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.

Announcement and legislation enactment improve children’s seating position in regional areas

New legislation requires all children 7 years and younger to use child-specific Australian Standards approved restraints suitable to their age and restricts seating young children in the front of cars. Observations of child seating position and restraint use were undertaken in Toowoomba and Rockhampton before the Queensland legislation was announced (T1), after the announcement but before it was enacted (T2) and after it came into force (T3). From T1 to T2, the percentage of children seated in the rear increased (69% to 75%), with a further increase from T2 to T3 (75% to 77%). This pattern was clear when there were one or two children in the car, but not when there were 3 or more. The effect on restraint use was more complex. After the announcement (T2) the percentage of children using adult seatbelts significantly increased regardless of the number of child passengers. However, once the legislation was enacted (T3) there was a significant increase in the percentage of children using child seats/boosters where there was one or two child passengers. Where there were three or more children in the vehicle there was little change in restraint choice between pre (T1) and post (T3) legislation.

Use of electronic travel diaries and vehicle instrumentation packages in the year 2000 : Atlanta Regional Household Travel Survey

The Georgia Institute of Technology is currently performing research that will result in the development and deployment of three instrumentation packages that allow for automated capture of personal travel-related data for a given time period (up to 10 days). These three packages include: A handheld electronic travel diary (ETD) with Global Positioning System (GPS) capabilities to capture trip information for all modes of travel; A comprehensive electronic travel monitoring system (CETMS), which includes an ETD, a rugged laptop computer, a GPS receiver and antenna, and an onboard engine monitoring system, to capture all trip and vehicle information; and a passive GPS receiver, antenna, and data logger to capture vehicle trips only.

Creativity, knowledge, engagement : keys to finding the right governance model for a regional community precinct

This paper investigates the Cooroy Mill community precinct (Sunshine Coast, Queensland), as a case study, seeking to understand the way local dynamics interplay and work with the community strengths to build a governance model of best fit. As we move to an age of ubiquitous computing and creative economies, the definition of public place and its governance take on new dimensions, which – while often utilizing models of the past – will need to acknowledge and change to the direction of the future. This paper considers a newly developed community precinct that has been built on three key principles: to foster creative expression with new media, to establish a knowledge economy in a regional area, and to subscribe to principles of community engagement. The study involved qualitative interviews with key stakeholders and a review of common practice models of governance along a spectrum from community control to state control. The paper concludes with a call for governance structures that are locally situated and tailored, inclusive, engaging, dynamic and flexible in order to build community capacity, encourage creativity, and build knowledge economies within emerging digital media cityscapes.

Impacts and opportunities : resident's view on sustainable development of tourism in regional Queensland, Australia

Tourism development is a priority for rural and regional areas of Australia. The challenge is how to develop the tourism industry in a sustainable manner. As part of a larger project investigating community perceptions of opportunities, strategies and challenges in regional sustainable development, this article explores participant's views and opinions of tourism development. Through purposive sampling, 28 local community leaders and residents in the Darling Downs region in Queensland, Australia, participated in four semi-structured focus groups. This paper focuses on two of these focus groups, where tourism was a critical issue. Participants were generally positive about the tourism industry and its impacts on their community, although they expressed several triple bottom line concerns about economic, environmental and scoial issues. Four key themes emerged: appropriate land use management, limited resources and ageing/insufficient infrastructure, preservaation of community heritage and lifestyle, and regional conflict. Residents supported sustainable tourism development and wanted to be more actively involved in decision-making, demanding greater transparency - and true engagement - from local government.

Feasibility of open markets for mainline railways in China

For decades, the development, construction, track ownership and operation of mainline railways in China have been overseen by the state-owned authorities. From mid-90’s, the mainline railway management has undergone revamps to revitalize the intra-modal competitiveness of railway transportation and to steer it toward the direction of modern business management. With the rapid economic growth; the large-scale expansion of the mainline network; and the increasing expectation on service, the mainline railways in China require further restructuring. Inevitably, a sustainable approach to ensure business viability and service quality in the next few decades is an imminent challenge. This paper reviews the operations and management of mainline railway in China and discusses the possibility of introducing open access market. Drawing the experiences on railway open markets outside China, the discussions include the need and feasibility of railway open market in China; and the suitability and limitations of different models. Particular considerations will be given to the unique characteristics of the mainline railways in China, where the developments across neighbouring regions are unbalanced; freight and passenger services are of similar demands; and the high-speed train operations are operated with low-speed ones in mixed traffic.

Regional changes in corneal thickness and shape with soft contact lenses

Purpose: To investigate the influence of soft contact lenses on regional variations in corneal thickness and shape while taking account of natural diurnal variations in these corneal parameters. Methods: Twelve young, healthy subjects wore 4 different types of soft contact lenses on 4 different days. The lenses were of two different materials (silicone hydrogel, hydrogel), designs (spherical, toric) and powers (–3.00, –7.00 D). Corneal thickness and topography measurements were taken before and after 8 hours of lens wear and on two days without lens wear, using the Pentacam HR system. Results: The hydrogel toric contact lens caused the greatest level of corneal thickening in the central (20.3 ± 10.0 microns) as well as peripheral cornea (24.1 ± 9.1 microns) (p < 0.001) with an obvious regional swelling of the cornea beneath the stabilizing zones. The anterior corneal surface generally showed slight flattening. All contact lenses resulted in central posterior corneal steepening and this was weakly correlated with central corneal swelling (p = 0.03) and peripheral corneal swelling (p = 0.01). Conclusions: There was an obvious regional corneal swelling apparent after wear of the hydrogel soft toric lenses, due to the location of the thicker stabilization zones of the toric lenses. However with the exception of the hydrogel toric lens, the magnitude of corneal swelling induced by the contact lenses over the 8 hours of wear was less than the natural diurnal thinning of the cornea over this same period.