Dissertations / Theses on the topic 'Securities Australia'

This dissertation investigates the research and investment banking activities of securities firms in the context of the Australian equities market. It comprises of three related essays that examine the stock recommendations of securities firms' research analysts and the aftermarket behaviour of securities firms that assist in raising capital for companies via an initial public offering (IPO). The fust essay focuses on the market's general reaction to research analysts' recommendations. The buy and sell-type recommendations of research analysts are observed to significantly impact prices and trading activity at the time of their release. The market reaction is, however, asymmetric. Buy-type recommendations have a stronger impact on the trading activity of the recommending securities firms. This indicates that buy-type recommendations generate more stockbroking business and may explain why research analysts tend to issue more buy than sell­type recommendations. Sell-type recommendations have a greater price impact suggesting that the market perceives sell-type recommendations to be more informative and that it is aware of analyst over-optimism. Post-recommendation returns indicate that sell-type recommendations are more informative than buy­type recommendations. Significant pre-recommendation abnormal returns, however, suggest that there may be information leakage prior to the official release of research analysts' recommendations. Alternative explanations for pre­recommendation returns include poor timing ability, a reactive rather than pro­active approach to issuing recommendations and front running by proprietary traders. The second essay explores the aftermarket trading behaviour of securities firms that assist in raising equity capital for companies via an IPO (henceforth known as syndicate members). US studies document that the syndicate member with the most responsibility in the capital raising process (that is, the lead syndicate member) is the most active in aftermarket trading with the main purpose being to price support IPOs. Similar behaviour is observed in Australian IPOs except that the lead syndicate member only appears to price support IPOs that are trading at or below the offer price on the first day. The rest of the syndicate plays a minor role in aftermarket trading. The final essay considers the objectivity of stock recommendations issued by research analysts whose securities firms are IPO syndicate members. It also assesses whether the market adjusts for the strategic behaviour of research analysts. The recommendations of research analysts' whose securities firms are lead syndicate members (henceforth known as lead syndicate analysts) are observed to be more optimistic than the recommendations of other syndicate members (affiliate analysts) and from non-syndicate members. The market is aware of this and disregards the buy recommendations of lead syndicate analysts. The market also disregards the initial buy recommendations of affiliate analysts choosing instead to only rely on the subsequent buy recommendations of affiliate analysts.

According to the Reserve Bank of Australia (2006) the increased supply of Commercial Mortgage-Backed Securities (CMBS), with a range of subordination, has broadened the investor base in real estate debt markets and reduced the commercial property sector’s dependence on bank financing The CMBS market has been one of the most dynamic and fastest-growing sectors in the capital markets, for a market which was virtually nonexistent prior to 1990. The global CMBS market issuance which stood at AU$5.1 billion (US$4 billion) in 1990 had grown to AU$380 billion (US$299 billion) by the end of 2006. In Australia, a total of over 60 CMBSs with nearly 180 tranches totalling over AU$17.4 billion had been issued to December 2006 from when they were first introduced in 1999. To date few studies have been done on Australian CMBSs outside the credit rating agency circles. These studies are predominantly practitioner focused (Jones Lang LaSalle 2001; Richardson 2003; Roche 2000, 2002). O’Sullivan (1998) and Simonovski (2003) are the only academic studies on CMBSs. As such, this thesis examines issues relating to the development of Australian CMBSs and quantitatively and qualitatively analyses the structuring of Australian CMBSs. In assessing the growth of the Australian CMBS market, an interpretive historical approach (Baumgarter & Hensley 2005) is adopted to provide a cogent review and explanation of features of international and Australian CMBSs. This helps to understand the changing nature of the market and provides better understanding of the present and suggests possible future directions. The Australian CMBS market is matured in comparison with the larger US and EU CMBS markets as seen by the diversity of asset classes backing the issues and transaction types, tightening spreads, and record issuance volumes.High property market transparency (Jones Lang LaSalle 2006b) and predominance of Listed Property Trusts (LPT) as CMBS issuers (Standard & Poor’s 2005b), who legally have to report their activities and underlying collateral performance to regulatory regimes such as Australian Stock Exchange (ASX)/Australian Securities and Investment Commission (ASIC) and their equity partners, have contributed to the success of the Australian CMBS market. Furthermore, the positive commercial real estate market outlook should support future CMBS issuance, with LPTs continuing their dominance as issuers. In investigating property risk assessment in Australian CMBSs, all the CMBSs issued over a six year period of 2000 to 2005 were obtained from Standard and Poor’s presale reports as found in their Ratings Direct database to identify and review how property risk factors were addressed in all issues and within specific property asset classes following the delineation of property risk by Adair and Hutchinson (2005). Adequate assessment of property risk and its reporting is critical to the success of CMBS issues. The proposed framework shows that assessing and reporting property risk in Australian CMBSs, which are primarily backed by direct property assets, under the headings of investment quality risk, covenant strength risk, and depreciation and obsolescence risk can easily be done. The proposed framework should prove useful to rating agencies, bond issuers and institutional investors. Rating agencies can adopt a more systematic and consistent approach towards reporting of assessed property risk in CMBSs. Issuers and institutional investors can examine the perceived consistency and appropriateness of the rating assigned to a CMBS issue by providing inferences concerning property risk assessment.The ultimate goal of structuring CMBS transactions is to obtain a high credit rating as this has an impact on the yield obtainable and the success of the issue. The credit rating process involves highly subjective assessment of both qualitative and quantitative factors of a particular company as well as pertinent industry level or market level variables (Huang et al. 2004), with the final rating assigned by a credit committee via voting (Kwon et al. 1997). As such, credit rating agencies state that researchers cannot replicate their ratings quantitatively since their ratings reflect each agency’s opinion about an issue’s potential default risk and relies heavily on a committee’s analysis of the issuer’s ability and willingness to repay its debt. However, researchers have replicated bond ratings on the premise that financial ratios contain a large amount of information about a company’s credit risk. In this study, quantitative analysis of determinants of CMBS credit ratings issued by Standard and Poor’s from 2000 – 2006 using ANNs and OR and qualitative analysis of factors considered necessary to obtain a high credit rating and pricing issues necessary for the success of an issue through mail surveys of arrangers and issuers are undertaken. Of the quantitative variables propagated by credit rating agencies as being important to CMBS rating, only loan-to-value ratio (LTV) is found to be statistically significant, with the other variables being statistically insignificant using OR. This leads to the conclusion that statistical approaches used in corporate bond rating studies have limited replication capabilities in CMBS rating and that the endogeneity arguments raise significant questions about LTV and debt service coverage ratio (DSCR) as convenient, short-cut measures of CMBS default risk.However, ANNs do offer promising predictive results and can be used to facilitate implementation of survey-based CMBS rating systems. This should contribute to making the CMBS rating methodology become more explicit which is advantageous in that both CMBS investors and issuers are provided with greater information and faith in the investment. ANN results show that 62.0% of CMBS rating is attributable to LTV (38.2%) and DSCR (23.6%); supporting earlier studies which have listed the two as being the most important variables in CMBS rating. The other variables’ contributions are: CMBS issue size (10.1%), CMBS tenure (6.7%), geographical diversity (13.5%) and property diversity (7.9%) respectively. The methodology used to obtain these results is validated when applied to predict LPT bond ratings. Both OR and ANN produce provide robust alternatives to rating LPT bonds, with no significant differences in results between the full models of the two methods. Qualitative analysis of surveys on arrangers and issuers provides insights into structuring issues they consider necessary to obtain a high credit rating and pricing issues necessary for the success of an issue. Rating of issues was found to be the main reason why investors invest in CMBSs and provision of funds at attractive rates as the main motivation behind CMBS issuance. Furthermore, asset quality was found to be the most important factor necessary to obtain a high credit rating supporting the view by Henderson and ING Barings (1997) that assets backing securitisation are its fundamental credit strength.In addition, analyses of the surveys reveal the following: • The choice of which debt funding option to use depends on market conditions. • Credit tranching, over-collateralisation and cross-collateralisation are the main forms of credit enhancement in use. • On average, the AAA note tranche needs to be above AU$100 million and have 60 - 85% subordination for the CMBS issue to be economically viable. • Structuring costs range between 0.1% – 1% of issue size and structuring duration ranges from 4 – 9 months. • Preferred refinancing options are further capital market issues and bank debt. • Pricing CMBSs is greatly influenced by factors in the broader capital markets. For instance, the market had literary shut down as a result of the “credit crunch” caused by the meltdown in the US sub-prime mortgage market. These findings can be useful to issuers as a guide on the cost of going to the bond market to raise capital, which can be useful in comparing with other sources of funds. The findings of this thesis address crucial research priorities of the property industry as CMBSs are seen as a major commercial real estate debt instrument. By looking at how property risk can be assessed and reported in a more systematic way, and investigating quantitative and qualitative factors considered in structuring CMBSs, investor confidence can be increased through the increased body of knowledge. Several published refereed journal articles in Appendix C further validate the stature and significance of this thesis. It is evident that the property research in this thesis can lead aid in the revitalisation of the Australian CMBS market after the “shut down” caused by the melt-down in the US sub-prime mortgage market and can also be used to set up property-backed CMBSs in emerging countries where the CMBS market is immature or non-existent.

