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We investigate the value-relevance of capitalised R&D on the balance sheet, and the extent to which R&D accruals improve the association between accounting-based measures of firm performance and capital market returns for Australian listed companies. This is a regulatory setting where management discretion in the capitalisation decision is permitted and can be empirically observed. Our results suggest that capitalised R&D on the balance sheets of selective capitalisers is value-relevant; that is, the ability of capitalised R&D to explain information contained in prices (given information conveyed by other components of the balance sheet) is statistically significant. For the same group of firms R&D accruals (particularly the initial capitalisation) improve accounting earnings as a measure of performance but only for the pooled sample using contemporaneous returns. The results for the fully expensing sample are less clear, perhaps due to the small sample size.

Regulation Fair Disclosure (FD), imposed by the Securities and Exchange Commission in October 2000, was designed to prohibit disclosure of material private information to selected market participants. The informational advantage such select participants gain is unclear. If multiple "insiders" receive identical information, private information is immediately incorporated in price and each insider has zero expected profit. If, on the other hand, Regulation FD has curtailed the flow of information from firms, private information becomes longer-lived and more valuable. Hence, market makers will demand increased compensation by widening the adverse selection component of the bid-ask spread. We identify the cost components of the bid-ask spread for a sample of NASDAQ stocks surrounding the implementation of Regulation FD. Controlling for other factors affecting the spread, we find that adverse selection costs increase approximately 36% after Regulation FD. We interpret our finding as Regulation FD failing to achieve one of its desired objectives.

We examine the relation between Australian CEO pay and accounting and share price performance indicators, as well as firm size, from 1987 to 1992 inclusive. Our results show no evidence of a linkage between CEO pay and performance. This finding is robust to the use of single year or pooled tests, as well as the specific identification of CEO changes.``Long window'' analysis of the pay-performance relation yields similar results. Possible explanations include incomplete disclosure of CEO compensation, the influence of other claimholders (e.g., debtholders), the existence of alternative monitoring mechanisms and the extent to which CEO compensation is effectively deferred. However, subject to these possibilities, our results can be interpreted as consistent with allegations that Australian CEOs have had, by international standards, a relatively small proportion of total compensation``at risk''.

In October 2014, the Australian National University announced that it was divesting from seven fossil fuel-intensive companies. This announcement sparked an unprecedented response in the community, both positive and negative. We examine this decision, the divestment movement in general, the science behind the issue and strategic responses, both policy and organisational. We argue that a confluence between policy responses and organisational responses is beginning to emerge that will lead to greater action on climate change.

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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.

This paper examines accounting and non-accounting based restrictive covenants in Australian private debt agreements. With respect to the former, our findings differ from previous research on public debt. We find more varied definitions of constraints and their specified tightness in private debt contracts than in public debt contracts. Further, limits on interest cover are found to be continuing constraints and not 'once-off' limits. The paper reports frequent use of more specific or 'tailored' accounting based constraints and the frequent inclusion of off-balance sheet numbers in the measurement rules specified.The paper also provides the first Australian evidence on the use of nonaccounting based constraints. These are pervasive and cover a wide range of corporate activity. While largely consistent with previous research the paper also reports evidence of restrictions previously argued to be sub-optimal and hence, unlikely to be observed. Specifically, there are frequent restrictions on firms' production and investment policies.We are grateful to several legal firms for providing generous access to private debt contracts. We also thank Greg Whittred, Jilnaught Wong (the Editor) and an anonymous referee for many helpful suggestions. Tony Abrahams and Anusha Kangatharan provided valuable research assistance.