Compliance with international financial reporting standards (IFRS) and the value relevance of accounting information in emerging stock markets : evidence from Kuwait

Since the 1960s, the value relevance of accounting information has been an important topic in accounting research. The value relevance research provides evidence as to whether accounting numbers relate to corporate value in a predicted manner (Beaver, 2002). Such research is not only important for investors but also provides useful insights into accounting reporting effectiveness for standard setters and other users. Both the quality of accounting standards used and the effectiveness associated with implementing these standards are fundamental prerequisites for high value relevance (Hellstrom, 2006). However, while the literature comprehensively documents the value relevance of accounting information in developed markets, little attention has been given to emerging markets where the quality of accounting standards and their enforcement are questionable. Moreover, there is currently no known research that explores the association between level of compliance with International Financial Reporting Standards (IFRS) and the value relevance of accounting information. Motivated by the lack of research on the value relevance of accounting information in emerging markets and the unique institutional setting in Kuwait, this study has three objectives. First, it investigates the extent of compliance with IFRS with respect to firms listed on the Kuwait Stock Exchange (KSE). Second, it examines the value relevance of accounting information produced by KSE-listed firms over the 1995 to 2006 period. The third objective links the first two and explores the association between the level of compliance with IFRS and the value relevance of accounting information to market participants. Since it is among the first countries to adopt IFRS, Kuwait provides an ideal setting in which to explore these objectives. In addition, the Kuwaiti accounting environment provides an interesting regulatory context in which each KSE-listed firm is required to appoint at least two external auditors from separate auditing firms. Based on the research objectives, five research questions (RQs) are addressed. RQ1 and RQ2 aim to determine the extent to which KSE-listed firms comply with IFRS and factors contributing to variations in compliance levels. These factors include firm attributes (firm age, leverage, size, profitability, liquidity), the number of brand name (Big-4) auditing firms auditing a firm’s financial statements, and industry categorization. RQ3 and RQ4 address the value relevance of IFRS-based financial statements to investors. RQ5 addresses whether the level of compliance with IFRS contributes to the value relevance of accounting information provided to investors. Based on the potential improvement in value relevance from adopting and complying with IFRS, it is predicted that the higher the level of compliance with IFRS, the greater the value relevance of book values and earnings. The research design of the study consists of two parts. First, in accordance with prior disclosure research, the level of compliance with mandatory IFRS is examined using a disclosure index. Second, the value relevance of financial statement information, specifically, earnings and book value, is examined empirically using two valuation models: price and returns models. The combined empirical evidence that results from the application of both models provides comprehensive insights into value relevance of accounting information in an emerging market setting. Consistent with expectations, the results show the average level of compliance with IFRS mandatory disclosures for all KSE-listed firms in 2006 was 72.6 percent; thus, indicating KSE-listed firms generally did not fully comply with all requirements. Significant variations in the extent of compliance are observed among firms and across accounting standards. As predicted, older, highly leveraged, larger, and profitable KSE-listed firms are more likely to comply with IFRS required disclosures. Interestingly, significant differences in the level of compliance are observed across the three possible auditor combinations of two Big-4, two non-Big 4, and mixed audit firm types. The results for the price and returns models provide evidence that earnings and book values are significant factors in the valuation of KSE-listed firms during the 1995 to 2006 period. However, the results show that the value relevance of earnings and book values decreased significantly during that period, suggesting that investors rely less on financial statements, possibly due to the increase in the available non-financial statement sources. Notwithstanding this decline, a significant association is observed between the level of compliance with IFRS and the value relevance of earnings and book value to KSE investors. The findings make several important contributions. First, they raise concerns about the effectiveness of the regulatory body that oversees compliance with IFRS in Kuwait. Second, they challenge the effectiveness of the two-auditor requirement in promoting compliance with regulations as well as the associated cost-benefit of this requirement for firms. Third, they provide the first known empirical evidence linking the level of IFRS compliance with the value relevance of financial statement information. Finally, the findings are relevant for standard setters and for their current review of KSE regulations. In particular, they highlight the importance of establishing and maintaining adequate monitoring and enforcement mechanisms to ensure compliance with accounting standards. In addition, the finding that stricter compliance with IFRS improves the value relevance of accounting information highlights the importance of full compliance with IFRS and not just mere adoption.

Video-stimulated accounts: Young children accounting for interactional matters in front of peers

Research in the early years places increasing importance on participatory methods to engage children. The playback of video-recording to stimulate conversation is a research method that enables children’s accounts to be heard and attends to a participatory view. During video-stimulated sessions, participants watch an extract of video-recording of a specific event in which they were involved, and then account for their participation in that event. Using an interactional perspective, this paper draws distinctions between video-stimulated accounts and a similar research method, popular in education, that of video-stimulated recall. Reporting upon a study of young children’s interactions in a playground, video-stimulated accounts are explicated to show how the participants worked toward the construction of events in the video-stimulated session. This paper discusses how the children account for complex matters within their social worlds, and manage the accounting of others in the video-stimulated session. When viewed from an interactional perspective and used alongside fine grained analytic approaches, video-stimulated accounts are an effective method to provide the standpoint of the children involved and further the competent child paradigm.

