Gidemy Elibray

Items

• International financial reporting standards and foreign ownership in South African companies
  Previous literature suggests that the adoption of International Financial Reporting Standards (IFRS) can facilitate cross-border capital flows, as it results in an increase in market liquidity and comparability benefits. Using foreign ownership levels in South African listed companies during the period 2003 to 2007, we test whether this association holds in a South African context when the top 40 South African companies mandatorily adopted IFRS. The results indicate that the adoption of IFRS did not have a significant positive association with foreign ownership levels during the sample period. We attribute the result to the harmonisation project undertaken in South Africa to align local accounting standards (SAGAAP) with the IFRS before the mandatory adoption thereof.
• Long-run accounting conservatism and subsequent equity returns
  This paper investigates the impact of long-run accounting conservatism on subsequent equity returns. The accounting conservatism proxy used is based on prior research and considered for different possible specifications. In contrast to prior research, this study compensates for the impact of momentum and the accrual anomaly by using five-year subsequent buy and hold total returns. A three-factor Fama and French model finds that accounting conservatism does not have a significant impact on subsequent equity returns for a sample of US firms. Stratifying the sample into pre-crisis and crisis periods does not affect results. However, this study also reveals that firms within certain industries do benefit from increased accounting conservatism, during both pre-crisis and crisis sample periods.
• US vs the World, a taxing issue
  As part of the short-term convergence project on income taxes, the IASB and FASB will consider the appropriate tax rate at which deferred tax assets and liabilities should be recognized. IAS 12 requires an entity to recognize its deferred tax assets and liabilities at the undistributed tax rate, while SFAS 109 generally requires an entity to recognize deferred tax assets and liabilities at the distributed tax rate. The various arguments for and against the use of the distributed tax rate and as it relates in the South African context to Secondary Tax on Companies (STC) are examined. The conclusion can be drawn that it might not always be appropriate to recognize a liability for STC on all distributable profits as they are earned.
• Recognising an STC liability versus recognising a deferred tax asset for unused STC credits according to the IASB framework : a comparison
  South African companies have, in the past, not recognised an asset for unused Secondary Tax on Companies ("STC") credits. AC 501, Accounting for "Secondary Tax on Companies (STC)", which is effective for annual periods beginning on or after 1 January 2004, now requires South African companies to recognise a deferred tax asset for unused STC credits, to the extent that it is probable that an entity will declare dividends of its own, against which the unused STC credits can be utilised. In terms of AC 501 and IAS 12 (AC 102), Income Taxes (the local and international accounting standard on income taxes), the recognition of a liability to pay STC has to be postponed until the declaration of a dividend. Some accounting commentators have indicated that they find it anomalous to recognise a deferred tax asset in respect of unused STC credits, while no liability is recognised for the STC that would be payable on the future distribution of retained earnings. The objective of the study is to consider whether it is conceptually anomalous to recognise a deferred tax asset for unused STC credits while no liability is raised for the STC that would become payable on future dividend declarations on profits already recognised in the financial statements. The study concludes that it is conceptually anomalous to recognise a deferred tax asset for unused STC credits when no corresponding liability is raised.
• The International Sustainability Standards Board’s (ISSB) past, present, and future : critical reflections and a research
  PURPOSE : This paper aims to critically reflect on the formation of the International Sustainability Standards Board (ISSB), its current agenda and likely future direction. The authors consider the relationships between the ISSB and other standard setters, regulators, practitioners and stakeholders, and develop a comprehensive research agenda. DESIGN/METHODOLOGY/APPROACH : The authors review and critically analyse academic and practitioner publications alongside the ISSB’s workplans to identify the themes impacting the future of the ISSB and to develop a research agenda. FINDINGS : Three key themes emerge from the authors’ analysis that are likely to influence the future of the ISSB: the jurisdiction and scope of the ISSB – how far its influence is likely to extend, both geographically and conceptually; the ongoing legitimacy challenge the ISSB is facing in terms of setting an agenda for sustainability reporting; and the “capture” of sustainability reporting by influential stakeholders including capital providers. ORIGINALITY/VALUE : The formation of the ISSB is critical to the future of sustainability reporting. The authors provide a comprehensive and topical overview of the past, present and potential future of the ISSB, highlighting the need for further research and providing a research agenda that addresses outstanding questions in the field.
