Greg Clinch

Deakin University · Accounting

We investigate the disclosure of non‐IFRS performance measures by 400 companies from eight countries using IFRS Standards (Australia, France, Germany, Hong Kong, Italy, Singapore, Sweden and the United Kingdom) in the years 2005, 2008, 2011 and 2013 (1595 company‐years). The incidence of disclosure is higher in UK and France but lower in Hong Kong,...

Short sellers assist in impounding negative news more quickly into stock prices and improve price informativeness. However, there is a lack of consistent evidence about whether short sellers trade predominantly in anticipation of, or in response to, a public information release. To shed light on this question, we exploit Reg SHO, which reduced the...

We investigate the stock price and trading volume effects of differential capital gains taxes applied to short- and long-term capital gains when firms disclose public information. We extend the theoretical framework developed in Shackelford and Verrecchia (2002) linking differential capital gains taxes to price and volume, allowing for positive and...

As informed traders, short sellers enhance the informativeness of stock prices, especially related to bad news, potentially reducing the benefits and increasing litigation and reputational costs of withholding bad news by managers. We exploit a quasi-natural experimental setting provided by the introduction of SEC regulation SHO (Reg-SHO), which si...

We explore the association between earnings and price for 400 IFRS adopting firms from eight countries (Australia, France, Germany, Hong Kong, Italy, Singapore, Sweden and the UK) in their annual reports for the years 2005, 2008, 2011 and 2013 (1,577 firm-years). We find no difference in the earnings/price association for firms that present non-GAA...

Our model, which is adapted from Feltham and Ohlson (Contemp Account Res 11:689–731, 1995) and Ohlson (Contemp Account Res 11:661–687, 1995) and extends Dechow and Dichev (Account Rev 77:35–59, 2002), characterizes the information about future cash flows reflected in accruals. It reveals investors can extract from accruals information about next pe...

We investigate the association between voluntary disclosure and the risk-related discount investors apply to price. First, we study the association between (endogenous) disclosure choice and the discount in price induced by changes in the underlying model parameters: this is akin to an empirical study that overlooks the role of endogenity. Second,...

This study provides evidence that short selling influences the disclosure of bad news by firms. Managers have incentives to withhold or delay the release of bad news. As informed traders, short sellers enhance the informativeness of stock prices, especially related to bad news, which leads to lower information asymmetry between firms and outside in...

Our model, which is adapted from Feltham and Ohlson (Contemp Account Res 11:689–731, 1995) and Ohlson (Contemp Account Res 11:661–687, 1995) and extends Dechow and Dichev (Account Rev 77:35–59, 2002), characterizes the information about future cash flows reflected in accruals. It reveals investors can extract from accruals information about next pe...

The objective of this paper is to ascertain whether there are significant differences in the loan loss provisioning behaviour of Islamic banks as compared to conventional banks. We proposed that loan loss provisioning will be linked to the extent of profit distribution management. The results suggest that Islamic banks consistently record lower loa...

This paper addresses the impact of capital gains taxes on the market price and trading volume response to public announcements in an indexation-based tax regime. Our analysis indicates that indexation makes share prices more responsive to public announcements. Moreover, ‘over responsiveness’ induces negative correlation between short-term price cha...

The objective of this paper is to ascertain whether Islamic banks do in fact manage profit distributions and if so, what factors are associated with the extent of profit distribution management. The results suggest that most Islamic banks manage profit distributions, with the extent of profit distribution directly related to religiosity, financial...

We investigate whether the adoption of IFRS increases the value relevance of accounting information for firms listed on the Australian Securities Exchange. Using a longitudinal study that covers pre-IFRS and post-IFRS periods during 1990–2008, we find that earnings become more value-relevant whereas the book value of equity does not. This impact is...

We investigate the impact of endogenous information acquisition on Easley and O’Hara’s (2004) result that moving information from being publicly to privately available results in an increase in a firm’s cost of capital. As in Christensen, de la Rosa and Feltham (2010), when the cost of information acquisition is fixed, Easley and O’Hara’s result re...

This paper investigates whether there is evidence of the accrual anomaly (Sloan, 1996) in Australia, whereby investors overestimate the impact of accruals on the persistence of earnings. While our results provide general support for the existence of the anomaly in Australia there are a number of idiosyncrasies. First, there is evidence of Australia...

In this study we investigate the association between audit quality and information asymmetry between informed and uninformed traders. We employ three proxies for information asymmetry - absolute price differences, absolute volatility differences, and absolute differences in the long/short ratio of trades - between U.S. stock and options markets, an...

We provide some initial descriptive and exploratory results concerning the earnings-returns relation in periods of poor versus strong macroeconomic performance. Based on data from three countries – Australia, the U.S., and China – our results indicate some differences for U.S. and Chinese firms, but not Australian firms. However the results for U.S...

We investigate firm level financial and non-financial information and their association with project failure for a sample of pre-production gold development firms. We choose pre-revenue generating ‘single project’ mining companies, since project failure is synonymous with company failure for these firms. The setting is interesting due to the high i...

We investigate whether the adoption of IFRS in 2005 by Australian firms has been associated with a loss of potentially useful information about intangible assets, as conjectured by Matolcsy and Wyatt (2006). We find that the negative association between analyst forecast error magnitude/dispersion and aggregate reported intangibles previously docume...

