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.

Towards controlled growth of carbon nanotubes from germanium on nanoindented silicon substrates

In this paper, we report on a metal-catalyst-free synthesis of carbon nanotubes (CNTs) on a pre-patterned Si(001) surface. Arrays of triangular-shaped holes were created by nanoindentation in specific sites of the sample. After germanium deposition and chemical vapor deposition (CVD) of acetylene, a few CNTs nucleated and grew from germanium nanoparticles. These results illustrate that it is possible to control the growth of CNTs without the use of any metal catalyst. By leading the assembly of Ge nanoparticles with a patterning technique, a precise control over the growth order is also attainable.

Controlled carbon nanotube synthesis from germanium nanoparticles

Controlled syntheses of carbon nanotubes (CNTs) are highly desirable for nanoelectronic applications. To date, metallic catalyst particles have usually been deemed unavoidable for the nucleation and growth of any kind of CNTs. However, the presence of metal species mixed with the CNTs represents a shortcoming for most electronic applications, as metal particles are incompatible with silicon semiconductor technology. Recently it has been shown that it is possible to create nanotubes without the presence of metallic catalysts, by using SIO2, Ge and other non-metallic nanoparticles. Here we report on a metal-catalyst-free synthesis of CNTs, obtained through Ge nano-particles assembled on silicon surfaces previously patterned by Focused Ion Beam and nanoindentation.

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.

Soil Carbon Turnover Measurement by Physical Fractionation at a Forest-to-Pasture Chronosequence in the Brazilian Amazon

The effect of conversion from forest-to-pasture upon soil carbon stocks has been intensively discussed, but few studies focus on how this land-use change affects carbon (C) distribution across soil fractions in the Amazon basin. We investigated this in the 20 cm depth along a chronosequence of sites from native forest to three successively older pastures. We performed a physicochemical fractionation of bulk soil samples to better understand the mechanisms by which soil C is stabilized and evaluate the contribution of each C fraction to total soil C. Additionally, we used a two-pool model to estimate the mean residence time (MRT) for the slow and active pool C in each fraction. Soil C increased with conversion from forest-to-pasture in the particulate organic matter (> 250 mu m), microaggregate (53-250 mu m), and d-clay (< 2 mu m) fractions. The microaggregate comprised the highest soil C content after the conversion from forest-to-pasture. The C content of the d-silt fraction decreased with time since conversion to pasture. Forest-derived C remained in all fractions with the highest concentration in the finest fractions, with the largest proportion of forest-derived soil C associated with clay minerals. Results from this work indicate that microaggregate formation is sensitive to changes in management and might serve as an indicator for management-induced soil carbon changes, and the soil C changes in the fractions are dependent on soil texture.

Soil carbon saturation : implications for measurable carbon pool dynamics in long-term incubations

The efficiency of agricultural management practices to store SOC depends on C input level and how far a soil is from its saturation level (i.e. saturation deficit). The C Saturation hypothesis suggests an ultimate soil C stabilization capacity defined by four SOM pools capable of C saturation: (1) non-protected, (2) physically protected, (3) chemically protected and (4) biochemically protected. We tested if C saturation deficit and the amount of added C influenced SOC storage in measurable soil fractions corresponding to the conceptual chemical, physical, biochemical, and non-protected C pools. We added two levels of C-13- labeled residue to soil samples from seven agricultural sites that were either closer to (i.e., A-horizon) or further from (i.e., C-horizon) their C saturation level and incubated them for 2.5 years. Residue-derived C stabilization was, in most sites, directly related to C saturation deficit but mechanisms of C stabilization differed between the chemically and biochemically protected pools. The physically protected C pool showed a varied effect of C saturation deficit on C-13 stabilization, due to opposite behavior of the POM and mineral fractions. We found distinct behavior between unaggregated and aggregated mineral-associated fractions emphasizing the mechanistic difference between the chemically and physically protected C-pools. To accurately predict SOC dynamics and stabilization, C Saturation of soil C pools, particularly the chemically and biochemically protected pools, should be considered. (C) 2008 Elsevier Ltd. All rights reserved.

Soil carbon saturation : evaluation and corroboration by long-term incubations

Although current assessments of agricultural management practices on soil organic C (SOC) dynamics are usually conducted without any explicit consideration of limits to soil C storage, it has been hypothesized that the SOC pool has an upper, or saturation limit with respect to C input levels at steady state. Agricultural management practices that increase C input levels over time produce a new equilibrium soil C content. However, multiple C input level treatments that produce no increase in SOC stocks at equilibrium show that soils have become saturated with respect to C inputs. SOC storage of added C input is a function of how far a soil is from saturation level (saturation deficit) as well as C input level. We tested experimentally if C saturation deficit and varying C input levels influenced soil C stabilization of added C-13 in soils varying in SOC content and physiochemical characteristics. We incubated for 2.5 years soil samples from seven agricultural sites that were closer to (i.e., A-horizon) or further from (i.e., C-horizon) their C saturation limit. At the initiation of the incubations, samples received low or high C input levels of 13 C-labeled wheat straw. We also tested the effect of Ca addition and residue quality on a subset of these soils. We hypothesized that the proportion of C stabilized would be greater in samples with larger C Saturation deficits (i.e., the C- versus A-horizon samples) and that the relative stabilization efficiency (i.e., Delta SCC/Delta C input) would decrease as C input level increased. We found that C saturation deficit influenced the stabilization of added residue at six out of the seven sites and C addition level affected the stabilization of added residue in four sites, corroborating both hypotheses. Increasing Ca availability or decreasing residue quality had no effect on the stabilization of added residue. The amount of new C stabilized was significantly related to C saturation deficit, supporting the hypothesis that C saturation influenced C stabilization at all our sites. Our results suggest that soils with low C contents and degraded lands may have the greatest potential and efficiency to store added C because they are further from their saturation level. (c) 2008 Elsevier Ltd. All rights reserved.

Soil carbon saturation: Linking concept and measurable carbon pools

The soil C saturation concept suggests a limit to whole soil organic carbon (SOC) accumulation determined by inherent physicochemical characteristics of four soil C pools: unprotected, physically protected, chemically protected, and biochemically protected. Previous attempts to quantify soil C sequestration capacity have focused primarily on silt and clay protection and largely ignored the effects of soil structural protection and biochemical protection. We assessed two contrasting models of SOC accumulation, one with no saturation limit (i.e., linear first-order model) and one with an explicit soil C saturation limit (i.e., C saturation model). We isolated soil fractions corresponding to the C pools (i.e., free particulate organic matter POM], microaggregate-associated C, silt- and clay-associated C, and non-hydrolyzable C) from eight long-term agroecosystern experiments across the United States and Canada. Due to the composite nature of the physically protected C pool, we firactioned it into mineral- vs. POM-associated C. Within each site, the number of fractions fitting the C saturation model was directly related to maximum SOC content, suggesting that a broad range in SOC content is necessary to evaluate fraction C saturation. The two sites with the greatest SOC range showed C saturation behavior in the chemically, biochemically, and some mineral-associated fractions of the physically protected pool. The unprotected pool and the aggregate-protected POM showed linear, nonsaturating behavior. Evidence of C saturation of chemically and biochemically protected SOC pools was observed at sites far from their theoretical C saturation level, while saturation of aggregate-protected fractions occurred in soils closer to their C saturation level.