PurposeThe purpose of this paper is to investigate the relation between a firm's cash conversion cycle and its profitability.Design/methodology/approachThe relation between the firm's cash conversion cycle and its profitability is examined using dynamic panel data analysis for a sample of Japanese firms for the period from 1990 to 2004. The analysis is applied at the levels of the full sample and divisions of the sample by industry and by size.FindingsA strong negative relation between the length of the firm's cash conversion cycle and its profitability is found in all of the authors’ study samples except for consumer goods companies and services companies.Originality/valueTraditional focus in corporate finance was on the long‐term financial decisions, particularly capital structure, dividends, and company valuation decisions. However, the recent trend in corporate finance is the focus on working capital management. Most of working capital management literature is based on the US experience. This study investigates the relation between the firm's cash conversion cycle and its profitability of Japanese firms where the organizational structure is totally different from that of the US firms; most of the Japanese firms are interconnected and related through corporate groups (keiretsu).

PurposeThe purpose of this paper is to present the results of an analysis of 137 articles concerning accounting in the People's Republic of China (PRC) published in 25 of the mainstream English language accounting journals from 1999 to 2008.Design/methodology/approachWithin the tradition of bibliometric evaluation of literature in scholarly accounting journals, a content analysis is undertaken of the journal articles to identify and evaluate a range of features and trends in relation to publication outlets, authorship, research design and methods and subject matter.FindingsWhile prior studies have suggested the literature on accounting in the PRC is relatively immature, the analysis reveals an increased sophistication in relation to the subject matter, research paradigms and methods and characteristics of authorship of this literature within mainstream accounting journals.Research limitations/implicationsSince a sample of only 25 mainstream international accounting journals is utilised, there remains obvious potential for examining the literature published in other types and other rankings of journals.Practical implicationsResults of the analysis reveal apparent scope for researchers of accounting in China to investigate a broader range of topics, utilise an extended panoply of research perspectives and methods, and encourage new and emerging researchers to the area.Originality/valueThe paper represents a follow‐up to an earlier study on the topic, providing comparisons and contrasts with that earlier work. Further, the current review also explores significant issues arising from the analysis and provides several suggestions for furthering the research effort in this field.

Purpose – In Australia, the public sector represents a significant component of the Australian economy and is a major employer across all states and territories. A constant stream of public sector management reforms has occurred over the last decade. These reforms include accrual accounting and budgeting, whole of government reporting, privatisation and contracting out to name a few. This would suggest that accounting graduates applying for positions at government agencies would benefit from some knowledge of these significant reforms. This paper aims to examine the perceptions of accounting academics as to barriers to public sector accounting (PSA) education in Australia and identify strategies for making the accounting curriculum more public sector inclusive.Design/methodology/approach – Two data collection methods were employed in order to attain a comprehensive picture of the state of PSA education in Australia. Telephone interviews were undertaken with accounting academics across a carefully selected...

PurposeThe paper's aim is to investigate the stock option disclosures of directors and the five most highly remunerated officers in the directors' report of Australian companies for the years 2000 and 2002 and the choice to position these disclosures in the notes to the financial statements as opposed to the directors' report.Design/methodology/approachThe study examines the compliance with mandatory disclosures for stock options for companies in the top 400 and also ascertains if there is consistent compliance across all required categories, including sensitive disclosures.FindingsAlthough compliance is high for most of the required stock option disclosures, 43 of the 153 firms in the sample did not disclose the amount (value) of the options issued. Another 27 of the companies disclosed a “Nil” value for the value of options issued. Most of the companies disclosed the information in the directors' report, with larger companies and companies in the finance industry more likely to disclose in the notes to the financial statements, where the information is less visible.Originality/valueThe results indicate that companies were secretive about the most sensitive of the required disclosures, the amount (value) of the options issued. Regulators and researchers need to be cautious in conducting compliance studies as although companies appear to be transparent in their disclosures about stock options for directors, closer examination reveals secrecy about sensitive components of the required disclosures.

