Journal of Accounting and Public Policy, Jun 12, 2014
ABSTRACT We investigate how auditor switching is affected by government influence, misalignment b... more ABSTRACT We investigate how auditor switching is affected by government influence, misalignment between type of auditor (government vs. private) and type of controlling shareholder (government vs. private), and misalignment between an incumbent auditor and imputed preferences of managers in a market characterized by continued substantial government ownership in listed entities. We exploit a natural policy and regulatory experiment in Iran that allows us to investigate what happens when previously government-owned entities are partially privatized as listed entities where, in many cases, the government retains significant ownership interests. At the same time, there were significant changes in the audit market, resulting in large increases in the number of private sector auditors competing for previously state-administered audits. We find the likelihood of auditor switches is strongly associated with measures of misalignment between type of auditor and type of controlling shareholder and auditor–managerial misalignment, but these associations are constrained by significant government influence. Exposing the constraining effect of significant government influence on auditor switching is an important contribution to our understanding of privatizations, government shareholder influence and auditor choice. These results have implications for policy development in other emerging and transition economies where privatization remains largely partial, and competition among private sector auditors is still emergent.
Generally accepted expositions of NPV analysis for capital budgeting apply a constant discount ra... more Generally accepted expositions of NPV analysis for capital budgeting apply a constant discount rate across the life of a project. This fails to adequately reflect the temporal structure of risk for investments in real assets. We propose the use of timevarying discount rates that reflect, as a minimum modification, the term structure of interest rate risk. We propose additional adjustments for the estimated risk premia associated with idiosyncratic project risk (especially asset specificity) and information uncertainty. These adjustments are likely to result in a term structure of discount rates which is upward sloping with a decreasing gradient
Stock Exchange (ASX) Corporate Governance Council recommendations in 2003 and the Corporate Law E... more Stock Exchange (ASX) Corporate Governance Council recommendations in 2003 and the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (CLERP 9) are likely to affect investor confidence when investing in listed companies in Australia. It has been stated that the reforms are intended to promote investor confidence (eg, Hamilton 2004). It is generally contended, however, that different types of investors vary in their preferences and abilities and so may not exhibit uniform responses to particular ...
Privatization has been an important phenomenon since the 1980s, which is accompanied by ongoing a... more Privatization has been an important phenomenon since the 1980s, which is accompanied by ongoing arguments about the advantages and disadvantages of government ownership in business corporations. With the continuing development of emerging stock markets, influences of government and private ownership on financial performance of listed corporations in emerging markets have attracted more and more research interest, yet yielded many inconsistent empirical results. We use meta-analytic ...
Purpose–Changes in Australian segment reporting standards over the last decade changed the requir... more Purpose–Changes in Australian segment reporting standards over the last decade changed the required disaggregation of segment information. The purpose of this paper is to investigate whether increased disaggregation has implications for users' confidence in decisions based on segment reports and perceptions of segment reporting usefulness. Design/methodology/approach–Using an experiment based on the differences between the original AASB 1005 and the more detailed requirements of AASB 114, the authors test ...
Abstract: The preferences of major stakeholders in the Fijian public sector reporting process as ... more Abstract: The preferences of major stakeholders in the Fijian public sector reporting process as to who should set government accounting standards and monitor their application are investigated by comparing the preferences of Parliamentarians, internal and external users, and preparers. There is support from all groups for the introduction of accounting standards but perceptions of the relativity of benefits exhibit diversity. There is disparity in choices of auditors for different types of entities, but there is strong support for the Office of the Auditor ...
Empirical researchers and analysts of small or owner-managed businesses genexally behave as if th... more Empirical researchers and analysts of small or owner-managed businesses genexally behave as if the selected organisational form and the consequent legal and accounting boundaries of owner-managed firms are meaningful. This paper discusses selected aspects of this notion, and provides some empirical evidence concerning loan securities, and treatments of debts and assets, which justify rejecting the relevance of the organisational types and implied boundaries in many contexts relating to owner-managed firms. These include analyses employing traditional accounting disclosures and studies that view the firm as defined by some formal organisational structure. Emphasis is on the treatment and effects of private debts and assets.
