Responses by Australian auditors to the global financial crisis

Xu, Yang; Carson, Elizabeth; Fargher, Neil; Jiang, Li

doi:10.1111/j.1467-629x.2011.00459.x

Cited by 138 publications

(166 citation statements)

References 49 publications

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“…For example, there were three changes of Prime Minister between 2010 and 2013; see Smales (2015) for more details. 9 In contrast to the capital structure literature, there are more studies conducted during the GFC period in other areas, such as audit committee ; financial risk management (Ganegoda and Evans, 2014); superannuation investment choices (Gerrans, 2012); individual financial risk tolerance (Gerrans et al, 2015); banking (Akhtar and Jahromi, 2015); corporate governance (Adams, 2012); bank risk taking behaviour (Hoang, Faff, and Haq, 2014); trade credit (Kestens, Cauwenberge, and Bauwhede, 2012), bank regulation (Levine, 2012); and accounting areas (Mala and Chand, 2012;Xu et al, 2013). Having said that, there are two recent studies slightly related to the financial crisis by examining capital structure issues through business cycles (Akhtar, 2012;Liu and Chen, 2012).…”

Section: Introductionmentioning

confidence: 99%

A Contemporary View of Corporate Finance Theory, Empirical Evidence and Practice

2015

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This paper uses a survey of Australian Corporate Treasurers to shed light on the gap between the theory and practice of corporate finance in Australia. Seven areas are examined: capital structure, payout policy, cash holdings, initial public offerings, seasoned equity offering, mergers and acquisitions, and corporate governance. We also exploit the Global Financial Crisis to examine the effect of liquidity shocks on a firm's capital structure choices. We then compare our Australian survey results with results from a comprehensive U.S. survey conducted by Graham and Harvey (2001). Our survey shows that the board of directors play the most important role in determining capital structure decisions and that corporate treasurers play the most important role in cash holding decisions. This contrasts with the academic literature that has typically focused on the role of CEO in both capital structure and cash holdings decisions. In addition, our respondents do not view the tax advantage of interest deductibility to be of first order of importance for debt issuance choices, which contrasts with most of the U.S. empirical studies. Finally, we juxtapose the theory-practice perspective, with a review of the most recent five years (2011)(2012)(2013)(2014)(2015) of corporate finance research published in the leading Asia Pacific Basin finance journals. Abstract This paper uses a survey of Australian Corporate Treasurers to shed light on the gap between the theory and practice of corporate finance in Australia. Seven areas are examined: capital structure, payout policy, cash holdings, initial public offerings, seasoned equity offering, mergers and acquisitions, and corporate governance. We also exploit the Global Financial Crisis to examine the effect of liquidity shocks on a firm's capital structure choices. We then compare our Australian survey results with results from a comprehensive U.S. survey conducted by Graham and Harvey (2001). Our survey shows that the board of directors play the most important role in determining capital structure decisions and that corporate treasurers play the most important role in cash holding decisions. This contrasts with the academic literature that has typically focused on the role of CEO in both capital structure and cash holdings decisions. In addition, our respondents do not view the tax advantage of interest deductibility to be of first order of importance for debt issuance choices, which contrasts with most of the U.S. empirical studies. Finally, we juxtapose the theory-practice perspective, with a review of the most recent five years (2011)(2012)(2013)(2014)(2015) of corporate finance research published in the leading Asia Pacific Basin finance journals.

