Assessing the value relevance of accounting data after the introduction of IFRS in Europe

Since 2005, European-listed companies have been required to prepare their consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS). We examine whether value relevance increased following the introduction of IFRS, using a sample of 3,721 companies listed on five European stock exchanges: Frankfurt, Madrid, Paris, London, and Milan. We find mixed evidence of an increase in value relevance. However, the influence of earnings on share price increased following the introduction of IFRS in Germany, France, and the United Kingdom, while the influence of book value of equity decreased (except for the United Kingdom). © 2010 Blackwell Publishing Ltd.

Managing the transition to IFRS-based financial reporting

This book provides a practical guide for accountants working in practice or in business faced with the complexity of moving to adopt IFRS-based financial reporting. The book offers not only an overview of the regulatory framework and the requirements to produce IFRS-compliant financial statements but also guidance on developing an implementation strategy including project management, identifying and responding to challenges, dealing with change management and communication with external stakeholders.

Evaluating the impact of institutional logic on the corporate Internet reporting by Egyptian listed companies

This study explores the institutional logic(s) governing the Corporate Internet Reporting (CIR) by Egyptian listed companies. In doing so, a mixed methods approach was followed. The qualitative part seeks to understand the perceptions, believes, values, norms, that are commonly shared by Egyptian companies which engaged in these practices. Consequently, seven cases of large listed Egyptian companies operating in different industries have been examined. Other stakeholders and stockholders have been interviewed in conjunction with these cases. The quantitative part consists of two studies. The first one is descriptive aiming to specify whether the induced logic(s) from the seven cases are commonly embraced by other Egyptian companies. The second study is explanatory aiming to investigate the impact of several institutional and economic factors on the extent of CIR, types of the online information, quality of the websites as well as the Internet facilities. Drawing on prior CIR literature, four potential types of logics could be inferred: efficiency, legitimacy, technical and marketing based logics. In Egypt, legitimacy logic was initially embraced in the earlier years after the Internet inception. latter, companies confronted radical challenges in their internal and external environments which impelled them to raise their websites potentialities to defend their competitive position; either domestically or internationally. Thus, two new logics emphasizing marketing and technical perspectives have emerged, in response. Strikingly, efficiency based logic is not the most prevalent logic driving CIR practices in Egypt as in the developed countries. The empirical results support this observation and show that almost half of Egyptian listed companies 115 as on December 2010 possessed an active website, half of them 62 disclosed part of their financial and accounting information, during December 2010 to February 2011. Less than half of the websites 52 offered latest annual financial statements. Fewer 33(29%) websites provided shareholders and stock information or included a separate section for corporate governance 25 (22%) compared to 50 (44%) possessing a section for news or press releases. Additionally, the variations in CIR practices, as well as timeliness and credibility were also evident even at industrial level. After controlling for firm size, profitability, leverage, liquidity, competition and growth, it was realized that industrial companies and those facing little competition tend to disclose less. In contrast, management size, foreign investors, foreign listing, dispersion of shareholders and firm size provided significant and positive impact individually or collectively. In contrast, neither audit firm, nor most of performance indicators (i.e. profitability, leverage, and liquidity) did exert an influence on the CIR practices. Thus, it is suggested that CIR practices are loosely institutionalised in Egypt, which necessitates issuing several regulative and processional rules to raise the quality attributes of Egyptian websites, especially, timeliness and credibility. Beside, this study highlights the potency of assessing the impact of institutional logic on CIR practices and suggests paying equal attention to the institutional and economic factors when comparing the CIR practices over time or across different institutional environments in the future.

Introducing international accounting standards to an emerging capital market: relative familiarity and language effect in Egypt

The purpose of this study is to assess the effect of relative familiarity and language accessibility on the International Accounting Standards (IASs) disclosures when IASs are first introduced in an emerging capital market. The study focuses on the annual reports of listed non-financial companies in Egypt when IASs were first introduced. The method used applies a disclosure index measurement to a sample of listed company annual reports and evaluates relative compliance with IASs in relation to corporate characteristics. The results show that for relatively less familiar requirements of IASs, the extent of compliance is related to the type of audit firm used and to the presence of a specific statement of compliance with IASs. A lower degree of compliance with less familiar IASs disclosure is observed consistently across a range of company characteristics. Consideration of agency theory and capital need theory would lead to prior expectation of a distinction in disclosure practices between different categories of companies. The results were, therefore, counterintuitive to expectations where the regulations were unfamiliar or not available in the native language, indicating that new variables have to be considered and additional theoretical explanations have to be found in future disclosure studies on emerging capital markets.

Introducing International Accounting Standards to an emerging capital market:Relative familiarity and language effect in Egypt

The purpose of this study is to assess the effect of relative familiarity and language accessibility on the International Accounting Standards (IASs) disclosures when IASs are first introduced in an emerging capital market. The study focuses on the annual reports of listed non-financial companies in Egypt when IASs were first introduced. The method used applies a disclosure index measurement to a sample of listed company annual reports and evaluates relative compliance with IASs in relation to corporate characteristics. The results show that for relatively less familiar requirements of IASs, the extent of compliance is related to the type of audit firm used and to the presence of a specific statement of compliance with IASs. A lower degree of compliance with less familiar IASs disclosure is observed consistently across a range of company characteristics. Consideration of agency theory and capital need theory would lead to prior expectation of a distinction in disclosure practices between different categories of companies. The results were, therefore, counterintuitive to expectations where the regulations were unfamiliar or not available in the native language, indicating that new variables have to be considered and additional theoretical explanations have to be found in future disclosure studies on emerging capital markets. © 2003 Elsevier Science Inc. All rights reserved.

