Asset revaluations and assessment of borrowing capacity

Article

Cotter, Julie and Zimmer, Ian. 1995. "Asset revaluations and assessment of borrowing capacity." Abacus: a journal of accounting, finance and business studies. 31 (2), pp. 136-151.
Article Title

Asset revaluations and assessment of borrowing capacity

ERA Journal ID19052
Article CategoryArticle
AuthorsCotter, Julie (Author) and Zimmer, Ian (Author)
Journal TitleAbacus: a journal of accounting, finance and business studies
Journal Citation31 (2), pp. 136-151
Number of Pages16
Year1995
Place of PublicationMelbourne, Australia
ISSN0001-3072
1467-6281
Abstract

Prior research has found support for contracting, political cost and information asymmetry explanations for managements' decision to revalue non-current assets. This study proposes that asset revaluations occur to signal available borrowing capacity via an increase in collateral
values at the time of increases in secured debt and that the economic benefits associated with an asset revaluation will be greatest for firms when they are experiencing times of declining cash flows from operations.
Results imply that firms that have undertaken an asset revaluation are more likely to be experiencing declining cash flows from operations than firms that have not revalued. This study also investigates whether the incidence of valuations coincides with increases in levels of secured borrowings due to lenders' demands for current values of assets offered as collateral. The evidence indicates that firms are more likely to record an asset revaluation if they have increased their secured borrowings, and that most non-year-end revaluations emanate directly from contracting with lenders.

Keywordsvaluation; assets; borrowing; liquidity
ANZSRC Field of Research 2020350103. Financial accounting
350204. Financial institutions (incl. banking)
380304. Microeconomic theory
Public Notes

Files associated with this item cannot be displayed due to copyright restrictions.

Byline AffiliationsFaculty of Business
University of Queensland
Institution of OriginUniversity of Southern Queensland
Permalink -

https://research.usq.edu.au/item/q0v5x/asset-revaluations-and-assessment-of-borrowing-capacity

Log in to edit
  • 1967
    total views
  • 7
    total downloads
  • 3
    views this month
  • 0
    downloads this month

