesis holds that the diffused nature of policyholders' ownership rights in mutuals makes it more difficult for them to monitor and control managerial behaviour compared with the relatively more closely-held shareholdings of stock companies. In such a situation, policyholders are likely to control managerial discretion across a range of business activities by means of restrictive mechanisms such as internal regulations. The relationship between the level of voluntary disclosure and eight explanatory variables - organisational form, assets-in-place, product concentration, reinsurance, localisation of operations, non-executive directors, firm size and distribution system - each representing the major constructs of the managerial-discretion hypothesis, is tested empirically in this study using data-triangulation. This methodology comprises a statistical analysis of pooled 1988-1993 data drawn from New Zealand's life insurance industry as well as an evaluation of field interviews and documentation obtained from 12 companies representing a cross-section of the industry. Data-triangulation helps to test the validity of the constructs used and evaluate the reliability of the evidence collected. Consistent with what was hypothesised, the empirical results indicate that the level of information voluntarily disclosed by life insurance companies in their annual reports is positively associated with stock companies, firm size, product diversity and reliance on independent sales agents/brokers. Contrary to expectations, the evidence suggest that non-executive directors complement rather than substitute for voluntary disclosure. Also contrary to what was hypothesised, the statistical analysis indicate that reinsurance had a positive influence on voluntary disclosure, but this observation was not supported by the fieldwork. Furthermore, two variables - assets-in-place and localisation of operations - were found not to be important determinants of voluntary disclosure in both the statistical analysis and field-based research. The study thus provides mixed support for the managerial-discretion hypothesis. The field-based research also reveals that other factors such as company culture and market competition could be important determinants of voluntary disclosure. Finally, a major contribution of this study is that the empirical results could assist industry regulators to better understand the disclosure practices of life insurance companies and so enable them to gauge the likely success of new reporting rules.
  • Thumbnail Image
    Item
    The investment opportunity set and corporate ownership, directorship, auditing, and disclosure policies : some New Zealand evidence : a thesis submitted in partial fulfilment of the requirements for the degree of Doctor of Philosophy in the Department of Accountancy and Business Law, College of Business, Massey University
    (Massey University, 1998) Hossain, Mahmud; Hossain, Mahmud
    Recent studies in accounting and finance indicate that accounting and other important corporate policy decisions (e.g., debt, dividend, compensation, disclosure, and hedging) are related to investment opportunities present in the firm. My study attempts to augment this research by investigating whether decisions about the level of managerial share ownership, percentage of outside directors, quality of audit services, and amount of forward-looking information disclosure are also related to the investment (growth) opportunities. I argue that because the incentive problem between the manager and shareholders is an increasing function of the firm's IOS (a combination of growth options and specific assets-in-place), firms with more growth options will be motivated to use various mechanisms including managerial share ownership, outside directors, high quality audit services, and prospective information disclosure to mitigate agency problems. Using data from 80 New Zealand (NZ) companies listed on the stock exchange in 1995, the cross-sectional tests reveal that the IOS is positively and significantly related to managerial share ownership, outside directors, auditing, and disclosure polices. Because the monitoring mechanisms employed at a particular point in time could be driven by past growth or changes in past growth and because firms select a mix of mechanisms to align manager-shareholder interests, I also use time series-tests for the period 1991-1995 to determine whether changes in the mix of these mechanisms are related to the changes in IOS. The results indicate that changes in the pairwise mix between outside directors and auditing, outside directors and disclosure, and inside ownership and disclosure are not significantly related to changes in IOS. By contrast, predictions about the changes in the pairwise mix between disclosure and auditing, inside ownership and outside directors, and inside ownership and auditing and changes in IOS are supported. Thus, the time-series tests provide limited support for the predictions that the pairwise mix between monitoring mechanisms will change with IOS. Nevertheless, the results of this study provide useful insights into ownership concentration, board composition, auditing, and disclosure practices in NZ and add to the growing literature on investment opportunities.
  • Thumbnail Image
    Item
    The impact of events on annual reporting disclosures
    (2003) Hooks, J. J.
    Burchell, Club and Hopwood (1985) considered that “little is known of how...wider social forces can impinge upon and change accounting” (p.382). This study identifies six political forces that may have instigated changes in accounting practice and annual reporting of a New Zealand electricity entity. Based on the literature (Hopwood, 1983, 1990; Napier, 1989; Gray and Haslam, 1990; Thomson, 1993) it is expected that significant changes in the environment in which the entity operates will effect changes in reporting. The study compares the annual report disclosures of an Electricity Supply Authority on a yearly basis from 1970 to 2001 - a 18 year period with little significant environmental impact in the electricity industry with a period of intense activity in the following 14 years. The study found considerable evidence that the change from a local body accountable to electors/consumers to a public company accountable to shareholders, led to a greater emphasis on profits and earnings per share as a means of measuring performance. It identifies specific changes in accounting practice that support this view as well as a period of “big bath” accounting, decreasing disclosure of commercially sensitive information, and the increasing use of dramatic presentation in the annual report.
  • Thumbnail Image
    Item
    An exploratory investigation into the corporate social disclosure of selected New Zealand companies
    (2002) Hall, J. A.
