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.

Greenhouse Gas Emissions Calculator for Grain and Biofuel Farming Systems

Greenhouse gas markets, where invisible gases are traded, must seem like black boxes to most people. Farmers can make money on these markets, such as the Chicago Climate Exchange, by installing methane capture technologies in animal-based systems, no-till farming, establishing grasslands, and planting trees.

A study of environmental and management drivers of non-co2 greenhouse gas emissions in Australian agro-ecosystems

Australian climate, soils and agricultural management practices are significantly different from those of the northern hemisphere nations. Consequently, experimental data on greenhouse gas production from European and North American agricultural soils and its interpretation are unlikely to be directly applicable to Australian systems.

Quantifying N2O and CO2 emissions from subtropical pasture

Greenhouse gas emissions from a well established, unfertilized tropical grass-legume pasture were monitored over two consecutive years using high resolution automatic sampling. Nitrous oxide emissions were highest during the summer months and were highly episodic, related more to the size and distribution of rain events than WFPS alone. Mean annual emissions were significantly higher during 2008 (5.7 ± 1.0 g N2O-N/ha/day) than 2007 (3.9 ± 0.4 and g N2O-N/ha/day) despite receiving nearly 500 mm less rain. Mean CO2 (28.2 ± 1.5 kg CO2 C/ha/day) was not significantly different (P < 0.01) between measurement years, emissions being highly dependent on temperature. A negative correlation between CO2 and WFPS at >70% indicated a threshold for soil conditions favouring denitrification. The use of automatic chambers for high resolution greenhouse gas sampling can greatly reduce emission estimation errors associated with temperature and WFPS changes.

Nitrous oxide emissions from irrigated cotton soils of northern Australia

An automated gas sampling methodology has been used to estimate nitrous oxide (N2O) emissions from heavy black clay soil in northern Australia where split applications of urea were applied to furrow irrigated cotton. Nitrous oxide emissions from the beds were 643 g N/ha over the 188 day measurement period (after planting), whilst the N2O emissions from the furrows were significantly higher at 967 g N/ha. The DNDC model was used to develop a full season simulation of N2O and N2 emissions. Seasonal N2O emissions were equivalent to 0.83% of applied N, with total gaseous N losses (excluding NH3) estimated to be 16% of the applied N.

N2O emissions from agricultural lands: a synthesis of simulation approaches

Nitrous oxide (N2O) is primarily produced by the microbially-mediated nitrification and denitrification processes in soils. It is influenced by a suite of climate (i.e. temperature and rainfall) and soil (physical and chemical) variables, interacting soil and plant nitrogen (N) transformations (either competing or supplying substrates) as well as land management practices. It is not surprising that N2O emissions are highly variable both spatially and temporally. Computer simulation models, which can integrate all of these variables, are required for the complex task of providing quantitative determinations of N2O emissions. Numerous simulation models have been developed to predict N2O production. Each model has its own philosophy in constructing simulation components as well as performance strengths. The models range from those that attempt to comprehensively simulate all soil processes to more empirical approaches requiring minimal input data. These N2O simulation models can be classified into three categories: laboratory, field and regional/global levels. Process-based field-scale N2O simulation models, which simulate whole agroecosystems and can be used to develop N2O mitigation measures, are the most widely used. The current challenge is how to scale up the relatively more robust field-scale model to catchment, regional and national scales. This paper reviews the development history, main construction components, strengths, limitations and applications of N2O emissions models, which have been published in the literature. The three scale levels are considered and the current knowledge gaps and challenges in modelling N2O emissions from soils are discussed.

Nitrogen fertilizer management for nitrous oxide (N2O) mitigation in intensive corn (Maize) production: an emissions reduction protocol for US Midwest agriculture

Nitrous oxide (N2O) is a major greenhouse gas (GHG) product of intensive agriculture. Fertilizer nitrogen (N) rate is the best single predictor of N2O emissions in row-crop agriculture in the US Midwest. We use this relationship to propose a transparent, scientifically robust protocol that can be utilized by developers of agricultural offset projects for generating fungible GHG emission reduction credits for the emerging US carbon cap and trade market. By coupling predicted N2O flux with the recently developed maximum return to N (MRTN) approach for determining economically profitable N input rates for optimized crop yield, we provide the basis for incentivizing N2O reductions without affecting yields. The protocol, if widely adopted, could reduce N2O from fertilized row-crop agriculture by more than 50%. Although other management and environmental factors can influence N2O emissions, fertilizer N rate can be viewed as a single unambiguous proxy—a transparent, tangible, and readily manageable commodity. Our protocol addresses baseline establishment, additionality, permanence, variability, and leakage, and provides for producers and other stakeholders the economic and environmental incentives necessary for adoption of agricultural N2O reduction offset projects.

