Interim reporting in Australia

Zhao, Suying

Interim reporting in Australia

Zhao, Suying

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Publication Type:: Thesis
Issue Date:: 2024

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Field	Value	Language
dc.contributor.author	Zhao, Suying
dc.date.accessioned	2025-03-24T23:53:30Z
dc.date.available	2025-03-24T23:53:30Z
dc.date.issued	2024
dc.identifier.uri	http://hdl.handle.net/10453/186182
dc.description	University of Technology Sydney. Faculty of Business.	en_US.UTF-8
dc.description.abstract	While annual and half yearly (interim) financial reports are both mandatory for listed companies in Australia, little is known about half yearly reports. This thesis contributes to remedy this situation. Australia provides a unique institutional setting in requiring ‘reviewed’ half yearly reports. Starting with a general overview of interim reports in Australia, I then examine three aspects of interim reporting: its usefulness to investors, how governance impacts its quality, and market responses to its content. I examine two attributes of interim earnings: its ability to reflect the performance of the reporting period (reliability) and its ability to indicate annual earnings (indicativeness). The results suggest that interim earnings is not as reliable as annual earnings, and more reliable interim earnings is better able to indicate annual earnings. Moreover, the interim earnings of small firms are relatively less reliable and less indicative. Next, I explore whether the characteristics of the audit committee are associated with interim earnings quality, as the audit committee is the main internal governance mechanism directly responsible for earnings quality. In this chapter, only audit committee independence is found to be significantly associated with earnings quality. My final analysis addresses the market response to interim earnings announcements compared to annual earnings announcements. Based on earlier findings in this thesis that interim earnings is less reliable than annual earnings, a weaker market response to interim earnings announcements is expected and found. However, although the difference in interim and annual earnings quality is greater for small firms, there is no corresponding difference in the market response, potentially as a result of a lack of investor attention for small firms. In further analysis, this chapter also reports a greater market response to interim bad news than annual bad news and a weaker market response to interim good news than annual good news, potentially because investors are aware of the possible deferral of bad news by managers. Overall, this thesis finds that interim reports exhibit lower reliability compared to annual reports, with greater variability observed for smaller firms. However, market responses to interim and annual earnings do not vary significantly for these smaller firms. Notably, the market response to the type of news contained in earnings differs for larger firms, with interim good news inducing a lower response and interim bad news inducing a greater response than their annual counterparts.	en_US.UTF-8
dc.format	Thesis (PhD)
dc.language.iso	en_US	en_US.UTF-8
dc.relation	https://opus.lib.uts.edu.au/bitstream/10453/186182/1/thesis.pdf
dc.rights	info:eu-repo/semantics/openAccess
dc.rights	The author owns the copyright in this thesis including all reproduction and reuse rights for the work. The work may not be altered without the permission of the copyright owner. Attribution is essential when quoting or paraphrasing from this thesis.
dc.rights	© 2024 Suying Zhao
dc.rights	au.edu.uts.lib/cph
dc.title	Interim reporting in Australia	en_US.UTF-8
dc.type	Thesis
utslib.copyright.status	open_access	*

Abstract:

While annual and half yearly (interim) financial reports are both mandatory for listed companies in Australia, little is known about half yearly reports. This thesis contributes to remedy this situation. Australia provides a unique institutional setting in requiring ‘reviewed’ half yearly reports. Starting with a general overview of interim reports in Australia, I then examine three aspects of interim reporting: its usefulness to investors, how governance impacts its quality, and market responses to its content. I examine two attributes of interim earnings: its ability to reflect the performance of the reporting period (reliability) and its ability to indicate annual earnings (indicativeness). The results suggest that interim earnings is not as reliable as annual earnings, and more reliable interim earnings is better able to indicate annual earnings. Moreover, the interim earnings of small firms are relatively less reliable and less indicative. Next, I explore whether the characteristics of the audit committee are associated with interim earnings quality, as the audit committee is the main internal governance mechanism directly responsible for earnings quality. In this chapter, only audit committee independence is found to be significantly associated with earnings quality. My final analysis addresses the market response to interim earnings announcements compared to annual earnings announcements. Based on earlier findings in this thesis that interim earnings is less reliable than annual earnings, a weaker market response to interim earnings announcements is expected and found. However, although the difference in interim and annual earnings quality is greater for small firms, there is no corresponding difference in the market response, potentially as a result of a lack of investor attention for small firms. In further analysis, this chapter also reports a greater market response to interim bad news than annual bad news and a weaker market response to interim good news than annual good news, potentially because investors are aware of the possible deferral of bad news by managers. Overall, this thesis finds that interim reports exhibit lower reliability compared to annual reports, with greater variability observed for smaller firms. However, market responses to interim and annual earnings do not vary significantly for these smaller firms. Notably, the market response to the type of news contained in earnings differs for larger firms, with interim good news inducing a lower response and interim bad news inducing a greater response than their annual counterparts.

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