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.

Are you a mindful driver? A review of the potential explanatory value of mindfulness in predicting speeding behaviour

Mindfulness is a concept which has been widely used in studies on consciousness, but has recently been applied to the understanding of behaviours in other areas, including clinical psychology, meditation, physical activity, education and business. It has been suggested that mindfulness can also be applied to road safety, though this has not yet been researched. A standard definition of mindfulness is “paying attention in a particular way, on purpose in the present moment and non-judgemental to the unfolding of experience moment by moment” [1]. Scales have been developed to measure mindfulness; however, there are different views in the literature on the nature of the mindfulness construct. This paper reviews the issues raised in the literature and arrives at an operational definition of mindfulness considered relevant to road safety. It is further proposed that mindfulness is best construed as operating together with other psychosocial factors to influence road safety behaviours. The specific case of speeding behaviour is outlined, where the psychosocial variables in the Theory of Planned Behaviour (TPB) have been demonstrated to predict both intention to speed and actual speeding behaviour. A role is proposed for mindfulness in enhancing the explanatory and predictive powers of the TPB concerning speeding. The implications of mindfulness for speeding countermeasures are discussed and a program of future research is outlined.

Implementing value management as a decision-making tool in the design stages of design and build construction projects : a methodology for improved cost optimization

Value Management (VM) has been proven to provide a structured framework, together with other supporting tools and techniques, that facilitate effective decision-making in many types of projects, thus achieving ‘best value’ for clients. One of the major success factors of VM in achieving better project objectives for clients is through the provision of beneficial input by multi-disciplinary team members being involved in critical decision-making discussions during the early stage of construction projects. This paper describes a doctoral research proposal based on the application of VM in design and build construction projects, especially focusing on the design stage. The research aims to study the effects of implementing VM in design and build construction projects, in particular how well the methodology addresses issues related to cost overruns resulting from poor coordination and overlooking of critical constructability issues amongst team members in construction projects in Malaysia. It is proposed that through contractors’ early involvement during the design stage, combined with the use of the VM methodology, particularly as a decision-making tool, better optimization of construction cost can be achieved, thus promoting more efficient and effective constructability. The main methods used in this research involve a thorough literature study, semi-structured interviews, and a survey of major stakeholders, a detailed case study and a VM workshop and focus group discussions involving construction professionals in order to explore and possibly develop a framework and a specific methodology for the facilitating successful application of VM within design and build construction projects.

Marketing VM services to achieve competitive advantage in the Malaysian Construction Sector

Value Management (VM) has been proven to provide a structured framework, together with supporting tools and techniques that facilitate effective decision-making in many types of projects, thus achieving ‘best value’ for clients. It is identified at International level as a natural career progression for the construction service provider and as an opportunity in developing leading-edge skills. The services offered by contractors and consultants in the construction sector have been expanding. In an increasingly competitive and global marketplace, firms are seeking ways to differentiate their services to ever more knowledgeable and demanding clients. The traditional demarcations have given way, and the old definition of what contractors, designers, engineers and quantity surveyors can, and cannot do in terms of their market offering has changed. Project management, design and cost and safety consultancy services, are being delivered by a diverse range of suppliers. Value management services have been developing in various sectors in industry; from manufacturing to the military and now construction. Given the growing evidence that VM has been successful in delivering value-for-money to the client, VM would appear to be gaining some momentum as an essential management tool in the Malaysian construction sector. The recently issued VM Circular 3/2009 by the Economic Planning Unit Malaysia (EPU) possibly marks a new beginning in public sector client acceptance on the strength of VM in construction. This paper therefore attempts to study the prospects of marketing the benefits of VM by construction service providers, and how it may provide an edge in an increasingly competitive Malaysian construction industry.

