Although previous research has generally found that goodwill reported in firms' financial reports is relevant to equity valuation, no known studies have directly examined whether the value-relevance of purchased goodwill holds as it ages. We examine this issue in the Australian context to determine whether the market attaches different values to the components of Australian firms' goodwill when it is disaggregated into different 'ages'. Our results suggest that recently acquired goodwill has information content whereas 'older' goodwill does not. Our findings have implications for goodwill accounting practice and recent changes to goodwill accounting standards. Copyright (c) The Authors Journal compilation (c) 2006 AFAANZ.

The call for enhanced financial literacy amongst consumers is a global phenomenon, driven by the growing complexity of financial markets and products, and government concerns about the affordability of supporting an ageing population. Worldwide, defined benefit pensions are giving way to the risk and uncertainty of defined contribution superannuation/pension funds where fund members now make choices and decisions that were once made on their behalf. An important prerequisite for informed financial decision‐making is adequate financial knowledge and skills to make competent investment decisions. This paper reports the findings of an online survey of the members of a large Australian public sector‐based superannuation fund and shows that although respondents generally understand basic financial matters, on average, their understanding of investments concepts, such as the relationship between risk and returns, is inadequate. These results highlight the need for education programs focusing specifically on developing fund members’ investment knowledge and skills to facilitate informed retirement savings decisions.

Purpose -This paper aims to investigate associations between related party transactions (RPTs) and governance and performance factors of new economy firms. Design/methodology/approach -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. Findings -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.Research limitations/implications -The findings are generally consistent with the "conflict of interest view" proposed by Gordon et al. suggesting RPTs do not serve shareholders' interests. Practical implications -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.Originality/value -This study contributes to the limited research on the effects and implications of RPTs.

The release of AASB 1028, Accounting for Employee Entitlements, followed a period of intense lobbying and debate, resulting in a standard that contained significantly less stringent requirements than those proposed in the preceding exposure draft. This article examines the incentives for public companies to lobby on the proposals in ED 53, Accounting for Employee Entitlements, for the recognition of superannuation commitments of Australian companies. First, it analyses written submissions of public companies to identify the relative importance of superannuation as opposed to other types of employee benefits, and to identify the issues within superannuation that were of particular concern. Second, characteristics of lobbying companies are compared with non-lobbying companies to identify whether the types of arguments put by lobbyists are indicative of systematic differences between lobbying and non-lobbying companies. The study finds that companies responding to ED 53 were predominantly concerned with issues relating to defined benefit superannuation plans and the adverse effects of the proposals on income volatility. Consistent with this, companies sponsoring defined benefit plans were more likely to lobby against the proposals. Companies that chose to lobby were also larger in size and had higher income volatility than non-lobbying companies. The article provides a mapping between the arguments used by lobbying companies and their economic characteristics and evidence that, at least in the case of superannuation issues, lobbying behaviour truthfully revealed the preferences of lobbyists. The findings differ from those of comparable U.S. studies, the most obvious reason for this being institutional differences. This underscores the need to control for institutional differences and to exercise caution in generalizing results across countries.

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