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.

Ownership structure and business evaluation practices in family SMEs : evidence from empirical research in Italy

This paper presents early results from a pilot project which aims to investigate the relationship between proprietary structure of small and medium- sized Italian family firms and their owners’ orientation towards a “business evaluation process”. Evidence from many studies point out the importance of family business in a worldwide economic environment: in Italy 93% of the businesses are represented by family firms; 98% of them have less than 50 employees (Italian Association of Family Firms, 2004) so we judged family SMEs as a relevant field of investigation. In this study we assume a broad definition of family business as “a firm whose control (50% of shares or voting rights) is closely held by the members of the same family” (Corbetta,1995). “Business evaluation process” is intended here both as “continuous evaluation process” (which is the expression of a well developed managerial attitude) or as an “immediate valuation” (i.e. in the case of new shareholder’s entrance, share exchange among siblings, etc). We set two hypotheses to be tested in this paper: the first is “quantitative” and aims to verify whether the number of owners (independent variable) in a family firm is positively correlated to the business evaluation process. If a family firm is led by only one subject, it is more likely that personal values, culture and feelings may affect his choices more than “purely economic opportunities”; so there is less concern about monitoring economic performance or about the economic value of the firm. As the shareholders’ number increases, economic aspects in managing the firm grow in importance over the personal values and "value orientation" acquires a central role. The second hypothesis investigates if and to what extent the presence of “non- family members” among the owners affects their orientation to the business evaluation process. The “Cramer’s V” test has been used to test the hypotheses; both were not confirmed from these early results; next steps will lead to make an inferential analysis on a representative sample of the population.

Internal market orientation and market-oriented behaviours

Purpose: The purpose of this empirical paper is to investigate internal marketing from a behavioural perspective. The impact of internal marketing behaviours, operationalised as an internal market orientation (IMO), on employees’ marketing and other in-role behaviours (IRB) were examined. ---------- Design/methodology/approach: Survey data measuring IMO, market orientation and a range of constructs relevant to the nomological network in which they are embedded were collected from the UK retail managers. These were tested to establish their psychometric properties and the conceptual model was analysed using structural equations modelling, employing a partial least squares methodology. ---------- Findings: IMO has positive consequences for employees’ market-oriented and other IRB. These, in turn, influence marketing success. Research limitations/implications – The paper provides empirical support for the long-held assumption that internal and external marketing are related and that organisations should balance their external focus with some attention to employees. Future research could measure the attitudes and behaviours of managers, employees and customers directly and explore the relationships between them. ---------- Practical implications: Firm must ensure that they do not put the needs of their employees second to those of managers and shareholders; managers must develop their listening skills and organisations must become more responsive to the needs of their employees. ---------- Originality/value: The paper contributes to the scarce body of empirical support for the role of internal marketing in services organisations. For researchers, this paper legitimises the study of internal marketing as a route to external market success; for managers, the study provides quantifiable evidence that focusing on employees’ wants and needs impacts their behaviours towards the market.

Dynamic capabilities and performance : strategy, structure and environment

Dynamic capabilities are widely considered to incorporate those processes that enable organizations to sustain superior performance over time. In this paper, we argue theoretically and demonstrate empirically that these effects are contingent on organizational structure and the competitive intensity in the market. Results from partial least square structural equation modeling (PLS-SEM) analyses indicate that organic organizational structures facilitate the impact of dynamic capabilities on organizational performance. Furthermore, we find that the performance effects of dynamic capabilities are contingent on the competitive intensity faced by firms. Our findings demonstrate the performance effects of internal alignment between organizational structure and dynamic capabilities, as well as the external fit of dynamic capabilities with competitive intensity. We outline the advantages of PLS-SEM for modeling latent constructs, such as dynamic capabilities, and conclude with managerial implications.