According to the Reserve Bank of Australia (2006) the increased supply of Commercial Mortgage-Backed Securities (CMBS), with a range of subordination, has broadened the investor base in real estate debt markets and reduced the commercial property sector’s dependence on bank financing The CMBS market has been one of the most dynamic and fastest-growing sectors in the capital markets, for a market which was virtually nonexistent prior to 1990. The global CMBS market issuance which stood at AU$5.1 billion (US$4 billion) in 1990 had grown to AU$380 billion (US$299 billion) by the end of 2006. In Australia, a total of over 60 CMBSs with nearly 180 tranches totalling over AU$17.4 billion had been issued to December 2006 from when they were first introduced in 1999. To date few studies have been done on Australian CMBSs outside the credit rating agency circles. These studies are predominantly practitioner focused (Jones Lang LaSalle 2001; Richardson 2003; Roche 2000, 2002). O’Sullivan (1998) and Simonovski (2003) are the only academic studies on CMBSs. As such, this thesis examines issues relating to the development of Australian CMBSs and quantitatively and qualitatively analyses the structuring of Australian CMBSs. In assessing the growth of the Australian CMBS market, an interpretive historical approach (Baumgarter & Hensley 2005) is adopted to provide a cogent review and explanation of features of international and Australian CMBSs. This helps to understand the changing nature of the market and provides better understanding of the present and suggests possible future directions. The Australian CMBS market is matured in comparison with the larger US and EU CMBS markets as seen by the diversity of asset classes backing the issues and transaction types, tightening spreads, and record issuance volumes.
High property market transparency (Jones Lang LaSalle 2006b) and predominance of Listed Property Trusts (LPT) as CMBS issuers (Standard & Poor’s 2005b), who legally have to report their activities and underlying collateral performance to regulatory regimes such as Australian Stock Exchange (ASX)/Australian Securities and Investment Commission (ASIC) and their equity partners, have contributed to the success of the Australian CMBS market. Furthermore, the positive commercial real estate market outlook should support future CMBS issuance, with LPTs continuing their dominance as issuers. In investigating property risk assessment in Australian CMBSs, all the CMBSs issued over a six year period of 2000 to 2005 were obtained from Standard and Poor’s presale reports as found in their Ratings Direct database to identify and review how property risk factors were addressed in all issues and within specific property asset classes following the delineation of property risk by Adair and Hutchinson (2005). Adequate assessment of property risk and its reporting is critical to the success of CMBS issues. The proposed framework shows that assessing and reporting property risk in Australian CMBSs, which are primarily backed by direct property assets, under the headings of investment quality risk, covenant strength risk, and depreciation and obsolescence risk can easily be done. The proposed framework should prove useful to rating agencies, bond issuers and institutional investors. Rating agencies can adopt a more systematic and consistent approach towards reporting of assessed property risk in CMBSs. Issuers and institutional investors can examine the perceived consistency and appropriateness of the rating assigned to a CMBS issue by providing inferences concerning property risk assessment.
The ultimate goal of structuring CMBS transactions is to obtain a high credit rating as this has an impact on the yield obtainable and the success of the issue. The credit rating process involves highly subjective assessment of both qualitative and quantitative factors of a particular company as well as pertinent industry level or market level variables (Huang et al. 2004), with the final rating assigned by a credit committee via voting (Kwon et al. 1997). As such, credit rating agencies state that researchers cannot replicate their ratings quantitatively since their ratings reflect each agency’s opinion about an issue’s potential default risk and relies heavily on a committee’s analysis of the issuer’s ability and willingness to repay its debt. However, researchers have replicated bond ratings on the premise that financial ratios contain a large amount of information about a company’s credit risk. In this study, quantitative analysis of determinants of CMBS credit ratings issued by Standard and Poor’s from 2000 – 2006 using ANNs and OR and qualitative analysis of factors considered necessary to obtain a high credit rating and pricing issues necessary for the success of an issue through mail surveys of arrangers and issuers are undertaken. Of the quantitative variables propagated by credit rating agencies as being important to CMBS rating, only loan-to-value ratio (LTV) is found to be statistically significant, with the other variables being statistically insignificant using OR. This leads to the conclusion that statistical approaches used in corporate bond rating studies have limited replication capabilities in CMBS rating and that the endogeneity arguments raise significant questions about LTV and debt service coverage ratio (DSCR) as convenient, short-cut measures of CMBS default risk.
However, ANNs do offer promising predictive results and can be used to facilitate implementation of survey-based CMBS rating systems. This should contribute to making the CMBS rating methodology become more explicit which is advantageous in that both CMBS investors and issuers are provided with greater information and faith in the investment. ANN results show that 62.0% of CMBS rating is attributable to LTV (38.2%) and DSCR (23.6%); supporting earlier studies which have listed the two as being the most important variables in CMBS rating. The other variables’ contributions are: CMBS issue size (10.1%), CMBS tenure (6.7%), geographical diversity (13.5%) and property diversity (7.9%) respectively. The methodology used to obtain these results is validated when applied to predict LPT bond ratings. Both OR and ANN produce provide robust alternatives to rating LPT bonds, with no significant differences in results between the full models of the two methods. Qualitative analysis of surveys on arrangers and issuers provides insights into structuring issues they consider necessary to obtain a high credit rating and pricing issues necessary for the success of an issue. Rating of issues was found to be the main reason why investors invest in CMBSs and provision of funds at attractive rates as the main motivation behind CMBS issuance. Furthermore, asset quality was found to be the most important factor necessary to obtain a high credit rating supporting the view by Henderson and ING Barings (1997) that assets backing securitisation are its fundamental credit strength.
In addition, analyses of the surveys reveal the following: • The choice of which debt funding option to use depends on market conditions. • Credit tranching, over-collateralisation and cross-collateralisation are the main forms of credit enhancement in use. • On average, the AAA note tranche needs to be above AU$100 million and have 60 - 85% subordination for the CMBS issue to be economically viable. • Structuring costs range between 0.1% – 1% of issue size and structuring duration ranges from 4 – 9 months. • Preferred refinancing options are further capital market issues and bank debt. • Pricing CMBSs is greatly influenced by factors in the broader capital markets. For instance, the market had literary shut down as a result of the “credit crunch” caused by the meltdown in the US sub-prime mortgage market. These findings can be useful to issuers as a guide on the cost of going to the bond market to raise capital, which can be useful in comparing with other sources of funds. The findings of this thesis address crucial research priorities of the property industry as CMBSs are seen as a major commercial real estate debt instrument. By looking at how property risk can be assessed and reported in a more systematic way, and investigating quantitative and qualitative factors considered in structuring CMBSs, investor confidence can be increased through the increased body of knowledge. Several published refereed journal articles in Appendix C further validate the stature and significance of this thesis. It is evident that the property research in this thesis can lead aid in the revitalisation of the Australian CMBS market after the “shut down” caused by the melt-down in the US sub-prime mortgage market and can also be used to set up property-backed CMBSs in emerging countries where the CMBS market is immature or non-existent.

