Research publications

Matolcsy, Z.P. & Wright, A. 2011, 'CEO compensation structure and firm performance', Accounting & Finance, vol. 51, no. 3, pp. 745-763.
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The objectives of our study are to estimate a model of `efficient? compensation structure based on firm characteristics and test the performance consequences of deviation from the efficient compensation structure. Our results are based on 3503 firm years for the period from 1999 to 2005. The results suggest that firms whose CEOs receive compensation inconsistent with their firm characteristics have a lower performance compared to those firms whose CEOs? compensation is consistent with their firms? characteristics. Our measure of performance is based on both accounting and market-based performance measures. Overall, our study provides some important new insights into the links between CEO compensation structure and firm performanc

Farook, S.Z., Hassan, M. & Lanis, R. 2011, 'Determinants of corporate social responsibility disclosure: the case of Islamic banks', Journal of Islamic Accounting and Business Research, vol. 2, no. 2, pp. 114-141.
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Purpose ? The purpose of this paper is to develop and test a theoretical model of the determinants of Islamic banks? social disclosures. In testing the hypotheses, the level of social disclosure in Islamic banks? annual reports is gauged based on a benchmark derived from Islamic principles.

Bugeja, M. 2011, 'Foreign takeovers of Australian listed entities', Australian Journal of Management, vol. 36, no. 1, pp. 89-107.
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This study examines if Australian target firm abnormal returns and characteristics differ between Australian and foreign bidders. The results indicate that takeovers from foreign bidders are associated with higher target firm abnormal returns than bids from Australian firms. Overseas bidders also pay an additional premium for research-intensive target firms. Target firms that receive an offer from outside Australia are significantly larger, have lower leverage, and are more likely to operate in the resources sector. Foreign acquisitions are also more likely to be a friendly takeover. The relative exchange rate is not associated with the likelihood of a foreign takeover. There is no difference in takeover success or competition between domestic and foreign bids.

Ferguson, A.C. & Scott, T. 2011, 'Market reactions to Australian boutique resource investor presentations', Resources Policy, vol. 36, pp. 330-338.
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This paper examines the market reactions to 817 investor presentations by 326 Australian resource firms and finds evidence suggesting these events are informative. Furthermore, the positive returns do not reverse over the following 15 days, which contrasts with previous investor presentation research. However, consistent with the prior literature, extended long run cumulative abnormal returns are not significantly different from zero. This paper also documents stronger reactions to first time presenting firms, presentations that are announced to the market and firms exhibiting at the Africa Downunder and Excellence in Oil & Gas conferences. There are also stronger reactions for firms with lower ownership concentration. Examining boutique resource firm investor presentations adds to the existing disclosure and dissemination literature due to the presence of relatively high information asymmetry in the extractive industries, a unique setting, which contrasts with previous studies.

Ferguson, A.C., Clinch, G.J. & Kean, S.E. 2011, 'Predicting the Failure of Developmental Gold Mining Projects', Australian Accounting Review, vol. 21, no. 1, pp. 44-53.
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This paper investigates firm-level financial and non-financial information and their association with project failure for a sample of pre-production gold development firms. Pre-revenue generating `single project? mining companies are chosen, since project failure is synonymous with company failure for these firms. The setting is interesting due to the high information asymmetry and limitations of the GAAP-based Altman Z-score in this context. A definition of project failure is applied and both financial and non-financial predictors are compared. Failure is driven by whether the deposit is open pit or underground, and whether the cash cost of production is disclosed at feasibility completion.

