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Financial accounting communication practices of Pacific Island Countries' entities

Brown, Alistair M. (2003) Financial accounting communication practices of Pacific Island Countries' entities. PhD thesis, Murdoch University.

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Through the lens of stakeholder, legitimacy theories, and developing country literature, this thesis generates empirical evidence of reporting and accounting communication disclosure practices of entities of Pacific Island Countries (PIC) with an additional emphasis on natural environment and human resource issues. Evidence is gathered through a positivist-objectivist research process through the medium of annual report analysis and extensive mail survey of user and preparer views.

The evidence obtained by 86 PIC reporting entities over a three year period finds support for the Traditional model of reporting with some aspects of the Western-narrow model present. Entity type, industry type, ethnic background are strong explanatory factors for both core statement accounting (CSA) practices and aggregated accounting disclosures (AAD). Size was also a significant predictor of both CSA and AAD.

Reporting model and moral perspective classification taxonomies are used to assess PIC user and preparer perceptions of the importance of a wide range of stakeholder groups. Both user and preparer respondents rate Interest-based financial stakeholders highest in importance and Traditional duty-based groups least important. A new classification taxonomy of stakeholders (based on financial focus) is developed from the theoretical and empirical considerations of the original two taxonomies. Financial focus is found to be the key predictor of user, preparer, and combined user and preparer ratings of stakeholder importance.

Results of PIC respondents rankings of mode of communication show over 40% of respondents rank oral communication ahead of either financial statements and comprehensive annual reports. Statistical analysis shows that respondent by financial focus is a highly significant predictor.

The level of reporting of Human Resource Disclosure is low (38%) but is considerably higher than Natural Environment Disclosure (8%). Multiple regression testing for significance between the level of Human Resource Disclosures (HRD) and Natural Environment Disclosures (NED), and ethnic, industry, entity and size attributes is conducted. In the annual report stage for NED, industry is a significant predictor. In the survey analysis stage, results show a highly significant difference between users and preparers rating of the importance of components of NED issues. An expectation gap exists between users' perceptions of HRD and NED and extant annual reporting of these issues.

This thesis adds to the growing accounting literature on the developing world, generating empirical evidence of a broad sweep of stakeholder groups, evolving and testing a financially-focused model, and finding that oral communication may prove a powerful medium of communication in the Pacific Island region. The development of a composite financial focus model, fusing the similar viewpoints of users and preparers, provides important insights for international and national organisations seeking to understand and influence the accounting communication practices of the PIC region.

This thesis has generalisable consequences for accounting and financial reporting in developing economies where non-western social, cultural and institutional arrangements have been developed.

Item Type: Thesis (PhD)
Murdoch Affiliation(s): Division of Business, Information Technology and Law
Notes: Note to the author: If you would like to make your thesis openly available on Murdoch University Library's Research Repository, please contact: Thank you.
Supervisor(s): Tower, Greg
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