Journal of Accounting and Public Policy, Jun 12, 2014
ABSTRACT We investigate how auditor switching is affected by government influence, misalignment b... more ABSTRACT We investigate how auditor switching is affected by government influence, misalignment between type of auditor (government vs. private) and type of controlling shareholder (government vs. private), and misalignment between an incumbent auditor and imputed preferences of managers in a market characterized by continued substantial government ownership in listed entities. We exploit a natural policy and regulatory experiment in Iran that allows us to investigate what happens when previously government-owned entities are partially privatized as listed entities where, in many cases, the government retains significant ownership interests. At the same time, there were significant changes in the audit market, resulting in large increases in the number of private sector auditors competing for previously state-administered audits. We find the likelihood of auditor switches is strongly associated with measures of misalignment between type of auditor and type of controlling shareholder and auditor–managerial misalignment, but these associations are constrained by significant government influence. Exposing the constraining effect of significant government influence on auditor switching is an important contribution to our understanding of privatizations, government shareholder influence and auditor choice. These results have implications for policy development in other emerging and transition economies where privatization remains largely partial, and competition among private sector auditors is still emergent.
Generally accepted expositions of NPV analysis for capital budgeting apply a constant discount ra... more Generally accepted expositions of NPV analysis for capital budgeting apply a constant discount rate across the life of a project. This fails to adequately reflect the temporal structure of risk for investments in real assets. We propose the use of timevarying discount rates that reflect, as a minimum modification, the term structure of interest rate risk. We propose additional adjustments for the estimated risk premia associated with idiosyncratic project risk (especially asset specificity) and information uncertainty. These adjustments are likely to result in a term structure of discount rates which is upward sloping with a decreasing gradient
Stock Exchange (ASX) Corporate Governance Council recommendations in 2003 and the Corporate Law E... more Stock Exchange (ASX) Corporate Governance Council recommendations in 2003 and the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (CLERP 9) are likely to affect investor confidence when investing in listed companies in Australia. It has been stated that the reforms are intended to promote investor confidence (eg, Hamilton 2004). It is generally contended, however, that different types of investors vary in their preferences and abilities and so may not exhibit uniform responses to particular ...
Privatization has been an important phenomenon since the 1980s, which is accompanied by ongoing a... more Privatization has been an important phenomenon since the 1980s, which is accompanied by ongoing arguments about the advantages and disadvantages of government ownership in business corporations. With the continuing development of emerging stock markets, influences of government and private ownership on financial performance of listed corporations in emerging markets have attracted more and more research interest, yet yielded many inconsistent empirical results. We use meta-analytic ...
Purpose–Changes in Australian segment reporting standards over the last decade changed the requir... more Purpose–Changes in Australian segment reporting standards over the last decade changed the required disaggregation of segment information. The purpose of this paper is to investigate whether increased disaggregation has implications for users' confidence in decisions based on segment reports and perceptions of segment reporting usefulness. Design/methodology/approach–Using an experiment based on the differences between the original AASB 1005 and the more detailed requirements of AASB 114, the authors test ...
Abstract: The preferences of major stakeholders in the Fijian public sector reporting process as ... more Abstract: The preferences of major stakeholders in the Fijian public sector reporting process as to who should set government accounting standards and monitor their application are investigated by comparing the preferences of Parliamentarians, internal and external users, and preparers. There is support from all groups for the introduction of accounting standards but perceptions of the relativity of benefits exhibit diversity. There is disparity in choices of auditors for different types of entities, but there is strong support for the Office of the Auditor ...
Empirical researchers and analysts of small or owner-managed businesses genexally behave as if th... more Empirical researchers and analysts of small or owner-managed businesses genexally behave as if the selected organisational form and the consequent legal and accounting boundaries of owner-managed firms are meaningful. This paper discusses selected aspects of this notion, and provides some empirical evidence concerning loan securities, and treatments of debts and assets, which justify rejecting the relevance of the organisational types and implied boundaries in many contexts relating to owner-managed firms. These include analyses employing traditional accounting disclosures and studies that view the firm as defined by some formal organisational structure. Emphasis is on the treatment and effects of private debts and assets.
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Papers by Greg Shailer