Influence of iodine value on combustion and NOx emission characteristics of a DI diesel engine

Biodiesel is a renewable fuel that has been shown to reduce many exhaust emissions, except oxides of nitrogen (NOx), in diesel engine cars. This is of special concern in inner urban areas that are subject to strict environmental regulations, such as EURO norms. Also, the use of pure biodiesel (B100) is inhibited because of its higher NOx emissions compared to petroleum diesel fuel. The aim of this present work is to investigate the effect of the iodine value and cetane number of various biodiesel fuels obtained from different feed stocks on the combustion and NOx emission characteristics of a direct injection (DI) diesel engine. The biodiesel fuels were chosen from various feed stocks such as coconut, palm kernel, mahua (Madhuca indica), pongamia pinnata, jatropha curcas, rice bran, and sesame seed oils. The experimental results show an approximately linear relationship between iodine value and NOx emissions. The biodiesels obtained from coconut and palm kernel showed lower NOx levels than diesel, but other biodiesels showed an increase in NOx. It was observed that the nature of the fatty acids of the biodiesel fuels had a significant influence on the NOx emissions. Also, the cetane numbers of the biodiesel fuels are affected both premixed combustion and the combustion rate, which further affected the amount of NOx formation. It was concluded that NOx emissions are influenced by many parameters of biodiesel fuels, particularly the iodine value and cetane number.

Reconfiguring the higher education value chain

Forces of demand and supply are changing the dynamics of the higher education market. Transformation of institutions of higher learning into competitive enterprise is underway. Higher education institutions are seemingly under intense pressure to create value and focus their efforts and scarce funds on activities that drive up value for their respective customers and other stakeholders. Porter’s generic ‘value chain’ model for creating value requires that the activities of an organization be segregated in to discrete components for value chain analysis to be performed. Recent trends in higher education make such segregation possible. Therefore, it is proposed that the academic process can be unbundled into discrete components which have well developed measures. A reconfigured value chain for higher education, with its own value drivers and critical internal linkages is also proposed in this paper.

Real estate 2.0 : towards a value ecology?

This paper anatomises emerging developments in online community engagement in a major global industry: real estate. Economists argue that we are entering a ‘social network economy’ in which ‘complex social networks’ govern consumer choice and product value. In the light of this, organisations are shifting from thinking and behaving in the conventional ‘value chain’ model--in which exchanges between firms and customers are one-way only, from the firm to the consumer--to the ‘value ecology’ model, in which consumers and their networks become co-creators of the value of the product. This paper studies the way in which the global real estate industry is responding to this environment. This paper identifies three key areas in which online real estate ‘value ecology’ work is occurring: real estate social networks, games, and locative media / augmented reality applications. Uptake of real estate applications is, of course, user-driven: the paper not only highlights emerging innovations; it also identifies which of these innovations are actually being taken up by users, and the content contributed as a result. The paper thus provides a case study of one major industry’s shift into a web 2.0 communication model, focusing on emerging trends and issues.

Co-creation in business service lifecycle management

Co-creation between customers and providers has recently gained more attention by business service providers as a promising endeavour. The different perspectives of co-creation - innovation, sourcing and marketing - are well deployed. From a provider’s point of view, the question of how to manage business services with respect to co-creation is vitally important. However, service engineering and service lifecycle management typically take a mostly internal, closed-loop approach, although a logical implication of acknowledging the value co-creation perspective on “service” would be to leverage customer and other stakeholder competences to the full extent. This paper aims at reconciling the perspectives of co-creation and makes a contribution by analysing where and how co-creation can be effectively utilised throughout the various stages of a generic business service lifecycle. The result will be a framework guiding companies in using co-creation when managing their business services.

Monitoring and regulatory role of the balanced scorecard in controlling organisational identities

