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 role of social skills and school connectedness in preadolescent depressive symptoms

In the current study, we tested whether school connectedness mediates more distal deficits in social skills in influencing depressive symptoms in a sample of 127 sixth- and seventh-grade students. Results demonstrated that school connectedness and social skills accounted for 44% and 26% of variance in depressive symptoms respectively and 49% in a combined model. Although the full mediation model hypothesis was not supported, follow-up analyses revealed that school connectedness partially mediated the link between social skills and preadolescent depressive symptoms. Thus, school connectedness appears to play as strong a role in depressive symptoms in this younger preadolescent age group.

Family-focused weight management program for five- to nine-year-olds incorporating parenting skills training with healthy lifestyle information to support behaviour modification

his case study aims to describe how general parenting principles can be used as part of parent-led, family-focused child weight management that is in line with current Australian Clinical Practice Guidelines. A parent-led, family-focused child weight management program was designed for use by dietitians with parents of young children (five- to nine-year-olds). The program utilises the cornerstones of overweight treatment: diet, activity, behaviour modification and family support delivered in an age-appropriate, family-focused manner. Parents participate in 16 sessions (4 parenting-focused, 8 lifestyle-focused and 4 individual telephone support calls) conducted weekly, fortnightly then monthly over six months. This case study illustrates how a family used the program, resulting in reduced degree of overweight and stabilised waist circumference in the child over 12 months. In conclusion, linking parenting skills to healthy family lifestyle education provides an innovative approach to family-focused child weight management. It addresses key Australian Clinical Practice Guidelines, works at the family level, and provides a means for dietitians to easily adopt age-appropriate behaviour modification as part of their practice.

Video-stimulated accounts: Young children accounting for interactional matters in front of peers

Research in the early years places increasing importance on participatory methods to engage children. The playback of video-recording to stimulate conversation is a research method that enables children’s accounts to be heard and attends to a participatory view. During video-stimulated sessions, participants watch an extract of video-recording of a specific event in which they were involved, and then account for their participation in that event. Using an interactional perspective, this paper draws distinctions between video-stimulated accounts and a similar research method, popular in education, that of video-stimulated recall. Reporting upon a study of young children’s interactions in a playground, video-stimulated accounts are explicated to show how the participants worked toward the construction of events in the video-stimulated session. This paper discusses how the children account for complex matters within their social worlds, and manage the accounting of others in the video-stimulated session. When viewed from an interactional perspective and used alongside fine grained analytic approaches, video-stimulated accounts are an effective method to provide the standpoint of the children involved and further the competent child paradigm.

Greenhouse Gas Fluxes in Tropical and Temperae Agriculture: The Need for a Full-Cost Accounting of Global Warming Potentials

Agriculture's contribution to radiative forcing is principally through its historical release of carbon in soil and vegetation to the atmosphere and through its contemporary release of nitrous oxide (N2O) and methane (CHM4). The sequestration of soil carbon in soils now depleted in soil organic matter is a well-known strategy for mitigating the buildup of CO2 in the atmosphere. Less well-recognized are other mitigation potentials. A full-cost accounting of the effects of agriculture on greenhouse gas emissions is necessary to quantify the relative importance of all mitigation options. Such an analysis shows nitrogen fertilizer, agricultural liming, fuel use, N2O emissions, and CH4 fluxes to have additional significant potential for mitigation. By evaluating all sources in terms of their global warming potential it becomes possible to directly evaluate greenhouse policy options for agriculture. A comparison of temperate and tropical systems illustrates some of these options.

Deriving grassland management factors for a carbon accounting method developed by the intergovernmental panel on climate change

Grassland management affects soil organic carbon (SOC) storage and can be used to mitigate greenhouse gas emissions. However, for a country to assess emission reductions due to grassland management, there must be an inventory method for estimating the change in SOC storage. The Intergovernmental Panel on Climate Change (IPCC) has developed a simple carbon accounting approach for this purpose, and here we derive new grassland management factors that represent the effect of changing management on carbon storage for this method. Our literature search identified 49 studies dealing with effects of management practices that either degraded or improved conditions relative to nominally managed grasslands. On average, degradation reduced SOC storage to 95% +/- 0.06 and 97% +/- 0.05 of carbon stored under nominal conditions in temperate and tropical regions, respectively. In contrast, improving grasslands with a single management activity enhanced SOC storage by 14% 0.06 and 17% +/- 0.05 in temperate and tropical regions, respectively, and with an additional improvement(s), storage increased by another 11% +/- 0.04. We applied the newly derived factor coefficients to analyze C sequestration potential for managed grasslands in the U.S., and found that over a 20-year period changing management could sequester from 5 to 142 Tg C yr(-1) or 0.1 to 0.9 Mg C ha(-1) yr(-1), depending on the level of change. This analysis provides revised factor coefficients for the IPCC method that can be used to estimate impacts of management; it also provides a methodological framework for countries to derive factor coefficients specific to conditions in their region.