Export as

Related outputs

Australian Centre for Sustainable Business and Development Collaborative Data Space
Cotter, Julie. Australian Centre for Sustainable Business and Development Collaborative Data Space. Toowoomba. https://doi.org/10.26192/9x42-6x23
Brisbane West Wellcamp Airport Perishable Goods Facility: preliminary feasibility study
Dunne, Tony and Cotter, Julie. 2015. Brisbane West Wellcamp Airport Perishable Goods Facility: preliminary feasibility study. Unpublished.
A marginal abatement cost analysis of practice options related to the NLMP program
Cotter, Julie, Glass, Roderick, Black, John, Madden, Patrick and Davison, Tom. 2015. A marginal abatement cost analysis of practice options related to the NLMP program. Australia. Meat & Livestock Australia.
Murray Darling Basin Regional Economic Diversification Program: a review of equity capital investment in the development of high value horticulture
Cotter, Julie, Rochecouste, John and Mohsin, Mohd. 2016. Murray Darling Basin Regional Economic Diversification Program: a review of equity capital investment in the development of high value horticulture .
Does the market price the nature and extent of earnings management for firms that beat their earnings benchmark?
Lento, Camillo, Cotter, Julie and Tutticci, Irene. 2016. "Does the market price the nature and extent of earnings management for firms that beat their earnings benchmark?" Australian Journal of Management. 41 (4), pp. 633-655. https://doi.org/10.1177/0312896216641600
The Influence of Non-State Actors on Corporate Climate Change Disclosure
Cotter, Julie. 2013. "The Influence of Non-State Actors on Corporate Climate Change Disclosure ." Cadman, Timothy (ed.) Climate Change and Global Policy Regimes:Towards Institutional Legitimacy. United Kingdom. Palgrave Macmillan. pp. 232-247
Big data based intelligent decision support system for sustainable regional development
Zhou, Hong, Noble, Christopher and Cotter, Julie. 2015. "Big data based intelligent decision support system for sustainable regional development ." 2015 International Conference on Big Data Intelligence and Computing (DataCom 2015). Chengdu, China 19 - 21 Dec 2015
Queensland Watt Savers final report
Wiesner, Retha and Cotter, Julie. 2015. Queensland Watt Savers final report. Brisbane, Australia. CitySmart.
Corporate climate change disclosure practices and regulation: the influence of institutional investors
Cotter, Julie and Najah, Muftah. 2013. "Corporate climate change disclosure practices and regulation: the influence of institutional investors." Young, Suzanne and Gates, Stephen (ed.) Institutional investors’ power to change corporate behaviour: international perspectives. Bingley, United Kingdom. Emerald. pp. 81-97
Modelling greenhouse gas emissions abatement options for beef and sheep farm businesses
Tomlinson, Adam, Keogh, Mick, Glass, Roderick and Cotter, Julie. 2013. Modelling greenhouse gas emissions abatement options for beef and sheep farm businesses . Sydney, Australia. Australian Farm Institute.
Sustainability reporting and assurance: a historical analysis on a world-wide phenomenon
Mori Junior, Renzo, Best, Peter J. and Cotter, Julie. 2014. "Sustainability reporting and assurance: a historical analysis on a world-wide phenomenon." Journal of Business Ethics. 120 (1), pp. 1-11. https://doi.org/10.1007/s10551-013-1637-y
GRI guidelines for assurance of sustainability reports: Fortune global 500 list 2010 analyses
Mori Junior, Renzo, Cotter, Julie and Best, Peter. 2012. "GRI guidelines for assurance of sustainability reports: Fortune global 500 list 2010 analyses." 2012 Australian GRI Conference on Sustainability and Integrated Reporting: Innovate, Integrate, Collaborate (GRI 2012) . Melbourne, Australia 26 - 28 Mar 2012 Sydney, Australia.
Sustainable investment: a tool for decision makers
Byrne, Nick and Cotter, Julie. 2012. Sustainable investment: a tool for decision makers. Brisbane, Australia. University of Southern Queensland.
Corporate governance quality, incentive factors and voluntary corporate governance disclosures in annual reports of Malaysian publicly listed companies
Lokman, Norziana, Cotter, Julie and Mula, Joseph. 2012. "Corporate governance quality, incentive factors and voluntary corporate governance disclosures in annual reports of Malaysian publicly listed companies." Corporate Ownership and Control. 10 (1), pp. 329-352.
Institutional investor influence on global climate change disclosure practices
Cotter, Julie and Najah, Muftah M.. 2012. "Institutional investor influence on global climate change disclosure practices." Australian Journal of Management. 37 (2), pp. 169-187. https://doi.org/10.1177/0312896211423945
Institutional investor influence on global climate change disclosure practices
Cotter, Julie and Najah, Muftah M.. 2011. "Institutional investor influence on global climate change disclosure practices." Dynamics of Investing Responsibly: From Screening to Mainstreaming (2011). Sydney, Australia 24 - 25 Nov 2011 Sydney, Australia.
IFRS adoption and analysts' earnings forecasts: Australian evidence
Cotter, Julie, Tarca, Ann and Wee, Marvin. 2012. "IFRS adoption and analysts' earnings forecasts: Australian evidence." Accounting and Finance. 52 (2), pp. 395-419. https://doi.org/10.1111/j.1467-629X.2010.00392.x
Corporate governance quality and voluntary disclosures of corporate governance information: practices of listed Malaysian family controlled businesses
Lokman, Norziana, Mula, Joseph M. and Cotter, Julie. 2011. "Corporate governance quality and voluntary disclosures of corporate governance information: practices of listed Malaysian family controlled businesses." Doyle, Karen (ed.) FBA 2011: Family Business Research, Practice and Policy: Interpretation and Integration . Perth, Australia 31 Aug 2011 Sydney, Australia.
