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.

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.

A framework for strategic infrastructure asset management

The concept of asset management is not a new but an evolving idea that has been attracting attention of many organisations operating and/or owning some kind of infrastructure assets. The term asset management have been used widely with fundamental differences in interpretation and usage. Regardless of the context of the usage of the term, asset management implies the process of optimising return by scrutinising performance and making key strategic decisions throughout all phases of an assets lifecycle (Sarfi and Tao, 2004). Hence, asset management is a philosophy and discipline through which organisations are enabled to more effectively deploy their resources to provide higher levels of customer service and reliability while balancing financial objectives. In Australia, asset management made its way into the public works in 1993 when the Australian Accounting Standard Board issued the Australian Accounting Standard 27 – AAS27. Standard AAS27 required government agencies to capitalise and depreciate assets rather than expense them against earnings. This development has indirectly forced organisations managing infrastructure assets to consider the useful life and cost effectiveness of asset investments. The Australian State Treasuries and the Australian National Audit Office was the first organisation to formalise the concepts and principles of asset management in Australia in which they defined asset management as “ a systematic, structured process covering the whole life of an asset”(Australian National Audit Office, 1996). This initiative led other Government bodies and industry sectors to develop, refine and apply the concept of asset management in the management of their respective infrastructure assets. Hence, it can be argued that the concept of asset management has emerged as a separate and recognised field of management during the late 1990s. In comparison to other disciplines such as construction, facilities, maintenance, project management, economics, finance, to name a few, asset management is a relatively new discipline and is clearly a contemporary topic. The primary contributors to the literature in asset management are largely government organisations and industry practitioners. These contributions take the form of guidelines and reports on the best practice of asset management. More recently, some of these best practices have been made to become a standard such as the PAS 55 (IAM, 2004, IAM, 2008b) in UK. As such, current literature in this field tends to lack well-grounded theories. To-date, while receiving relatively more interest and attention from empirical researchers, the advancement of this field, particularly in terms of the volume of academic and theoretical development is at best moderate. A plausible reason for the lack of advancement is that many researchers and practitioners are still unaware of, or unimpressed by, the contribution that asset management can make to the performance of infrastructure asset. This paper seeks to explore the practices of organisations that manage infrastructure assets to develop a framework of strategic infrastructure asset management processes. It will begin by examining the development of asset management. This is followed by the discussion on the method to be adopted for this paper. Next, is the discussion of the result form case studies. It first describes the goals of infrastructure asset management and how they can support the broader business goals. Following this, a set of core processes that can support the achievement of business goals are provided. These core processes are synthesised based on the practices of asset managers in the case study organisations.

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.

Doing social media : some fundamental principles

Facebook has clocked up some 400 million registered users worldwide; Twitter has just reached the 100 million mark. Within these communities, Australians appear to be particularly active: we lead the world by spending nearly eight hours per month using social media. These figures highlight the fact that for most businesses, social media are now important for engaging with customers.

Efficient control of an autonomous underwater vehicle while accounting for thruster failure

This paper is concerned with the design and implementation of control strategies onto a test-bed vehicle with six degrees-of-freedom. We design our trajectories to be efficient in time and in power consumption. Moreover, we also consider cases when actuator failure can arise and discuss alternate control strategies in this situation. Our calculations are supplemented by experimental results.

The exemplification of governance principles within state asset management laws and policies : the case of Indonesia

Efficient state asset management is crucial for governments as they facilitate the fulfillment of their public functions, which include the provision of essential services and other public administration support. In recent times economies internationally and particularly in South east Asia, have displayed increased recognition of the importance of efficiencies across state asset management law, policies and practice. This has been exemplified by a surge in notable instances of reform in state asset management. A prominent theme in this phenomenon is the consideration of governance principles within the re-conceptualization of state asset management law and related policy, with many countries recognizing variability in the quality of asset governance and opportunities for profit as being critical factors. This issue is very current in Indonesia where a major reform process in this area has been confirmed by the establishment of a new Directorate of State Asset Management. The incumbent Director-General of State Asset Management has confirmed a re-emphasis on adherence to governance principles within applicable state asset management law and policy reform. This paper reviews aspects of the challenge of reviewing and reforming Indonesian practice within state asset management law and policy specifically related to public housing, public buildings, parklands, and vacant land. A critical issue in beginning this review is how Indonesia currently conceptualizes the notion of asset governance and how this meaning is embodied in recent changes in law and policy and importantly in options for future change. This paper discusses the potential complexities uniquely Indonesian characteristics such as decentralisation and regional autonomy regime, political history, and bureaucratic culture