• The benefit of introducing audit software into curricula for computer auditing students : a student perspective from the University of Pretoria
  The use of computers in the learning process is a well-researched area. The introduction of computers and related audit software in the auditing field has had a major influence on the auditing process. Very little research has been done on the inclusion of computer audit software in the auditing syllabus. Even less research has been done on the students' perspective of the benefits of the introduction of such software. To offset this shortcoming, the third-year computer-auditing students at the University of Pretoria were requested to complete a questionnaire. The aim was to evaluate the students' perspective on the benefits, if any, for third year auditing students at the University of Pretoria, derived from the incorporation of practical computer training in an audit software package, in their syllabus. The results of the study clearly indicated that students are willing to sacrifice more of their time for practical computer classes because they are aware of the beneficial impact on their understanding of the subject as well as their future careers.
• Developing a conceptual model of influences around integrated reporting, new insights and directions for future research
  PURPOSE : This paper aims to develop a conceptual model for examining the development of integrated reporting, relate the articles in this Meditari Accountancy Research special issue on integrated reporting to the model and identify areas for future research. DESIGN/METHODOLOGY/APPROACH : The paper uses a narrative/discursive style to summarise key findings from the articles in the special issue and develop a normative research agenda. Findings The findings of the prior literature, as well as the articles in this special issue, support the conceptual model developed in this paper. This new conceptual model can be used in multiple ways. ORIGINALITY/VALUE : The special issue draws on some of the latest developments in integrated reporting from multiple jurisdictions. Different theoretical frameworks and methodologies, coupled with primary evidence on integrated reporting, construct a pluralistic assessment of integrated reporting, which can be used as a basis for future research. The new conceptual model developed in this paper can be used as an organising framework; a way of understanding and thinking about the various influences; a way of identifying additional factors to control for in a study; and/or a way of identifying new, interesting and underexplored research questions.
• Part 2 : deferred tax 0%, 14.5% or 29%?
  Recent circular issued by SAICA, Circular 1/2006, Disclosures in relation to deferred tax, recognizes that the debate surrounding paragraph 51 of IAS 12 (AC 102) has focused particularly on measuring deferred tax in relation to investment properties. The appropriate rate to be used to measure deferred tax is not an accounting policy choice. The rate should be determined based on the expected manner of recovery of the carrying amount of the asset. Secondly, the 14.5% rate is only appropriate, in the case of buildings, if it is expected that the carrying amount of the asset will be recovered through sale, and then only to fair value adjustments above the CGT valuation date value of the asset.
• Employee-related disclosures in corporate annual reports and the King II Report recommendations
  The recommendations of the King II Report on corporate governance regarding employee-related disclosures by listed companies were identified. The annual reports of the Top 100 industrial companies as well as of the mining companies listed on the Johannesburg Securities Exchange were furthermore analysed to establish the percentage of companies that comply with the King II recommendations. It transpired that few of them comply fully with these recommendations.
• Accounting for nil- or low-interest loans from the government
  South Africa remains a relatively high interest rate environment and a nil- or low-interest loan may therefore be a popular method of assistance, as the recipient of the loan could enjoy a substantial interest saving.
• The effect of expensing share-based payments on basic earnings per share of South African listed companies
  PURPOSE – This study aims to investigate the post-implementation impact of expensing share-based payment transactions on basic earnings per share. In recent years, IFRS 2 was one of the most opposed and controversial standards issued by the IASB. DESIGN / METHODOLOGY / APPROACH – The sample relates to the period immediately after implementation (2006-2009) and consists of the 531 firm-year observations where share-based payments were present among Johannesburg Stock Exchange listed companies. The effect of share-based payments on basic earnings per share is assessed. FINDINGS – The findings of this study show a statistically significant impact on basic earnings per share, but the results are more modest than suggested by prior studies. The number of companies reporting a share-based payment expense increased over the five-year period 2005-2009. ORIGINALITY / VALUE – The introduction of IFRS 2 caused small but not necessarily immaterial changes to the income profile of companies. This is important for analysts and general users of financial information who need to be aware of these changes. The results also suggest that IFRS 2 did not merely cause accounting policy changes, but has impacted on the way share-based payment transactions are used by companies.