    Corporate social disclosure, that is, the communication of an organisation’s social and environmental impact through the annual report or similar medium, is an increasingly important issue, and arguably has benefits for companies and society. This study investigates the corporate social disclosures of five companies over a five-year period, with the aim of investigating trends in corporate social disclosure in large New Zealand companies who operate in industries receiving public attention for their social and environmental impact. Corporate social disclosure was measured through number of sentences disclosed, and classified into theme (environment, energy, product, community, employee health and safety, employee other and general) and evidence (monetary quantitative, non-monetary quantitative and declarative). This study found no clear trend of increasing levels of corporate social disclosure; instead there was an increase in 1997 and a decrease in 1998. Legitimacy theory, political economy theory and economic conditions represented possible explanations for this trend, demonstrating the difficulty in using a single perspective to explain corporate social disclosure. Corporate social disclosure did not significantly increase from 1996 to 2000, and disclosure was primarily ‘quantitative’ and ‘employee other’, leading this research to posit that New Zealand companies are not responding to the increased worldwide importance of corporate social disclosure. In summary, this study provides valuable empirical evidence of corporate social disclosure in New Zealand, and also provides an example of the complexity of corporate social disclosure practice, and the difficulty in applying a single theoretical perspective to explain corporate social disclosure.
  • Thumbnail Image
    Item
    'True and fair view' versus 'Present fairly in conformity with generally accepted accounting principles'
    (2001) Kirk, N. E.
    The ‘true and fair view’ concept is one of two competing but not mutually exclusive legal standards for financial reporting quality that have been subject to debate on their meaning, use and importance. The other is ‘present fairly in conformity with generally accepted accounting principles’ (GAAP). While the former is closely identified with judgement and is used in the United Kingdom, the European Union, Singapore, Australia, and New Zealand, the latter is the standard for United States financial reporting and tends to be more rule based. This paper presents the findings of an empirical investigation of the ‘true and fair view’ in New Zealand. It reports the results of a survey of financial directors, auditors and shareholders of New Zealand listed companies investigating their perceptions of, and preferences for, ‘true and fair view’ versus other standards for financial statement reporting including ‘present fairly in conformity with generally accepted accounting principles’ (GAAP), 'fairly reflects' and 'present fairly', and compares the findings with relevant international research. The purpose of the research was twofold; firstly to determine if ‘within-group’ and ‘betweengroup’ differences in perceptions and preferences for the terms existed, thus contributing to an expectations gap; and, secondly, to examine whether or not the New Zealand respondents shared the preference for ‘true and fair view’ versus ‘present fairly in conformity with GAAP’ found in previous international research. The results show that a clear majority of all three groups share similar perceptions of the meaning of the 'true and fair view’ concept, and support its use in financial reporting. All groups preferred ‘true and fair view’ to other terms including ‘fairly present in conformity with GAAP’, a result consistent with previous comparisons of United Kingdom, and United States investors’ opinions. This illustrates that the 'true and fair view' concept remains an important international overall standard for financial reporting quality.
  • Thumbnail Image
    Item
    Aspects of the motivation for voluntary disclosures: evidence from the publication of value added statements in an emerging economy
    (2001) van Staden, C. J.
    This paper investigates the motivation for the voluntary disclosure of financial information by companies in their annual financial statements, by examining aspects of the usefulness of the value added statement. The value added statement is published voluntarily with the annual financial statements and is currently experiencing high levels of publication in South Africa, which is evidently brought about by the high political costs and significant legitimacy threats that companies operating in South Africa are facing. It was found from the literature and from a survey among management that the value added statement was primarily aimed at the employees. Employees have also been regarded as users of financial information in the literature. However, a survey among trade unions in South Africa found that almost no use is made of the value added statement even though the unions make use of other financial information. This indicates that voluntary disclosures do not necessarily satisfy the information needs of their intended audience. The research also indicates that the trade unions might not use the value added statement because they suspect that the statement is being used to reduce political costs and legitimacy threats, and is therefore not reliable. This is a major shortcoming of voluntary disclosures.
  • Thumbnail Image
    Item
    New Zealand's experiment with prudential regulation : can disclosure discipline moderate excessive risk taking in New Zealand deposit taking institutions? : a thesis presented in partial fulfillment of the requirements for the degree Doctor of Philosophy at Massey University, Albany
    (Massey University, 2009) Wilson, William Robert
    The New Zealand economy in the period up to 2006 provides an opportunity to assess an alternative disclosure based approach to the prudential regulation of deposittakers, in a market free of many of the distortions which arise from traditional regulatory schemes. The overall objective of this research has been to assess the effectiveness of the prudential regulation of New Zealand financial institutions and judge if the country is well served by it. Analysis of New Zealand’s registered bank sector suggests public disclosure adds value to New Zealand’s financial system. However, the significant relationship found between disclosure risk indicators and bank risk premiums was not as a result of market discipline, rather it is argued self-discipline was the mechanism, demonstrating bank management and directors are discharging their duties in a prudent manner. A feature of the New Zealand disclosure regime for banks is the significant responsibilities placed on bank directors; directors are then held accountable for their actions. Findings in the management of banks were in contrast to non-bank deposittakers, where disclosure was judged to be ineffective, and of no practical use due to its poor quality. The management of non-bank deposit-takers appeared to receive very little oversight from depositors, their trustees or official agencies. As a result, many appear to have managed their institution in their own interests, with little consideration given to other stakeholders. Failures which occurred in NBDTs from 2006 resulted from deficiencies in the prudential regulation of these deposit-takers, demonstrating the severity of asymmetric information and moral hazard problems which can arise if prudential regulation is not correctly designed and management interests are not aligned with other stakeholders. The New Zealand disclosure regime will never guarantee a bank will not fail, nor should it try to do so, but it should assist the functioning of a sound and efficient financial system. To this end, it is recommended that the Reserve Bank, in re-designing the regulatory framework for NBDTs, hold the management and directors of NBDTs similarly accountable, while also incorporating regular disclosure and minimum prudential standards. Governments have an important role to play in ensuring the financial system is efficient.