Validation of the MEASURE automobile emissions model : a statistical analysis

The Mobile Emissions Assessment System for Urban and Regional Evaluation (MEASURE) model provides an external validation capability for hot stabilized option; the model is one of several new modal emissions models designed to predict hot stabilized emission rates for various motor vehicle groups as a function of the conditions under which the vehicles are operating. The validation of aggregate measurements, such as speed and acceleration profile, is performed on an independent data set using three statistical criteria. The MEASURE algorithms have proved to provide significant improvements in both average emission estimates and explanatory power over some earlier models for pollutants across almost every operating cycle tested.

Quantification of the relationship between Fuser Roller Temperature and Laser Printer Emissions

Recently published studies not only demonstrated that laser printers are often significant sources of ultrafine particles, but they also shed light on particle formation mechanisms. While the role of fuser roller temperature as a factor affecting particle formation rate has been postulated, its impact has never been quantified. To address this gap in knowledge, this study measured emissions from 30 laser printers in chamber using a standardized printing sequence, as well as monitoring fuser roller temperature. Based on a simplified mass balance equation, the average emission rates of particle number, PM2.5 and O3 were calculated. The results showed that: almost all printers were found to be high particle number emitters (i.e. > 1.01×1010 particles/min); colour printing generated more PM2.5 than monochrome printing; and all printers generated significant amounts of O3. Particle number emissions varied significantly during printing and followed the cycle of fuser roller temperature variation, which points to temperature being the strongest factor controlling emissions. For two sub-groups of printers using the same technology (heating lamps), systematic positive correlations, in the form of a power law, were found between average particle number emission rate and average roller temperature. Other factors, such as fuser material and structure, are also thought to play a role, since no such correlation was found for the remaining two sub-groups of printers using heating lamps, or for the printers using heating strips. In addition, O3 and total PM2.5 were not found to be statistically correlated with fuser temperature.

Critical analysis of high particle number emissions from accelerating compressed natural gas buses

Compressed natural gas (CNG) engines are thought to be less harmful to the environment than conventional diesel engines, especially in terms of particle emissions. Although, this is true with respect to particulate matter (PM) emissions, results of particle number (PN) emission comparisons have been inconclusive. In this study, results of on-road and dynamometer studies of buses were used to derive several important conclusions. We show that, although PN emissions from CNG buses are significantly lower than from diesel buses at low engine power, they become comparable at high power. For diesel buses, PN emissions are not significantly different between acceleration and operation at steady maximum power. However, the corresponding PN emissions from CNG buses when accelerating are an order of magnitude greater than when operating at steady maximum power. During acceleration under heavy load, PN emissions from CNG buses are an order of magnitude higher than from diesel buses. The particles emitted from CNG buses are too small to contribute to PM10 emissions or contribute to a reduction of visibility, and may consist of semivolatile nanoparticles.

Dust emissions from a tunnel-ventilated broiler poultry shed with fresh and partially reused litter

Dust emissions from large-scale, tunnel-ventilated poultry sheds could have negative health and environmental impacts. Despite this fact, the literature concerning dust emissions from tunnel-ventilated poultry sheds in Australia and overseas is relatively scarce. Dust measurements were conducted during two consecutive production cycles at a single broiler shed on a poultry farm near Ipswich, Queensland. Fresh litter was employed during the first cycle and partially reused litter was employed during the second cycle. This provided an opportunity to study the effect that partial litter reuse has on dust emissions. Dust levels were characterised by the number concentration of suspended particles having diameter between 0.5–20 μm and by the mass concentration of dust particles below 10 μm diameter (PM10) and 2.5 μm diameter (PM2.5). In addition, we measured the number size distributions of dust particles. The average concentration and emission rate of dust was higher when partially reused litter was used in the shed than when fresh litter was used. In addition we found that dust particles emitted from the shed with partially reused litter were finer than the particles emitted with fresh litter. Although the change in litter properties is certainly contributing to this observed variability, other factors such as ventilation rate and litter moisture content are also likely to be involved.