Standardized reporting of climate change information in Australia
Cotter, Julie, Najah, Muftah and Wang, Shihui Sophie. 2011. "Standardized reporting of climate change information in Australia." Sustainability Accounting, Management and Policy Journal. 2 (2), pp. 294-321. https://doi.org/10.1108/20408021111185420
Board and monitoring committee independence
Cotter, Julie and Silvester, Mark. 2003. "Board and monitoring committee independence." Abacus: a journal of accounting, finance and business studies. 39 (2), pp. 211-232. https://doi.org/10.1111/1467-6281.00127
Asset revaluations and debt contracting
Cotter, Julie. 1999. "Asset revaluations and debt contracting." Abacus: a journal of accounting, finance and business studies. 35 (3), pp. 268-285. https://doi.org/10.1111/1467-6281.00046
The whole of university experience: retention, attrition, learning and personal support interventions during undergraduate business studies
Willcoxson, Lesley, Manning, Mark, Wynder, Monte, Hibbins, Ray, Joy, Sally, Thomas, Jan, Leask, Betty, Girardi, Antonia, Sidoryn, Tristana, Cotter, Julie, Kavanagh, Marie, Troedson, David and Lynch, Bernadette. 2011. The whole of university experience: retention, attrition, learning and personal support interventions during undergraduate business studies. Sydney, Australia. Australian Learning and Teaching Council Limited.
Accrual and cash flow accounting models: a comparison of the value relevance and timeliness of their components
Cotter, Julie. 1996. "Accrual and cash flow accounting models: a comparison of the value relevance and timeliness of their components." Accounting and Finance. 36 (2), pp. 127-150. https://doi.org/10.1111/j.1467-629X.1996.tb00303.x
Beyond the first-year experience: the impact on attrition of student experiences throughout undergraduate degree studies in six diverse universities
Willcoxson, Lesley, Cotter, Julie and Joy, Sally. 2011. "Beyond the first-year experience: the impact on attrition of student experiences throughout undergraduate degree studies in six diverse universities." Studies in Higher Education. 36 (3), pp. 331-352. https://doi.org/10.1080/03075070903581533
An analysis of factors influencing asset writedowns
Cotter, Julie, Stokes, Donald and Wyatt, Anne-Marie. 1998. "An analysis of factors influencing asset writedowns." Accounting and Finance. 38 (2), pp. 157-179. https://doi.org/10.1111/1467-629X.00008
Voluntary disclosure research: which theory is relevant?
Cotter, Julie, Lokman, Norziana and Najah, Muftah M.. 2011. "Voluntary disclosure research: which theory is relevant?" The Journal of Theoretical Accounting Research. 6 (2), pp. 77-95.
Sustainable investment: a tool for decision makers
Byrne, Nick and Cotter, Julie. 2010. "Sustainable investment: a tool for decision makers." Peyvandi, Ali and Eide, Molly (ed.) APC 2010: 22nd Asian-Pacific Conference on International Accounting Issues. Gold Coast, Australia 07 - 09 Nov 2010 Fresno, CA, United States .
The technostructure gap: the educational qualifications of executive and non-executive directors
Phillips, Peter J. and Cotter, Julie. 2010. "The technostructure gap: the educational qualifications of executive and non-executive directors." Corporate Ownership and Control. 7 (4), pp. 102-113.
Audit committees and earnings quality
Baxter, Peter and Cotter, Julie. 2009. "Audit committees and earnings quality." Accounting and Finance. 49 (2), pp. 267-290. https://doi.org/10.1111/j.1467-629X.2008.00290.x
Corporate governance, sustainability and the assessment of default risk
James-Overheu, Christina and Cotter, Julie. 2009. "Corporate governance, sustainability and the assessment of default risk." Asian Journal of Finance and Accounting. 1 (1), pp. 34-53.
Disclosure versus recognition: The case of asset revaluations
Cotter, Julie and Zimmer, Ian. 2003. "Disclosure versus recognition: The case of asset revaluations." Asia-Pacific Journal of Accounting and Economics. 10 (1), pp. 81-99.
Corporate governance disclosure and the assessment of default risk
James, Christina and Cotter, Julie. 2007. "Corporate governance disclosure and the assessment of default risk." OBEC 2007: Oxford Business and Economics Conference. Oxford, United Kingdom 24 - 26 Jun 2007 Oxford, United Kingdom.
Relevance of parent entity financial reports
Cotter, Julie. 2004. Relevance of parent entity financial reports. Melbourne, Australia. Australian Accounting Standards Board.
Utilisation and restrictiveness of covenants in Australian private debt contracts
Cotter, Julie. 1998. "Utilisation and restrictiveness of covenants in Australian private debt contracts." Accounting and Finance. 38 (2), pp. 181-196. https://doi.org/10.1111/1467-629X.00009
Reliability of asset revaluations: the impact of appraiser independence
Cotter, Julie and Richardson, Scott. 2002. "Reliability of asset revaluations: the impact of appraiser independence." Review of Accounting Studies. 7 (4), pp. 435-457. https://doi.org/10.1023/A:1020763612369
Expectations management and beatable targets: how do analysts react to explicit earnings guidance?
Cotter, Julie, Tuna, Irem and Wysocki, Peter D.. 2006. "Expectations management and beatable targets: how do analysts react to explicit earnings guidance? " Contemporary Accounting Research. 23 (3), pp. 593-624. https://doi.org/10.1506/FJ4D-04UN-68T7-R8CA
Offer pricing of Australian industrial initial public offers
Cotter, Julie, Goyen, Michelle and Hegarty, Sherryl. 2005. "Offer pricing of Australian industrial initial public offers." Accounting and Finance. 45 (1), pp. 95-125. https://doi.org/10.1111/j.l467-629x.2004.00137.x