In the context of possible future directions in the accounting regulatory arena, this paper considers what policy makers can learn from the experiences of Australian managers and…
Abstract
In the context of possible future directions in the accounting regulatory arena, this paper considers what policy makers can learn from the experiences of Australian managers and investors in relation to capitalization of intangible assets. Focuses on features of the Australian institutional setting, the motivations behind Australian managers’ decisions to capitalize intangible assets, and capital market efficiency implications. Australian GAAP leaves corporate managers wide discretion to capitalize intangible assets irrespective of whether the assets are acquired or generated internally. One central element of this accounting discretion is the historically liberal attitude of Australian accounting regulators to deviations from the historic cost basis of measurement. Concerns about the availability, and abuses, of reliable measures in relation to intangible assets and revalued assets prompted the USA to proscribe these practices generally. Evidence from the Australian setting suggests these concerns could be overstated. Evidence to date suggests Australian equity markets are no less efficient than the USA markets. Existing evidence suggests uncertainty about intangible investment outcomes is a central property of intangible investment which could quasi‐regulate accounting capitalization practice in a discretionary accounting setting. Supports future regulatory deliberations and research focus on the economics of intangible investments, and information search behaviours of investors, as one way to move forward in the regulatory sphere.
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Willoe Freeman, Peter Wells and Anne Wyatt
This paper aims to evaluate the business activities, financial reports, and management compensation practices of Countrywide Financial Corporation (Countrywide) in the period…
Abstract
Purpose
This paper aims to evaluate the business activities, financial reports, and management compensation practices of Countrywide Financial Corporation (Countrywide) in the period preceding the company's financial distress and leading to its eventual takeover by Bank of America in 2008. This analysis provides a number of insights into the risks that Countrywide was exposed to which may guide future research and financial management.
Design/methodology/approach
Case study evaluating the failure of Countrywide Financial Corporation.
Findings
First, Countrywide was highly reliant upon the securitization of mortgage loans to finance its activities and this was apparent in the financial reports. Second, these securitization transactions exposed Countrywide to significant financial risks, including the risk inherent in the uncertain values of residual interests and warrantees. Problematically, these risks were not transparently reflected in the financial reports, as confirmed by the lag in the timing of stock price responses. This untimely market response suggests the equity market was not aware of Countrywide's risk exposures until shortly before the company's solvency crisis. Third, the compensation practices of Countrywide encouraged and rewarded management for exposing the firm to significant risks.
Practical implications
This paper provides insights into financial management that are relevant for researchers and professionals.
Originality/value
This paper provides insights for researchers and practitioners relating to the impact of asset securitization on business risk and how these business activities and risks are disclosed in the financial reports.
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The purpose of this paper is to provoke reflection on the risks of people in the later stages of dementia being marginalised in care settings and to set out some key principles…
Abstract
Purpose
The purpose of this paper is to provoke reflection on the risks of people in the later stages of dementia being marginalised in care settings and to set out some key principles and approaches which enable ongoing connection. The paper provides practice examples to illuminate ways in which connected relationships can be maintained.
Design/methodology/approach
This is a view point paper based on both a personal perspective (the writer grew up in a care home) and professional experience in the field of care work and culture change.
Findings
Connecting with people who are in the later stages of dementia is of central importance in offering person-centred relational care.
Originality/value
The PACE principles described are original and are published here for the first time.
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Forecasting future period profitability is widely identified as an aim of financial statement analysis, and these forecasts are typically relied upon for the estimation of firm…
Abstract
Forecasting future period profitability is widely identified as an aim of financial statement analysis, and these forecasts are typically relied upon for the estimation of firm value. To facilitate this, the decomposition of earnings into its components or drivers, is typically advocated. This paper investigates the existence of systematic differences in persistence across the components of earnings. If components of earnings experience differences in persistence, this may provide insights into the determinants of aggregate earnings level and persistence. This paper provides evidence of differences in persistence between components of earnings. Differences are found between components formed on the basis of: financial ratios; operating and financing activities; and cash and accruals. Furthermore, there is evidence that earnings components improve the explanatory power of models evaluating aggregate earnings persistence, with this result being strongest for firms with extreme income decreasing accruals. Due to the pivotal role of earnings in firm valuation, the results from this paper have direct implications for valuation.
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Chee W. Chow, Dawn W. Massey, Linda Thorne and Anne Wu
Over the last decade, many published papers lament auditors’ shift from professionalism to commercialism and call for increasing auditors’ commitment to the public interest (see…
Abstract
Over the last decade, many published papers lament auditors’ shift from professionalism to commercialism and call for increasing auditors’ commitment to the public interest (see, e.g., Bailey, 2008; Fogarty & Rigsby, 2010; Lampe & Garcia, 2013; Wyatt, 2004; Zeff, 2003a, 2003b). At the same time, suggesting effective methodologies for improving auditors’ commitment to the public interest is particularly challenging because issues arising in the audit context are complex, and often involve tradeoffs between multiple stakeholders (e.g., Gaa, 1992; Massey & Thorne, 2006). An understanding of auditors ethical characterizations across separate phases of the audit process is needed so that methodologies can be devised to improve auditors’ commitment to the public interest. Thus, in this paper we interviewed 24 auditors and asked them to describe critical ethical incidents that they have encountered throughout the various phases of the audit process. Our results not only document the tension underlying the shift between professionalism and commercialism in auditing suggested by others, but also show that ethical conflicts are found in each phase of the audit and there are cross-phase differences in the auditors’ ethical characterizations. Limitations of the findings are also discussed as are suggestions for future research.
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Dark tourism is a place for tourists to travel to understand the deaths, suffering, and tragedy. Nowadays, movie makers have positioned dark tourism as a source of edutainment for…
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Dark tourism is a place for tourists to travel to understand the deaths, suffering, and tragedy. Nowadays, movie makers have positioned dark tourism as a source of edutainment for society, contributing to the marketing of dark places. This type of education helps children to make associations between museum artifacts, memories, battles, and visitors’ lives. This study explores how movies have put forth on dark tourism and edutainment by involving audiences, especially students, through storytelling techniques. This research analyses the content of the Bollywood movie Bawaal (2023), which was based on education from the sites of World War II, a holocaust in Europe. Movies can improve students’ and children’s interest in history. There is a need to understand how movies are closely linked to dark tourism. The result shows that explaining dark tourist places is essential for the upcoming generation to maintain their connection with the world’s history. This study will spread consciousness about World War II or Holocaust places and help indirectly market dark tourism.