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Subject: search.filters.subject.Disclosure in accounting

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    Value based performance reporting : a study of the information used by Australasian analysts in their assessment of long-term firm performance (value) : a thesis presented in partial fulfillment of the requirements for the degree of Master of Business Studies in Accounting, Massey University
    (Massey University, 2007) Macfarquhar, Clay Colin
    Public company shareholders and potential investors rely on statutory and voluntary disclosures to enable an informed assessment of company performance and value. It is widely acknowledged that traditional historic accrual accounting measures do not offer a complete picture of firm performance, and that there is demand for an expanded set of performance indicators to service the needs of concerned stakeholders. The reliance on voluntary disclosure of company specific non-financial information is of particular concern to this thesis as the examination of existing literature displays evidence that such areas of performance are under-reported externally. With reference to a range of performance indicators that New Zealand and Australian Chartered Financial Analysts identify as relevant in their assessment of performance and value, this study identifies areas of performance that are under-reported by management and where information asymmetry is proposed to exist. The issue of under-reporting is assessed through gap analysis comparing the surveyed analysts ratings for the 'predictive value' (PV) measure of each performance item/indicator to the respective ratings for 'ease of acquisition' (EA). The study finds that analysts rely on a broad range of financial and non-financial information in their assessment of firm performance. More specifically the reporting of traditional financial information remains relevant and the extent of its provision is adequate, however the study finds that in many cases information not forming part of traditionally reported financial information has 'predictive value' relevance but is relatively more difficult to acquire. The thesis research findings therefore indicate that information reporting reliant on voluntary disclosure is at greater risk of being under-reported (externally). Such under-reporting has been found to be associated with non-financial information that relies on management identifying relevant company specific measures and subsequent voluntary disclosure. In an attempt to emphasise the importance of restoring the information balance between management and interested external parties (for performance assessment and valuation purposes), the thesis will include an exploration and discuss of literature on the benefits associated with full disclosure, along with potential means of identifying relevant measures for external reporting.
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    Accounting for the elephant in the room : disclosure of intangible assets in New Zealand public companies : a thesis submitted to meet the requirements of Paper 152.800 (100 points) towards the degree of Master of Management, Department of Management, College of Business, Massey University
    (Massey University, 2006) Ambler, Ian
    Company market values often exceed the values that are published in company annual reports. One popular explanation for this discrepancy is that traditional company accounting and reporting practices ignore the potentially very large value creating impact of intangible assets, which are also often referred to as intellectual capital or knowledge resources. The theories for measuring intangible assets are reviewed, highlighting the many conceptual and definitional problems that have been encountered. These problems are traced to the resource-based static perspective of intangible assets, which sees them as balance sheet items analogous to tangible assets. A recent transition from this perspective is identified in the literature, towards recognising that the value of intangible assets arises more from their use than their possession. This is a dynamic or flow perspective of intangible assets, which views them as knowledge resources used strategically to create value. Adopting this perspective shifts the intangible asset issue away from being an accounting matter based on reporting historical transactions, to become a corporate governance and strategic management matter concerned with reporting future value creation performance and capability. The empirical research develops and tests a novel instrument for measuring intangible asset reporting in New Zealand public companies, building on recently introduced Danish intellectual capital reporting guidelines centred on this emerging dynamic perspective. Of a sample of 50 listed public companies, 84% are found to be voluntarily reporting their use of intellectual capital to create value, 16% extensively. The reporting differences between these companies are then explored. Nearly two thirds of the variation may be explained by a combination of differences in profitability, the capital market's perceptions of their future added value, industry differences of tangible asset intensity, company size and company expansion strategies. The empirical findings show a positive relationship between higher levels of disclosure and the future value placed on companies by the capital markets, which suggests capital markets reward companies that adopt a more open disclosure policy with a lower cost of capital and easier access to capital. These outcomes are compared with the inconclusive results found in a control survey of intellectual capital disclosure based on the earlier static perspective using a commonly used disclosure measurement methodology. This comparison reinforces the relevance of the emerging dynamic perspective of intangible assets, and the value to be gained from adapting disclosure research methodologies that reflect this approach. This research shows there is currently a very low level of performance outlook reporting by New Zealand companies, a finding consistent with international research. It may seem that the next logical step from disclosing how a company intends to use intangible assets to create value is for its management to report its view of forward-looking expected performance. However, the literature reports that companies with conflicting goals may undermine the confidence the capital markets are prepared to place on their projections. Capital markets prefer to make their own informed assessments of the future performance of companies based on their own external assessment of each company's business model. In the context of the principles-based reporting guidelines in New Zealand's corporate governance regulatory framework, the findings of this research indicate that a small group of exemplar companies are leading the way towards a more comprehensive voluntary disclosure of their future value creation strategies. This offers evidence that the principled-based regulatory approach is working to raise the average quality of annual report disclosures by New Zealand public companies, though the uniformity and instant results of a rules-based approach are missing.