Labour market institutions and the gender wage gap in Britain and Australia, 1973–90

The importance of wage structure is frequently interpreted as indirect evidence of the role played by labour market institutions. The current paper follows in this tradition, examining the role of wage structure in explaining the trend in the gender wage gap over the period 1973–91 for both Australia and the UK. The focus is upon whether changes in wage structure (and associated gender wage gap) both across country and over time are compatible with institutional explanations. Combining comparisons both cross-country and over time yields a more stringent, albeit indirect, test of the role of institutions.

Environmental information provision, market valuation, and firm incentives: An empirical study of the Japanese PRTR system

The environmental performance of a listed firm could affect its level of investment in pollution prevention and its access to financial markets. Previous studies using Tobin's q that explore market response to environmental performance do not distinguish between the impact of performance on investment and market response, which may mislead conclusions. To overcome this problem, we simultaneously estimate the functions of the intangible asset, the replacement cost, and the toxic chemical risk. We find that the Japanese financial market does not value risk associated with toxic chemical releases. Nevertheless, even without market valuation, firms increase investment to reduce pollution. © 2010 by the Board of Regents of the University of Wisconsin System.

Non-market use and non-use values for preserving ecosystem services over time : a choice experiment application to coral reef ecosystems in New Caledonia

Non-use values (i.e. economic values assigned by individuals to ecosystem goods and services unrelated to current or future uses) provide one of the most compelling incentives for the preservation of ecosystems and biodiversity. Assessing the non-use values of non-users is relatively straightforward using stated preference methods, but the standard approaches for estimating non-use values of users (stated decomposition) have substantial shortcomings which undermine the robustness of their results. In this paper, we propose a pragmatic interpretation of non-use values to derive estimates that capture their main dimensions, based on the identification of a willingness to pay for ecosystem protection beyond one's expected life. We empirically test our approach using a choice experiment conducted on coral reef ecosystem protection in two coastal areas in New Caledonia with different institutional, cultural, environmental and socio-economic contexts. We compute individual willingness to pay estimates, and derive individual non-use value estimates using our interpretation. We find that, a minima, estimates of non-use values may comprise between 25 and 40% of the mean willingness to pay for ecosystem preservation, less than has been found in most studies.

Corporate-cooperative management of fisheries: A potential alternative governance structure for low value small fisheries?

While the economic and environmental benefits of fisheries management are well accepted, the costs of effective management in low value fisheries, including the research necessary to underpin such management, may be considerable relative to the total economic benefits they may generate. Co-management is often seen as a panacea in low value fisheries. Increasing fisher participation increases legitimacy of management decision in the absence of detailed scientific input. However, where only a small number of operators exist, the potential benefits of co-management are negated by the high transaction cost to the individual fishers engaging in the management process. From an economic perspective, sole ownership has been identified as the management structure which can best achieve biological and economic sustainability. Moving low value fisheries with a small number of participants to a corporate-cooperative management model may come close to achieving these sole ownership benefits, with lower transaction costs. In this paper we look at the applicability of different management models with industry involvement to low value fisheries with a small number of participants. We provide an illustration as to how a fishery could be transitioned to a corporate-cooperative management model that captures the key benefits of sole management at a low cost and is consistent with societal objectives.

Market structure of international construction professional services: Evidences from top design firms

Construction professional service (CPS) in the international arena has been very competitive despite that the industry is proliferating at a high rate. To excel in international business, CPS firms have the importance of building overseas competition strategies on a proper understanding of the international CPS (I-CPS) market. However, subject to borderless trade, information technology–based networking, global outsourcing, and changing forms of procurement, the I-CPS market structure has become more covert, intricate, and unstraightforward than before. Through examining business competition among top international design firms, this study aims to identify the attributes of the I-CPS market structure from two perspectives—concentration and turnover. Data from Engineering News-Record over the period 2001–2011 were collected to calculate market concentration ratios and turnover indices. The results show that I-CPS competition is characterized by atomism, much turbulence with a steady increase in competition intensity, and the predominant role of new entrants and exiting firms in market turnovers. The combination of concentration and turnover is found useful to address the attributes of the I-CPS market structure, which favors I-CPS firms to formulate international competition strategies in due ways.