According to the Reserve Bank of Australia (2006) the increased supply of Commercial Mortgage-Backed Securities (CMBS), with a range of subordination, has broadened the investor base in real estate debt markets and reduced the commercial property sector’s dependence on bank financing The CMBS market has been one of the most dynamic and fastest-growing sectors in the capital markets, for a market which was virtually nonexistent prior to 1990. The global CMBS market issuance which stood at AU$5.1 billion (US$4 billion) in 1990 had grown to AU$380 billion (US$299 billion) by the end of 2006. In Australia, a total of over 60 CMBSs with nearly 180 tranches totalling over AU$17.4 billion had been issued to December 2006 from when they were first introduced in 1999. To date few studies have been done on Australian CMBSs outside the credit rating agency circles. These studies are predominantly practitioner focused (Jones Lang LaSalle 2001; Richardson 2003; Roche 2000, 2002). O’Sullivan (1998) and Simonovski (2003) are the only academic studies on CMBSs. As such, this thesis examines issues relating to the development of Australian CMBSs and quantitatively and qualitatively analyses the structuring of Australian CMBSs. In assessing the growth of the Australian CMBS market, an interpretive historical approach (Baumgarter & Hensley 2005) is adopted to provide a cogent review and explanation of features of international and Australian CMBSs. This helps to understand the changing nature of the market and provides better understanding of the present and suggests possible future directions. The Australian CMBS market is matured in comparison with the larger US and EU CMBS markets as seen by the diversity of asset classes backing the issues and transaction types, tightening spreads, and record issuance volumes. High property market transparency (Jones Lang LaSalle 2006b) and predominance of Listed Property Trusts (LPT) as CMBS issuers (Standard & Poor’s 2005b), who legally have to report their activities and underlying collateral performance to regulatory regimes such as Australian Stock Exchange (ASX)/Australian Securities and Investment Commission (ASIC) and their equity partners, have contributed to the success of the Australian CMBS market. Furthermore, the positive commercial real estate market outlook should support future CMBS issuance, with LPTs continuing their dominance as issuers. In investigating property risk assessment in Australian CMBSs, all the CMBSs issued over a six year period of 2000 to 2005 were obtained from Standard and Poor’s presale reports as found in their Ratings Direct database to identify and review how property risk factors were addressed in all issues and within specific property asset classes following the delineation of property risk by Adair and Hutchinson (2005). Adequate assessment of property risk and its reporting is critical to the success of CMBS issues. The proposed framework shows that assessing and reporting property risk in Australian CMBSs, which are primarily backed by direct property assets, under the headings of investment quality risk, covenant strength risk, and depreciation and obsolescence risk can easily be done. The proposed framework should prove useful to rating agencies, bond issuers and institutional investors. Rating agencies can adopt a more systematic and consistent approach towards reporting of assessed property risk in CMBSs. Issuers and institutional investors can examine the perceived consistency and appropriateness of the rating assigned to a CMBS issue by providing inferences concerning property risk assessment. High property market transparency (Jones Lang LaSalle 2006b) and predominance of Listed Property Trusts (LPT) as CMBS issuers (Standard & Poor’s 2005b), who legally have to report their activities and underlying collateral performance to regulatory regimes such as Australian Stock Exchange (ASX)/Australian Securities and Investment Commission (ASIC) and their equity partners, have contributed to the success of the Australian CMBS market. Furthermore, the positive commercial real estate market outlook should support future CMBS issuance, with LPTs continuing their dominance as issuers. In investigating property risk assessment in Australian CMBSs, all the CMBSs issued over a six year period of 2000 to 2005 were obtained from Standard and Poor’s presale reports as found in their Ratings Direct database to identify and review how property risk factors were addressed in all issues and within specific property asset classes following the delineation of property risk by Adair and Hutchinson (2005). Adequate assessment of property risk and its reporting is critical to the success of CMBS issues. The proposed framework shows that assessing and reporting property risk in Australian CMBSs, which are primarily backed by direct property assets, under the headings of investment quality risk, covenant strength risk, and depreciation and obsolescence risk can easily be done. The proposed framework should prove useful to rating agencies, bond issuers and institutional investors. Rating agencies can adopt a more systematic and consistent approach towards reporting of assessed property risk in CMBSs. Issuers and institutional investors can examine the perceived consistency and appropriateness of the rating assigned to a CMBS issue by providing inferences concerning property risk assessment. The ultimate goal of structuring CMBS transactions is to obtain a high credit rating as this has an impact on the yield obtainable and the success of the issue. The credit rating process involves highly subjective assessment of both qualitative and quantitative factors of a particular company as well as pertinent industry level or market level variables (Huang et al. 2004), with the final rating assigned by a credit committee via voting (Kwon et al. 1997). As such, credit rating agencies state that researchers cannot replicate their ratings quantitatively since their ratings reflect each agency’s opinion about an issue’s potential default risk and relies heavily on a committee’s analysis of the issuer’s ability and willingness to repay its debt. However, researchers have replicated bond ratings on the premise that financial ratios contain a large amount of information about a company’s credit risk. In this study, quantitative analysis of determinants of CMBS credit ratings issued by Standard and Poor’s from 2000 – 2006 using ANNs and OR and qualitative analysis of factors considered necessary to obtain a high credit rating and pricing issues necessary for the success of an issue through mail surveys of arrangers and issuers are undertaken. Of the quantitative variables propagated by credit rating agencies as being important to CMBS rating, only loan-to-value ratio (LTV) is found to be statistically significant, with the other variables being statistically insignificant using OR. This leads to the conclusion that statistical approaches used in corporate bond rating studies have limited replication capabilities in CMBS rating and that the endogeneity arguments raise significant questions about LTV and debt service coverage ratio (DSCR) as convenient, short-cut measures of CMBS default risk. The ultimate goal of structuring CMBS transactions is to obtain a high credit rating as this has an impact on the yield obtainable and the success of the issue. The credit rating process involves highly subjective assessment of both qualitative and quantitative factors of a particular company as well as pertinent industry level or market level variables (Huang et al. 2004), with the final rating assigned by a credit committee via voting (Kwon et al. 1997). As such, credit rating agencies state that researchers cannot replicate their ratings quantitatively since their ratings reflect each agency’s opinion about an issue’s potential default risk and relies heavily on a committee’s analysis of the issuer’s ability and willingness to repay its debt. However, researchers have replicated bond ratings on the premise that financial ratios contain a large amount of information about a company’s credit risk. In this study, quantitative analysis of determinants of CMBS credit ratings issued by Standard and Poor’s from 2000 – 2006 using ANNs and OR and qualitative analysis of factors considered necessary to obtain a high credit rating and pricing issues necessary for the success of an issue through mail surveys of arrangers and issuers are undertaken. Of the quantitative variables propagated by credit rating agencies as being important to CMBS rating, only loan-to-value ratio (LTV) is found to be statistically significant, with the other variables being statistically insignificant using OR. This leads to the conclusion that statistical approaches used in corporate bond rating studies have limited replication capabilities in CMBS rating and that the endogeneity arguments raise significant questions about LTV and debt service coverage ratio (DSCR) as convenient, short-cut measures of CMBS default risk. However, ANNs do offer promising predictive results and can be used to facilitate implementation of survey-based CMBS rating systems. This should contribute to making the CMBS rating methodology become more explicit which is advantageous in that both CMBS investors and issuers are provided with greater information and faith in the investment. ANN results show that 62.0% of CMBS rating is attributable to LTV (38.2%) and DSCR (23.6%); supporting earlier studies which have listed the two as being the most important variables in CMBS rating. The other variables’ contributions are: CMBS issue size (10.1%), CMBS tenure (6.7%), geographical diversity (13.5%) and property diversity (7.9%) respectively. The methodology used to obtain these results is validated when applied to predict LPT bond ratings. Both OR and ANN produce provide robust alternatives to rating LPT bonds, with no significant differences in results between the full models of the two methods. Qualitative analysis of surveys on arrangers and issuers provides insights into structuring issues they consider necessary to obtain a high credit rating and pricing issues necessary for the success of an issue. Rating of issues was found to be the main reason why investors invest in CMBSs and provision of funds at attractive rates as the main motivation behind CMBS issuance. Furthermore, asset quality was found to be the most important factor necessary to obtain a high credit rating supporting the view by Henderson and ING Barings (1997) that assets backing securitisation are its fundamental credit strength. However, ANNs do offer promising predictive results and can be used to facilitate implementation of survey-based CMBS rating systems. This should contribute to making the CMBS rating methodology become more explicit which is advantageous in that both CMBS investors and issuers are provided with greater information and faith in the investment. ANN results show that 62.0% of CMBS rating is attributable to LTV (38.2%) and DSCR (23.6%); supporting earlier studies which have listed the two as being the most important variables in CMBS rating. The other variables’ contributions are: CMBS issue size (10.1%), CMBS tenure (6.7%), geographical diversity (13.5%) and property diversity (7.9%) respectively. The methodology used to obtain these results is validated when applied to predict LPT bond ratings. Both OR and ANN produce provide robust alternatives to rating LPT bonds, with no significant differences in results between the full models of the two methods. Qualitative analysis of surveys on arrangers and issuers provides insights into structuring issues they consider necessary to obtain a high credit rating and pricing issues necessary for the success of an issue. Rating of issues was found to be the main reason why investors invest in CMBSs and provision of funds at attractive rates as the main motivation behind CMBS issuance. Furthermore, asset quality was found to be the most important factor necessary to obtain a high credit rating supporting the view by Henderson and ING Barings (1997) that assets backing securitisation are its fundamental credit strength. In addition, analyses of the surveys reveal the following: • The choice of which debt funding option to use depends on market conditions. • Credit tranching, over-collateralisation and cross-collateralisation are the main forms of credit enhancement in use. • On average, the AAA note tranche needs to be above AU$100 million and have 60 - 85% subordination for the CMBS issue to be economically viable. • Structuring costs range between 0.1% – 1% of issue size and structuring duration ranges from 4 – 9 months. • Preferred refinancing options are further capital market issues and bank debt. • Pricing CMBSs is greatly influenced by factors in the broader capital markets. For instance, the market had literary shut down as a result of the “credit crunch” caused by the meltdown in the US sub-prime mortgage market. These findings can be useful to issuers as a guide on the cost of going to the bond market to raise capital, which can be useful in comparing with other sources of funds. The findings of this thesis address crucial research priorities of the property industry as CMBSs are seen as a major commercial real estate debt instrument. By looking at how property risk can be assessed and reported in a more systematic way, and investigating quantitative and qualitative factors considered in structuring CMBSs, investor confidence can be increased through the increased body of knowledge. Several published refereed journal articles in Appendix C further validate the stature and significance of this thesis. It is evident that the property research in this thesis can lead aid in the revitalisation of the Australian CMBS market after the “shut down” caused by the melt-down in the US sub-prime mortgage market and can also be used to set up property-backed CMBSs in emerging countries where the CMBS market is immature or non-existent. In addition, analyses of the surveys reveal the following: • The choice of which debt funding option to use depends on market conditions. • Credit tranching, over-collateralisation and cross-collateralisation are the main forms of credit enhancement in use. • On average, the AAA note tranche needs to be above AU$100 million and have 60 - 85% subordination for the CMBS issue to be economically viable. • Structuring costs range between 0.1% – 1% of issue size and structuring duration ranges from 4 – 9 months. • Preferred refinancing options are further capital market issues and bank debt. • Pricing CMBSs is greatly influenced by factors in the broader capital markets. For instance, the market had literary shut down as a result of the “credit crunch” caused by the meltdown in the US sub-prime mortgage market. These findings can be useful to issuers as a guide on the cost of going to the bond market to raise capital, which can be useful in comparing with other sources of funds. The findings of this thesis address crucial research priorities of the property industry as CMBSs are seen as a major commercial real estate debt instrument. By looking at how property risk can be assessed and reported in a more systematic way, and investigating quantitative and qualitative factors considered in structuring CMBSs, investor confidence can be increased through the increased body of knowledge. Several published refereed journal articles in Appendix C further validate the stature and significance of this thesis. It is evident that the property research in this thesis can lead aid in the revitalisation of the Australian CMBS market after the “shut down” caused by the melt-down in the US sub-prime mortgage market and can also be used to set up property-backed CMBSs in emerging countries where the CMBS market is immature or non-existent.

The rapid globalisation of finance has caused the securities and financial systems globally to be intricately, and inextricably, interwoven into a single financial ecosystem. This phenomenon has accelerated the trend towards international cooperation. While such cooperation has enhanced the standards of monitoring, supervision and regulation in the securities sector, it begets the question: Can cross-border collaboration be leveraged as a strategic tool to catalyse and achieve transformative results in three fundamental areas of securities markets: market development, integration and regulation? If so, are India and Australia well suited for such cooperation? To answer this question in the affirmative, this thesis conducts a comparative examination of the Indian and Australian securities regimes, and proposes a deeper, strategic bilateral collaboration between them. The thesis undertakes a high-level analysis of the securities regimes of the Indian securities regulator, Securities and Exchange Board of India (‘SEBI’), and its Australian counterpart, Australian Securities and Investments Commission (‘ASIC’), against the International Organization of Securities Commission’s (‘IOSCO’) widely endorsed 38 Principles of Securities Regulation, focusing on the supervisory and enforcement powers of these regulators and the effectiveness of their compliance regimes. The thesis addresses a fundamental gap in the scholarship on the comparative study of the Indian and Australian securities regimes. This academic exercise provides the foundation for a practical roadmap for strategic collaboration between the two jurisdictions. Consisting of the Cube Vision and the Strategic Action Plan, the thesis proposes a collaboration model that is scalable and may be replicated in other sectors of the financial sector or economy. Most significantly, the proposal is capable of being effectively transformed into a broader, multilateral strategic cooperation initiative in the future.

