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.

Impact of the Corporate Law Economic Reform Program Act 1999 on initial public offering prospectus earnings forecasts

Commencing 13 March 2000, the Corporate Law Economic Reform Program Act 1999 (Cth) introduced changes to the regulation of corporate fundraising in Australia. In particular, it effected a reduction in the litigation risk associated with initial public offering prospectus disclosure.We find that the change is associated with a reduction in forecast frequency and an increase in forecast value relevance, but not with forecast error or bias. These results confirm previous findings that changes in litigation risk affect the level but not the quality of disclosure. They also suggest that the reforms’ objectives of reducing fundraising costs while improving investor protection, have been achieved.

The role of context and motivation variables in mobile commerce usage: A further perspective on Chong (2013)

We comment on a recent article by Chong (2013) on the roles of demographic and motivation variables in mobile commerce usage. Drawing on the recent research on the service-dominant logic, socioemotional selectivity theory, and data from a first empirical study, we argue that a broader discussion on the value relevance of mobile commerce activities for customers and the consideration of consumers' future time perspectives would provide a richer, potentially more appropriate picture of the drivers of mobile commerce usage. Furthermore, using data from a second empirical study, we highlight several validity issues of the used scales. We hope to motivate a replication and extension of Chong's study and also provide recommendations for future research on this area.

Integration of medical images to the teaching of systematic pathology : an evaluation of relevance

A sound knowledge of pathological disease processes is required for professional practice within health professions. The project described in this paper reviewed the resources currently available for the delivery of systematic pathology tutorials. Additional complementary resources were developed and the inclusion of these additional learning resources in practical tutorial sessions was evaluated for their impact on student learning. Student evaluation of the learning resources was undertaken across one semester with two different cohorts of health profession students using questionnaires and focus group discussion. Both cohorts reported an enhancement to their understanding of pathological disease processes through the use of the additional resources. Results indicate student perception of the value of the resources correlates with staff perception and is independent of prior experiences.

The continuing relevance of the library as a third place for users and non-users of IT : the case of Canada Bay

The purpose of this paper is to consider how libraries support the development of community networks both physically and digitally. To do this, a case-study methodology was employed, including a combination of data about the library and qualitative interviews with library users considering their experience of the library. This paper proposes that libraries act as ‘third places’ spatially connecting people; libraries also build links with online media and play a critical role in inclusively connecting non-technology users with the information on the Internet and digital technology more generally. The paper establishes the value of libraries in the digital age and recommends that libraries actively seek ways to develop links between non-technology users and activity on the Internet. It addresses the need to reach these types of non-technology users in different ways. Further, it suggests that libraries utilise their positioning as third places to create broader community networks, to support local communities beyond existing users and beyond the library precinct.

But what makes it doctoral? Taking on the traditionalists : interdisciplinary, practice-led doctoral research in the creative industries - a case study in academic politics, research, rigour and relevance

This paper examines a Doctoral journey of interdisciplinary exploration, explication, examination...and exasperation. In choosing to pursue a practice-led doctorate I had determined from the outset that ‘writing 100,000 words that only two people ever read’, was not something which interested me. Hence, the oft-asked question of ‘what kind of doctorate’ I was engaged in, consistently elicited the response, “a useful one”. In order to satisfy my own imperatives of authenticity and usefulness, my doctoral research had to clearly demonstrate relevance to; productively inform; engage with; and add value to: wider professional field(s) of practice; students in the university courses I teach; and the broader community - not just the academic community. Consequently, over the course of my research, the question, ‘But what makes it Doctoral?’ consistently resounded and resonated. Answering that question, to satisfy not only the traditionalists asking it but, perhaps surprisingly, some academic innovators - and more particularly, myself as researcher - revealed academic/political inconsistencies and issues which challenged both the fundamental assumptions and actuality of practice-led research. This paper examines some of those inconsistencies, issues and challenges and provides at least one possible answer to the question: ‘But what makes it Doctoral?’

Using value-based partnerships to support community engaged learning : benefits, challenges, stakeholder perspectives

Increasingly, the not-for-profit sector, as an emerging contributor to the creative economy, is creating a context for engaging creative practitioners in developing solutions to complex problems, triggering a demand for skills and knowledge needed to address this complexity. Across the university and community contexts alternative models of engagement are emerging to support this dynamic. This paper presents a case study of a creative project in which a value-based approach is used to foster a collaborative partnership between community partners and a multidisciplinary team of final year Creative Industries students who in the course of the project developed a range of communication resources, including a social media campaign, an interactive game and a series of short films to support volunteer engagement and leadership initiatives. The paper considers the implications this values approach has for the design of service learning curriculum for multidisciplinary creative teams and the potential it has to support meaningful collaboration between creatives and the not-for-profit sector. It further explores how it impact on student and partner engagement, learning outcomes and the benefits for the partner organisation. The paper concludes that a value-based approach to university-community engagement has the potential to support and enable a greater degree of reciprocity, deeper engagement between stakeholders and greater relevance of the final outcome.

