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The recent decline in funding levels of defined benefit pension plans (DBPs) has attracted the attention of regulators in Australia and other jurisdictions. In light of such scrutiny, this study provides timely empirical evidence of the economic and regulatory implications of the recent change in the financial position of DBPs sponsored by Australian listed companies. We identify that over the four‐year period from 2000 to 2003 the frequencies of both accrued benefits deficits and vested benefits deficits increased sharply after 2001. Coinciding with the increased incidence of deficits, the time lag in measuring accrued and vested benefits declined significantly. Controlling for firms taking contribution holidays, we find that the market prices vested benefits surpluses and deficits, and accrued benefits deficits, but not accrued benefits surpluses. This asymmetric treatment of firms’ superannuation funding positions is consistent with accounting conservatism theories and, as a consequence, has implications for recent adoption of IFRS accounting standards requiring Australian companies to recognise both accrued benefits surpluses and deficits.

The purpose of this paper is to jointly assess the impact of regulatory reform for corporate fundraising in Australia (CLERP Act 1999) and the relaxation of ASX admission rules in 1999, on the accuracy of management earnings forecasts in initial public offer (IPO) prospectuses. The relaxation of ASX listing rules permitted a new category of new economy firms (commitments test entities (CTEs)) to list without a prior history of profitability, while the CLERP Act (introduced in 2000) was accompanied by tighter disclosure obligations and stronger enforcement action by the corporate regulator (ASIC).

All IPO earnings forecasts in prospectuses lodged between 1998 and 2003 are examined to assess the pre‐ and post‐CLERP Act impact. Based on active ASIC enforcement action in the post‐reform period, IPO firms are hypothesised to provide more accurate forecasts, particularly CTE firms, which are less likely to have a reasonable basis for forecasting. Research models are developed to empirically test the impact of the reforms on CTE and non‐CTE IPO firms.

The new regulatory environment has had a positive impact on management forecasting behaviour. In the post‐CLERP Act period, the accuracy of prospectus forecasts and their revisions significantly improved and, as expected, the results are primarily driven by CTE firms. However, the majority of prospectus forecasts continue to be materially inaccurate.

The results highlight the need to control for both the changing nature of listed firms and the level of enforcement action when examining responses to regulatory changes to corporate fundraising activities.

This paper aims to investigate associations between related party transactions (RPTs) and governance and performance factors of new economy firms.

Previous research has examined the RPTs of large US firms. In contrast, the authors focus on smaller, newly listed Australian firms. Referred to as “commitments test entities” (CTE), these firms are distinguished by the unique Australian Securities Exchange listing requirements applying to them, and associated additional (quarterly cash flow) reporting requirements.

While strong corporate governance characteristics may be expected to constrain the amounts of payments and loans to related parties, we find only weak evidence to support that proposition. The results show that financial condition dominates the decision to engage in RPTs and suggest that external monitoring (associated both with larger firm size and the quarterly reporting phase) are a more effective restraint on the magnitude of RPTs for these high‐risk CTE firms.

The findings are generally consistent with the “conflict of interest view” proposed by Gordon et al. suggesting RPTs do not serve shareholders' interests.

The findings suggest that external monitoring may be a more effective control over RPTs than internal corporate governance mechanisms in this institutional context of small “cashbox” firms. Since RPTs may not be in the best interests of shareholders, extending mandatory RPT disclosures to all periodic cash flow reports warrants further consideration by regulators.

This study contributes to the limited research on the effects and implications of RPTs.

The purpose of this study is to examine the usefulness of pre‐production cash expenditure forecasts issued by Australian mining explorers in their quarterly cash‐flow reports.

Usefulness is determined by examining compliance and the reliability of forecasts (accuracy and bias) for a sample of 1,760 forecasts issued by 481 explorers in 2005/2006. The cross‐sectional variation in reliability is examined using regression analysis.

The findings reveal a high level of compliance but significant inaccuracies (median forecast error of around 50 percent of actual expenditure for exploration and evaluation expenditure and 85 percent for development expenditure), and some evidence of forecast bias. Forecast inaccuracy is more prevalent in firms that have poorer performance, greater financial slack, greater cash‐flow volatility, no financial leverage, and for firms that are smaller, in the pre‐development stage, and in the mineral (non‐oil and gas) sub‐industry.

The analysis of forecast usefulness is confined to compliance and reliability. Further research could consider the value‐relevance and predictive ability of these forecasts.

The findings question the usefulness of mandatory forecasting by showing that the information role of forecasts in capital markets is impaired when firms have little discretion over the forecast decision, timing and specificity.

This is the first study to examine mandatory cash expenditure forecasts and makes a significant contribution to the small literature on mandatory financial forecasts.

The aim of this paper is to document the author's keynote address in Accounting at the 16th Annual Conference on Pacific Basin Finance, Economics, Accounting and Management “Innovation for a Sustainable Future: Visions for 2020”, July 3‐4, 2008, Brisbane, Australia.

In keeping with the theme of the Conference, the paper considers two areas – global accounting and financial reporting, and regulation and institutions.

As business has become more global and financial markets have developed world‐wide, comparable accounting and financial information across countries and companies is a logical step to continue to support and advance business. With this shift, though, the world moves towards a monopoly in accounting standards and standard setting.

The potential costs, problems, and possible solutions need to be considered. Current regulatory environments and institutions offer limited ability to effectively monitor such a monopoly. So innovation must occur.

The paper shows that an infrastructure to support global investor protection and convergence of investor protections and rights can offer such innovation to support and sustain global business.

Managers generally have discretion in determining how components of earnings are presented in financial statements in distinguishing between “normal” earnings and items classified as unusual, special, significant, exceptional or abnormal. Prior research has found that such intra‐period classificatory choice is used as a form of earnings management. Prior to 2001, Australian accounting standards mandated that unusually large items of revenue and expense be classified as “abnormal items” for financial reporting, but this classification was removed from accounting standards from 2001. This move by the regulators was partly in response to concerns that the abnormal classification was being used opportunistically to manage reported pre‐abnormal earnings. The purpose of this paper is to extend the earnings management literature by examining the reporting of abnormal items for evidence of intra‐period classificatory earnings management in the unique Australian setting.

This study investigates associations between reporting of abnormal items and incentives in the form of analyst following and the earnings benchmarks of analysts' forecasts, earnings levels, and earnings changes, for a sample of Australian, top‐500 firms, for the seven‐year period from 1994 to 2000.

The findings suggest there are systematic differences between firms reporting abnormal items and those with no abnormal items. Results show evidence that, on average, firms shifted expense items from pre‐abnormal earnings to bottom line net income through reclassification as abnormal losses.

The paper's findings suggest that the standard setters were justified in removing the “abnormal” classification from the accounting standard. However, it cannot be assumed that all firms acted opportunistically in the classification of items as abnormal. With the removal of the standardised classification of items outside normal operations as “abnormal”, firms lost the opportunity to use such disclosures as a signalling device, with the consequential effect of limiting the scope of effectively communicating information about the nature of items presented in financial reports.