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Warrnambool graduate now a Warrnambool professor

Graeme Wines is a real home-grown success story at the Warrnambool Campus of Deakin University.

The newly appointed Professor in Accounting was born and raised in Warrnambool, educated at Warrnambool High School, completed his undergraduate degree at the then Warrnambool Institute of Advanced Education and has worked at the Campus for 25 years in total, originally starting as a tutor.
Now he has become the first home-made accounting professor.

Warrnambool has had three previous academics who moved on to become accounting professors at other universities but Professor Wines is the first to complete the achievement while based in Warrnambool.

"It is a significant recognition that Warrnambool is a vibrant Campus and part of a university which is committed to rural and regional engagement," he said.

"It is a fantastic achievement for the Campus in that I am a graduate of Warrnambool. I completed my PhD through the Australian National University in Canberra but it is pleasing to be able to work my way through the ranks while remaining based in Warrnambool."

Professor Wines has played a major role in developing the Accounting course in Warrnambool and is in the process of completing his eighth textbook edition. "We've got a great course here," he said. "Our graduates are in positions of responsibility all around the world and we have helped a lot of local accounting firms address shortages."

Professor Wines's teaching and research have specialised in the areas of financial reporting, accounting theory, auditing, and rural and regional accounting firm services.

He is about to embark on another major piece of research after receiving a $245,000 Australia Research Council grant in conjunction with five other researchers to examine and make recommendations on the enterprise risk management processes of energy intensive companies for their greenhouse gas emissions.

Along with his 25 years at the Warrnambool Campus, Professor Wines has prior experience working in secondary education and for accounting firms. Professor Wines joins a select group of four professors who are based at the Warrnambool Campus; Pro Vice-Chancellor (Rural and Regional), Professor Sue Kilpatrick, Professor Gerry Quinn from the School of Life and Environmental Science and Director of the Greater Green Triangle University Department of Rural Health, Professor James Dunbar.

And then, just like that, the iconic mutual life insurance industry was gone

Regulatory changes by the Australian Government can have unintended consequences and Australia's smaller mutual credit unions and health insurers could do well to learn from the demise of the mutual life insurance industry during such a change, Deakin University's Monica Keneley believes.

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Divorce looms if your wife is unhappier than you

Look out fellas! If your wife is less happy than you – even during the first year of marriage - separation and divorce is likely, a team of economists has found.

Dr Cahit Guven, an expert on wellbeing and economics from Deakin University, together with his co-authors Professor Claudia Senik and Dr Holger Stichnot, wanted to find out if the happiness gap between husbands and wives really mattered. And if it did, could it act as a predictor of divorce.

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Oil contracts key to predicting price of gold

Analysts looking to capitalise on the suspected relationship between the oil and gold markets need to look closely at when the contracts on the futures market mature, Deakin University research has shown.

Professor of Finance, Paresh Narayan, who looked at the link between the oil and gold spot markets between 1963 and 2008 in the US and presented the findings of the study at a seminar in Geelong recently, said analysts and academics have long debated whether there is a relationship between the price for oil and the price for gold and whether the market price for oil can be used to predict the price for gold.

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Future generations first in environment trade off

Warrnambool residents are an altruistic group who care about the wellbeing of future generations, a Deakin University researcher has found.

The PhD study, which has implications for environmental policy, showed that if given a choice residents would put the wellbeing of the next generation before their own.

Dr Helen Scarborough, a lecturer in Deakin's Faculty of Business and Law, asked members of the Warrnambool community to choose between three hypothetical environmental policies. Each policy would have potential impacts on the wellbeing of people aged 50, aged 25 and newly born.

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Sunny days take risk out of investors' decisions

Sunshine makes people happy and happy people make less risky investment decisions, a Deakin University researcher has found.

Using data from Germany and the Netherlands, Dr Cahit Guven, an expert in behavioural economics and wellbeing, examined the connection between the weather, people's self-reported wellbeing and their economic choices.

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Maternity leave and child care key to women's return to work

Australian women's decision return to work is influenced by their maternity leave rights, the availability of quality and affordable child-care and level of household wealth, a Deakin University study has found. Using longitundinal data from the Household Income and Labour in Dynamics (HILDA) survey (2001 to 2007), economists Dr Cahit Guven and Dr Aydogan Ulker, looked at the factors which influence the length of time women spend on maternity leave after the birth of their child.