This thesis investigates the share price response to the announcement of private placements of hybrid securities in Australia. Firstly, the size and direction of the share price response is examined. Secondly, the determinants of the share price response are examined. Where possible, comparisons are made to evidence from international markets. The sample of data tested consists of 43 announcements of convertible debt issues, 39 announcements of preference share issues and 19 announcements of option issues made between 1983 and 2000 by Australian firms. The analysis of the share price impact in response to the announcements is conducted using Maynes and Rumsey (1993) event study methodology that adjusts for thin trading. The determinants of the share price response are examined using model specifications that are derived from the theoretical literature. The analysis of the announcement effect of private placements of hybrid securities finds significant negative abnormal returns for convertible debt issues, insignificant negative abnormal returns for preference share issues and significant positive abnormal returns for option issues. In comparison to international studies, the convertible debt results are similar to public and rights issues, the insignificant preference share results are similar to other findings and the option results are similar to private placements of equity and rights issues of options. The results of the investigation of the determinants of the announcement effect of private placements of hybrid securities finds that convertible debt issues are best explained by information asymmetry - firm and issue characteristics, the information asymmetry - external monitors hypothesis, the information asymmetry - dynamic hypothesis and the agency cost hypothesis. The impact of preference share issues is best explained by information asymmetry - firm and issue characteristics, the information asymmetry - external monitors hypothesis, the agency cost hypothesis and the price pressure hypothesis. The announcement effect of option issues is best explained by information asymmetry - firm and issue characteristics, the information asymmetry -dynamic hypothesis and the optimal capital structure hypothesis.

Studies on the use of hybrid securities by listed firms to raise capital in international markets have been limited. The existing evidence on the seasoned capital raising process has concentrated on straight equity and debt issues in the United States (US) market. The Australian market provides a unique comparative capital raising environment as it has a number of operating and structural features that are different to many other markets. These differences include the method of issuing securities (rights issues), underwriting contracts (standby contracts), the trading volume of securities (thin trading), the industry makeup of listed firms (a high number of resource firms) and characteristics of capital raising instruments (convertible debt is non callable and is the only type of listed debt instrument, options are used as stand alone instruments to raise capital). This research focuses on how these differences give rise to differences in the share price reaction to security issues, the relevant explanations of the share price reaction, the security choice decision and the demand for underwriter services in the Australian market, compared to other markets. The impact of the announcement of hybrid security issues is examined using event study methodology adjusted for thin trading (as per Maynes and Rumsey(1993). Australian markets have differing characteristics to international markets including differing issue and issuer characteristics of hybrid security issues. However, the announcement effect evidence for Australian hybrid issues is consistent with international evidence for convertible debt issues but is inconsistent for company issued options and preference shares. Announcements of convertible debt are met with a significant negative share market response, a positive pre announcement runup and negative post announcement dnft, similar to US and UK issues. Although the announcement of an option issue can be viewed as an issue of delayed equity, option issues are met with a significant positive share price response rather than the negative share price response found for international equity issues. Announcements of preference share issues are met with an insignificant positive share price response which is in contrast to US and UK results. The results of the analysis of the explanation of the announcement effect of issuing new hybrid securities in the Australian market, suggest that different variables are significant explanators for the Australian market compared to international markets. The results of the models developed for the explanations of the announcement effect of Australian hybrid issues differ across security type. In general, the results for Australian issues of hybrid securities provide the greatest support for variants of the information asymmetry hypothesis. Convertible debt issues are best explained by the general information asymmetry hypothesis and the information asymmetry : external monitoring hypothesis. Option issues are best explained by information asymmetry : rights issues information asymmetry : signalling and agency cost hypotheses. Preference share issues are best explained by information asymmetry : rights issues, information asymmetry : external monitoring and the information asymmetry : signalling hypothesis. The security choice decision between hybrid securities is examined using logit regression analysis. When the choice is restricted to options and convertible debt, firms with high financial risk (leverage) and firm nsk (share volatility) are more likely to issue equity or in this study, equity like securities (options) and firms with higher pre announcement returns and larger issue size are more likely to issue debt or debt like securities (convertible debt). When the choice is extended to include preference shares, firms with high firm risk are more likely to choose options and firms making a relatively large issue are less likely to choose options (when financial risk is measured as long term debt over total assets) or more likely to choose convertible debt (when financial risk is measured as long term debt over equity). The determinants of underwriter use are examined using logit regression analysis for option issues as they are the only type of hybrid instruments that are not mostly underwritten. The results for the demand for underwriter services show that issue size, trading frequency and market risk are the determinants of the use of underwriters for Australian option issuers. This implies that mangers are more likely to choose to use an underwriter, the higher the amount of capital to be raised, the higher the trading frequency of the shares and the lower the market risk. The results are similar to partial results found for New Zealand and Norwegian equity issues where subscription price discount, issue size, firm risk, trading frequency, shareholder concentration and shareholder precommitments are determinants of underwriter use.

Asset securitization is one of the most important financial innovations recently. With an impressive growth in terms of volume of issuance, from almost zero to five trillion USD, in a period of 15-20 years, it is one of the most rapidly growing markets in the financial world. Yet, little is known about this, literally invisible market. Companies engage in asset securitization for a variety of reasons and numerous advantages and disadvantages of asset securitization can be found throughout the literature. Asset securitization has an impact on a number of stakeholder groups: shareholders, managers, employees, investors, the financial markets and ultimately the overall economy and society. Asset securitization is one of the reasons for the financial crisis that started in mid 2007. Since the recent financial turmoil, it became clear the asset securitization was the primary funding source for companies in the financial industry and it was the primary supplier of credit in developed economies. Because of its importance and impact, it is very important that we study the reasons, the motivations, the consequences and the effects from this so powerful financial innovation. And it is important to study it from as many different aspects as possible. Many questions surrounding asset securitization are unanswered and it is important to answer them sooner. This study investigates the wealth effects from asset securitization on the shareholders of the securitizing companies. We study whether the announcement about a pending securitization transaction has any impact on the stock price of the securitizing company. That way we can discover whether asset securitization creates wealth, destroys wealth or has no impact on wealth at all. Not many studies have been done on this topic so far. The existing seven studies are focused mainly on the US and the EU market and report contradicting results. In this study, for the first time, data from Australia is being used. The Australian securitization market is the second, single most active securitization market in the world, after the US market. We conduct quantitative analysis on a sample of 98 securitization transactions during the period 2000-2006. With this sample, we cover almost 29% of the number of securitization transactions during that period and almost 39% in terms of volume of issuance. To analyze the data we use standard event study methodology, common for this type of studies.    Our analysis reveals that investors in Australia do not perceive asset securitization favorably. Securitizing companies’ stock price decreases in the 10 days around the securitization announcement day, resulting in statistically significant wealth losses for the originating companies’ shareholders. Furthermore, the wealth losses are significant for less frequent securitizers, for securitizers that engage in small volume securitization transactions and for securitizing companies with low asset quality.    With this study we make theoretical and practical contribution. We lend empirical support to the previous theories and we help managers, shareholders and investors shape their forecasts.

In March 2003, the Australian Stock Exchange (ASX) released new corporate governance guidelines, which included debatable “best practice” recommendations such as the adoption of an independent board and separation of the roles of chairperson and CEO. Given the premise that strong corporate governance enhances shareholder value and, by extension, increases initial public offering (IPO) issuers’ appeal to investors, this thesis assesses the level of conformity by a sample of Australian firms, which made an IPO between 1994 and 1999, with the best practice recommendations. We also examine the relationship between firm outcomes (including IPO underpricing, post-IPO long-run performance, and the likelihood of a SEO) and board governance quality, captured by board composition, board leadership, board size and share ownership of directors. These outcomes are addressed as they are important dimensions of firm performance that may be reasonably assumed to be associated with the quality of corporate governance, and these tests can provide an insight into the preference of investors who arguably are best placed to assess the appropriateness of the recommendations promoted by the ASX. Further, we analyse changes in IPO firms’ board structures from the time of listing to five years later to determine if IPO firms adopt governance structures that are more in line with the best practice recommendations after listing and if the changes are related to IPO firms’ long-run performance. Overall, we find that IPO firms that arguably have the strongest incentive to adopt the “optimal” board structures diverge substantially from ASX’s recommendations both at the time of IPO and five years later. IPO firms’ board structures are found to be unrelated with the level of IPO underpricing and board size, after controlling for the size of the firm, is significant in explaining both long-run aftermarket performance and the probability of a SEO. IPO firms with larger boards and those that increase the board size after listing are found to perform better in the long-run. However, contrary to expectation, smaller boards are associated with a higher likelihood of equity reissuance. Overall, the results lead us to question the role played by the board of directors in signalling firm quality. Our findings also suggest that ASX’s best practice recommendations are likely to distort the market-driven practices already in place.

