Massey University School of Accountancy PhD Theses

Abstracts of PhD Theses Completed

Lei Cai

The Mispricing of Real Earnings Management in the Post-Sarbanes-Oxley Era

Prior literature provides evidence that managers use both accruals earnings management (AM) and real activities manipulation (RM) to achieve desired earnings objective. But few have studied the role of governance on RM. Cohen et al. (2007) document firms switching from AM to RM after the passage of Sarbanes-Oxley Act (SOX). I expect RM could do more harm than AM on future performance. The implication is that opportunistic managers in better governance firms are more likely to manipulate earnings through RM such as reducing R&D expenses, resulting in worse future performance.

In my study, I will use two-stage path analysis to examine the relationship between corporate governance and future performance through AM and RM as mediating factors. In the first stage, I will investigate whether corporate governance affects the trade-off between AM and RM. In the second stage, I will explore the consequence of each type of manipulations on future firm performance. Due to the study involves multiple dependent variables that could be correlated with each other, I will adopt some multivariate statistical methods in the analysis, such as PCA, clustering, and RDA. 

Shahwali Khan

Volatility and Value Relevance of Comprehensive Income

This thesis investigates the issue of volatility and value relevance of comprehensive income. IASB’s latest exposure draft (IASB, 2010) proposes a single statement of comprehensive income (CI). I segment the thesis into three parts. First I investigate the volatility of CI and observe its relation with market measures of risk. Second I measure whether CI is a better measure to summarize firm’s performance. Third I assess whether CI has better predictive power to predict future operating cash flows, future net income and future CI. As asset revaluations are voluntary under IAS 16 Property, Plant and Equipment, I will show the impact on the volatility of CI, with and without revaluations.


Rahayu Abdul Rahman

The Impact of Culture, Corporate Characteristics and Governance on Corporate Social Reporting of Malaysian Shariah-Approved Companies 

The main purpose of this thesis is to examine the association between religious ethical values and earnings quality. This study builds upon the principals and ethical framework of Islamic teachings (Shariah). It analyses how such ethical values affect the earnings quality of Malaysian listed firms. Shariah is the Islamic code for day-to-day conduct of individuals under Islam. It provides principles of good practices including accountability at both individual and organizational levels. The study finds a significant negative association between Shariah, and real and accrual-based earnings management. In particular, this study finds that Shariah is associated with lower abnormal discretionary accruals, abnormal cash flow from operations, and abnormal discretionary expenses.  Further, results of the study reveal that Shariah is associated with higher levels of accounting conservatism. Overall, the results suggest that Shariah is an important monitoring mechanism in limiting managerial opportunism and, consequently, enhances the quality of accounting earnings. 


Abstracts of PhD Research in Progress

Frances Chua

Disclosure of Corporate Code of Ethics

There have been increasing calls for corporate governance reforms in countries engaged in capitalistic pursuits in the past few decades. Subsumed in these calls is the drive to restore public interest and to promote better ethics among business professionals. In an era of increasing emphasis on corporate accountability, pressures for corporate betterment come not only from those who purportedly have a “stake” in corporations but also from the corporations themselves. This is reflected in the increasing number of corporations producing codes of ethics to show their ethical commitments.

Research into corporate codes of ethics has identified a variety of reasons why corporations produce codes of ethics. Most of such reasons tend to be functional and descriptive in nature and are not sufficiently insightful in their explanations. The purpose of this study is to go beyond functionality and provide a better understanding of the underlying reasons for ethical disclosures by corporations. Institutional theory is adopted to explain the conceptual component of the study, which includes a critical examination of the intricate relationships between business ethics and trust, the pressures confronting corporations, the prevalence of corporate codes of ethics, and the various reasons for code adoption. A set of propositions focused on the underlying reasons for code disclosures by companies is developed and their validity will be tested empirically by examining the ethics disclosures of the top 1000 U.S. companies between 2000 and 2010. It is hoped that such an analysis will help to explain the actions taken by the corporations to increase their ethics and trust propensity in light of regulatory guidance and any other motivations.

Adnan A. Khattak 

Corporate Governance and Stock Price Synchronicity: An International Comparison

Stock price synchronicity is the tendency of stock prices to move in the same direction in a particular period of time. Morck, Yeung and Yu (MYY, 2000, using 1995 data, document that stock prices move together more (less) in low (high) GDP economies due to difference in variations in property rights arrangement of the sample countries. They also report that stock price synchronicity, defined as R2 (coefficient of determination) from asset pricing model, is a useful measure of the amount of firm-specific information impounded in stock prices in international markets. Recent empirical research argues that R2 does not capture firm-specific information (sales, ROA, ROE, and Size) and states that R2 is affected by many other variables such as a country’s economic variables, and corporate governance measures. The question is whether GDP is the only driver of stock price synchronicity or whether firm-specific informationalso plays a role in stock price co-movement. The study investigates other determinants of stock price synchronicity beyond GDP specifically to explore the relation between R2 and firm-specific information.