This thesis employs the theoretical fusion of disciplinary knowledge, interlacing an analysis from both functional and interpretive frameworks and applies these paradigms to three concepts—organisational identity, the balanced scorecard performance measurement system, and control. As an applied thesis, this study highlights how particular public sector organisations are using a range of multi-disciplinary forms of knowledge constructed for their needs to achieve practical outcomes. Practical evidence of this study is not bound by a single disciplinary field or the concerns raised by academics about the rigorous application of academic knowledge. The study’s value lies in its ability to explore how current communication and accounting knowledge is being used for practical purposes in organisational life. The main focus of this thesis is on identities in an organisational communication context. In exploring the theoretical and practical challenges, the research questions for this thesis were formulated as: 1. Is it possible to effectively control identities in organisations by the use of an integrated performance measurement system—the balanced scorecard—and if so, how? 2. What is the relationship between identities and an integrated performance measurement system—the balanced scorecard—in the identity construction process? Identities in the organisational context have been extensively discussed in graphic design, corporate communication and marketing, strategic management, organisational behaviour, and social psychology literatures. Corporate identity is the self-presentation of the personality of an organisation (Van Riel, 1995; Van Riel & Balmer, 1997), and organisational identity is the statement of central characteristics described by members (Albert & Whetten, 2003). In this study, identity management is positioned as a strategically complex task, embracing not only logo and name, but also multiple dimensions, levels and facets of organisational life. Responding to the collaborative efforts of researchers and practitioners in identity conceptualisation and methodological approaches, this dissertation argues that analysis can be achieved through the use of an integrated framework of identity products, patternings and processes (Cornelissen, Haslam, & Balmer, 2007), transforming conceptualisations of corporate identity, organisational identity and identification studies. Likewise, the performance measurement literature from the accounting field now emphasises the importance of ‘soft’ non-financial measures in gauging performance—potentially allowing the monitoring and regulation of ‘collective’ identities (Cornelissen et al., 2007). The balanced scorecard (BSC) (Kaplan & Norton, 1996a), as the selected integrated performance measurement system, quantifies organisational performance under the four perspectives of finance, customer, internal process, and learning and growth. Broadening the traditional performance measurement boundary, the BSC transforms how organisations perceived themselves (Vaivio, 2007). The rhetorical and communicative value of the BSC has also been emphasised in organisational self-understanding (Malina, Nørreklit, & Selto, 2007; Malmi, 2001; Norreklit, 2000, 2003). Thus, this study establishes a theoretical connection between the controlling effects of the BSC and organisational identity construction. Common to both literatures, the aspects of control became the focus of this dissertation, as ‘the exercise or act of achieving a goal’ (Tompkins & Cheney, 1985, p. 180). This study explores not only traditional technical and bureaucratic control (Edwards, 1981), but also concertive control (Tompkins & Cheney, 1985), shifting the locus of control to employees who make their own decisions towards desired organisational premises (Simon, 1976). The controlling effects on collective identities are explored through the lens of the rhetorical frames mobilised through the power of organisational enthymemes (Tompkins & Cheney, 1985) and identification processes (Ashforth, Harrison, & Corley, 2008). In operationalising the concept of control, two guiding questions were developed to support the research questions: 1.1 How does the use of the balanced scorecard monitor identities in public sector organisations? 1.2 How does the use of the balanced scorecard regulate identities in public sector organisations? This study adopts qualitative multiple case studies using ethnographic techniques. Data were gathered from interviews of 41 managers, organisational documents, and participant observation from 2003 to 2008, to inform an understanding of organisational practices and members’ perceptions in the five cases of two public sector organisations in Australia. Drawing on the functional and interpretive paradigms, the effective design and use of the systems, as well as the understanding of shared meanings of identities and identifications are simultaneously recognised. The analytical structure guided by the ‘bracketing’ (Lewis & Grimes, 1999) and ‘interplay’ strategies (Schultz & Hatch, 1996) preserved, connected and contrasted the unique findings from the multi-paradigms. The ‘temporal bracketing’ strategy (Langley, 1999) from the process view supports the comparative exploration of the analysis over the periods under study. The findings suggest that the effective use of the BSC can monitor and regulate identity products, patternings and processes. In monitoring identities, the flexible BSC framework allowed the case study organisations to monitor various aspects of finance, customer, improvement and organisational capability that included identity dimensions. Such inclusion legitimises identity management as organisational performance. In regulating identities, the use of the BSC created a mechanism to form collective identities by articulating various perspectives and causal linkages, and through the cascading and alignment of multiple scorecards. The BSC—directly reflecting organisationally valued premises and legitimised symbols—acted as an identity product of communication, visual symbols and behavioural guidance. The selective promotion of the BSC measures filtered organisational focus to shape unique identity multiplicity and characteristics within the cases. Further, the use of the BSC facilitated the assimilation of multiple identities by controlling the direction and strength of identifications, engaging different groups of members. More specifically, the tight authority of the BSC framework and systems are explained both by technical and bureaucratic controls, while subtle communication of organisational premises and information filtering is achieved through concertive control. This study confirms that these macro top-down controls mediated the sensebreaking and sensegiving process of organisational identification, supporting research by Ashforth, Harrison and Corley (2008). This study pays attention to members’ power of self-regulation, filling minor premises of the derived logic of their organisation through the playing out of organisational enthymemes (Tompkins & Cheney, 1985). Members are then encouraged to make their own decisions towards the organisational premises embedded in the BSC, through the micro bottom-up identification processes including: enacting organisationally valued identities; sensemaking; and the construction of identity narratives aligned with those organisationally valued premises. Within the process, the self-referential effect of communication encouraged members to believe the organisational messages embedded in the BSC in transforming collective and individual identities. Therefore, communication through the use of the BSC continued the self-producing of normative performance mechanisms, established meanings of identities, and enabled members’ self-regulation in identity construction. Further, this research establishes the relationship between identity and the use of the BSC in terms of identity multiplicity and attributes. The BSC framework constrained and enabled case study organisations and members to monitor and regulate identity multiplicity across a number of dimensions, levels and facets. The use of the BSC constantly heightened the identity attributes of distinctiveness, relativity, visibility, fluidity and manageability in identity construction over time. Overall, this research explains the reciprocal controlling relationships of multiple structures in organisations to achieve a goal. It bridges the gap among corporate and organisational identity theories by adopting Cornelissen, Haslam and Balmer’s (2007) integrated identity framework, and reduces the gap in understanding between identity and performance measurement studies. Parallel review of the process of monitoring and regulating identities from both literatures synthesised the theoretical strengths of both to conceptualise and operationalise identities. This study extends the discussion on positioning identity, culture, commitment, and image and reputation measures in integrated performance measurement systems as organisational capital. Further, this study applies understanding of the multiple forms of control (Edwards, 1979; Tompkins & Cheney, 1985), emphasising the power of organisational members in identification processes, using the notion of rhetorical organisational enthymemes. This highlights the value of the collaborative theoretical power of identity, communication and performance measurement frameworks. These case studies provide practical insights about the public sector where existing bureaucracy and desired organisational identity directions are competing within a large organisational setting. Further research on personal identity and simple control in organisations that fully cascade the BSC down to individual members would provide enriched data. The extended application of the conceptual framework to other public and private sector organisations with a longitudinal view will also contribute to further theory building.

