تأثیر اصلاحات نظارتی بر ارتباط ارزش اطلاعات حسابداری: شواهد از اصلاحات نظارتی سال 1993 در نیوزیلند

This paper examines the impact of the 1993 financial reporting regulatory reforms in New Zealand on the value-relevance of accounting information. The study achieves this by regressing stock data of companies on book values and earnings for the pre- and post-regulatory periods. The Financial Reporting Act of 1993 was enacted in New Zealand as part of a wider package of company law reform. The 1987 share market collapse led to a Ministerial Committee of Inquiry that criticised the quality of financial reporting and the high level of non-compliance with accounting standards. The Committee recommended establishing an Accounting Standards Review Board to give the accounting standards a force of law. Whether this development increases the value-relevance of accounting information is an empirical question. The results, however, fail to find any significant increase in the total value-relevance of accounting information in the post-regulation period. There is, however, a corresponding increase in the incremental explanatory power of equity book values in the post-regulation period. This study also extends extant research on the effect of regulation on the value-relevance of accounting information by incorporating firm-specific factors to isolate the effect of regulation.

The purpose of this paper is to investigate whether the 1993 regulatory reforms in New Zealand have had a discernible impact on the relevance of accounting numbers subsequent to promulgation. The Financial Reporting Act (1993) (hereafter FRA) was enacted in New Zealand as part of a wider package of company law reform. The Act places an obligation on certain entities to prepare financial statements and provide these statements to the Registrar of companies. In addition, the Act establishes a body, the Accounting Standards Review Board (ASRB) which is charged with prescribing the requirements for financial reporting by those entities, and giving these requirements the force of law. With the introduction of any reporting regulation, the question that inevitably arises is whether accounting regulation is effective or not. That is, do companies provide credible information to market participants even in the absence of regulation? Proponents of a free-market perspective on accounting regulation argue that accounting information should be treated like any other goods or services and that demand and supply forces should be allowed to determine the optimal supply of accounting information. They derive their argument from Coase (1960), who states that when property rights are well defined and “transaction costs” are zero, market participants will organize their transactions in ways that will achieve efficient outcomes (see also Easterbrook and Fischel, 1991 and Stigler, 1964). The pro-regulation perspective, on the other hand, suggests that regulation is necessary because of market failure for public goods. This theoretical model further suggests that mandatory disclosure can be beneficial when the costs of writing or enforcing contracts that bind managers to maximize shareholder value are prohibitively high. The empirical literature provides mixed evidence on the market impact of mandatory regulatory requirements on disclosure practices. Barton and Waymire (2004) examine the extent to which managers, without a regulatory mandate, supply higher quality financial reporting to mitigate investor losses during a financial crisis. Using data from the 1929 United States of America (U.S.A.) stock market, they find that contracting and control conflicts induce managers to provide high-quality information even in the absence of regulation and that firms with high-quality information suffered less during the stock market crash. Greenstone, Oyer and Vissing-Jorgensen (2006), on the other hand, find positive market reactions to the 1964 Securities Acts amendments. Evidence from the recent, comprehensive governance legislation, the Sarbanes–Oxley Act of 2002 (SOX 2002) is mixed, with Chhaochharia and Grinstein (2007) finding positive market effects of the SOX (2002) on firm value, while Zhang (2007) reports the opposite. Consistent with Zhang (2007), Bhattacharya, Groznik and Haslem (2007) find that CEO certification mandated by SOX (2002) is not value-relevant.1 While regulatory authorities may believe that enhancing the relevance of financial information is desirable, there can be significant impediments to achieving such a goal. Ely and Waymire (1999) state that: … information relevance is likely a complex, multidimensional attribute and standard-setters may not reach consensus on which specific methods will enhance relevance… Second, the relevance of accounting data may be influenced by changes in the economic environment beyond the standard setter's control… Hence they may play a continual game of “catch-up” where new standards are required merely to keep pace with changing external circumstances. Finally, standard-setting is a political process… As such, standard-setters may be required to trade off relevance against the need to satisfy multiple constituencies with conflicting interests (p. 295). This paper explores the impact of regulatory reform on the value-relevance of accounting information. An accounting number is deemed to be value-relevant if it is significantly related to stock price (the measure of value) (Beaver, 2002). Beaver (2002, 460) also states that, “value-relevance research demands an in-depth knowledge of accounting institutions, accounting standards, and the specific features of the reported numbers”. Regulation aimed at enriching these aspects, therefore, requires careful scrutiny. The FRA, which was enacted in New Zealand in 1993 and is examined in this study, is an example of such regulation. The FRA, through the enforcement regime of the ASRB, has an important role to play in the provision of accounting information in New Zealand. With adoption of International Financial Reporting Standards (IFRSs) became mandatory since January 2007, this enforcement regime assumes much greater importance, as good quality reporting standards will be of little use without a strong enforcement mechanism. No evidence, however, presently exists about the effectiveness of the FRA in this enforcement capacity and consequently whether accounting information that is more relevant to users has been provided since the promulgation of the FRA. This paper addresses this issue, by examining the impact – if any – of the promulgation of the FRA on the value-relevance of accounting information. Using data from 38 companies that were listed on the New Zealand Stock Exchange during both the pre- and post-reform eras from 1990 to 1999, this study fails to find any significant increase in the value-relevance of accounting information (earnings and equity book values) in the post-regulation period. When the value-relevance of accounting information is decomposed into equity book values and earnings components, the evidence suggests a significant increase in the incremental explanatory power of equity book values in the post-regulation period, but not in the incremental power of earnings. These findings, however, may not be due solely to regulatory reform, as the relevance of accounting data may also have been influenced by firm-specific economic factors. Four such factors, which have been shown to affect changes in the value-relevance of accounting information, are identified and their impact on the pricing of earnings and equity book values estimated. Regression results reveal that the firm-specific variables have a much higher explanatory power for stock prices than the baseline regression model. The incorporation of firm-specific economic variables in analyzing the impact of regulation on the valuation properties of accounting information is an advance on the existing literature. Earlier empirical studies on the impact of regulatory reform on the value-relevance of accounting information (Ballester and Livnat, 1997, Ely and Waymire, 1999 and Giner and Rees, 1999) are based on a simple comparison of the adjusted R2s in the pre- and post-regulatory periods. This change in adjusted R2s, however, is difficult to attribute to changes in regulatory reform if other fundamental economic factors that could affect the value-relevance of accounting information remain uncontrolled. This study addresses this issue.