Synthesis, crystal structure and DNA cleavage activity of (aqua)bis(dipyridophenazine)copper(II) complex

A copper(II) complex of dipyridophenazine, viz., [Cu(dppz)(2)(H2O)](ClO4)(2) (I), has been prepared and structurally characterized by X-ray crystallography. The crystal structure of the complex shows a five-coordinate structure in which two N,N-donor dipyridophenazine (dppz) and one aqua ligand bind to the copper(II) center giving Cu-O and Cu-N bond distances in the range of 1.981(6) to 2.043(6) angstrom. The ESI-MS spectrum of 1 in MeCN shows a peak at m/z value of 313 (100%) indicating the dissociation of the aqua ligand in the solution phase. The complex is one-electron paramagnetic (mu(eff), 1.86 mu(B)). It displays a quasi-reversible Cu(II)/Cu(I) redox process at 0.096 V. The complex is an avid binder to CT DNA giving a binding constant value of 3.5 x 10(5) M-1. It shows significant hydrolytic cleavage of supercoiled pUC19 DNA in dark ill the absence of any external agents. The complex exhibits chemical nuclease activity oil treatment with 3-mercaptopropionic acid as a reducing agent forming hydroxyl radicals. Complex 1 is a model synthetic nuclease and hydrolase showing both modes of DNA cleavage under different reaction conditions. The DNA cleavage activity of 1 is significantly better than its phen analogue but similar to that of the bis-dpq complex.

Vertical structure and horizontal gradients of aerosol extinction coefficients over coastal India inferred from airborne lidar measurements during the Integrated Campaign for Aerosol, Gases and Radiation Budget (ICARB) field campaign

Quantitative estimates of the vertical structure and the spatial gradients of aerosol extinction coefficients have been made from airborne lidar measurements across the coastline into offshore oceanic regions along the east and west coasts of India. The vertical structure revealed the presence of strong, elevated aerosol layers in the altitude region of similar to 2-4 km, well above the atmospheric boundary layer (ABL). Horizontal gradients also showed a vertical structure, being sharp with the e(-1) scaling distance (D-0H) as small as similar to 150 km in the well-mixed regions mostly under the influence of local source effects. Above the ABL, where local effects are subdued, the gradients were much shallower (similar to 600-800 km); nevertheless, they were steep compared to the value of similar to 1500-2500 km reported for columnar AOD during winter. The gradients of these elevated layers were steeper over the east coast of India than over the west coast. Near-simultaneous radio sonde (Vaisala, Inc., Finland) ascents made over the northern Bay of Bengal showed the presence of convectively unstable regions, first from surface to similar to 750-1000 m and the other extending from 1750 to 3000 m separated by a stable region in between. These can act as a conduit for the advection of aerosols and favor the transport of continental aerosols in the higher levels (> 2 km) into the oceans without entering the marine boundary layer below. Large spatial gradient in aerosol optical and hence radiative impacts between the coastal landmass and the adjacent oceans within a short distance of < 300 km (even at an altitude of 3 km) during summer and the premonsoon is of significance to the regional climate.

Adoption of environmental assurance in pastoral industry supply chains - Market failure and beyond

This paper describes adoption rates of environmental assurance within meat and wool supply chains, and discusses this in terms of market interest and demand for certified 'environmentally friendly' products, based on phone surveys and personal interviews with pastoral producers, meat and wool processors, wholesalers and retailers, and domestic consumers. Members of meat and wool supply chains, particularly pastoral producers, are both aware of and interested in implementing various forms of environmental assurance, but significant costs combined with few private benefits have resulted in low adoption rates. The main reason for the lack of benefits is that the end user (the consumer) does not value environmental assurance and is not willing to pay for it. For this reason, global food and fibre supply chains, which compete to supply consumers with safe and quality food at the lowest price, resist public pressure to implement environmental assurance. This market failure is further exacerbated by highly variable environmental and social production standards required of primary producers in different countries, and the disparate levels of government support provided to them. Given that it is the Australian general public and not markets that demand environmental benefits from agriculture, the Australian government has a mandate to use public funds to counter this market failure. A national farm environmental policy should utilise a range of financial incentives to reward farmers for delivering general public good environmental outcomes, with these specified and verified through a national environmental assurance scheme.

