A Governance Perspective on Executive Options Plans - Reflections on Some Australian Empirical Evidence

Carlin, Tyrone M.; Ford, Guy

doi:10.2139/ssrn.536482

Cited by 8 publications

(5 citation statements)

References 15 publications

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“…Previous accounting literature has utilised several approaches to examine the large increase in the use of SBC and its impact on firms’ market valuation and financial reporting. For example, Carlin and Ford (: 78) in their study of large listed Australian companies (1997–2002) highlight that the use of share options compensation packages for directors and executives had ‘grown substantially’ and analyse this growth from a governance perspective. They point to increasing evidence that share options schemes were being ‘associated with a range of dubious behaviour on the part of executives’ (p. 78).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Therefore, cash‐settled‐based payments might be used for the purpose of earnings management, among other things, an issue that needs further consideration by the IASB and other standard setters. This also suggests that a ‘careful watch’ on the structure of SBC payments is another important element of governance oversight (Carlin and Ford : 82).…”

Section: Assessing the Statistical Impact Of Sbc Expense On Selected mentioning

confidence: 99%

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Does Accounting Treatment of Share‐based Payments Impact Performance Measures for Banks?

Ismail

Adwan

Stittle

2018

Australian Accounting Review

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This paper identifies, evaluates and analyses the resulting impact of mandatory expensing of share-based compensation (SBC) under IFRS2/FASB123R on a set of widely used performance measures in the EU and US banking industry. The paper shows that the accounting treatment of SBC schemes, following the mandatory adoption of IFRS2/FAS123R, has a statistically significant negative impact on the selected performance measures over the period . The impact also seems to be material, yet modest, for US banks and only for large and high-growth EU banks, indicating that earlier public concerns and criticisms of the implementation of IFRS2/FAS123R are largely unsubstantiated. The findings also show that banks continue to use SBC, but there is a reduction, albeit insignificant, in the recognised SBC expense over the period 2009-11. That is, earlier public concerns that firms would curtail employing SBC in their employees' compensation schemes to avoid the effect of SBC expense recognition on their financial ratios came to light after the first option life-cycle in the post-adoption period was over. The findings also show a marked movement towards using cash-settled-based payments, possibly due to their manipulative accounting treatment, a potentially interesting issue for related accounting research and accounting standard setters.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Assessing the Statistical Impact Of Sbc Expense On Selected mentioning

confidence: 99%

Does Accounting Treatment of Share‐based Payments Impact Performance Measures for Banks?

Ismail

Adwan

Stittle

2018

Australian Accounting Review

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“…The unexpected revelation of NAB's failure to manage risk adequately in its foreign currency dealings has “prompted all financial institutions in Australia to review their management of trading” (Whyte and Boyd, 2004, p. 64), since the major banks in particular are focused on an aggressive pursuit of profits in relation to foreign currency dealing (Baker, 2004, p. 55). Against the backdrop of a number of high‐profile corporate collapses in the late 1990s, there has been a growing public awareness of the need for reform of corporate governance practices (Carlin and Ford, 2006, p. 75; citing Di Piazza and Eccles, 2002). Consequently, in Australia and other countries there has been “an attempt to remedy ills ranging from board structure and relationship with management to disclosure requirements and audit independence” (Carlin and Ford, 2006, p. 75), in order to provide reassurance that the systems underlying financial reports can be relied upon.…”

Section: Nab's Crisis and Responsementioning

confidence: 99%

“…Against the backdrop of a number of high‐profile corporate collapses in the late 1990s, there has been a growing public awareness of the need for reform of corporate governance practices (Carlin and Ford, 2006, p. 75; citing Di Piazza and Eccles, 2002). Consequently, in Australia and other countries there has been “an attempt to remedy ills ranging from board structure and relationship with management to disclosure requirements and audit independence” (Carlin and Ford, 2006, p. 75), in order to provide reassurance that the systems underlying financial reports can be relied upon.…”

Section: Nab's Crisis and Responsementioning

confidence: 99%

What lies beneath? Financial reporting and corporate governance in Australian banks

Abraham

Deo

Irvine

2008

Asian Review of Accounting

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PurposeThis paper aims to focus on a number of unexpected disclosures by major Australian banks, to highlight the subjectivity of financial reports and their failure to present an accurate portrayal of the underlying realities, and to propose that corporate governance disclosures are required to provide reassurance that financial reports are trustworthy.Design/methodology/approachMouck's institutional framework of financial regulation portrays financial reporting as a “game” played within a set of rules. It provides insights about the subjectivity of financial reports which are illustrated with archival evidence from banks' reports and activities.FindingsThe banks' financial reports were shown, in the light of later revelations, to portray an unrealistic view of their operations. Disclosures about corporate governance practices play a strong legitimising role, enhancing perceptions that financial reports correspond with organisational realities.Research limitations/implicationsThis study considers a narrow population of companies within one industry. By extending the focus, greater evidence could be provided that accounting standards and financial reporting requirements have lost their connection with business practices.Practical implicationsIn spite of financial reporting reforms, financial reports are becoming less reflective of companies' activities and performance. This questions the usefulness of accounting standards, and the effectiveness of regulatory systems. Future reforms to accounting standards need to address these issues.Originality/valueThe paper demonstrates the contention that the financial reports of several Australian banks fail to match the realities that lie beneath is really a broader challenge to the usefulness and credibility of Australia's system of financial reporting and regulation.

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“…In the wake of a global epidemic of revelations of corporate misbehaviour in the beginning years of this decade came a resurgence in interest in and attentiveness towards the objective of improving corporate governance (Carlin & Ford, 2004). A major element of that wave of consciousness was manifested in a heightened focus on the need for improvements in the transparency, consistency, comparability and decision usefulness of corporate financial reports.…”

Section: Introductionmentioning

confidence: 99%

The Rise and Impact of Hybrid Securities in Australian Listed Corporations

Carlin

Finch²

2005

SSRN Journal

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A Governance Perspective on Executive Options Plans - Reflections on Some Australian Empirical Evidence

Cited by 8 publications

References 15 publications

Does Accounting Treatment of Share‐based Payments Impact Performance Measures for Banks?

Does Accounting Treatment of Share‐based Payments Impact Performance Measures for Banks?

What lies beneath? Financial reporting and corporate governance in Australian banks

The Rise and Impact of Hybrid Securities in Australian Listed Corporations

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