Micro-economic reform is a primary objective of modern Australian socio-economic policy. The key outcome targetted by this reform is increased efficiency, measured by a range of factors, including cost reduction, increased savings, and a more facilitative environment for business activity. These benefits are sought by the proponents of reform as part of a push to increase national prosperity, but concerns that social equity is undermined by it are expressed by opponents of that reform. The debate between efficiency and equity is raging in current Australian tax policy, a key site for micro-economic reform. As Government Budget restructuring occurs in Australia, demographic change (eg, the ageing population) undermines the ability of public funded welfare to provide retirement benefits. Responsibility for self-funded retirement is an important contributor to increasing private savings. Investment in growth assets such as corporate stock is increasing in Australia, however concerns about volatility of asset values and yield stimulate the importance of investment risk management techniques. Financial contract innovation utilising financial derivatives is a dominant mechanism for that risk management. Synthetic equity products which are characterised by capital protection and enhanced yield are popular and efficient equity risk management vehicles, and are observed globally, particularly in the North American market. Financial contract innovation, risk management using financial derivatives, and synthetic equity products suffer from an adverse tax regulatory response in Australia, which deprives Australian investors from access to important savings vehicles. The negative Australian tax response stems from anachronistic legislation and jurisprudence, which emphasises tax outcomes based on legal form. The pinnacle of this approach is the tax law insistence on characterisation of financial contracts as either debt or equity, despite some important financial similarities between these two asset types. Since derivatives produce transactions with novel legal forms this approach is unresponsive to innovation. The negative tax result also stems from a perception that the new products are tax arbitrage vehicles, offering tax benefits properly available to investment in stocks, which is thought to be inappropriate when the new products resemble debt positions (particularly when they are capital protected and yield enhanced). The negative tax response reflects administrative concerns about taxpayer equity and revenue leakage. This approach seeks to impose tax linearity by proxy: rather than utilising systemic reform to align the tax treatment of debt and equity, the current strategy simply denies the equity tax benefits to a variety of innovative financial contracts. It deprives Australians of efficiency enhancing savings products, which because of an adverse tax result are unattractive to investors. The weakness of the current approach is illustrated by critical analysis of three key current and proposed tax laws: the ???debt dividend??? rules in sec. 46D Income Tax Assessment Act 1936 (the ???Tax Act???); the 1997 Budget measures (which seek to integrate related stock and derivative positions); and the proposals in the Taxation of Financial Arrangements Issues Paper (which include a market value tax accounting treatment for ???traded equity,??? and propose a denial of the tax benefits for risk managed equity investments). The thesis develops a model for financial analysis of synthetic equity products to verify the efficiency claims made for them. The approach is described as the ???Tax ReValue??? model. The Tax ReValue approach isolates the enhanced investment returns possible for synthetic equity, and the model is tested by application to the leading Australian synthetic equity product, the converting preference share. The conclusions reached are that the converting preference share provides the key benefits of enhanced investment return and lower capital costs to its corporate issuer. This financial efficiency analysis is relied upon to support the assertion that a facilitative tax response to such products is appropriate. The facilitative response can be delivered by a reformulation of the existing tax rules, or by systemic reform. The reformulation of the existing tax rules is articulated by a Rule of Reason, which is proposed in the thesis as the basis for the allocation and retention of the equity tax benefits. To avoid concerns about taxpayer equity and revenue leakage the Rule of Reason proposes a Two Step approach to the allocation of the equity tax benefits to synthetics. The financial analysis is used to quantify non-tax benefits of synthetic equity products, and to predict whether and to what extent the security performs financially like debt or equity. This financial analysis is overlayed by a refined technical legal appraisal of whether the security contains the essential legal ???Badges of Equity.??? The resulting form and substance approach provides a fair and equitable control mechanism for perceived tax arbitrage, whilst facilitating efficient financial contract innovation. The ultimate source of non-linearity in the taxation of investment capital is the differential tax benefits provided to equity and debt. To promote tax linearity the differentiation needs to be removed, and the thesis makes recommendations for systemic reform, particularly concerning the introduction of a system of ???Franked Debt.??? The proposed system of ???Franked Debt??? would align the tax treatment of debt and equity by replacing the corporate interest deduction tax benefit with a lender credit in respect of corporate tax paid. This credit would operate mechanically like the existing shareholder imputation credit. The interface of this domestic tax credit scheme with the taxation of International investment capital, and the problems occasioned by constructive delivery of franking credits to Australian taxpayers via synthetics, are resolved by the design and costings of the new system, which has the potential to be revenue positive.

With the rapid growth in the development of economic reform in the People???s Republic of China since the late 1970s, China???s legal system has also been undergoing major reform and development. This has seen the emergence of a major effort to draw upon the law reform experiences of other countries, especially in the area of economic law reform. As the securities industry is a key component of an increasingly corporatised market economy, it has been necessary to adopt an effective body of securities laws. Disclosure is the fundamental issue of securities laws as it exists in market transactions and the conduct of market participants. As such, the development of an appropriate body of disclosure law and practice is vital to the integrity of securities law and ultimately to the market economy. It is for this reason that this dissertation looks at the development of China???s securities market and corporate disclosure laws, and identifies the forces that have led to its current form and content. This dissertation argues that China???s legal system must be seen as a product of China???s distinctive history and local circumstances. It analyses the current nature of China???s corporate disclosure laws and notes that China???s law reformers have relied heavily upon the US model which may not necessarily suit China. Based upon a number of theoretical understandings of the transplantation and development of law, this dissertation argues that China???s approach to law reform in this area has not always produced a body of law that is appropriate to China???s particular circumstances. It suggests that valuable insights can be gained from a comparison of the methods of corporate disclosure law reform that were followed in Australia. The Australian experience is relevant to China as Australian lawyers and regulators have played an important role in fashioning securities regulation in Hong Kong and as Hong Kong has sometimes been seen as providing useful models for China itself.

Thesis (Ph.D.) -- University of Western Sydney, 2004.
"A thesis submitted in fulfilment of requirements for the degree of Doctor of Philosophy in Economics and Finance" Bibliography : leaves 211-226.

This dissertation considers the reforms made to the liability rules in Australia�s prospectus laws during the 1990s. It traces the rewrite of the fundraising provisions at the end of the 1980s as part of the new Corporations Law through to the rewrite of those provisions at the end of the 1990s as part of the CLERP Act initiative. As the law in this area is not particularly well served by detailed judicial or academic analysis in Australia, the dissertation seeks to define the scope of the Australian liability regime by reference to case law analysis, a review of relevant theoretical considerations and comparative analysis with other key jurisdictions. The thesis of the dissertation is that many of the reforms were, particularly initially, misconceived in key respects because of a failure to apply appropriate theoretical underpinnings and to take account of the lessons that could have been learned from a comparative analysis with other key jurisdictions.

A mixed-method research approach was used to identify the market factors associated with gold project transactions on the ASX. Informed by the analysis of historical project transaction data an econometric model was developed through the triangulation of a quantitative study using capital markets theory and a qualitative study based on behavioural finance theory. The resulting valuation framework provides pragmatic guidance for use in research and industry practice.