"Maternity leave entitlements, job flexibility and higher wage rates before the birth increase the probability of returning to work, while difficulties in accessing child care and higher household wealth delay it." said Dr Ulker. "Women face a trade-off between the social benefits of being at home with their child and the quality of child care they receive compared with the economic impacts their withdrawal from the workforce has on the household budget".

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Soccer holds key to wealth and influence

Cities which are home to a leading Soccer Club are winners not just on the field but in the game of political and economic influence, a Deakin University economist believes.

In fact using a global analysis of soccer championships Associate Professor Mehmet Ulubasoglu has been able to use the game as a proxy to show the concentration of political and economic power across the world and within a country itself.

"Successful soccer teams are the ones who can hire the best talent, a feat that requires command over relatively large resources that need to be raised from fans, supporters, merchandise sales and broadcast revenues," Associate Professor Ulubasoglu told the Australasian Meeting of the Econometric Society at the Australian National University(7-10 July).

"Typically most of these sources are local, but we would argue that teams that credibly contest championships are the ones located in cities which command relatively more resources.

"You could tease out a reasonable measure of geographical distribution of wealth in any given country by looking at soccer championships and the relative importance of the cities these teams represent."

Associate Professor Mehmet Ulubasoglu said being able to see the concentration of political and economic power was important because of the effect it had on the economic development of a country.

"Basically the concentration of political and economic wealth in one city can act as a brake on economic development of a country over the long-run, because it stops competition and effectively concentrates all the money and resources in one place, choking innovation and development due to the political influence it affords," Associate Professor Ulubasoglu explained.

"This effect, has been noticed since 2AD after Rome became the largest city in the world. "Its size meant that Rome used its military and political power to suppress competition and extract resources from its empire. "Researchers believe the parasitic character of the Rome metropolis was not only responsible for weakening the Italian economy, it also played a central part in the collapse of the empire."

Associate Professor Ulubasoglu said similar patterns had been seen as the world developed with such cities being labelled Romes without Empires.

"Economists have long struggled with definitively measuring the implications of high urban concentration and its effect on the economic outcomes of a country partly because of the difficulty of measurement; cities' populations do not always convert to a political influence measure, " Associate Professor Ulubasoglu explained.

"So we developed an alternative measurement by creating an index of the distribution of soccer championships across cities in a given economy mimicking the geographic concentration of wealth and political influence." Associate Professor Ulubasoglu said soccer had been chosen because it was one of the most popular sports in the world, played at professional and amateur level.

"A FIFA study found that more than 240 million people regularly played soccer in more than 200 countries," he said.

"What made soccer particularly attractive for us is the fact that in professional premier leagues, teams competing for the championships have been associated with urban centres, any city worth its salt being represented by at least one soccer team in the league.

"The study covers 100 countries, including Australia. Because not all countries' favourite sports is soccer, the implications are cross-checked with a sub-sample of 45 countries which participated the FIFA World Cups - soccer is more likely to be a premier sport in those countries, - similar results hold.

"Consider Germany and Paraguay, which, respectively, possess one of the lowest and the highest geographical concentration of wealth. Our analysis suggests an average of 2% difference in the annual growth rates of these countries over the period 1960-1999 due to differences in the geographical concentration of wealth and its associated effects.

"Federal countries like Australia are advantaged because employers, employees and industry can move around which is likely to reduce political agglomeration.

"Australia can still do better if Melbourne and Sydney's dominance is reduced, however."

*The study is co-authored with Professor Cem Karayalcin of Florida International University, USA.

Governance and audit key to good Fair Value Accounting

Australian companies should ensure they have the appropriate governance and audit processes in place when using Fair Value Accounting as part of the adoption of global financial reporting standards (IFRS), a visiting academic has warned.

Professor Dan Dhaliwal, an expert on Fair Value Accounting who visited Deakin University from the University of Arizona, said concerns about the contribution of Fair Value Accounting to the Global Financial Crisis were unfounded.

"Fair Value Accounting has been in place in the United States for many years," he told seminar participants.

"Financial Accounting Standards Board (FASB) Statement No. 157 (FAS 157), requires companies to record transactions at fair value ie the price that would be received if an asset was sold or the price that would be paid if a liability was transferred in an orderly transaction between buyers and sellers.

