The Journal of Applied Research in Accounting and Finance

The Journal of Applied Research in Accounting and Finance (JARAF) Vol. 5, No. 2, December 2010

7 Pages Posted: 5 Feb 2011 Last revised: 18 Aug 2014

See all articles by Tyrone M. Carlin

Tyrone M. Carlin

Southern Cross University; The University of Sydney Business School

Nigel Finch

Saki Partners

Date Written: February 4, 2011


That which at first blush seems simple often reveals deep complexity upon closer, more prolonged investigation. So it is with discount rates. As hammers and nails are to a builder, discount rates are to practitioners in the domain of accounting, finance and financial management. They are, and they are regarded as, fundamental tools — an essential element of any and every repertoire.

This raises a paradox. The endemic character of discount rates engenders a sense of ease and familiarity amongst those for whom the application of such tools is an element of the daily stock in trade. Nonetheless, each of the four papers which comprise this edition of the journal revolve around this one phenomenon, and the difficulties which can rapidly emerge when moving from the abstract to the practical dimension.

Though each of the papers in this edition is focused on questions relating to discount rates, two distinctive sub-themes are explored. The first, traversed in the contributions by Davis, Hall and Dempsey et al examine in detail the choice between the application of pre-tax and post-tax discount rates. These papers raise a consistent thread of argument that there are enormous dangers associated with the application of pre-tax discount rates.

This should be a matter of concern for practitioners, regulators and especially standard setters, who have been enamoured of pre-tax discount rates in a number of financial reporting settings.

The second sub-theme examines discount rate choice by Australian listed firms undertaking the process of goodwill impairment testing. There has been a degree of controversy in the financial reporting literature on this point over the past several years, and the contribution by Ji in this edition brings together a heavier weight of evidence in relation to this question than has been previously available. The results suggest that auditors, regulators and company directors should be paying particularly close attention to this matter.

As we conclude another year, we extend our thanks, yet again, to our editorial board, to our team of reviewers, our contributors and especially our readers, who now number in excess of 10,000 around the globe.

Keywords: financial reporting

JEL Classification: M40, M41

Suggested Citation

Carlin, Tyrone M. and Finch, Nigel, The Journal of Applied Research in Accounting and Finance (February 4, 2011). The Journal of Applied Research in Accounting and Finance (JARAF) Vol. 5, No. 2, December 2010. Available at SSRN:

Tyrone M. Carlin

Southern Cross University ( email )

Lismore, New South Wales 2480

The University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
+ 61 2 9036 7230 (Phone)
+61 2 9351 7471 (Fax)


Nigel Finch (Contact Author)

Saki Partners ( email )


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