Study of the structure and function of the sheath of tropically adapted bulls and risk factors for preputial eversion and preputial prolapse

Preputial prolapse is an obvious condition affecting bulls from many breeds. Unfortunately, the losses in production and welfare concerns associated with preputial prolapse can remain undetected for long periods of time in the extensive beef areas of northern Australia where the bulls are not inspected regularly. Thus, there is a critical need to identify the structural factors predisposing to preputial prolapse in young bulls so that they can be culled early. Despite there being no firm scientific evidence of an association between preputial eversion and preputial prolapse, it seems logical that the increased exposure of the sensitive prepuce as a consequence of preputial eversion may increase the risk of bulls developing preputial pathology, in particular preputial prolapse. This may be particularly relevant in Bos indicus bulls as they have a more pendulous sheath and thus eversion of the prepuce may be associated with a greater risk of injury to the prepuce compared to that in Bos taurus bulls. Further, studies of preputial eversion in Bos taurus bulls have concluded that there is an association between polledness and increased prevalence and severity (length of everted prepuce and duration of eversion) of preputial eversion due primarily to the absence or poor development of the caudal preputial muscles. No similar definitive work in Bos indicus bulls has been conducted and thus anatomical studies reported in this thesis were conducted to determine if a similar association occurred in Bos indicus bulls. A survey of a sample of large beef breeding herds in northern Australia found that preputial prolapse is a significant problem in Bos indicus and Bos indicus derived bulls and affected both young and older bulls. The importance of preputial prolapse confirmed the value of further research into the causes of this problem. A series of anatomical studies confirmed that preputial eversion in Bos indicus derived bulls was not more prevalent in polled bulls than horned bulls and was not associated with deficiency of the caudal preputial muscles as was established in Bos taurus bulls. An anatomical study of Bos indicus derived bulls with preputial prolapse found that preputial prolapse occurred in horned bulls of varying ages and these bulls did not have any evidence of deficiency in the caudal preputial muscles. However, preputial prolapse was observed in young polled bulls that had poorly developed or absent caudal preputial muscles. It was concluded that deficiency of the caudal preputial muscles in polled Bos indicus derived bulls may predispose to preputial prolapse at an early age, but no predisposing anatomical factors were found for horned Bos indicus derived bulls. In these studies, preputial eversion and preputial prolapse were found in horned Bos indicus derived bulls that did not have any preputial muscle deficiency and it was noted that preputial eversion was not related to the length of the prepuce. Further studies confirmed that preputial eversion was linearly and consistently associated with position of the glans penis within the sheath in Bos indicus derived bulls, and movement of the glans penis towards the preputial orifice consistently resulted in preputial eversion in these bulls. A method to objectively measure the relationship between movement of the glans penis within the sheath and preputial eversion was developed. Studies in humans have linked function of some abdominal muscles to function of the pelvic organs. This relationship was investigated in Bos indicus derived bulls to determine whether the function of specific abdominal muscles affected position of the penis in the sheath. Using the method developed to objectively measure the relationship between penis movement and preputial eversion, the abdominal muscles that potentially were associated with movement of the glans penis or preputial eversion were examined but no significant relationships were observed. In the anatomical study of Bos indicus derived bulls not affected with preputial prolapse a more pendulous sheath was associated with increased prevalence of preputial eversion. This relationship was confirmed for horned and polled bulls in the penis movement studies. Bos indicus derived bulls with more pendulous sheaths evert their prepuces more than bulls with less pendulous sheaths thus increasing the risk of damage to the prepuce either from the environment, other bulls, or from them inadvertently stepping on the everted prepuce when they get to their feet. Culling Bos indicus derived bulls with more pendulous sheaths should reduce the incidence of preputial eversion and possibly preputial prolapse. The anatomical study of Bos indicus derived bulls that did not have preputial prolapse demonstrates that there are herds of bulls where the polled bulls do not have any evidence of deficiency of the caudal preputial iv muscles. There is a need to develop a practical and cost effective test to identify polled Bos indicus bulls that have a deficiency in their caudal preputial muscles.