This thesis is comprised of two studies. The first study investigates the incidence and magnitude of low-balling in the Australian Securities Exchange (ASX) top 500 firms. In auditing, low-balling refers to the provision of audit services below their actual costs during the early years of an audit engagement (DeAngelo, 1981a). Indeed, low-balling is the ‘bait to catch’ for non-audit services or continuity of office. It has been the focus of regulatory bodies, practitioners, and academics because of its potential adverse influence on auditor independence and audit quality (Levin, 2002; Ramsay, 2001; SEC, 2000; Sewon & Wang, 2012; U.S. Senate, 2002). This study is primarily motivated by the non-trivial presence of auditor switch even within the ASX 500 firms. For example, there were 282 instances of auditor switch among the ASX top 500 firms between 2006 and 2016. This amounts to roughly 5% of ASX 500 firms switching their auditors every year. An auditor switch potentially creates an opportunity for a fee discounting in the first year of engagement, which in turn can raise questions about audit quality. Given the availability of audit fees data, the Australian setting offers an excellent opportunity to investigate whether auditor switches influence audit fees. The first study is motivated by increased attention on corporate governance and boards’ monitoring roles since the global financial crisis (Claessens, Dell’Ariccia, Igan, & Laeven, 2010; Erkens, Hung, & Matos, 2012; Goldin & Vogel, 2010; Woods, 2010; Xu, Carson, Fargher, & Jiang, 2013). Moreover, the ASX Corporate Governance Council issued ‘if not, why not’ type governance standards for public listed companies in 2003 (ASX, 2003). These standards oblige companies to publicly disclose their reasons to not comply with a Council recommendation. ASX Listing Rules mandate ASX top 300 companies to establish an audit committee and to provide a summary of their audit committee charters (ASX Corporate Governance Council, 2014, p. 22). It is recommended that the committee comments on the provision of NAS (ASX Corporate Governance Council, 2014, p. 22). Audit committees oversee the selection, remuneration, and dismissal of auditors. Hence, the new regulatory environment in Australia is likely to influence auditor switch and potentially any relation between auditor switch and audit fees. Furthermore, recent Australian studies on the relation between auditor switch and audit fees have focused on audit partner rotation (Ferguson, Lam, & Ma, 2017; Grosse, Ma, & Scott, 2018; Stewart, Kent, & Routledge, 2015). This study extends prior Australian studies by examining audit firm switches rather than partner switches. Although there are concerns regarding the influence of low-balling on auditor independence (Huang, Raghunandan, Huang, & Chiou, 2015; PCAOB, 2011), prior evidence suggests that low-balling is widely practised (DeAngelo, 1981a; Velte, 2012; Velte & Azibi, 2015). Moreover, in terms of motives for low-balling, DeAngelo (1981a) and Dye (1991) provide two opposing low-balling theories. DeAngelo (1981a) suggests that the initial fee is discounted in every setting, whereas Dye (1991) posits that public disclosure of fees prevents fee discounting. Thus, Australia provides a unique setting to analyse low-balling theories, as it requires public disclosure of audit and non-audit fees data (Craswell & Francis, 1999). Following prior studies, this study employs a parsimonious model that captures the most significant drivers of audit fees, including auditor switch (variable of interest). This study estimates its audit fees model using both ordinary least squares (OLS) regression and a random-effects technique. The first study examines audit fees data of ASX 500 companies from 2006 to 2016, based on their market capitalisation on 30 June 2016. This study compares the first year's audit fees and total fees of the incumbent auditor against the last fee charged by the former auditor to calculate fee discounting. An audit fee estimation model regresses fees against some variables that are either positively or negatively related to them based on evidence in the extant literature (Hay, Knechel, & Wong, 2006). Audit fees are regressed on a set of control variables, namely: the size of an auditee’s revenue (Iyer & Iyer, 1996; Maher, Tiessen, Colson, & Broman, 1992), audit committee size (Vafeas & Waegelein, 2007), audit committee independence (Lee & Mande, 2005), audit committee expertise (Abbott, Parker, Peters, & Raghunandan, 2003b), auditor quality (Choi, Kim, Kim, & Zang, 2010), audit opinion (Simunic, 1980), provision of non-audit services (Simon, 1985; Simunic, 1984), leverage (Choi, Kim, Liu, & Simunic, 2008), inventory (Gul, Chen, & Tsui, 2003), receivables (Gul et al., 2003; Singh, Woodliff, Sultana, & Newby, 2014), auditor switch in the first year after a switch (Garsombke & Armitage, 1993), return on assets ratio (ROA) (Huang, Raghunandan, & Rama, 2009), and quick ratio (Singh et al., 2014). The total fees model also considers NAFRATIO (the ratio of an auditee’s nonaudit to audit fees) (Hay et al., 2006; Whisenant, Sankaraguruswamy, & Raghunandan, 2003) and Loss (1 if an auditee has a bottom-line loss, else 0) (Desir, Casterella, & Kokina, 2013) as two additional control variables that are likely to influence total fees. The remaining control variables are as per the audit fees model. The data are obtained from ASX, Connect 4, Morningstar, and companies’ annual reports. The first study shows that of the 282 instances of auditor switch among the ASX top 500 firms between 2006 and 2016, 155 (55%) switches were to Big Four, and 127 (45%) switches were to non-Big Four. There is evidence that companies switch more frequently from non-Big Fours to Big Fours than they do from Big Fours to non-Big Fours. Results based on multivariate analysis suggest that auditor switch does not affect either audit fees or total fees. Thus, in the sample of ASX top 500 firms throughout 2006- 2016, there is no evidence of low-balling associated with auditor switch. Moreover, an auditee size is the most significant determinant of its audit and total fees. Findings are robust to various robustness checks, namely: heteroscedasticity; multicollinearity; exclusion of audit committee expertise, quick ratio, and mid-tier audit firms; different switching sub-categories, random-effects model, audit fees change model, total fees change model. Between the two competing theories of low-balling, the results are more consistent with Dye (1991) than with DeAngelo (1981a). This finding is potentially due to the public disclosure of audit and non-audit fees in Australia. The first study also examines the relationship between the audit committee and audit fees. Results show that audit committee existence is not associated with audit fees. However, audit committee quality, measured by audit committee size, independence, and expertise, is positively associated with audit fees. This finding is because a high-quality audit committee demands higher audit effort and quality, leading to higher audit fees. In contrast, audit committee quality is not associated with audit fees in case of an auditor switch. This result is because public disclosure of audit fees deters auditors from discounting their initial audit fees in Australia. The first study has several contributions. First, it provides recent evidence of the price efficiency of the audit market in Australia. Results suggest that auditor switch does not lead to a significant fee reduction in the initial audit engagement in the sample of ASX top 500 firms. To the extent audit fees reflect audit quality (DeFond & Zhang, 2014; Ireland & Lennox, 2002), this study is likely to enhance users’ confidence in the audit reports of the ASX top 500 firms in Australia. Second, the first study provides recent evidence that the Australian audit market is increasingly being concentrated in the hands of the Big Fours with more firms switching from non-Big Fours to Big Fours. Such concentration of the audit market could be the result of several factors, including increased audit complexity over time, demand for higher audit quality over time, and competitive advantages of the Big Four auditors over non-Big Fours. Third, although the rotation of audit firms is not mandatory in Australia, many of the ASX top 500 listed companies switched their audit firms throughout the 2006-2016 period. The results of the first study support the argument that a low-balling outlaw is not necessary for Australia. Fourth, this study shows that public fee disclosure can prevent low-balling practices, supporting Dye (1991) theory. The second study of this thesis examines the influence of non-audit services (NAS) on audit quality in Australia. Auditors are more likely to report their discoveries if their litigation and reputation losses are higher than the benefits associated with their NAS (Hong-jo, Choi, & Cheung, 2017). Hence, popular media frequently question the potential implications of NAS on audit quality (Kahn, 2002; Solomon, 2002). A significant audit failure that is associated with the provision of NAS initiates a regulatory response (Schmidt, 2012). For example, a key motivation of Ramsay (2001) to provide a report regarding the independence of auditors was the rise of NAS provided by large accounting firms in Australia (Ramsay, 2001, p. 6). Thus, there are theoretical reasons to believe that the provision of NAS will lead to reduced audit quality. Most prior studies that investigated the association between NAS and audit quality were undertaken in the United States (U.S.) setting, where evidence was mixed (Blay & Geiger, 2013; Church, Jenkins, McCracken, Roush, & Stanley, 2014; Knechel & Sharma, 2012; Prawitt, Sharp, & Wood, 2012). The second study is primarily motivated by the limitations of prior studies in this area, especially the U.S. studies. Specifically, previous U.S. studies potentially suffered from the self-selection bias, as before 2001, listed firms in the U.S. were not required to publicly disclose the amount and nature of the fees to their auditors (Dickins & Higgs, 2005). Moreover, although the SOX mandated the public disclosure of fees paid to auditors, it has banned U.S. listed firms from acquiring particular NAS (such as actuarial services) from their auditors (Dickins & Higgs, 2005). Second, unlike the U.S., Australia permits auditors to provide NAS. However, all NAS require prior approval of the audit committee and subsequent disclosure of the paid fees (Patel & Prasad, 2013). Further, ASX Listing Rules mandate ASX 300 companies to have an audit committee. It is recommended that the committee comments on the provision of NAS (ASX Corporate Governance Council, 2014, p. 22). Hence, the new regulatory environment in Australia is likely to influence audit quality and potentially any relation between NAS and audit quality. Finally, there is limited evidence in Australia on the link between NAS and audit quality. Most prior studies regarding NAS and audit quality in Australia predated CLERP 9 (Craswell, Stokes, & Laughton, 2002; Gul, Tsui, & Dhaliwal, 2006; Ruddock, Taylor, & Taylor, 2006). The second study focuses on two widely used measures of audit quality: auditor’s propensity to issue a going-concern audit opinion and discretionary accruals to address the hypothesis that the provision of NAS impairs audit quality in Australia. This study uses a logistic regression for its going-concern audit opinion model as its dependent variable is binary (DeFond & Zhang, 2014). However, it uses the OLS regression technique for its discretionary accruals model as its dependent variable is continuous. The experimental variables of the second study are LnNon-auditFees (natural log of an auditee’s non-audit fees in dollar value) and NASTF (the ratio of an auditee’s non-audit to total fee) for both going-concern audit opinion and discretionary accruals models. The second study uses the sample of ASX top 500 companies throughout 2006-2016. Results support the second study’s hypothesis that NAS impair audit quality. This study contributes to the current debate regarding the relationship between NAS and audit quality. Findings of this study are essential to standard setters (such as AUASB). Findings of this study suggest that the current regulatory environment does not appear to safeguard enough audit quality in Australia. Thus, proposals to regulate NAS to a greater extent may be necessary as current NAS practice deteriorates audit quality. Specifically, this study shows that economic and social bonding of NAS may encourage auditors to sacrifice their independence and reduce their audit quality. Furthermore, the findings have important policy implications for other Anglo-American countries (e.g., the UK) because of the similarities of their regulatory setting with Australia. However, additional analysis suggests that providing NAS to clients can compromise audit quality of some auditors (such as Deloitte or Bentleys), supporting this study’s hypothesis. However, it does not impair audit quality of others (such as PWC or PKF), supporting prior studies that conclude NAS do not impair audit quality (Church et al., 2014; Knechel & Sharma, 2012; Mitra, 2007; Reynolds, Deis Jr, & Francis, 2004). Overall, further analysis suggests that a gain in audit efficiency and a decline in audit quality are both at play when auditors provide NAS to their clients. Thus, whether audit quality will improve or decline due to the provision of NAS depends on market characteristics and auditor characteristics. These results explain why there is mixed evidence in the literature when it comes to NAS and audit quality.
Thesis (PhD Doctorate)
Doctor of Philosophy (PhD)
Dept Account,Finance & Econ
Griffith Business School
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The Australian Securities Exchange (ASX) listing rule 3.1 requires listed companies to immediately disclose price sensitive information to the market via the ASX’s Company Announcements Platform (CAP) prior to release through other disclosure channels. Since 1999, to improve the communication process, the ASX has permitted third-party mediation in the disclosure process that leads to the release of an Open Briefing (OB) through CAP. An OB is an interview between senior executives of the firm and an Open Briefing analyst employed by Orient Capital Pty Ltd (broaching topics such as current profit and outlook). Motivated by an absence of research on factors that influence firms to use OBs as a discretionary disclosure channel, this study examines (1) Why do firms choose to release information to the market via OBs?, (2) What are the firm characteristics that explain the discretionary use of OBs as a disclosure channel?, and (3) What are the disclosure attributes that influence firms’ decisions to regularly use OBs as a disclosure channel? Based on agency and information economics theories, a theoretical framework is developed to address research questions. This theoretical framework comprises disclosure environments such as firm characteristics and external factors, disclosure attributes and disclosure consequences. In order to address the first research question, the study investigates (i) the purpose of using OBs, (2) whether firms use OBs to provide information relating to previous public announcements, and (3) whether firms use OBs to provide routine or non-routine disclosures. In relation to the second and third research questions, hypotheses are developed to test factors expected to explain the discretionary use of OBs and firms’ decisions to regularly use OBs, and to explore the factors influencing the nature of OB disclosure. Content analysis and logistic regression models are used to investigate the research questions and test the hypotheses. Data are drawn from a hand-collected population of 1863 OB announcements issued by 239 listed firms between 2000 and 2010. The results show that types of information disclosed via an OB announcement are principally on matters relating to corporate strategies and performance and outlook. Most OB announcements are linked with a previous related announcement, with the lag between announcements significantly longer for loss-making firms than profitmaking firms. The main results show that firms which tend to be larger, have an analyst following, and have higher growth opportunities, are more likely to release OBs. Further, older firms and firms that release OB announcements containing good news, historical information and less complex information tend to be regular OB users. Lastly, firms more likely to disclose strategic information via OBs tend to operate in industries facing greater uncertainty, do not have analysts following, and have higher growth opportunities are less likely to disclose good news, historical information and complex information via OBs. This study is expected to contribute to disclosure literature in terms of disclosure attributes and firm characteristics that influence behaviour in this unique (OB) disclosure channel. With regard to practical significance, regulators can gain an understanding of how OBs are disclosed which can assist them in monitoring the use of OBs and improving the effectiveness of communications with stakeholders. In addition, investors can have a better comprehension of information contained in OB announcements, which may in turn better facilitate their investment decisions.

