ACCOUNTING

Critique of an academic article

Synopsis

This paper provides a critique of an academic article “Corporate governance and value relevance accounting information: Evidence from Australia” in which the author has tried to find out the probable association with corporate governance and accounting information in Australia. Particularly after the occurrence of numerous accounting fraud and prevailing corporate meltdown over the globe that has forced the concerned authorities to instigate, develop and incorporate a sound corporate policies that would assess them in controlling the increasing concept of fraud and maintaining a sound platform for companies.

For corporate governance the author has used variables related to the field of audit committee and external audit, whereas has identified the value-relevance by results obtained through calculation of regression of stock value of earnings and book values of equity using the Ohlosn's accounting-based valuation framework.

Critique of academic article

Introduction

In prevailing period of globalization where capital markets have become more fluent, there is non-stop transaction of capital in national and international market, and in these circumstances, and proper evaluation of financial statements has becomes a most prominent issue of the international market (Habib & Azim, 2008, 167-194). Thus, in awe of enhancing the precision and evaluation of financial data leading financial authorities of across the globe has instructed there local and multinational companies to develop their financial statements in accordance with the rules and regulation of IFRS and GAAP.

Steps taken by financial bodies for enhancing the value of financial reporting and its value at international market has provided researcher an opportunity of expanding their knowledge by trying to understand the prevailing distinction in the concept of value relevance of accounting in countries of the globe.

In order to achieve the main objective of this report it has been divided in to four main sections. The first section of this report would provide the overall analysis of the article including (aims of the article, explanation of the arguments, overall findings presented by the author). Moving forward, this report has analyzed the hypothesis of this article and its association with the available literature to identify its value. The third section of this report contains in-depth explanation of the article theoretical framework that has assessed the author in completing its research objectives. The fourth section would illustrate the significance and limitation of this article and affect of these limitations on the findings presented by the author.

Discussion

Summary of the article

The author (habib et al, 2008) has evaluated the association of framework of corporate governance with the value of accounting information in Australia. The modern wave of organizational diminishes or liquidity across the global has forced the authorities and management of the organization to instigate and execute appropriate principles of running the organization (Ashbaugh et al, 2006, pp. 203-243). In the beginning of twenty first century Australia witnessed severe financial crises with major companies like ( HIH Insurance, One.Tel and others) were collapsed and were forced to liquidate. In light of these circumstances Australian Stock Exchange in year 2002 developed ASX corporate governance council comprises ...