Microbial L-phenylalanine ammonia-lyase. Purification, subunit structure and kinetic properties of the enzyme from Rhizoctonia solani

Phenylalanine ammonia-lyase (EC 4.3.1.5) was purified to homogeneity from the acetone-dried powders of the mycelial felts of the plant pathogenic fungus Rhizoctonia solani. 2. A useful modification in protamine sulphate treatment to get substantial purification of the enzyme in a single-step is described. 3. The purified enzyme shows bisubstrate activity towards L-phenylalanine and L-tyrosine. 4. It is sensitive to carbonyl reagents and the inhibition is not reversed by gel filtration. 5. The molecular weight of the enzyme as determined by Sephadex G-200 chromatography and sucrose-density-gradient centrifugation is around 330000. 6. The enzyme is made up of two pairs of unidentical subunits, with a molecular weight of 70000 (alpha) and 90000 (beta) respectively. 7. Studies on initial velocity versus substrate concentration have shown significant deviations from Michaelis-Menten kinetics. 8. The double-reciprocal plots are biphasic (concave downwards) and Hofstee plots show a curvilinear pattern. 9. The apparent Km value increases from 0.18 mM to as high as 5.0 mM with the increase in the concentration of the substrate and during this process the Vmax, increases by 2-2.5-fold. 10. The value of Hill coefficient is 0.5. 11. Steady-state rates of phenylalanine ammonia-lyase reaction in the presence of inhibitors like D-phenylalanine, cinnamic, p-coumaric, caffeic, dihydrocaffeic and phenylpyruvic acid have shown that only one molecule of each type of inhibitor binds to a molecule of the enzyme. These observations suggest the involvement of negative homotropic interactions in phenylalanine ammonia-lyase. 12. The enzyme could not be desensitized by treatment with HgCl2, p-chloromercuribenzoic acid or by repeated freezing and thawing.

Vegetation structure and floristic composition of a tropical dry deciduous forest in Bhadra Wildlife Sanctuary, Karnataka, India

A permanent 2 ha (200 m x 100 m) plot was established for long-term monitoring of plant diversity and dynamics in a tropical dry deciduous forest of Bhadra Wildlife Sanctuary, Karnataka, southern India. Enumeration of all woody plants >= 1 cm DBH (diameter at breast height) yielded a total of 1766 individuals that belonged to 46 species, 37 genera and 24 families. Combretaceae was the most abundant family in the forest with a family importance value of 68.3. Plant density varied from 20 - 90 individuals with an average 35 individuals/quadrat (20 m x 20 m). Randia dumetorum, with 466 individuals (representing 26.7 % of the total density 2 ha(-1)) with species importance value of 36.25, was the dominant species in the plot. The total basal area of the plot was 18.09 m(2) ha(-1) with a mean of 0.72 m(2) quadrat(-1). The highest basal area of the plot was contributed by Combretaceae (12.93 m(2) 2 ha(-1)) at family level and Terminalia tomentosa (5.58 m(2) 2 ha(-1)) at species level. The lowest diameter class (1-10 cm) had the highest density (1054 individuals 2 ha(-1)), but basal area was highest in the 80 - 90 cm diameter class (5.03m(2) 2 ha(-1)). Most of the species exhibited random or aggregated distribution over the plot. This study provides a baseline information on the dry forests of Bhadra Wildlife Sanctuary.