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.

Service bid comparisons by fuzzy ranking in open railway market timetabling

In an open railway access market, the Infrastructure Provider (IP), upon the receipts of service bids from the Train Service Providers (TSPs), assigns track access rights according to its own business objectives and the merits of the bids; and produces the train service timetable through negotiations. In practice, IP chooses to negotiate with the TSPs one by one in such a sequence that IP optimizes its objectives. The TSP bids are usually very complicated, containing a large number of parameters in different natures. It is a difficult task even for an expert to give a priority sequence for negotiations from the contents of the bids. This study proposes the application of fuzzy ranking method to compare and prioritize the TSP bids in order to produce a negotiation sequence. The results of this study allow investigations on the behaviors of the stakeholders in bid preparation and negotiation, as well as evaluation of service quality in the open railway market.

Bayesian methodology incorporating expert judgment for ranking countermeasure effectiveness under uncertainty: Example applied to at grade railroad crossings in Korea

This paper describes the formalization and application of a methodology to evaluate the safety benefit of countermeasures in the face of uncertainty. To illustrate the methodology, 18 countermeasures for improving safety of at grade railroad crossings (AGRXs) in the Republic of Korea are considered. Akin to “stated preference” methods in travel survey research, the methodology applies random selection and laws of large numbers to derive accident modification factor (AMF) densities from expert opinions. In a full Bayesian analysis framework, the collective opinions in the form of AMF densities (data likelihood) are combined with prior knowledge (AMF density priors) for the 18 countermeasures to obtain ‘best’ estimates of AMFs (AMF posterior credible intervals). The countermeasures are then compared and recommended based on the largest safety returns with minimum risk (uncertainty). To the author's knowledge the complete methodology is new and has not previously been applied or reported in the literature. The results demonstrate that the methodology is able to discern anticipated safety benefit differences across candidate countermeasures. For the 18 at grade railroad crossings considered in this analysis, it was found that the top three performing countermeasures for reducing crashes are in-vehicle warning systems, obstacle detection systems, and constant warning time systems.

Multi-criteria ranking and receptor modelling of airborne fine particles at three sites in the Pearl River Delta region of China

The multi-criteria decision making methods, Preference METHods for Enrichment Evaluation (PROMETHEE) and Graphical Analysis for Interactive Assistance (GAIA), and the two-way Positive Matrix Factorization (PMF) receptor model were applied to airborne fine particle compositional data collected at three sites in Hong Kong during two monitoring campaigns held from November 2000 to October 2001 and November 2004 to October 2005. PROMETHEE/GAIA indicated that the three sites were worse during the later monitoring campaign, and that the order of the air quality at the sites during each campaign was: rural site > urban site > roadside site. The PMF analysis on the other hand, identified 6 common sources at all of the sites (diesel vehicle, fresh sea salt, secondary sulphate, soil, aged sea salt and oil combustion) which accounted for approximately 68.8 ± 8.7% of the fine particle mass at the sites. In addition, road dust, gasoline vehicle, biomass burning, secondary nitrate, and metal processing were identified at some of the sites. Secondary sulphate was found to be the highest contributor to the fine particle mass at the rural and urban sites with vehicle emission as a high contributor to the roadside site. The PMF results are broadly similar to those obtained in a previous analysis by PCA/APCS. However, the PMF analysis resolved more factors at each site than the PCA/APCS. In addition, the study demonstrated that combined results from multi-criteria decision making analysis and receptor modelling can provide more detailed information that can be used to formulate the scientific basis for mitigating air pollution in the region.

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.

Australian Library and Information Studies (LIS) researchers' ranking of LIS journals

The paper describes the processes and the outcomes of the ranking of LIS journal titles by Australia’s LIS researchers during 2007-8, firstly through the Australian federal government’s Research Quality Framework (RQF) process and then its replacement, the Excellence in Research for Australia (ERA) initiative. The requirement to rank the journals titles used came from discussions held at the RQF panel meeting held in February 2007 in Canberra, Australia. While it was recognised that the Web of Science (formerly ISI) journal impact approach of journal acceptance for measures of research quality and impact might not work for LIS, it was apparent that this model would be the default if no other ranking of journal titles became apparent. Although an increasing number of LIS and related discipline journals were appearing in the Web of Science listed rankings, the number was few and it was thus decided by the Australian LIS research community to undertake the ranking exercise.

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.

Selection of solar energy for green building using superiority and inferiority multi-criteria ranking (SIR) method

Green energy is one of the key factors, driving down electricity bill and zero carbon emission generating electricity to green building. However, the climate change and environmental policies are accelerating people to use renewable energy instead of coal-fired (convention type) energy for green building that energy is not environmental friendly. Therefore, solar energy is one of the clean energy solving environmental impact and paying less in electricity fee. The method of solar energy is collecting sun from solar array and saves in battery from which provides necessary electricity to whole house with zero carbon emission. However, in the market a lot of solar arrays suppliers, the aims of this paper attempted to use superiority and inferiority multi-criteria ranking (SIR) method with 13 constraints establishing I-flows and S-flows matrices to evaluate four alternatives solar energies and determining which alternative is the best, providing power to sustainable building. Furthermore, SIR is well-known structured approach of multi-criteria decision support tools and gradually used in construction and building. The outcome of this paper significantly gives an indication to user selecting solar energy.