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.

The low-affinity site of the β1-adrenoceptor and its relevance to cardiovascular pharmacology

β-Adrenoceptor blocking agents (β-blockers) that at low concentrations antagonize cardiostimulant effects of catecholamines, but at high concentrations also cause cardiostimulation, have been appearing since the late 1960s. These cardiostimulant β-blockers, coined non-conventional partial agonists, antagonize the effects of catecholamines through a high-affinity site (β1HAR), but cause cardiostimulation mainly through a low-affinity site (β1LAR) of the myocardial β1-adrenoceptor. The experimental non-conventional partial agonist (−)-CGP12177 increases cardiac L-type Ca2+ current density and Ca2+ transients, shortens action potential duration but augments action potential plateau, increases heart rate and force, as well as causes arrhythmic Ca2+ transients and arrhythmic cardiocyte contractions. Other β-blockers, which do not cause cardiostimulation, consistently have lower affinity for β1LAR than β1HAR. These sites were verified and the cardiac pharmacology of non-conventional partial agonists confirmed on recombinant β1-adrenoceptors and on β1-adrenoceptors overexpressed into the heart. A targeted mutation of Asp138 to Glu138 virtually abolished the pharmacology of β1HAR but left intact the pharmacology of β1LAR. Non-conventional partial agonists may be beneficial for the treatment of peripheral autonomic neuropathy but probably due to their arrhythmic propensities, may be harmful for the treatment of chronic heart failure.

Overview of the INEX 2010 focused relevance feedback track

The INEX 2010 Focused Relevance Feedback track offered a refined approach to the evaluation of Focused Relevance Feedback algorithms through simulated exhaustive user feedback. As in traditional approaches we simulated a user-in-the loop by re-using the assessments of ad-hoc retrieval obtained from real users who assess focused ad-hoc retrieval submissions. The evaluation was extended in several ways: the use of exhaustive relevance feedback over entire runs; the evaluation of focused retrieval where both the retrieval results and the feedback are focused; the evaluation was performed over a closed set of documents and complete focused assessments; the evaluation was performed over executable implementations of relevance feedback algorithms; and �finally, the entire evaluation platform is reusable. We present the evaluation methodology, its implementation, and experimental results obtained for nine submissions from three participating organisations.

Mining positive and negative patterns for relevance feature discovery

It is a big challenge to guarantee the quality of discovered relevance features in text documents for describing user preferences because of the large number of terms, patterns, and noise. Most existing popular text mining and classification methods have adopted term-based approaches. However, they have all suffered from the problems of polysemy and synonymy. Over the years, people have often held the hypothesis that pattern-based methods should perform better than term-based ones in describing user preferences, but many experiments do not support this hypothesis. The innovative technique presented in paper makes a breakthrough for this difficulty. This technique discovers both positive and negative patterns in text documents as higher level features in order to accurately weight low-level features (terms) based on their specificity and their distributions in the higher level features. Substantial experiments using this technique on Reuters Corpus Volume 1 and TREC topics show that the proposed approach significantly outperforms both the state-of-the-art term-based methods underpinned by Okapi BM25, Rocchio or Support Vector Machine and pattern based methods on precision, recall and F measures.

Students' perceptions of the relevance of mathematics in engineering

In this paper, we report on the findings of an exploratory study into the experience of students as they learn first year engineering mathematics. Here we define engineering as the application of mathematics and sciences to the building and design of projects for the use of society (Kirschenman and Brenner 2010)d. Qualitative and quantitative data on students' views of the relevance of their mathematics study to their engineering studies and future careers in engineering was collected. The students described using a range of mathematics techniques (mathematics skills developed, mathematics concepts applied to engineering and skills developed relevant for engineering) for various usages (as a subject of study, a tool for other subjects or a tool for real world problems). We found a number of themes relating to the design of mathematics engineering curriculum emerged from the data. These included the relevance of mathematics within different engineering majors, the relevance of mathematics to future studies, the relevance of learning mathematical rigour, and the effectiveness of problem solving tasks in conveying the relevance of mathematics more effectively than other forms of assessment. We make recommendations for the design of engineering mathematics curriculum based on our findings.

IS-impact utility and intuitiveness : a rigorous approach to relevance

The study proposes to test the ‘IS-Impact’ index as Analytic Theory (AT). To (a) methodically evaluate the ‘relevance’ qualities of IS-Impact; namely, Utility & Intuitiveness. In so doing, to (b) document an exemplar of ‘a rigorous approach to relevance’, while (c) treating the overarching study as a higher-order case study having AT as the unit-of-analysis, and assessing adequacy of the 6 AT qualities, both for IS-Impact and for similar taxonomies. Also to (d) look beyond IS-Impact to other forms of Design Science, considering the generality of the AT qualities; and (e) further validating IS-Impact in new system organisation contexts taking account of contemporary understandings of construct theorisation, operationalization and validation.