The contemporary librarian : skills, knowledge and attributes required in a world of emerging technologies

Seventy-six librarians participated in a series of focus groups in support of research exploring the skills, knowledge and attributes required by the contemporary library and information professional in a world of every changing technology. The project was funded by the Australian Learning and Teaching Council. Text data mining analysis revealed three main thematic clusters (libraries, people, jobs) and one minor thematic cluster (community). Library 2.0 was broadly viewed by participants as being about change whilst librarian 2.0 was perceived by participants as not a new creation but just about good librarian practices. Participants expressed the general belief that personality traits, not just qualifications, were critical to be a successful librarian or information worker in the future.

Innovative use of Blackboard® to assess laboratory skills

A novel application of the popular web instruction architecture Blackboard Academic Suite® is described. The method was applied to a large number of students to assess quantitatively the accuracy of each student’s laboratory skills. The method provided immediate feedback to students on their personal skill level, replaced labour-intensive scrutiny of laboratory skills by teaching staff and identified immediately those students requiring further individual assistance in mastering the skill under evaluation. The method can be used for both formative and summative assessment. When used formatively, the assessment can be repeated by the student without penalty until the skill is mastered. When used for summative assessment, the method can save the teacher much time and effort in assessing laboratory skills of vital importance to students in the real world.

Skills for creative industries graduate success

Purpose: Although there is increasing evidence that the creative industries are essential to national economic growth as well as social and cultural well-being, creative graduates often find it difficult to become established professionally. This study investigates the value of career management competence and intrinsic career motivations (as elements of ‘protean career orientation’) in predicting positive graduate outcomes. ----- ----- Design/methodology: Self-report surveys were administered to 208 creative industries graduates from two Australian universities at two points in time: at course completion, and one year later. ----- ----- Findings: Individual career management competence and intrinsic work motivations, measured at course completion, were significant predictors of early career success, using both subjective and objective measures, measured one year later. ----- ----- Practical implications: This study suggests that an emphasis on student development beyond the traditional ‘key’ employability skills may well be worthwhile. The article also suggests a broad learning and teaching approach by which universities can encourage the development of student career identity, and thus engender student intrinsic career motivations and career self management skills and behaviours. ----- ----- Originality/value: This is one of the first studies to demonstrate empirically a link between a particular set of skills and graduate outcomes. In addition, it provides insights into the role of student career motivations in positive transitions to the world of work in the creative industries.

The influence of family ownership on the quality of accounting information

This article explores the quality of accounting information in listed family firms. The authors exploit the features of the Italian equitymarket characterizd by high ownership concentration across all tpes of firms to disentangle the effects of family ownership from other major block holders on the quality of accounting information. The findings document that family firms convey financial information of higher quality compared to the nonfamily peers. Furthermore the authors provide evidence that the determinants of accounting quality differ across family and nonfamily firms.

A green drought : the challenge of mentoring for Australian accounting academics

Purpose: The purpose of this paper is to expose the impact of the shortage of senior academics,particularly professors, in Australian accounting schools, to relate the way one school addressed this shortage through a mentoring scheme, and to challenge existing institutional arrangements.----------- Design/methodology/approach: This is a contextualised qualitative case study of a mentoring scheme conducted in an Australian accounting school. Data collected from semi-structured interviews, personal reflections and from Australian university web sites are interpreted theoretically using the metaphor of a “green drought”.---------- Findings: The mentoring scheme achieved some notable successes, but raised many issues and challenges. Mentoring is a multifaceted investment in vocational endeavour and intellectual infrastructure, which will not occur unless creative means are developed over the long term to overcome current and future shortages of academic mentors.---------- Research limitations/implications: This is a qualitative case study, which, therefore, limits its generalisability. However, its contextualisation enables insights to be applied to the wider academic environment. ----------Practical implications: In the Australian and global academic environment, as accounting professors retire in greater numbers, new and creative ways of mentoring will need to be devised. The challenge will be to address longer term issues of academic sustainability, and not just to focus on short-term academic outcomes.---------- Originality/value: A mentoring scheme based on a collegial networking model of mentoring is presented as a means of enhancing academic endeavour through a creative short-term solution to a shortage of accounting professors. The paper exemplifies the theorising power of metaphor in a qualitative study.