This study examines effects of mandatory partner rotation (MPR) on audit fees of Australian‐listed companies. Using a fee changes approach, evidence of fee increases in year of the MPR driven by smaller offices of non‐Big 4 auditors is found, consistent with supply‐side resource constraint arguments. Broadly consistent findings are observed using a fee levels approach. Appointment of inexperienced partners to MPR engagements has no discernible effect on fees. Additional analysis of audit reporting lag indicates fee increases reflect additional audit effort as opposed to a pricing strategy. Overall, the evidence supports recent moves by policy‐makers to soften MPR requirements.

Since Amihud and Mendelson (1987) documented a higher open-to-open return volatility compared to close-to-close return volatility in the US market, there have been various explanations offered, such as call auction opening, a long halt of trade, and specialist systems. No consensus has been reached so far. As an order-driven dealership market, the Hong Kong stock market provides another dimension for examination. If halt of trade is the major cause of the open-to-open volatility in the Hong Kong market, this volatility should also be higher. This is not observed. Positive autocorrelation of the open-to-open return series also suggests that there is no temporary price deviation at market opening. We view these as consistent with the specialist argument put forth by Stoll and Whaley (1990). Copyright Blackwell Publishers Ltd 1999.

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Using a unique hand-collected sample, we study market reactions to mining developers announcing project finance loans. We document a significant three-day abnormal return of 2.6% and a 3.4% reduction in abnormal bid-ask spread around loan approvals, consistent with information transfer from private lenders to equity holders and reduction in asymmetric information. Cross-sectional analysis reveals a negative association between announcement return and hedging requirements specified in loan contracts, which becomes insignificant after controlling for treatment effects of hedging. Specialist banks do not charge lower rates but are more likely to impose hedging requirements, consistent with rent extraction due to bargaining power. (JEL G30, G32)

Prior studies on chief executive officer (CEO) compensation focus mainly on large firms. This paper aims to suggest new factors associated with CEO compensation for small, homogeneous firms, specifically, Australian early-stage mining exploration entities (MEEs). We document a set of predictors of CEO compensation proxying for economic performance, including geological prospectivity components of the exploration and evaluation (E&E) asset account and proceeds from equity raisings that enhances survival probabilities. We find positive associations between these predictors and CEO remuneration. In terms of CEO pay mix, we find that E&E asset acquisitions and equity proceeds are both positively associated with the proportion of option value in CEO total compensation. This suggests MEEs allocate their cash resources to investment opportunities, rather than CEO compensation. Overall, these findings, coupled with a significant and positive pay-performance relation, provide evidence supporting efficient compensation practices in the MEE context.