• Approaches to social constructivist accounting education
  Thesis (PhD)--University of Pretoria, 2018.
• Backtesting historical simulation value-at-risk for a selected portfolio of South African bonds
  As financial asset portfolios have become more complex, it has become more difficult for the management of financial institutions to obtain a useful, yet practical measure of market risk. Since modern portfolios contain more derivative instruments, simple linear measures such as standard deviation and duration are inappropriate. Due to this need a market risk measurement technique called Value-at-Risk (VaR) was developed. VaR can be defined as the predicted maximum potential adverse loss of a single financial asset, or portfolio of assets, over a target horizon, within a given confidence interval. A backtesting procedure was designed to compare realized trading results of a selection of representative bonds with model generated risk measures in order to evaluate the accuracy of the VaR model. The backtesting procedure used in this study involves the comparison between the number of times the VaR model under-predicted the subsequent day's loss, versus the number of times such an under-prediction is expected. The empirical results from this study illustrates that VaR underestimated risk during periods of high volatility and overestimated VaR during periods of low volatility, thus rendering it useless as a measure of extreme market movement. The purpose of this study is not to test the validity of VaR, but to illustrate the shortcoming of VaR, in that it measures only market risk. Practitioners should always bear in mind that VaR is a market risk measurement technique and does not warn of extreme market movements.
• Corporate social responsibility and earnings management of South African companies
  L.A.J. (University of South Africa) was responsible for generating the idea, gathering the data, performing the analyses, concluding and writing the article. M.D.K. (University of Pretoria) and C.J.D.V. (University of Auckland, New Zealand and University of Pretoria) were involved in providing guidance throughout the process.
• The information content of mandatory and discretionary non-GAAP earnings
  PURPOSE – This paper aims to investigate the pricing of discretionary earnings in South Africa. This is a unique setting, as South African listed firms also reportmandatory non-GAAP earnings (“headline earnings”). DESIGN/METHODOLOGY/APPROACH – Results are based on multivariate regression analyses for South African firms that report from 2010 to 2019. FINDINGS – Findings show that the value-relevance of discretionary earnings exceeds that of both GAAP earnings and headline earnings. In addition, placement of discretionary earnings reconciliations communicates information about the decision-usefulness of earnings. ORIGINALITY/VALUE – Discretionary earnings remain the most value-relevant earnings measure, despite the divergent decision-useful characteristics offered by headline earnings and GAAP earnings. Therefore, the most decision-useful earnings reflect unique industry or firm characteristics rather than the assurance arising from regulation.
• Management of risks associated with the disclosure of future-oriented information in integrated reports
  PURPOSE : Integrated reporting (IR) promotes the disclosure of future-oriented information to enable financial stakeholders to make better-informed decisions. However, the downside to this type of disclosure is the risk to management of disclosing such future-oriented information. This paper aims to explore how IR preparers manage the risk of disclosing future-oriented information in companies’ integrated reports. DESIGN/METHODOLOGY/APPROACH : This study represents an exploratory interpretative thematic analysis of 33 semi-structured interviews with managers involved in IR in eight Sri Lankan companies representing various industries. The thematic analysis is informed by the research literature and prior studies on IR. FINDINGS : This paper provides evidence of various strategies to manage the risk associated with the disclosure of future-oriented information in integrated reports. These strategies include making non-specific predictions; increasing the accuracy of the predictions; linking performance management to disclosed targets, thus ensuring individual responsibility for target achievement; disclosing ex post explanations for not achieving previously disclosed targets; and linking disclosed targets to the company’s risk management procedures. However, these strategies can cause managers to provide conservative future-oriented information, rather than “best estimate” future-oriented information. PRACTICAL IMPLICATIONS : The study describes the strategies that managers use to mitigate the risks involved in disclosing future-oriented information. These strategies can provide support or raise concerns, for managers in deciding how to deal with such risks. Regulators tasked with investor protection, as well as stock exchanges interested in the transparency and accountability of listed companies’ activities should be aware of these strategies. Furthermore, the International Integrated Reporting Council (IIRC) should be interested in the implications of this study because some of the identified strategies could undermine the usefulness of integrated reports to stakeholders. This is a significant concern given that the IIRC envisages integrated reporting and thinking as vehicles that could align capital allocation and corporate behaviour with wider sustainable development goals. SOCIAL IMPLICATIONS : The trend of future-oriented information moving from being used only in organisations’ internal management systems to being externally reported in integrated reports has implications for stakeholder groups interested in the reported targets. This study reveals management strategies that could affect future-oriented information reliability and reduce their usefulness for users of integrated reports. ORIGINALITY/VALUE : This study provides unique insights into the emerging area of how managers deal with the risks involved in disclosing future-oriented IR information.