Interactive data in financial reporting:the construction of the non-professional investor

The Securities and Exchange Commission (SEC) in the United States and in particular its immediately past chairman, Christopher Cox, has been actively promoting an upgrade of the EDGAR system of disseminating filings. The new generation of information provision has been dubbed by Chairman Cox, "Interactive Data" (SEC, 2006). In October this year the Office of Interactive Disclosure was created(http://www.sec.gov/news/press/2007/2007-213.htm). The focus of this paper is to examine the way in which the non-professional investor has been constructed by various actors. We examine the manner in which Interactive Data has been sold as the panacea for financial market 'irregularities' by the SEC and others. The academic literature shows almost no evidence of researching non-professional investors in any real sense (Young, 2006). Both this literature and the behaviour of representatives of institutions such as the SEC and FSA appears to find it convenient to construct this class of investor in a particular form and to speak for them. We theorise the activities of the SEC and its chairman in particular over a period of about three years, both following and prior to the 'credit crunch'. Our approach is to examine a selection of the policy documents released by the SEC and other interested parties and the statements made by some of the policy makers and regulators central to the programme to advance the socio-technical project that is constituted by Interactive Data. We adopt insights from ANT and more particularly the sociology of translation (Callon, 1986; Latour, 1987, 2005; Law, 1996, 2002; Law & Singleton, 2005) to show how individuals and regulators have acted as spokespersons for this malleable class of investor. We theorise the processes of accountability to investors and others and in so doing reveal the regulatory bodies taking the regulated for granted. The possible implications of technological developments in digital reporting have been identified also by the CEO's of the six biggest audit firms in a discussion document on the role of accounting information and audit in the future of global capital markets (DiPiazza et al., 2006). The potential for digital reporting enabled through XBRL to "revolutionize the entire company reporting model" (p.16) is discussed and they conclude that the new model "should be driven by the wants of investors and other users of company information,..." (p.17; emphasis in the original). Here rather than examine the somewhat illusive and vexing question of whether adding interactive functionality to 'traditional' reports can achieve the benefits claimed for nonprofessional investors we wish to consider the rhetorical and discursive moves in which the SEC and others have engaged to present such developments as providing clearer reporting and accountability standards and serving the interests of this constructed and largely unknown group - the non-professional investor.

Corporate governance and compliance with International Financial Reporting Standards (IFRSs):evidence from two MENA stock exchanges

This study examines the influence of corporate governance structures on the levels of compliance with IFRSs disclosure requirements by companies listed on the stock exchanges of two leading MENA (Middle East and North Africa) countries, Egypt and Jordan. This study employs a cross-sectional analysis of a sample of non-financial companies listed on the two stock exchanges for the fiscal year 2007. Using an unweighted disclosure index, the study measures the levels of compliance by companies listed on the two stock exchanges investigated.Univariate and multivariate regression analyses are used to estimate the relationships proposed in the hypotheses. In addition, the study uses semi-structured interviews in order to supplement the interpretation of the findings of the quantitative analyses. An innovative theoretical foundation is deployed, in which compliance is interpretable through three lenses - institutional isomorphism theory, secrecy versus transparency (one of Gray’s accounting sub-cultural values), and financial economics theories. The study extends the financial reporting literature, cross-national comparative financial disclosure literature, and the emerging markets disclosure literature by carrying out one of the first comparative studies of the above mentioned stock exchanges. Results provide evidence of a lack of de facto compliance (i.e., actual compliance) with IFRSs disclosure requirements in the scrutinised MENA countries. The impact of corporate governance mechanisms for best practice on enhancing the extent of compliance with mandatory IFRSs is absent in the stock exchanges in question. The limited impact of corporate governance best practice is mainly attributed to the novelty of corporate governance in the region, a finding which lends support to the applicability of the proposed theoretical foundation to the MENA context. Finally, the study provides recommendations for improving de facto compliance with IFRSs disclosure requirements and corporate governance best practice in the MENA region and suggests areas for future research.

The challenges faced by reporting entities on their transition to international financial reporting standards:a qualitative study

This study explores the challenges of implementing International Financial Reporting Standards (IFRS) at the organisational level. Based on interviews with experts with aggregated experience relating to the transition projects of over 170 reporting entities, this paper highlights the main challenges in delivering a successful implementation of IFRS. The findings show that the problems faced in implementation include lack of education and training, securing executive-level support, identifying and responding to the wider business-related implications of the transition, and issues with capturing the necessary information for reporting under IFRS.This paper complements the existing literature and offers a qualitative alternative to considering the transition to IFRS, offering insight into the organisational context of IFRS implementation. These insights are useful not only from a historic perspective, but also for organisations and regulators in the many jurisdictions where IFRS is permitted but not required, where more reporting entities will voluntarily move to IFRS-based reporting in the future. More broadly, they are also applicable to the challenges faced in implementing new and significantly revised IFRSs.