Internal market orientation and market-oriented behaviours

Purpose: The purpose of this empirical paper is to investigate internal marketing from a behavioural perspective. The impact of internal marketing behaviours, operationalised as an internal market orientation (IMO), on employees’ marketing and other in-role behaviours (IRB) were examined. ---------- Design/methodology/approach: Survey data measuring IMO, market orientation and a range of constructs relevant to the nomological network in which they are embedded were collected from the UK retail managers. These were tested to establish their psychometric properties and the conceptual model was analysed using structural equations modelling, employing a partial least squares methodology. ---------- Findings: IMO has positive consequences for employees’ market-oriented and other IRB. These, in turn, influence marketing success. Research limitations/implications – The paper provides empirical support for the long-held assumption that internal and external marketing are related and that organisations should balance their external focus with some attention to employees. Future research could measure the attitudes and behaviours of managers, employees and customers directly and explore the relationships between them. ---------- Practical implications: Firm must ensure that they do not put the needs of their employees second to those of managers and shareholders; managers must develop their listening skills and organisations must become more responsive to the needs of their employees. ---------- Originality/value: The paper contributes to the scarce body of empirical support for the role of internal marketing in services organisations. For researchers, this paper legitimises the study of internal marketing as a route to external market success; for managers, the study provides quantifiable evidence that focusing on employees’ wants and needs impacts their behaviours towards the market.