This paper examines the impact of the 1993 financial reporting regulatory reforms in New Zealand on the value-relevance of accounting information. The study does not find evidence that the 1993 regulatory reform in New Zealand had a discernible impact on the value-relevance of accounting information. Firm-specific economic factors, on the other hand, do explain a significant fraction of the relevance of accounting information for stock prices. When firms report losses, investors consider earnings to be less relevant for equity valuation purposes. For larger firms, however, earnings are value-relevant, probably because larger firms are more likely to be profitable and earnings of such firms are more persistent compared to their small firm counterparts. Furthermore, earnings of high growth firms are valued positively in the market, which is consistent with the argument that high growth firms are likely to have experienced positive abnormal earnings in recent periods, which are expected to persist into the future. Failure to find any significant effect of regulatory reform does not automatically imply that the regulation is ineffective or unnecessary. As noted by Ely and Waymire (1999), the relevance of accounting data may be influenced by changes in the economic environment which standard setters can hardly influence and, “Hence they may play a continual game of “catch-up” where new standards are required merely to keep pace with changing external circumstances” (p. 295). Several limitations of the study should be noted. Firstly, although the study controls for the effects of firm-specific economic factors on the value-relevance of accounting information, does not examine the effects of particular accounting standards promulgated during the sample period. However, the fact that firm-specific variables interacted with accounting earnings and equity book values explain about 84% of the variation in stock prices reduces the concern to some extent. However, the result should be interpreted in light of the concern raised above. Secondly, the study has assumed that the post-regulatory period starts after the ASRB comes into force, namely, August 1994. In the tests conducted, nine 1994 observations have their fiscal years ending between August and December 1994. Strictly speaking, these observations should be considered as part of the post-regulatory period, but to be consistent with the fact that these observations pertain to 1994 and hence should not be merged with 1995 in calculating annual R2, the nine observations have been included with the 1994 data. This may have had an impact on the results. Secondly, the pre-regulation period covered by the study started only in January 1990, as this is the date from which DATASTREAM started to provide adjusted stock price data for a significant number of companies. This limited pre-regulation period may have had an impact on the analyses, due to its duration being shorter than the post-regulation period.