• Corporate social responsibility disclosures by South Africa mining companies : the Marikana massacre
  Following the strike at Lonmin Plc. which led to the death of 34 miners and the wounding of 78 others on 16 August 2012, we evaluate whether the extent of corporate social responsibility (CSR) disclosures by South African mining companies, in total and per disclosure category, was affected by this event. Content analysis is used to measure the extent of CSR disclosures before and after the Marikana massacre in the integrated annual and stand-alone CSR reports of companies. CSR disclosure was not affected by the Marikana massacre. Our results suggest that the extent of CSR disclosure may be influenced by other factors than only the need by companies to gain or repair legitimacy in response to a legitimacy-threatening event. The only variable in our analysis that had a positive and significant association with CSR disclosure, in total and for each of the different CSR disclosure categories, is whether a company is a member of the Social Responsibility Index (SRI) or not. We use the Marikana massacre, which, following many prior research using legitimacy theory, should have an effect on disclosure, to consider whether legitimacy theory in isolation can be used to evaluate why companies make certain choices regarding the extent of their CSR disclosures.
• The future horizons of accountancy education in South Africa : a review of the educational requirements until 1990
  Thesis (DCom)--University of Pretoria, 2010.
• The influence of integrated reporting and internationalisation on intellectual capital disclosures
  PURPOSE : The purpose of this paper is to examine whether preparing an integrated report and/or whether cross-listing is associated with more intellectual capital (IC) disclosure. DESIGN/METHODOLOGY/APPROACH : The paper compares the content of IC disclosures of matched samples of companies. FINDINGS : The findings show that companies preparing an integrated report disclose more IC information, and that companies exposed to international capital market pressures through cross-listing do not disclose more IC information. RESEARCH LIMITATIONS/IMPLICATIONS : The findings imply that integrated reporting (IR) is likely to increase IC disclosures and also that future IC disclosure research may have to take into account whether companies prepare an integrated report. PRACTICAL IMPLICATIONS : The results will be of interest to the proponents of IC and of IR, including the developers of the IR framework, regulators and companies considering IR. ORIGINALITY/VALUE : This is one of the first studies to assess the influence of preparing an integrated report on the level of IC disclosure.
• Psychopathic and antisocial, but not emotionally intelligent
  Psychopaths are characterized as skilled manipulators, yet they are also said to be deficient in recognizing others’ emotions. These two depictions suggest opposing predictions for the relation of ability-based emotional intelligence (EI) to psychopathy. The current study investigated EI, psychopathy, and antisocial behavior in a sample of 429 undergraduate students from three universities. Results indicated that, as expected, EI was negatively correlated with antisocial behavior, and psychopathy was highly positively correlated with antisocial behavior. Total EI was significantly negatively correlated with all psychopathy scales for both sexes. There were no positive correlations between any EI subscales and psychopathy in either sex, suggesting that psychopathy is not related to high ability in any aspect of EI.
• Is voluntary International Integrated Reporting Framework adoption a step on the sustainability road and does adoption matter to capital markets?