NT-ProBNP levels in saliva and its clinical relevance to heart failure

Background: Current blood based diagnostic assays to detect heart failure (HF) have large intra-individual and inter-individual variations which have made it difficult to determine whether the changes in the analyte levels reflect an actual change in disease activity. Human saliva mirrors the body's health and well being and similar to 20% of proteins that are present in blood are also found in saliva. Saliva has numerous advantages over blood as a diagnostic fluid which allows for a non-invasive, simple, and safe sample collection. The aim of our study was to develop an immunoassay to detect NT-proBNP in saliva and to determine if there is a correlation with blood levels. Methods: Saliva samples were collected from healthy volunteers (n = 40) who had no underlying heart conditions and HF patients (n = 45) at rest. Samples were stored at -80 degrees C until analysis. A customised homogeneous sandwich AlphaLISA((R)) immunoassay was used to quantify NT-proBNP levels in saliva. Results: Our NT-proBNP immunoassay was validated against a commercial Roche assay on plasma samples collected from HF patients (n = 37) and the correlation was r(2) = 0.78 (p<0.01, y = 1.705 x +1910.8). The median salivary NT-proBNP levels in the healthy and HF participants were <16 pg/mL and 76.8 pg/mL, respectively. The salivary NT-proBNP immunoassay showed a clinical sensitivity of 82.2% and specificity of 100%, positive predictive value of 100% and negative predictive value of 83.3%, with an overall diagnostic accuracy of 90.6%. Conclusion: We have firstly demonstrated that NT-proBNP can be detected in saliva and that the levels were higher in heart failure patients compared with healthy control subjects. Further studies will be needed to demonstrate the clinical relevance of salivary NT-proBNP in unselected, previously undiagnosed populations.

Applying design-led innovation in a not-for-profit aged care provider to create shared value

This study examines the role of Design-Led Innovation in creating shared value; sustainable competitive advantage for an organisation and social value for the communities in which it operates. A case study analysed an undertaking by a not-for-profit aged care organisation to create a sustainable competitive advantage in the market by reinventing the experience of ageing and defining an innovative future business model. This paper reflects on the role of Design-Led Innovation in facilitating this change agenda and explores the particular relevance of the associated techniques in a not-for-profit, human services context. It was found that the Design-Led Innovation approach was effective in achieving the goal of defining a way for the organisation to create shared value.

Electronic games: Can they create value for the moderate drinking brand?

Purpose This paper aims to understand how experiential value can generate awareness, image, perceived quality and loyalty to the moderate drinking brand. Electronic games are increasingly used by social marketers in an attempt to support target audiences uptake of social behaviours. However, little is known of the value this creates for target audiences and its impact on the uptake of a social behaviour brand. Design/methodology/approach A survey of male adolescents (n = 137) was conducted to test proposed relationships between experiential value and consumer-based brand equity dimensions. The research tested the game “Don’t Turn a Night Out into a Nightmare” that was developed by the Australian Federal Government as part of a social marketing campaign. Data were analysed using linear regression and MANCOVA. Findings The findings indicate that there are significant relationships between consumer-based brand equity dimensions for the social behaviour brand of moderate drinking, indicating relevance of a commercial marketing theory for social marketing. Furthermore, findings show that different combinations of experiential value dimensions have an impact on different components of consumer-based brand equity. These findings indicate that when social marketers are developing electronic games, they must create different combinations of value in game play to achieve awareness, positive image, high perceived quality and, ultimately, loyalty to a behaviour. Practical implications Social marketers seeking to use electronic games to influence the uptake of behaviour brands such as moderate drinking must provide a more complete value package. Originality/value This paper is the first to examine how experiential value can influence the creation of brand equity for a social behaviour brand.

Following fashion: Visible progressiveness and the social construction of firm value

A central tenet underlying studies on management fashions is that the diffusion of novel forms, models and techniques is driven by an institutional norm of progress, which is the societal expectation that managers will continuously use 'new and improved' management practices. We add to the literature on management fashions by arguing that, if the display of progressiveness in the manner of managing and organizing is expected of organizations, firms that are visibly progressive would be evaluated more positively by organizational audiences following this institutional prescription. Using article counts of co-occurrences of firms and various fashionable management practices in Wall Street Journal, we hypothesize positive effects of such associations on security analysts' evaluations of these firms. Results support this hypothesis. Our study enriches the management fashion literature by highlighting the consequential relevance of organizational adherence to the norm of progress.