"FAS 157 was criticised because it allowed companies to record the value of assets which did not reflect the real value of the securities on offer, leading to the economy-wide decline in asset values seen during 2008.

"In some ways it is difficult to disentangle whether accounting caused the economic reality or merely reflected it. The weight of evidence shows that Fair Value Accounting did not create the Financial Crisis.

"It was bad credit quality and the lack of appropriate corporate governance mechanisms at the firm level along with laxness in the banking regulatory system which created the problems."

Professor Dhaliwal encouraged companies which engage in asset securitisation to revisit their bonus compensation schemes.

"These companies will want to provide managerial incentives to ensure that asset securitisation deals are profitable to the company over the longer term," he said.

"They may wish to tie bonus compensation to deal performance rather than current period net income."

He warned investors to be wary of the amount an underwriter retained of securitised assets.

"Merrill Lynch reportedly was so enamoured with recording the gains from each securitisation, it was willing to retain more and more of each deal, a cardinal sin in underwriting."

Professor Dhaliwal said banking regulators may wish to compile a risk profile across industry to assess the correlation of risk between firms.

"Finance academics are also proposing that investors may want to see a 'risk' balance sheet to supplement the historical cost and fair value balance sheets already used when assessing companies for investment purposes.

"The FASB may also want to identify any perverse incentives created out of any future standards so that corporate governance systems, auditors and regulators can develop industry and firm-specific safeguards to avoid manipulation by managers."

Reducing port delays, not tariffs boosts trade performance

Every additional day that a product is delayed before being shipped reduces a country's trade by more than one percent, research with the World Bank and Deakin University has found.

Dr Cong Pham an expert on international trade at the University said that merely reducing the time it takes to get goods from the factory gate and onto a ship would have as much a positive impact on a country's trade performance as reductions in tariffs.

Dr Pham, and Simeon Djankov and Caroline Freund from the World Bank looked at how time delays as a form of trade costs affect international trade in 98 countries, including Australia.

"One day of delay is equivalent to a country distancing itself from its trade partners by 70km on average. The impact is twice as much for landlocked economies," Dr Pham said.

Dr Pham said getting products from factory to ship was, as you would expect, relatively quick in developed countries. Specifically, surveys undertaken by the World Bank's Doing Business team show that the whole process of documents preparation, customs clearance and technical control, ports and terminal handling and inland transportation takes average 10.7 days in the OECD countries and 23.3 in East Asia and the Pacific. While Australia's required time for export, which is 9 days, is less than its neighbours like New Zealand (10 days) and Indonesia (21 days) it needs to do much better in order to catch up with the best OECD performers in this respect. The export procedures only take 5 days in Denmark and Singapore and 6 days in Luxembourg, Hong Kong, Netherlands and the United States.

The study by Dr Pham and his co-authors at the World Bank is forthcoming in the Review of Economics and Statistics 2009.

Prison visits put ethics in mind of accounting students

Deakin University lecturer, Associate Professor Steven Dellaportas, has put ethical behaviour top of mind for his accounting and auditing students. He has taken a group of students to prison where they interviewed accountants who have committed fraud.

While the visits are part of Associate Professor Dellaportas' research interest in ethics, feedback from the students indicates that the experience has helped them understand the roles and responsibilities of accountants, the ethical dilemmas they face and the consequences of illegal behaviour.

"Accounting graduates have highly regarded technical abilities. Now, accounting educators have been challenged to teach students how to deal with the reality of being an accountant and the ethical challenges they will face," he said.

"Accountants are there to serve the public interest not self interest, yet the environments in which they work places enormous and continuous pressure on them to look after the entity rather than to do the right thing."

"What we try and do is make the students aware of the issues they are likely to face and provide them with a strategy to deal with those issues, as well as give them an understanding of the consequences of what will happen if they follow the wrong path," he said.

Associate Professor Dellaportas said current research on white collar crime covered a diverse area and included corruption, bribery and tax offences. Most of it tended to focus on senior executives.

"My focus is on the accountant. My research with the offenders has confirmed they experience financial pressure and they have the opportunity. When accountants commit fraud they intentionally break this trust that is given to them by their client or employer. They know the behaviour is unethical but they rationalise it by blaming the victim. So they say things like 'the victim is incapable of securing their assets, they deserve to have them stolen', or 'the Australian Taxation Office is a bureaucratic and faceless organisation, no-one is getting hurt."