Sek, J.T. & Taylor, S. 2011, 'Profit or prophet? A Case Study of the Reporting of Non-GAAP Earnings by Australian Banks', Australian Accounting Review, vol. 21, no. 4, pp. 327-339.
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Australian firms increasingly highlight earnings results that do not conform to the definition of profit under generally accepted Australian accounting principles (GAAP). We compile a detailed description of the differences between GAAP and non-GAAP earnings for each of the four largest Australian trading banks for the years 2003 to 2008. Our evidence shows that each of the major banks has a history of reporting what are typically termed 'cash earnings' or 'underlying earnings~ However, the definition of these terms is not consistent between banks, nor does it appear to be consistently applied by individual banks over time. Interestingly, the switch to Australian International Financial Reporting Standards has a noticeable impact on the definition of non-GAAP earnings. The data we summarise raises questions about the role of GAAP earnings versus non-statutory definitions of financial performance voluntarily provided by firms themselves. More broadly, the ability of firms to 'self-define' outcomes presents a significant challenge to capital market regulators such as the Australian Securities and Investments Commission.

Bugeja, M. 2011, 'Takeover premiums and the perception of auditor independence and reputation', The British Accounting Review, vol. 43, pp. 278-293.
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This study investigates if there is a positive association between takeover premiums and the bidder?s perception of target firm auditor reputation and independence. Using auditor size as a proxy for auditor reputation, the results indicate that in hostile takeovers target shareholders receive a higher takeover premium when a Big 4 auditor audits the target firm prior to the takeover. This result is only significant, however, in the period prior to the highly publicised audit failures. The impact of perceived auditor independence on takeover premiums is studied using the levels and size of non-audit service (NAS) fees provided by the target firm auditor. Using three proxies for auditor independence, the results show no association between perceived auditor independence and takeover premiums. This finding is robust to partitioning the sample by auditor size, takeover hostility and splitting the sample into takeovers pre- and post- the corporate scandals that occurred in 2002.

Lanis, R. & Richardson, G.F. 2011, 'The effect of board of director composition on corporate tax aggressiveness', Journal Of Accounting And Public Policy, vol. 30, no. 1, pp. 50-70.
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This study considers the effect of board of director composition on corporate tax aggressiveness. Our logit regression results for a choice-based sample of 32 corporations comprising 16 tax-aggressive corporations and 16 non-tax-aggressive corporations s

Matolcsy, Z.P., Tyler, J.V. & Wells, P.A. 2011, 'The Impact of Quasi-Regulatory Reforms on Boards and their Committees during the Period 2001-2007', Australian Accounting Review, vol. 21, no. 4, pp. 352-364.
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This study investigates the cumulative impact of quasi-regulatory and regulatory reforms, and political pressure on board composition and sub-committees of boards over the period 2001 to 2007. Based on a sample of 450 firms listed on the Australian Stock Exchange, we find that most firms complied with the Principles of Good Corporate Governance and Best Practice by 2007. In particular, 85% of firms had an independent board and there was a significant increase in majority independent committees (audit, remuneration and nomination). While there was an increase in majority board independence, the increase in the mean level of board independence to 71% was modest. The level of compliance was highest for large firms, but the impact was largest on small firms, which changed their board composition the most. The relation between firm characteristics and board composition declined between 2001 and 2007, and changes in board composition were not able to be explained by changes in firm characteristics. If it is assumed that firms on average select their board to reflect their economic needs, this suggests that the changes in board composition may have been costly for firms.

Ferguson, A.C., Grosse, M., Kean, S.E., Scott, T. 2011, 'Your Governance or Mine?', Australian Accounting Review, vol. 21, no. 4, pp. 406-417.
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In response to criticism directed at the resource sector's corporate governance, this paper examines the corporate governance and underlying firm characteristics of resource development stage entities (DSEs) relative to a size-matched sample of non-resource firms. We find that resource DSEs have different governance characteristics in the measures of board independence, chair/CEO duality and CEO cash bonuses. Furthermore, there are differences in the information environment measures of analyst following, debt levels, stock market return and stock turnover. Considering we document substantial differences in underlying firm characteristics, corporate governance differences are likely appropriate to the mining industry and should not be uniformly labelled as 'bad~ Our results suggest that media rankings based on corporate governance scores may not accurately portray the resource sector. Overall, our results are of interest to Australian investors and regulators and contribute to a broader understanding of contextually contingent corporate governance.