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.

International rigid contact lens prescribing

Rigid lenses have been fitted less since the introduction of soft lenses nearly 40 years ago. Data that we have gathered from annual contact lens fitting surveys conducted in Australia, Canada, Japan, the Netherlands, Norway, the UK and the USA between 2000 and 2008 facilitate an accurate characterization of the pattern of the decline of rigid lens fitting during the first decade of this century. There is a trend for rigid lenses to be utilized primarily for refitting those patients who are already successful rigid lens wearers—most typically older females being refit with higher Dk materials. Rigid lenses are generally fitted on a full-time basis (four or more days of wear per week) without a planned replacement schedule. Orthokeratology is especially popular in the Netherlands, but is seldom prescribed in the other countries surveyed.

Nitrogen fertilizer rate management as a nitrous oxide mitigation strategy: Development of a nitrous oxide emission reduction protocol (NERP)

Nitrous oxide (N2O) is a potent agricultural greenhouse gas (GHG). More than 50% of the global anthropogenic N2O flux is attributable to emissions from soil, primarily due to large fertilizer nitrogen (N) applications to corn and other non-leguminous crops. Quantification of the trade–offs between N2O emissions, fertilizer N rate, and crop yield is an essential requirement for informing management strategies aiming to reduce the agricultural sector GHG burden, without compromising productivity and producer livelihood. There is currently great interest in developing and implementing agricultural GHG reduction offset projects for inclusion within carbon offset markets. Nitrous oxide, with a global warming potential (GWP) of 298, is a major target for these endeavours due to the high payback associated with its emission prevention. In this paper we use robust quantitative relationships between fertilizer N rate and N2O emissions, along with a recently developed approach for determining economically profitable N rates for optimized crop yield, to propose a simple, transparent, and robust N2O emission reduction protocol (NERP) for generating agricultural GHG emission reduction credits. This NERP has the advantage of providing an economic and environmental incentive for producers and other stakeholders, necessary requirements in the implementation of agricultural offset projects.

Bioavailability of soil organic carbon and Fe as influenced by forestry practices in a subtropical coastal catchment

Potential impacts of plantation forestry practices on soil organic carbon and Fe available to microorganisms were investigated in a subtropical coastal catchment. The impacts of harvesting or replanting were largely limited to the soil top layer (0–10 cm depth). The thirty-year-old Pinus plantation showed low soil moisture content (Wc) and relatively high levels of soil total organic carbon (TOC). Harvesting and replanting increased soil Wc but reduced TOC levels. Mean dissolved organic carbon (DOC) and microbial biomass carbon (MBC) increased in harvested or replanted soils, but such changes were not statistically significant (P > 0.05). Total dithionite-citrate and aqua regia-extractable Fe did not respond to forestry practices, but acid ammonium oxalate and pyrophosphate-extractable, bioavailable Fe decreased markedly after harvesting or replanting. Numbers of heterotrophic bacteria were significantly correlated with DOC levels (P < 0.05), whereas Fe-reducing bacteria and S-bacteria detected using laboratory cultivation techniques did not show strong correlation with either soil DOC or Fe content.