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Purpose This paper aims to examine the existence of related party transactions (RPTs) in failed financial companies in New Zealand when firms have interlocking directors on the board. We also examine the role of auditors in the review of RPTs. We anticipate that inter-company director relationships promote RPTs, while reputable large auditors (i.e. Big4) restrict the practice.Design/methodology/approach This study uses multivariate analysis to examine the determinants of RPTs. We use an unique, hand-collected database of New Zealand finance companies all of which collapsed during the years 2006-2011.Findings Using a sample of 65 firms (including 38 failed finance firms) and 219 firm-year observations, we found that almost half of the failed finance firms were engaged in RPTs. For the failed firms, those that were engaged in RPTs were mostly represented by interlocking directors and were audited by non-Big4 auditors, implying lower monitoring quality may facilitate RPTs. Using a sub-sample, we also found evidence that firms engaged in RPTs were later convicted of questionable accounting and disclosure practices.Practical implications This research is beneficial to regulators and audit professionals in understanding the potential for adverse outcomes associated with interlocking directors and undisclosed RPTs. While interlocking directors could enrich the external connections of a firm which might facilitate capital resourcing, this study suggests regulators might encourage firms to disclose RPTs when the firm has higher interlocked directors.Originality/value This study is the first to examine the association between RPTs and interlocking directors using a sample of failed finance companies. RPTs and lack of disclosure were widely attributed with being the determinants of corporate failure in the finance sector. However, failed finance firms remain widely under-researched because of a lack of available data. This study circumvent this limitation by using print media and business news portals to collate information on RPTs and interlocking directors. While prior research indicates that weak corporate governance leads to poor accounting practice, using the interlocking board as a proxy for weak corporate governance, this study is the first to substantiate the adverse effect of interlocking boards and undisclosed RPTs with corporate failure. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to ascertain the practical efficacy of statistical corporate failure models in improving auditors' going concern assessment. It also aims to examine auditors' perceptions of corporate failure models as an analytical procedure in this context. Design/methodology/approach – The paper utilises a survey questionnaire with a case study component to evaluate the practical value of corporate failure models for assessing going concern, and to examine auditors' perceptions of such models as an analytical procedure for assessing going concern. Findings – The results indicate that corporate failure models facilitate the formation of more appropriate going concern opinions and increase judgment consensus. Auditors perceive such models as useful in obtaining relevant evidential matter and in mitigating some of the subjectivity involved in assessing going concern. However, the results also indicate that corporate failure models are perceived to be more effective in the planning stages than at the final stages of the audit. Furthermore, auditors are seeking more explicit guidance in auditing standards on the use of corporate failure models for assessing going concern. Originality/value – The study extends previous research by examining the practical efficacy of corporate failure models for assisting auditors to assess going concern in light of human information processing limitations. Further, it examines auditors' perceptions of corporate failure models as an analytical procedure, and the guidance that auditors seek on the use of such models in auditing standards. [ABSTRACT FROM AUTHOR]

The paper traces the development of the law relating to liquidated damages in Australia, New Zealand, England, and Singapore. The examination reveals that there is little difference because the courts in each jurisdiction have drawn on common precedents. The paper canvasses the distinction between a genuine pre-estimate of the likely damage and a penalty. Where a party has sought to guarantee compliance with a contract by use of a liquidated damages provision that coerces his or her contractual partner, there is a potential for the clause to be held to be void as a penalty. However, there is a developing reluctance on the part of the courts to interfere with the bargain made by the parties. The use of liquidated damages clauses adds to the predictability of the outcomes of construction contracts. The consequences of a liquidated damages provision being held to be void are discussed. The work concludes with an examination of situations where a party can elect to claim the damages assessed by common law principles in lieu of liquidated damages. [ABSTRACT FROM AUTHOR]

Adapting a life cycle model from managerial literature, conclusions are drawn about the nature of colonial entrepreneurship from a case analysis of 133 New Zealand entrepreneurs, active between 1880 and 1910. Five stages in the life cycle of the entrepreneur are investigated: preparation, embarkation, exploration, expansion and transformation. Characteristic behaviours observed include the prevalence of entrepreneurial partnerships; a propensity for commencing multiple business ventures; and persistence in the face of business failure. Strategically, the colonial entrepreneur leveraged personal skills and abilities as a modus operandi for business expansion, often relying on family ownership and family management structures. [ABSTRACT FROM AUTHOR]