Greenhouse Gas Fluxes in Tropical and Temperae Agriculture: The Need for a Full-Cost Accounting of Global Warming Potentials

Agriculture's contribution to radiative forcing is principally through its historical release of carbon in soil and vegetation to the atmosphere and through its contemporary release of nitrous oxide (N2O) and methane (CHM4). The sequestration of soil carbon in soils now depleted in soil organic matter is a well-known strategy for mitigating the buildup of CO2 in the atmosphere. Less well-recognized are other mitigation potentials. A full-cost accounting of the effects of agriculture on greenhouse gas emissions is necessary to quantify the relative importance of all mitigation options. Such an analysis shows nitrogen fertilizer, agricultural liming, fuel use, N2O emissions, and CH4 fluxes to have additional significant potential for mitigation. By evaluating all sources in terms of their global warming potential it becomes possible to directly evaluate greenhouse policy options for agriculture. A comparison of temperate and tropical systems illustrates some of these options.

Land use effects on soil carbon fractions in the southeastern United States. II. changes in soil carbon fractions along a forest to pasture chronosequence

Since land use change can have significant impacts on regional biogeochemistry, we investigated how conversion of forest and cultivation to pasture impact soil C and N cycling. In addition to examining total soil C, we isolated soil physiochemical C fractions in order to understand the mechanisms by which soil C is sequestered or lost. Total soil C did not change significantly over time following conversion from forest, though coarse (250-2,000 mum) particulate organic matter C increased by a factor of 6 immediately after conversion. Aggregate mean weight diameter was reduced by about 50% after conversion, but values were like those under forest after 8 years under pasture. Samples collected from a long-term pasture that was converted from annual cultivation more than 50 years ago revealed that some soil physical properties negatively impacted by cultivation were very slow to recover. Finally, our results indicate that soil macroaggregates turn over more rapidly under pasture than under forest and are less efficient at stabilizing soil C, whereas microaggregates from pasture soils stabilize a larger concentration of C than forest microaggregates. Since conversion from forest to pasture has a minimal impact on total soil C content in the Piedmont region of Virginia, United States, a simple C stock accounting system could use the same base soil C stock value for either type of land use. However, since the effects of forest to pasture conversion are a function of grassland management following conversion, assessments of C sequestration rates require activity data on the extent of various grassland management practices.

Deriving grassland management factors for a carbon accounting method developed by the intergovernmental panel on climate change

Grassland management affects soil organic carbon (SOC) storage and can be used to mitigate greenhouse gas emissions. However, for a country to assess emission reductions due to grassland management, there must be an inventory method for estimating the change in SOC storage. The Intergovernmental Panel on Climate Change (IPCC) has developed a simple carbon accounting approach for this purpose, and here we derive new grassland management factors that represent the effect of changing management on carbon storage for this method. Our literature search identified 49 studies dealing with effects of management practices that either degraded or improved conditions relative to nominally managed grasslands. On average, degradation reduced SOC storage to 95% +/- 0.06 and 97% +/- 0.05 of carbon stored under nominal conditions in temperate and tropical regions, respectively. In contrast, improving grasslands with a single management activity enhanced SOC storage by 14% 0.06 and 17% +/- 0.05 in temperate and tropical regions, respectively, and with an additional improvement(s), storage increased by another 11% +/- 0.04. We applied the newly derived factor coefficients to analyze C sequestration potential for managed grasslands in the U.S., and found that over a 20-year period changing management could sequester from 5 to 142 Tg C yr(-1) or 0.1 to 0.9 Mg C ha(-1) yr(-1), depending on the level of change. This analysis provides revised factor coefficients for the IPCC method that can be used to estimate impacts of management; it also provides a methodological framework for countries to derive factor coefficients specific to conditions in their region.

Best practices in prediction for decision-making : lessons from the atmospheric and earth sciences

Predictions that result from scientific research hold great appeal for decision-makers who are grappling with complex and controversial environmental issues, by promising to enhance their ability to determine a need for and outcomes of alternative decisions. A problem exists in that decision-makers and scientists in the public and private sectors solicit, produce, and use such predictions with little understanding of their accuracy or utility, and often without systematic evaluation or mechanisms of accountability. In order to contribute to a more effective role for ecological science in support of decision-making, this paper discusses three ``best practices'' for quantitative ecosystem modeling and prediction gleaned from research on modeling, prediction, and decision-making in the atmospheric and earth sciences. The lessons are distilled from a series of case studies and placed into the specific context of examples from ecological science.

Values, wellness and the social sciences curriculum

Recent initiatives in values education in Australia emphasise the importance of the process of valuing and general methodologies that foster this in the classroom. Although a range of strategies are available, this chapter argues that inquiry-based approaches in the Social Sciences play a significant role in linking valuing processes with decision making skills. Collectively, these approaches prompt the development of reasoning and self awareness which also impact on student wellness. This chapter proposes some curriculum approaches to foreground values education in the Australian Social Sciences classroom. It argues that valuing is an important life skill that can be cultivated in the classroom through specific valuing strategies. It contends that the development of the capacity to make informed value choices is a critical factor in promoting wellness and resilience in students and in preparing them for the decision making skills required for effective participation in society.