PurposeAs one of the main purposes of financial statements is to provide relevant information for investors, relationships between share prices and accounting variables have been widely researched. Early studies focus mainly on earnings, but attention has turned in recent years to valuation models that include the book value of the equity. Many of these studies cite the residual income model as their theoretical base and, with the growing emphasis on shareholder value, residual income measures are more commonly used in the business community to track financial performance. Given such trends, the purpose of this paper is to review the theoretical background of the residual income model and discuss results of empirical studies that use it.Design/methodology/approachThe study seeks an understanding of how published accounting information relates to share prices in the developed market in Asia, outside Japan. More specifically, the study aims to extend the international literature in market based accounting research by examining empirical evidence on relationships between share prices and the two summary accounting variables of equity book value and earnings for firms listed on the stock exchange in Malaysia.FindingsThe findings imply that, the two accounting variables summarising the balance sheet and the income statement, respectively, are significant factors in the valuation process, and that managers are justified in using the accounting system as a primary source of information for monitoring financial performance.Originality/valueThese findings should be of interest to other researchers, and to managers and investors who currently use or are planning to use residual income to monitor business performance.

PurposeThe study aims to document and highlight the problems and benefits of implementing activity‐based costing (ABC) in two companies in Malaysia.Design/methodology/approachA case study methodology was used to describe the process of ABC implementation in a Malaysian based multinational company as well as a Malaysian multinational company.FindingsAlthough ABC is not widely adopted by companies in Malaysia, it is recognized as a valuable tool to improve the performance of these two companies. Additionally, many of the problems that hinder the implementation of ABC are related to managerial factors rather than the technical aspects of the tool itself. Several factors are pertinent to ensure the success of ABC: top management support, simplifying the ABC implementation process, sourcing suitable ABC software, and finally, ensuring that all affected employees understand and actively support the implementation process.Originality/valueThe findings have significant implications for companies that want to embark on ABC. The problems highlighted may help companies planning to adopt ABC in the near future to better address these issues.

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.

Purpose In response to corporate scandals the USA issued the Sarbanes-Oxley Act to promote corporate responsibility for financial reporting. Some see the impact of the US legislation crossing borders and influencing the nature of financial reporting in other countries. The purpose of this paper is to investigate whether or not there have been increases in transparency in non-US financial markets, specifically in South East Asia, suggesting a ripple effect as a result of the Sarbanes-Oxley Act. Design/methodology/approach The study examines the audited financial statements of 92 South East Asian companies issued before and after the Sarbanes-Oxley legislation to note any significant increase in transparency. As a proxy for transparency, the study examines the number of footnotes included in audited financial statements. Findings The results indicate a statistically significant increase in the number of footnotes in the positive direction. Because of this increase, a changing trend of increased transparency is suggested in South East Asia. Originality/value In 2002 the USA passed the Sarbanes-Oxley Act to promote corporate responsibility for financial reporting. Some see this US legislation creating a ripple effect on financial reporting in other countries. The findings of this study suggest a changing trend of increased transparency in financial reporting in South East Asia. Although this trend cannot be directly attributed to the effects of the Sarbanes-Oxley Act, it appears to be related to a larger, more transcendent worldwide reform movement towards increased corporate responsibility and financial reporting to which the Sarbanes-Oxley Act appears to have served as a catalyst.

The purpose of this study is to provide further evidence on the importance of international diversification, and to determine the optimal allocation of assets in a portfolio comprising domestic (Australian) and international assets. The study focuses on stock index futures contracts in five countries ‐ Australia, USA, UK, Hong Kong and Japan. Daily data for the five selected contracts over the period from 1 January 1990 to 31 December 2000 is employed in the study. Consistent with previous studies, the results confirm the importance of international diversification and indicate that the portfolio risk is reduced considerably when more international assets are added sequentially to the portfolio. Empirical analysis also shows that the optimal asset allocation results in higher risk reduction and better returns when compared with an equally weighted portfolio.

The main objective of the paper is to examine and evaluate how security analysts in Thailand and Malaysia appraise ordinary shares and what sources of information they use. A questionnaire was sent to 570 sell‐side Thai securities analysts working for 63 stock brokering firms, and to 160 Malaysian analysts working for a sample of 24 stock brokering firms. Responses were received from 191 Thai analysts and 75 Malaysian analysts. The results reinforce and support our expectation that fundamental analysis is the primary method of investment appraisal. Of the Thai analysts, 147 (77 per cent) reported that fundamental analysis is ‘almost always’ used to value common stocks and a further 38 (nearly 20 per cent) reported that they ‘usually’ use fundamental analysis. Similarly, 73 per cent of Malaysian respondents indicated that fundamental analysis is almost always used and a further 18 per cent usually use it as a basis for valuing common stocks. The results also reveal that both groups rate profit and loss account, balance sheet, half‐yearly results, company annual report, and company visits as the most important sources of information. In terms of relative importance, Thai analysts view company visits as the most important source, while their Malaysian counterparts rate the profit and loss account first.