In the economic environment of the information age, the performance of the stock market is considered an important indicator of the health of a nation's economy. Typically, the performance of any stock market is reflected through stock market prices. It would not be over emphasizing to state that, now the stock market is shedding value, it is having a tremendous influence in shaping the overall economies of most developed nations around the globe. Two research questions from the perspective of the Australian stock market have been developed for empirical examination.The questions are: (i) what systematic risk factors are influential for the Australian stock market returns in both the long-and short-runs; and (ii) is the Australian stock market linked to developed stock markets under the influence of globalization? The methodological approaches suitable for empirical analyses have been closely investigated to reveal the precise characteristics of the long-run stock market pricing process.Empirical tests have been performed to ascertain whether the Australian stock market is responsive to the a priori variables, and if so, which ones and to what extent. Cointegration techniques have been applied to help answer both research questions. To answer the second research question, an analysis has been performed that examined six overseas developed stock markets and asked whether the Australian stock market is cointegrated with those markets in the long-run. The results of the first study show that only a few systematic risk factors are responsible for Australian stock market price movements in the long-run while short-run dynamics are in force. The results of the second study confirm that the Australian stock market is being influenced by a small number of overseas markets and it is integrated with those markets under the influence of globalization.
Doctor of Philosophy (PhD)

New information has an important role in asset price movement. This paper investigates the role of scheduled domestic news releases on the Australian government bond market. Specifically, it examines the impact of pre-announced macroeconomic news release on bond futures markets and associated market volatility. Furthermore, an EGARCH-in-mean model is used to determine the asymmetric response of the conditional volatility to either news release or unexpected changes of some news content. The results indicate that excess return of bond futures in the research period was leptokurtic (fat-tailed) with time-varying conditional heteroscedasticity. Day of the week volatility was also present but with a declining pace. It’s generally attributed to the release dates of announcements and information flow from offshore markets. Although announcement effects to the bond futures market were significant, they depended on the type of maturity. Finally, results from EGARCH indicate that fundamental lagging indicators such as CPI and GDP are always important in explaining the impact of news release on market volatility, whereas the unemployment rate has a reasonable role in announcement surprises. The data suggest the following conclusion: investors are seriously concerned with news releases on macroeconomic variables they can feasibly forecast because they are always fundamental and provide a partial indication of the future economy. Surprises from news content are also critical to investors because some important variables can only be forecasted with limited accuracy. Therefore, deviation from anticipated outcomes in the actual content also causes significant market movement.
Thesis(M.Comm.)-- School of Commerce, 2007.

New information has an important role in asset price movement. This paper investigates the role of scheduled domestic news releases on the Australian government bond market. Specifically, it examines the impact of pre-announced macroeconomic news release on bond futures markets and associated market volatility. Furthermore, an EGARCH-in-mean model is used to determine the asymmetric response of the conditional volatility to either news release or unexpected changes of some news content. The results indicate that excess return of bond futures in the research period was leptokurtic (fat-tailed) with time-varying conditional heteroscedasticity. Day of the week volatility was also present but with a declining pace. It’s generally attributed to the release dates of announcements and information flow from offshore markets. Although announcement effects to the bond futures market were significant, they depended on the type of maturity. Finally, results from EGARCH indicate that fundamental lagging indicators such as CPI and GDP are always important in explaining the impact of news release on market volatility, whereas the unemployment rate has a reasonable role in announcement surprises. The data suggest the following conclusion: investors are seriously concerned with news releases on macroeconomic variables they can feasibly forecast because they are always fundamental and provide a partial indication of the future economy. Surprises from news content are also critical to investors because some important variables can only be forecasted with limited accuracy. Therefore, deviation from anticipated outcomes in the actual content also causes significant market movement.
Thesis (M.Comm.) -- University of Adelaide, School of Commerce, 2007

This thesis involves a theoretical and empirical examination of issues in financial risk management with a focus on the Australian environment. The primary aim of the thesis is to contribute to the understanding of the use and impact of derivative financial instruments for financial risk management. The majority of published work in this area is from the U.S.A. Therefore, the analysis and results contained in this thesis are of interest to an international audience. The results provide new evidence, in addition to confirmatory evidence, in relation to a number of issues. The thesis is divided into three sections with the conclusions provided in chapter eleven. The thesis is divided into three sections with the conclusions provided in chapter eleven. Following the introduction in chapter one, the first section (chapters two to five)examines issues associated with risk management. Chapter two considers some of the professional standards for the management of risk that have been issued by various professional and regulatory bodies. Chapter three examines different types of derivative contracts and how derivatives may be used. Measuring risk is an essential part of managing it. Financial risk is often difficult to identify from outside the organisation because organisations may hedge any portion of the exposure. Furthermore, financial risk may arise and then cease to exist as contracts are settled in such short periods that there is little evidence outside the firm to allow identification of them. However, there have been attempts to measure exposure to financial risk and these are covered in chapter four. Chapter five examines the theoretical issues associated with hedging financial risk and the potential benefits obtained from hedging. Section two (chapters six and seven) considers the use of derivatives in Australian Commonwealth public sector organisations. Risk management has traditionally been seen within the context of private sector organisations. However, the issue is becoming increasingly relevant and important to public sector entities as governments around the world implement policies that involve corporatisation, devolution of financial responsibility and impose competitive neutrality on their departments and bodies. Australia is no different and in some circles is seen as a world leader in the evolution of a business-orientated public sector. However, the strict translation of private sector theories and practices to the public sector, in which there are fundamental differences, may not be feasible nor desirable. Further, risk management in the public sector may require different practices and methods to achieve the desired outcomes. Chapter six introduces the empirical aspects of the thesis by considering the legal power of Commonwealth organisations in Australia to enter into derivative contracts. Public sector organisations, in particular Commonwealth statutory authorities, do not always have the powers 'of a natural person' afforded to companies governed under Australian corporations law. Such inconsistency is the base for uncertainty and possible additional costs for parties contracting with these organisations. Chapter six concludes with possible solutions to remove the uncertainty with respect to the legal power of Commonwealth organisations to enter derivative contracts. Chapter seven examines the use of derivative contracts in Commonwealth organisations through financial statement analysis and a questionnaire survey. This chapter represents the first public study of derivative use in Commonwealth organisations in Australia. Section three (chapters eight, nine and ten) considers important issues in the efficiency of derivatives markets. Three issues are considered. Chapter eight considers the price and volatility effects surrounding expirations of 90-day Bank Accepted Bill futures contracts. The evidence as presented in chapter eight for the Australian 90-day Bank Accepted Bills market is not sufficient to conclude that there are abnormal price or volatility effects surrounding the expiration of equivalent futures contracts. Hedgers therefore are unlikely to experience higher volatility if contracts are closed out or rolled over on maturity day. Another potential problem when hedging is pricing derivative contracts, such as options. When derivatives, in particular option contracts, are used in risk management the price of the contract must be ascertained. The Black-Scholes option pricing model is commonly used to price options. If the model incorrectly prices options then risk management strategies will be less effective. One bias, which has been identified in studies using overseas data, is the volatility 'smile'. Risk management strategies using options should take account of the effect of this bias. Chapter nine documents the volatility smile in the Australian stock options market. Chapter ten extends chapter nine by considering time varying volatility in option prices. Obtaining estimates of the volatility of the underlying asset price that provide more accurate Black-Scholes option prices is important. Generally, for options already trading, the implied volatility of previous day option prices is found to produce lower pricing errors over a range of different volatility estimates, including those obtained from a Generalised AutoRegressive Conditional Heteroscedastic (GARCH) model. However, if the option is not traded, GARCH estimates provide a better alternative than historical estimates.

In the economic environment of the information age, the performance of the stock market is considered an important indicator of the health of a nation's economy. Typically, the performance of any stock market is reflected through stock market prices. It would not be over emphasizing to state that, now the stock market is shedding value, it is having a tremendous influence in shaping the overall economies of most developed nations around the globe. Two research questions from the perspective of the Australian stock market have been developed for empirical examination.The questions are: (i) what systematic risk factors are influential for the Australian stock market returns in both the long-and short-runs; and (ii) is the Australian stock market linked to developed stock markets under the influence of globalization? The methodological approaches suitable for empirical analyses have been closely investigated to reveal the precise characteristics of the long-run stock market pricing process.Empirical tests have been performed to ascertain whether the Australian stock market is responsive to the a priori variables, and if so, which ones and to what extent. Cointegration techniques have been applied to help answer both research questions. To answer the second research question, an analysis has been performed that examined six overseas developed stock markets and asked whether the Australian stock market is cointegrated with those markets in the long-run. The results of the first study show that only a few systematic risk factors are responsible for Australian stock market price movements in the long-run while short-run dynamics are in force. The results of the second study confirm that the Australian stock market is being influenced by a small number of overseas markets and it is integrated with those markets under the influence of globalization.

An enforceable undertaking is an administrative sanction available to a number of Australian regulators at both the Federal and State level. It is a promise enforceable in court. In an enforceable undertaking, the alleged offender, known as the promisor, promises the regulator (for the purpose of this thesis, the Australian Securities and Investments Commission (‘ASIC’)) to do or not to do certain actions. Such a sanction is the result of an agreement between the alleged offender and the regulatory agency. An enforceable undertaking is thus a form of settlement. By analysing the 286 enforceable undertakings accepted by ASIC over the last decade (1998-2008), this thesis considers whether an enforceable undertaking is an improved form of settlement and identifies the strengths and weaknesses of this sanction. For the purpose of comparison, the manner in which enforceable undertakings are used by other regulators such as the Australian Competition and Consumer Commission is also considered. Some of the criticisms levelled at settlements, such as issues relating to transparency and accountability, are referred to and an assessment is made as to whether such criticisms apply to enforceable undertakings. The study finds that an enforceable undertaking is a flexible sanction that provides the regulator with a creative way to deal directly with certain alleged contraventions of the law. Further, an enforceable undertaking may be deemed to be moderately restorative in nature. Accordingly, this sanction may provide, in certain instances, a better outcome than other remedies that are at the regulator’s disposal. Such a remedy has its own place in the Braithwaite’s enforcement pyramid. An enforceable undertaking is, in addition, more transparent than a settlement. Its terms are unlikely to be perceived as unreasonable either by the promisor or the victims of the alleged offender. Further, while the use of settlements raises issues of accountability, the fact that an enforceable undertaking is subject to judicial review and is enforceable in court provides a certain protection to the promisor. Ultimately, if the terms of an undertaking are unreasonable, it is unlikely for the courts to give such promises any legal effect. Lastly, to ensure compliance of the promisor with the terms of the undertaking, an effective monitoring system has to be in place. However, since ASIC is more reactive than proactive in relation to the monitoring of undertakings, such a monitoring system relies heavily on self-regulation by the promisors. The thesis concludes that the current system of monitoring enforceable undertakings has a number of flaws that should be taken into account by the regulator. In summary, an enforceable undertaking is an enhanced form of settlement, the use of which by regulators should continue and generally replace the use of other forms of settlements.