Embedding values through global education in social sciences pre-service teacher education : linking the head and heart

This chapter aims to situate values education as a core component of social science pre-service teacher education. In particular, it reflects on an experiment in embedding a values laden Global Education perspective in a fourth year social science curriculum method unit. This unit was designed and taught by the researcher on the assumption that beginning social science teachers need to be empowered with pedagogical skills and new dispositions to deal with value laden emerging global and regional concerns in their secondary school classrooms. Moreover, it was assumed that when pre-service teachers engage in dynamic and interactive learning experiences in their curriculum unit, they commence the process of ‘capacity building’ those skills which prepare them for their own lifelong professional learning. This approach to values education also aimed at providing pre-service teachers with opportunities to ‘create deep understandings of teaching and learning’ (Barnes, 1989, p. 17) by reflecting on the ways in which ‘pedagogy can be transformative’ (Lovat and Toomey, 2011 add page no from Chapter One). It was assumed that this tertiary experience would foster the sine qua non of teaching – a commitment to students and their learning. Central to fostering new ‘dispositions’ through this approach, was the belief in the power of pedagogy to make the difference in enhancing student participation and learning. In this sense, this experiment in values education in secondary social science pre-service teacher education aligns with the Troika metaphor for a paradigm change, articulated by Lovat and Toomey (2009) in Chapter One.

Bridging the gap between tertiary education and work : a model of situated learning in accountancy

In professions such as teaching, health sciences (medicine, nursing, allied health), and built environment (engineering), significant work-based learning through practica is an essential element before graduation. However, there is no such requirement in Accountancy. This thesis reports the findings of a qualitative case study of the development and implementation of a Workplace Learning Experience Program in Accountancy at the Queensland University of Technology (QUT) in Australia. The case study of this intervention, based on sociocultural learning theory, provides the grounds for the development of a new model of teaching and learning for accounting education. The survey and interview-based study documents the responses of two cohorts of university students and a group of employers to a work placement program. The study demonstrates that a 100 hour work placement in Accountancy has elements that enhance student learning. It demonstrates the potential value of the application of sociocultural theories of learning, especially the concept of situated learning involving legitimate peripheral participation (Lave & Wenger, 1991). This research establishes the theoretical base for a paradigm shift for the Accountancy profession to acknowledge work placements prior to graduation as a major element of learning. It is argued that the current model of accounting education requires reform to better align university and workplace learning.

Theoretical analysis of the motion and evaporation of exhaled respiratory droplets of mixed composition

The dynamics of droplets exhaled from the respiratory system during coughing or talking is addressed. A mathematical model is presented accounting for the motion of a droplet in conjunction with its evaporation. Droplet evaporation and motion are accounted for under two scenarios: 1) A well mixed droplet and 2) A droplet with inner composition variation. A multiple shells model was implemented to account for internal mass and heat transfer and for concentration and temperature gradients inside the droplet. The trajectories of the droplets are computed for a range of conditions and the spatial distribution and residence times of such droplets are evaluated.

The influence of family ownership on the quality of accounting information

This article explores the quality of accounting information in listed family firms. The authors exploit the features of the Italian equitymarket characterizd by high ownership concentration across all tpes of firms to disentangle the effects of family ownership from other major block holders on the quality of accounting information. The findings document that family firms convey financial information of higher quality compared to the nonfamily peers. Furthermore the authors provide evidence that the determinants of accounting quality differ across family and nonfamily firms.

A green drought : the challenge of mentoring for Australian accounting academics

Purpose: The purpose of this paper is to expose the impact of the shortage of senior academics,particularly professors, in Australian accounting schools, to relate the way one school addressed this shortage through a mentoring scheme, and to challenge existing institutional arrangements.----------- Design/methodology/approach: This is a contextualised qualitative case study of a mentoring scheme conducted in an Australian accounting school. Data collected from semi-structured interviews, personal reflections and from Australian university web sites are interpreted theoretically using the metaphor of a “green drought”.---------- Findings: The mentoring scheme achieved some notable successes, but raised many issues and challenges. Mentoring is a multifaceted investment in vocational endeavour and intellectual infrastructure, which will not occur unless creative means are developed over the long term to overcome current and future shortages of academic mentors.---------- Research limitations/implications: This is a qualitative case study, which, therefore, limits its generalisability. However, its contextualisation enables insights to be applied to the wider academic environment. ----------Practical implications: In the Australian and global academic environment, as accounting professors retire in greater numbers, new and creative ways of mentoring will need to be devised. The challenge will be to address longer term issues of academic sustainability, and not just to focus on short-term academic outcomes.---------- Originality/value: A mentoring scheme based on a collegial networking model of mentoring is presented as a means of enhancing academic endeavour through a creative short-term solution to a shortage of accounting professors. The paper exemplifies the theorising power of metaphor in a qualitative study.