Journal of Applied Research in Accounting and Finance
Vol 7 (1) July 2012
Corporate Acquisitions in Australia - A Binary Analysis by Nigel Garrow, Guy Ford and Tom Valentine
Mergers and acquisitions are often disadvantageous for shareholders in the acquiring firm, but value-enhancing for the acquired firm and the CEO of the acquirer. Best corporate governance practice proposes that the roles of Chairman and CEO should be performed by different people, yet there is very little analysis linking these separate roles with firm performance. This study, using binary analysis, finds a significant positive correlation between the period of joint tenure of a Chairman and CEO in the acquirer with M&A outcomes, and a significant negative correlation between CEO remuneration change and M&A outcomes. These findings have implications for investors and corporate governance practice.
Exploring the Risks of Overstatements and Understatements in Financial Reporting by Cenap Ilter
This article explores the effects of gaps between inflation and devaluation on financial statements in economies. A model company, an assumed subsidiary of a US parent, is used for reporting to the parent based on current International Financial Reporting Standards (IFRS). The model company reported to its parent on different assumed inflation and devaluation rates, and the results are discussed and discrepancies explained. The article suggests that financial statements are distorted in an economy as the current IAS 29 does not require any restatement of the financial statements until the cumulative inflation rate for the last three years is around 100%.The paper explores the premise that restatement of financial statements on local currencies based on IAS 29 at lower inflation rates before conversion to the reporting currency should be considered as a solution to solve the distortions in financial reporting for multinational companies.
Market Integrity and Disclosure Quality - Financial Forecasts in Prospectuses by Barbara Mescher
The purpose of this article is to examine financial forecasts within a disclosure document known as a prospectus. Statements within this document contribute to market integrity which is maintained if statements or omissions do not mislead or deceive the market or prospective investors. Forecasts have particular salience to potential investors. The article aims to analyse the relevant law and to show that clarification is required.