An examination of monotony and hypovigilance, independent of fatigue : relevance to road safety

Driving is a vigilance task, requiring sustained attention to maintain performance and avoid crashes. Hypovigilance (i.e., marked reduction in vigilance) while driving manifests as poor driving performance and is commonly attributed to fatigue (Dinges, 1995). However, poor driving performance has been found to be more frequent when driving in monotonous road environments, suggesting that monotony plays a role in generating hypovigilance (Thiffault & Bergeron, 2003b). Research to date has tended to conceptualise monotony as a uni-dimensional task characteristic, typically used over a prolonged period of time to facilitate other factors under investigation, most notably fatigue. However, more often than not, more than one exogenous factor relating to the task or operating environment is manipulated to vary or generate monotony (Mascord & Heath, 1992). Here we aimed to explore whether monotony is a multi-dimensional construct that is determined by characteristics of both the task proper and the task environment. The general assumption that monotony is a task characteristic used solely to elicit hypovigilance or poor performance related to fatigue appears to have led to there being little rigorous investigation into the exact nature of the relationship. While the two concepts are undoubtedly linked, the independent effect of monotony on hypovigilance remains largely ignored. Notwithstanding, there is evidence that monotony effects can emerge very early in vigilance tasks and are not necessarily accompanied by fatigue (see Meuter, Rakotonirainy, Johns, & Wagner, 2005). This phenomenon raises a largely untested, empirical question explored in two studies: Can hypovigilance emerge as a consequence of task and/or environmental monotony, independent of time on task and fatigue? In Study 1, using a short computerised vigilance task requiring responses to be withheld to infrequent targets, we explored the differential impacts of stimuli and task demand manipulations on the development of a monotonous context and the associated effects on vigilance performance (as indexed by respone errors and response times), independent of fatigue and time on task. The role of individual differences (sensation seeking, extroversion and cognitive failures) in moderating monotony effects was also considered. The results indicate that monotony affects sustained attention, with hypovigilance and associated performance worse in monotonous than in non-monotonous contexts. Critically, performance decrements emerged early in the task (within 4.3 minutes) and remained consistent over the course of the experiment (21.5 minutes), suggesting that monotony effects can operate independent of time on task and fatigue. A combination of low task demands and low stimulus variability form a monotonous context characterised by hypovigilance and poor task performance. Variations to task demand and stimulus variability were also found to independently affect performance, suggesting that monotony is a multi-dimensional construct relating to both task monotony (associated with the task itself) and environmental monotony (related to characteristics of the stimulus). Consequently, it can be concluded that monotony is multi-dimensional and is characterised by low variability in stimuli and/or task demands. The proposition that individual differences emerge under conditions of varying monotony with high sensation seekers and/or extroverts performing worse in monotonous contexts was only partially supported. Using a driving simulator, the findings of Study 1 were extended to a driving context to identify the behavioural and psychophysiological indices of monotony-related hypovigilance associated with variations to road design and road side scenery (Study 2). Supporting the proposition that monotony is a multi-dimensional construct, road design variability emerged as a key moderating characteristic of environmental monotony, resulting in poor driving performance indexed by decrements in steering wheel measures (mean lateral position). Sensation seeking also emerged as a moderating factor, where participants high in sensation seeking tendencies displayed worse driving behaviour in monotonous conditions. Importantly, impaired driving performance was observed within 8 minutes of commencing the driving task characterised by environmental monotony (low variability in road design) and was not accompanied by a decline in psychophysiological arousal. In addition, no subjective declines in alertness were reported. With fatigue effects associated with prolonged driving (van der Hulst, Meijman, & Rothengatter, 2001) and indexed by drowsiness, this pattern of results indicates that monotony can affect driver vigilance, independent of time on task and fatigue. Perceptual load theory (Lavie, 1995, 2005) and mindlessness theory (Robertson, Manly, Andrade, Baddley, & Yiend, 1997) provide useful theoretical frameworks for explaining and predicting monotony effects by positing that the low load (of task and/or stimuli) associated with a monotonous task results in spare attentional capacity which spills over involuntarily, resulting in the processing of task-irrelevant stimuli or task unrelated thoughts. That is, individuals – even when not fatigued - become easily distracted when performing a highly monotonous task, resulting in hypovigilance and impaired performance. The implications for road safety, including the likely effectiveness of fatigue countermeasures to mitigate monotony-related driver hypovigilance are discussed.

Observing the relevance of an information systems success model

This paper contributes to the rigor vs. relevance debate in the Information Systems (IS) discipline. Using the Action Research methodology, this study evaluates the relevance of a rigorously validated IS evaluation model in practice. The study captures observations of operational end-users employing a market leading Enterprise System application for procurement and order fulfillment in an organization. The analysis of the observations demonstrates the broad relevance of the measurement instrument. More importantly, the study identifies several improvements and possible confusions in applying the instrument in the practice.