The regulation of insider trading - the act of trading in securities or other financial products while in possession of relevant non-public, price-sensitive information - is a controversial and complex area of corporate law. Although there has been a marked increase in the number of individual offenders convicted of insider trading in recent years, there has never been a successful criminal prosecution of a corporation for insider trading in Australia, or even a successful set of civil penalty proceedings. This thesis will focus on corporate criminal liability for insider trading in Australia - a topic of great theoretical and practical significance. Corporations are subject to the prohibition of insider trading under Australian law, yet the absence of any successful prosecution, and the dearth of cases concerning corporate defendants, means the law is untested on many relevant issues, complicated by conflicting views as to the proper application of insider trading laws to corporations. The purpose of this thesis is threefold: (i) to determine the manner in which insider trading laws apply to corporations in Australia; (ii) to critically examine the application of those insider trading laws and identify any associated difficulties or flaws; and (iii) to set out proposals for reform and a new model of corporate criminal liability for insider trading in Australia. This thesis will demonstrate that there are a number of specific problems which can be identified in the application of the elements of the insider trading offence to corporations. In particular, there are many mechanisms, existing under both the general law and statute, which can be used to attribute the elements of the insider trading offence to corporations, although there is a lack of clarity as to their availability and application. These different mechanisms also apply a variety of tests, many of which are conflicting, making it difficult to determine when a corporation will actually be regarded as engaging in insider trading. The Chinese Wall defence for corporations also contains a number of gaps in its operation, creating additional uncertainty. This thesis critically analyses corporate criminal liability for insider trading in Australia. Having regard to the need for legislative certainty and the 'market integrity' rationale underpinning Australia's insider trading laws, this thesis recommends reforms to the existing regulatory regime in order to remedy the identified problems and to better apply the law to corporations. Accordingly, a new model of direct corporate criminal liability for insider trading in Australia is proposed.

Investments in business acquisitions have become a key part of corporate investment strategy. Business acquisitions are a vibrant investment decision which forms part of a firm’s growth strategy, that influences and determines firm value. Efficiency theory suggests that companies are motivated to invest in business acquisitions to realise synergy gains. Although there are previous studies undertaken to examine determinants of domestic business acquisitions in countries like the U.S and the U.K, determinants applicable in these countries may not have equal influence on business acquisition decisions of companies that are listed on the Australian Securities Exchange. Identification of factors influencing the business acquisition decision (the deal value) of companies listed on the Australian Securities Exchange provides a theroritical guidance on estimating the most possible purchase price consideration for acquirers and on formulating new policies to develop a more competitive capital market for regulators. The study by Erel et al. (2012) shows Australia is having the largest number of domestic mergers and acquisitions recording 4,875 during the period from 1990 to 2007 compared to all mergers and acquisitions recorded in all other countries. The importance of identifying factors influencing business acquisition decisions motivates this study to examine the factors influencing the business acquisition decision (the deal value) of acquirers that are listed on the Australian Securities Exchange. This study examines the factors influencing the business acquisition decision of companies that are listed on the Australian Securities Exchange, from acquirer’s characteristics and macro-economic point of view. This study also investigates whether the determinants related to acquirer’s characteristics and the macro-economic environment are impacted by the industry classification and the time. Specifically, the study examines how the determinants, such as acquirer’s characteristics (profitability, leverage and liquidity), and macro-economic characteristics (interest rate, exchange rate and stock market index) affect the business acquisition decision (the deal value) of acquirers that are listed on the Australian Securities Exchange. The Ordinary Least Squares (OLS) multiple regression assessment of the 160 completed business acquisitions representing 79.13 per cent of population in terms of total deal value of completed business acquisitions during 1997 to 2012 shows evidence that the acquirer’s profitability before considering the impact of the industry classification and the time, is statistically significantly positively associated with the business acquisition decision (the deal value) of acquirers that are listed on the Australian Securities Exchange. This finding lends support to previous empirical studies that greater profitability of an acquirer motivates them investing on business acquisitions. The study finds that the acquirer’s leverage before considering the impact of the industry classification and the time, is statistically positively associated with the business acquisition decision (the deal value) of acquirers that are listed on the Australian Securities Exchange. This finding contributes to previous empirical studies that greater leverage of an acquirer motivates them investing on business acquisitions. The study finds that the acquirer’s liquidity before considering the impact of the industry classification and the time, is statistically significantly negatively associated with their business acquisition decision (deal value) of acquirers that are listed on the Australian Securities Exchange. This finding is not consistent with the findings from prior studies. When acquirer’s business acquisition decision is influenced by their industry classification, this study support that the acquirer’s profitability and leverage have a statistically significant positive impact on the business acquisition decision (the deal value) of acquirers listed on the Australian Securities Exchange whilst the acquirer’s liquidity has a statistically negative impact on their business acquisition decision. When acquirer’s business acquisition decision is influenced by the time in terms of when the business acquisition occurs, this study support that the acquirer’s profitability and leverage have a statistically significant positive impact on the business acquisition decision (the deal value) of acquirers listed on the Australian Securities Exchange whilst the acquirer’s liquidity has a statistically negative impact on their business acquisition decision. This study finds that the macro-economic variables of interest rate and exchange rate are statistically significantly positively associated with the business acquisition decision (the deal value) of acquirers that are listed on the Australian Securities Exchange. This finding supports to previous empirical studies that higher interest rate and higher exchange rate motivate investments in business acquisitions. The study supports that the macro-economic variable, stock market index is statistically negatively associated with the business acquisition decision (the deal value) of acquirers that are listed on the Australian Securities Exchange. This finding supports to previous empirical studies that the lower stock market index motivates investments in business acquisitions. When acquirer’s business acquisition decision is influenced by their industry classification, this study support that the macro-economic variables of interest rate and exchange rate have a statistically significant positive impact on the business acquisition decision (the deal value) of acquirers that are listed on the Australian Securities Exchange whilst the macro-economic variable stock market index is statistically negatively associated with the business acquisition decision (the deal value) of acquirers that are listed on the Australian Securities Exchange. When acquirer’s business acquisition decision is influenced by the time in terms of when the business acquisition occurs, the study supports that the macro-economic variable stock market index has a statistically positive impact on the business acquisition decision (the deal value) of acquirers that are listed on the Australian Securities Exchange.

This research analyses the relationship between gender diversity and financial performance within corporate boards of Australian Securities Exchange (ASX) listed small and medium enterprises (SMEs). It is innovative in that it addresses a gap in prior research, which either fails to consider, or is inconclusive regarding the relationship between gender diversity and financial performance in the context of SMEs. The proportion of female representation is identified in prior literature as an important variable to measure board gender diversity. Accordingly, a gender diversity index has been developed. This study discusses the key theoretical perspectives underlying the gender diversity framework. The conceptual framework underpinning this study to test the hypotheses have been based on resource dependence theory, human capital theory, agency theory, upper echelon theory and critical mass theory. Hypotheses were developed to test relationships between: (1) gender diversity and firm innovation; (2) innovation and firm performance; and (3) the effect of gender diversity on firm performance. The potential moderating effect of innovation on the relationship between gender diversity and firm performance was also tested. The study further analysed the effect of situational and contextual factors associated with the organisational environment under which board decisions are made. The research design used a quantitative research method to test the two research questions and four hypotheses. The sample is consisted of 798 SME firms from 2014 to 2018. The study was extended to include association between gender diversity and performance for the subgroups of nine SME sectors. Data were extracted from the Orbis database and firm annual reports. Linear fixed model and adjusted mixed-effect models were used for data analysis. The primary independent variable is gender diversity, which is measured by Blau’s index; the dependent variable is firm performance, which is measured by return on assets(ROA), return on equity (ROE), return on capital employed (ROCE) and Tobin’s Q. This study used four control variables: firm size, board size, firm age, and leverage. The potential for innovation as a moderating variable was explored using the firms’ research and development (R&D) expenditure. The study found that the percentage of female board members was 24.94% in 2018 compared with 16.67% in 2014. The sector-wise performance data demonstrated no significant difference in firm performance with the presence of gender diversity (75% of performances across all sectors are positive but not statistically significant). There was no association between gender diversity and performance. Further, the potential effect of R&D expenditure as a moderator was not statistically significant. This study is innovative because no previous research on board gender diversity and its influence on listed SME performance, with innovation as a potential moderating variable, has been undertaken in the Australian setting. The findings of this study are consistent with prior research, where contradictory results or no results were found when investigating the effect of board diversity on performance. The analysis of the results shows some significant effects of gender diversity on financial performance, and it found no evidence of a significant negative link between board gender diversity and performance. Thus, the results do not contradict the case for the inclusion of female members in SME corporate boards. The effect of gender diversity may be different under different circumstances and at different times and across firms and time periods; the results may offset and produce no effect on firm performance.

Recently, the Saudi Capital Market Authority (CMA) opened the door for foreign investors to invest directly in the stock exchange market (Tadawul) to gain more welfare from their investments. Along with this step, the CMA released a set of Rules for Qualified Foreign Financial Institutions Investments (RQFFII) in Listed Shares 2015 that aimed to attract and protect the shareholders' rights. In this research project, the RQFFII have been examined to discover the level of attraction that these Saudi rules offer to foreign investment. The project also aimed to highlight strengths and weaknesses in the rules with regard to the protection shareholders' rights. This thesis explored the possible influence of foreign investments in the Saudi stock exchange. The research project aimed to increase the CMA and shareholders' awareness and knowledge in regard to these rules which lead to more protection of the local stock exchange.