  PURPOSE : This paper aims to examine the type of firms that voluntarily adopt the International Integrated Reporting Framework (IIRF) and how markets respond to voluntary IIRF adherence. DESIGN/METHODOLOGY/APPROACH : Analysis of a matched global sample of listed firms that voluntarily adopt the IIRF (IIRF firms) and those that do not (non-IIRF firms). The samples range from 188 to 436 observations as alternative research designs, different matched samples and regression specifications, and several sensitivity analyses were conducted. FINDINGS : In markets where integrated reporting (IR) is not mainstream, voluntary IIRF adoption is more likely for firms with established sustainability practices. Such findings suggest that the IIRF is an incremental innovation for sustainability rather than an innovation that radically changes management and reporting practices. In Japan, where IR is mainstream, results show no observable differences between IIRF firms and non-IIRF firms. Consistent with the determinants results, this paper finds no evidence of associations between voluntary IIRF adoption and the information environment, the cost of equity or firm value. However, the additional analysis provides preliminary evidence suggesting capital market effects may differ for IIRF firms with higher sustainability or market performance. PRACTICAL IMPLICATIONS : This study offers useful insights into the current global debate on whether there is value in adopting the IIRF. ORIGINALITY/VALUE : This study adds to the limited body of research on the determinants and consequences of voluntary IIRF adoption, offering insights for regulators, practitioners and proponents of IR. This study is the first to provide quantitative evidence of the influence sustainability practices have on voluntary IIRF adoption. Further, the results add to the current global debate on whether there is value in adopting the IIRF. This paper finds that voluntary IIRF adoption has no clear and distinct influence on disclosure practices and capital markets, suggesting there are no additional benefits from prioritising the promotion or adoption of the IIRF over other disclosure forms. Unless there are advancements supporting the implementation of integrated thinking and information connectivity, the potential for the IIRF to improve information quality may be limited to encouraging more non-financial disclosure and transparency in countries where integrated disclosures are not trending.
• How can vice-chancellor compensation be justified? Evidence from New Zealand
  DATA AVAILABILITY STATEMENT : The data are available from the authors upon request.
• Will the formation of the International Sustainability Standards Board result in the death of integrated reporting?
  PURPOSE : This paper critically analyses the future of Integrated Reporting (IR) given recent and likely future developments in corporate reporting and sustainability disclosure standard setting. DESIGN/METHODOLOGY/APPROACH : This paper uses Alvesson and Deetz’s (2000) critical framework to consider the research question through insight (a review of the history of IR and the formation of the International Sustainability Standards Board [ISSB]), critique (considering power structures, momentum and global trends) and transformative redefinition (proposing reasons for how and why IR might survive or perish). FINDINGS : IR’s future as a reporting initiative is uncertain. Pressure from investors may lead to detailed sustainability disclosures being favoured over IR’s more holistic story-telling approach. This may result in IR joining the long list of abandoned corporate reporting initiatives. Yet IR is not incompatible with recent developments in non-financial reporting and may continue to thrive. IR aligns well with developments in management accounting practices and other voluntary forms of sustainability reporting. IR’s associated “Integrated Thinking” seeks to develop organisational decision-making that leads to sustainable value creation. Whether it lasts as an external reporting format or not, IR is likely to leave a legacy related to changes in reporting characteristics. ORIGINALITY/VALUE : This study explores the future of IR at a critical juncture in corporate reporting history, considering the entry of the ISSB, which is fundamentally changing the landscape of sustainability disclosure standard setting.
• The process beyond the numbers and ratios
  Accounting numbers and ratios represent merely reflections of reality and have limited meaning and significance in and of themselves. They may contain embedded meaning, but extracting it requires creative skills of interpretation. The purpose of this study focuses on the conversion of data into knowledge, observations about the discovered world and the discovering person - the interpreter. An empirically tested reference base or proportional model is offered to assist in the performance of an organised interpretation.
• Recognising a deferred tax asset for unused STC credits in compliance with international financial reporting standards – Is the consensus in AC 501 correct?
  In the past, South African companies did not recognise an asset for unused STC credits. AC 501, Accounting for ‘Secondary Tax on Companies (STC)’, which is effective for annual accounting periods beginning on or after 1 January 2004, now requires South African companies to recognise a deferred tax asset for unused STC credits to the extent that it is probable that an entity will declare dividends of its own against which the unused STC credits can be utilised. This change in the accounting treatment for unused STC credits has come in for some criticism, as accounting commentators do not all agree on the treatment enforced by AC 501. The objective of this study is to consider the soundness of this requirement in AC 501 by comparison with the International Financial Reporting Standard on income taxes, IAS 12, Income Taxes. The results of the conceptual analysis of AC 501 and IAS 12 were tested with reference to expert opinions of academics and practitioners in the field. This study concludes that recognising a deferred tax asset for unused STC credits contradicts IAS 12, which requires deferred tax assets and liabilities to be measured at the undistributed rate.