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Section: Introductionmentioning

confidence: 99%

A Contemporary View of Corporate Finance Theory, Empirical Evidence and Practice

2015

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“…They suggested that companies who initiate clawbacks are perceived to have higher accounting quality and lower audit risk, as indicated by shorter ARL for these companies. Xu et al (2013) examined the performance of a sample of Australian companies from a macroeconomic perspective, evaluating auditor activity in response to the global financial crisis of 2008. They found that the financial crisis did appear to influence auditor effort and perception of risk.…”

Section: Performance and Financial Conditionmentioning

confidence: 99%

An International Perspective on Audit Report Lag: A Synthesis of the Literature and Opportunities for Future Research

et al. 2016

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Audit report lag (ARL) is the length of time from a company's fiscal year-end to the audit report date, and is often viewed as the most important financial reporting timeliness determinant. Given that timeliness is an area of interest to investors, managers, regulators, auditors and academics, an understanding of ARL determinants is extremely important. As financial markets become more globally oriented, an international understanding of ARL determinants becomes even more important. This paper summarizes the extant literature on ARL and its determinants with an emphasis on international literature. Our review categorizes prior research based on company-specific and auditrelated factors, and explores the associations that have been identified with respect to ARL. Finally, we identify possible areas of interest not currently present in the literature and speculate on several opportunities for future research.

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“…There are currently very few studies, either in Spain (Mareque, López-Corrales, & De Lima, 2012;Mareque, López-Corrales, & Pedrosa, 2011) or in other countries (Carson, Simnett, & Tronnes, 2011;Cheffers, Whalen, & Sielis, 2011;Cheffers, Whalen, & Thrun, 2010;Feldmann & Read, 2010;Jiang, 2013 and that show the effect of the financial crisis on audit reports. A recent review by Carson et al (2012) provides a synthesis of the existing academic literature on the presentation of reports containing problems of continuity.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Therefore, the rate of bankruptcies without prior issue of a going concern uncertainty opinion does not seem to have decreased notably during the period of financial crisis. Xu et al (2011Xu et al ( , 2013 published two papers on firms listed on the Australian stock exchange. In the first, they make a descriptive study for a sample of 8382 firms, in order to examine the response by Australian auditors to the current world financial crisis.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Furthermore, firms belonging to the financial sector, the materials sector, and the industrial sector received the most qualified reports. In relation to the audit firm, they study whether there are any differences between the increase in the reports issued by the Big-4 and the Non-Big-4, concluding that both types of auditor increase the frequency of issue of reports with going concern qualifications if the period 2008-2009 is compared with 2005-2007. In the second paper, Xu et al (2013) examine the impact of the global financial crisis on auditor behaviour in Australia. Using a sample of listed companies, they examine whether the global financial crisis has impacted the propensity of auditors to issue going concern qualifications, and whether it has increased audit effort as reflected in audit fees and audit reporting lag.…”

Section: Literature Reviewmentioning

confidence: 99%

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Audit reporting for going concern in Spain during the global financial crisis

Mareque

López-Corrales

Pedrosa

2017

Economic Research-Ekonomska Istraživanja

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The current world financial crisis is causing real difficulties in the operation of firms and has generated renewed interest in audit reports. This study aims to analyse the impact of the financial crisis on the audit reports issued by auditors. We focus especially on those reports that contain questions relating to going concern situations. The sample analysed is formed by 2935 audit reports of unlisted Spanish firms for the years [2007][2008][2009][2010]. From the results obtained we can affirm that the crisis being suffered by Spanish firms has not gone unnoticed by audit professionals. Our research reveals that as the crisis in Spain has worsened, the proportion of reports that include references to going concern situations has increased in comparison with 2007, when the financial crisis had not become manifest in Spain. The sectors of the Spanish economy most affected by the crisis are real estate and construction. Taking into account whether the audit firm issuing the report is Big-4 or Non-Big-4, no significant differences can be appreciated in the percentage of reports issued with going concern qualifications before the start of the crisis (2007) and during the crisis (2008)(2009)(2010).

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Responses by Australian auditors to the global financial crisis

Cited by 138 publications

References 49 publications

A Contemporary View of Corporate Finance Theory, Empirical Evidence and Practice

A Contemporary View of Corporate Finance Theory, Empirical Evidence and Practice

An International Perspective on Audit Report Lag: A Synthesis of the Literature and Opportunities for Future Research

Audit reporting for going concern in Spain during the global financial crisis

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