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Asset write-ups or revaluations are a common feature of Australian accounting and reporting practice. This paper adopts the perspective that efficiency rather than opportunism is the reason for revaluations. It argues asset revaluations are a low-cost mechanism for mitigating underinvestment problems induced by the presence of risky debt and exacerbated by the manner in which conventional borrowing limitations are written. It is hypothesized that revaluation should be positively related to the presence of growth opportunities, financial leverage and the presence of borrowing limitations; and negatively related to a firm's ability to finance growth internally. The empirical results generally support the hypothesized relationships.

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Auditing texts and the statements issued by professional accounting associations commonly emphasize that audit reports are intended to 'convey information'. However, several commentators have claimed that auditors are reluctant to qualify their reports because the publication of audit qualifications would adversely affect the interests of corporate participants. This view of auditors' attitudes seems especially common in Australia. For example, Chambers (171, p. 159) wrote: Any serious qualification puts readers on notice of disagreement. It may issue in demands for explanation at annual meetings, or inquiries by official or regulatory agencies, or notice and comment in the financial press. As qualification may in these ways be damaging to the confidence in the company of investors and creditors, and the value of outstanding securities, the caution of auditors and their reluctance to give qualified reports is understandable. Australian Audit Qualifications, 1961-72The form and content of audit reports has varied over time and differs between jurisdictions. During the period under review, Australian statutes required auditors to report whether financial statements conveyed a 'true and fair view' of the state of a