JARAF Editorial, Volume 7 (1) July 2012
Editorial of the Journal of Applied Research in Accounting and Finance, Volume 7 (1) July 2012.
8 Pages Posted: 25 May 2012 Last revised: 20 Aug 2014
Date Written: May 22, 2012
Welcome to this edition of the Journal of Applied Research in Accounting and Finance. Now in its seventh year, JARAF continues to encourage and promote applied research that has practical applications in the contemporary teaching and practice of accounting and corporate finance. In this issue we examine topics related to M&A activity and corporate governance, financial reporting under IAS and legal aspect of fundraising.
In our first article, Nigel Garrow, Guy Ford and Tom Valentine from Macquarie Graduate School of Management examine aspects of firm performance delivered by merger and acquisition activity and aspects of best practice corporate governance. As many researchers have shown, corporate actions are often value destroying from the perspective of the acquiring firm and this research team further examines the relationship between tenure and remuneration of chairman and CEO against the historical M&A outcome for acquiring firms. Given the recent volatility in capital markets, it is likely that increased M&A activity will undoubtedly follow in the not-too-distant future and this article has some interesting insights for those likely to be on the buy-side.
Next, Cenap Ilter from Grant MacEwan University examines the effects of inflation and devaluation of financial statements under International Accounting Standards. As Ilter demonstrates, a broad range of possible valuation outcomes is possible when differing assumptions are brought to bear in the preparation of financial reporting under IAS. This inconsistency is further amplified in high inflationary economies, such as those emerging economies that increasingly have a more pronounced role in supporting growth and investment in the tumultuous developed world. The scope of this reporting issue is non-trivial, as many multinational firms, who hold investments or subsidiaries in high inflation economies, are likely to be impacted by inconsistencies in the current standard.
Finally, Barbara Mescher from the University of Sydney examines the law relating to financial forecasts used in prospectuses. For any capital raising, forward-looking financial information forms the basis of investment evaluation and pricing for potential investors, is a critical enabler in the success of many fund raising initiatives and underpins the integrity of capital markets. Mescher ‘s analysis of the existing legislative framework in Australia suggests that the basis of assumptions in financial forecasts is highly contentious and the consequences for directors signing off on a prospectus are grave, and she concludes that further clarification is required by the regulator to assist corporations in accessing equity funding.
Keywords: financial reporting
JEL Classification: M40, M41
Suggested Citation: Suggested Citation