Since 1995, most of the world’s capital markets and economies have experienced many significant changes which have been brought about due to economic and corporate crises. The changes are mostly about the way corporations are governed. Most of the countries have incorporated regulatory, institutional, accounting standard-setting and CG reforms, e.g. the Sarbanes-Oxley Act (2002), Corporate Law Economic Reforms Program (CLERP, 2004), IFRS (2001), and Codes of corporate governance. There has also been a considerable shift in the political and economic systems of many of the countries of the world. These improvements in regulatory and institutional regimes and the shift towards the market system by many developing countries raise the question of whether these changes have any beneficial effects on the determinants and level of stock price co-movements. Therefore, the study investigates the effects of improved regulatory and institutional changes in reducing stock price synchronicity.


Varsha Kashyap                                             

Firms’ Financial Accounting and Assurance Practices under Australian Carbon Tax and New Zealand’s Emission Trading Scheme: An Exploratory Study

The purpose of this study is to survey the carbon financial accounting practices of the companies affected under Australian Carbon Tax and New Zealand’s Emission Trading Scheme (ETS).  It will present the findings as guidance on carbon financial accounting in the absence of a uniform standard. Added to this survey will be an examination of the relation between (1) firms’ characteristics; (2) firms’ carbon emission levels carbon emissions related disclosures and the way carbon accounting is being conducted in the affected companies. 

The findings presented by this study will be useful for establishing a guideline for accountants and auditors to help affected companies financially account for carbon allowances. The findings will also be useful to accounting policy makers in understanding how and why the affected companies financially account for their carbon allowances in a certain way. This can further help the accounting policy makers in developing a uniform carbon financial accounting guidance, given that IASB is yet to issue draft guidance on the financial accounting of carbon emission. Lastly, with the scant amount of literature available in the field of financial accounting and assurance of carbon emissions under Carbon Tax and ETS, this project will also give meaningful insight to academics and researchers to further their studies into this subject.


Feona Sayles

Patching Up the Differences: An Exploration of Gang Identity in Whanganui

This research will explore adult NZ gang identity and the ways that visible signs of this identity have been interpreted by members of the Whanganui community. This research arose as a result of the District Council (Prohibition of Gang Insignia) Act 2009 (‘Gang Insignia Act 2009’) which allows the Whanganui District Council to make bylaws prohibiting the wearing of gang insignia in certain areas.

The ‘Gang Insignia Act 2009’ reflects a view that the wearing of gang insignia should be considered a social problem that requires legal intervention. My research will adopt a social constructionist perspective and will seek to discover the meanings attributed to gang insignia by members of the Whanganui community, how these meanings have developed, and the consequences arising from adopting the legislative meaning. My research will involve an analysis of media representations of ‘gangs’ alongside semi-structured interviews with gang members, the public, and other relevant parties in Whanganui. 


Trish O’Sullivan

Online Shopping: Pearls and Pitfalls for New Zealand Consumers – How to Increase Consumer Protection and Confidence

The general theme of my study will be to identify the legal issues faced by consumers shopping online and to develop ideas for improving consumer protection and confidence in online shopping. An increase in consumer confidence should lead to an increase in the levels of retail shopping online which would have flow on economic benefits. 

Recent reports and surveys in New Zealand and Australia show that online shopping currently makes up 5-6% of all retail shopping and increased by around 12% in Australia in the 12 months ending in July 2011. With the level at between 5 and 6 % of all retail shopping there is scope for significant further growth in online shopping. Online shopping has significant economic benefits for retailers – among other things, they do not need to lease expensive retail space, they have reduced overhead costs and their customers can shop all hours. These benefits can lead to reduced prices for consumers and more shopping choices.

An OECD report released in November 2009 notes, “Given the significant benefits of e-commerce to the economy and to consumers, it is important for governments and stakeholders to work together to ensure that the benefits are fully realised, which includes finding ways to boost consumer confidence in online transactions.”


Massey Contact Centre Mon - Fri 8:30am to 5:00pm 0800 MASSEY (+64 6 350 5701) TXT 5222 Web chat Staff Alumni News Māori @ Massey