We investigate whether the adoption of IFRS increases the value relevance of accounting information for firms listed on the Australian Securities Exchange. Using a longitudinal study that covers pre-IFRS and post-IFRS periods during 1990-2008, we find that the combined relevance of book value of equity and earnings alters little with IFRS adoption....

In this paper we investigate the market price and trading volume response to a public announcement in two alternative capital gains tax regimes. The first regime applies a concessional tax rate to long-term gains and losses (the U.S.-style setting). The second regime provides concessional tax treatment via indexation of the cost base (the indexatio...

Based on data simulated using a modified Ohlson (1995) valuation model, we investigate effects on inferences of five potential scale-related effects: multiplicative and additive omitted scale factors, scale-varying coefficients, survivorship, and heteroscedasticity. We find that diagnostics identified in prior research are not successful in detecti...

Numerous controversies — from goodwill amortisation to the appropriateness of fair value accounting — illustrate both the importance of measurement questions, and the difficulty often encountered in devising accounting measurement “solutions” that are widely accepted. This paper discusses what might be learned about accounting measurement questions...

There is strong evidence that current levels of accounting diversity are reflected in various dimensions of sharemarket activity. However, there is little available research to help us assess the potential effects of accounting hamonisation on the ASX and its participants. Moreover, the available indications suggest that the answers will not be sim...

This paper provides a review of capital markets research relevant to the goodwill accounting debate. Results indicate that the reported goodwill asset under United States GAAP is associated with share values, but there is no clear evidence of a similar association for goodwill amortisation. Similarly, there is no clear evidence of a competitive dis...

We examine whether the value relevance of reported intangibles differs between financial reporting regimes pre- and post- adoption of Australian equivalents to International Financial Reporting Standards, AGAAP and AIFRS respectively. Using AIFRS and AGAAP measures of goodwill and identifiable intangible assets for the same financial year and testi...

Given we can infer from call option prices the value of the underlying stock as seen by option market participants, using this assessment as a conditioning variable for future stock returns as distinct from past stock prices, do we observe the same price momentum characteristics? Using a sample of firms with traded call options over the 1976-1995 p...

Ball, Walker and Whittred (1979) reported that companies receiving audit qualifications for non-compliance with the requirement to depreciate buildings earned higher than expected returns at the time of the release of the qualification. This paper examines the possibility that this result could be due to cash-flow effects related to the decision no...

Abstract Using a sample of firms with traded call options over the 1976-1995 period, we provide evidence consistent with call option prices anticipating stock returns over subsequent trading weeks. Stocks that option market participants consistently rank as future “good” (‘bad”) performers in a given trading week subsequently reveal these levels of...

Our recognition and disclosure model reveals that price informativeness is determined by the interaction of the qualities of three information sources-the recognized amount, the disclosed information, and the information revealed by price-and accounting expertise acquisition. It also reveals that recognition of an accounting amount alters each of t...

We investigate the ability of disclosed operating cash flow and indirect accruals components to explain annual returns for a sample of Australian firms. Consistent with claims made by accounting standard setters, we find evidence of significant explanatory power for disclosed operating cash flow components beyond aggregate operating cash flows when...

We show harmonizing domestic GAAP with foreign GAAP can have deleterious effects on security market performance, specifically price informativeness and trading volume. Harmonization effects result from interaction between two forces. Direct informational effects depend on whether harmonization increases or decreases GAAP precision. Expertise acquis...

This study investigates how Australian asset revaluations are associated with share prices and non market-based firm value estimates. We find that revalued financial, tangible, and intangible assets can be value-relevant. Although prior research presages the financial assets findings, the intangible assets findings are striking in strength and cons...

We explore how competitive disadvantage affects firms' incentives to disclose or withhold infor Mation of common interest to competing firms within a Cournot duopoly. We establish the existence of a unique disclosure equilibrium to the problem of firms disclosing private infor Mation about aggregate demand, and show that firms choose to withhold in...

We synthesize and extend research exploring differences between U.S. and other countries' Generally Accepted Accounting Principles (GAAP) by investigating whether differences between domestic and U.S. GAAP for U.S.-listėd U.K., Australian, and Canadian firms are associated with firms' returns and prices. The accounting differences we investigate in...

We document that tax considerations influence whether and when a firm withdraws excess assets in its defined benefit pension plan through a reversion. Since a reversion impacts taxable income over many years and alternative methods of withdrawing excess assets exist, we argue that the economically relevant tax-based decision criterion is its ‘diffe...

This study analyses the relation between cash compensation of bank CEOs and accounting earnings from selected discretionary transactions. Results indicate that income from discreationary transactions accompanied by cash flow effects is reflected in the CEO compensation function. There is no reliable indication that income from discreationary transa...

In this paper, I explore several aspects of the empirical relation between compensation contracts and levels of research and development (R&D) activity. I document differences in the explicit compensation contracts offered by high and low R&D firms and examine how the relation between total compensation and stock-and accounting-based performance me...

This paper investigates the extent of intra-industry information transfers associated with the half-yearly earnings announcements of a sample of Australian firms. The ‘omitted factor’ interpretation of Foster's (1981) results is examined using a recursive systems specification of the return generating process to model extra-market return covariatio...

Acknowledgments: The authors are grateful to the Australian Research Council (ARC), CPA Australia, and

This paper examines the economic consequences of changes in the regulation of financial reporting for contingent convertible securities (COCOs). Using a sample of 199 COCO issuers from 2000-2004, we document significantly negative shareholder reactions around event dates in 2004 that relate to increased disclosure requirements and to a required cha...