The value relevance and reliability of intangible assets

2014 ◽  
Vol 22 (3) ◽  
pp. 182-216 ◽  
Author(s):  
Xu-Dong Ji ◽  
Wei Lu
Keyword(s):  
Financial Reporting ◽  
Intangible Assets ◽  
Value Relevance ◽  
Relevant Information ◽  
Accounting Standard ◽  
Content Type ◽  
Listed Firms ◽  
Financial Reporting Standards ◽  
The Relationship ◽  
Relevance And Reliability

Purpose – The purpose of this paper is to examine the value relevance of intangible assets, including goodwill and other types of intangibles in the pre- and post-adoption periods of International Financial Reporting Standards (IFRS). Most importantly, this paper investigates whether the value relevance of reported intangible assets is associated with their value reliability. Furthermore, this paper reports whether the adoption of IFRS improves the value relevance of intangible assets and alters the relationship between value relevance and reliability. Design/methodology/approach – Both price and return models based on Ohlosn theory (1995) are employed to test the value relevance and value reliability of intangibles. Australian-listed firms with capitalised intangibles from 2001 to 2009 are selected in this study. The sample includes 6,650 firm-year observations. Findings – The main result shows that capitalised intangible assets are value relevant in Australia, in both the pre- and post-adoption of IFRS periods. Value relevance is higher in firms with more reliable information on intangible assets. This study finds that the value relevance of intangibles has declined in the post-adoption period of IFRS. However, the positive relationship between the value relevance and the reliability of intangibles has remained unchanged in the post-adoption period. Originality/value – The paper contributes a new measurement of value reliability of accounting information about intangibles. This paper is one of few studies on the relationship between value relevance and reliability of intangible assets. The results show that value relevance is positively associated with value reliability. This suggests that, when accounting standard setters assess whether the existing IFRS of intangibles should be improved in the future, they need to think not only in terms of whether the standard can provide more relevant information of intangibles to investors but also whether the standard can make the information of intangibles more reliable.

scholarly journals IFRS adoption, value relevance and conditional conservatism: evidence from China

2019 ◽  
Vol 27 (4) ◽  
pp. 529-546 ◽  
Author(s):  
Cyrus Isaboke ◽  
Yan Chen
Keyword(s):  
Financial Reporting ◽  
Value Relevance ◽  
Financial Information ◽  
Content Type ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Conditional Conservatism ◽  
Before And After ◽  
The Relationship ◽  
A Company

Purpose This study sought to evaluate the relationship between value relevance of financial information and conditional conservatism of non-financial companies listed in China. Design/methodology/approach Using panel data comprising of 28,723 firm years, the authors determine the value relevance of financial information before and after mandatory International Financial Reporting Standards (IFRS) adoption while incorporating the relationship with conditional conservatism. The authors further examined how this relationship varies between state and non-state owned companies. Findings Conditional conservatism is positively (negatively) related to value relevance prior (post) to mandatory IFRS adoption while it makes no difference as to whether a company is state or non-state owned, as IFRS has a positive and significant effect on value relevance. Conservatism, on the other hand, has a negative and insignificant relationship with market value of both state and non-state owned firms during the pre- and post-IFRS period. Originality/value By exploring an emerging economy, the authors provide evidence on the variations in value relevance amongst state and non-state owned firms. In particular, the authors establish the positive effect of IFRS on the value relevance of non-state firms as compared to state-owned institutions.

An investigation of the level of compliance with international accounting standards (IAS 1) by listed firms in Bahrain Bourse

2016 ◽  
Vol 9 (2) ◽  
pp. 254-276 ◽  
Author(s):  
Fatema Ebrahim Alrawahi ◽  
Adel Mohammed Sarea
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Annual Reports ◽  
International Accounting ◽  
International Accounting Standards ◽  
Content Type ◽  
Listed Firms ◽  
Financial Reporting Standards ◽  
Industry Type ◽  
Regulatory Bodies

Purpose This study aims to investigate the association between seven firm-specific characteristics and the level of mandatory compliance with International Accounting Standards (IAS) 1 by firms listed on Bahrain Bourse. Design/methodology/approach A disclosure index is used to measure the extent of compliance with IAS 1. Each of the 36 sampled firms’ annual reports were examined against the index for the financial year ending December 31, 2013. Findings The results reveal an overall compliance of 83 per cent. Regression results report that only audit firm size, profitability and industry type have a positive and significant association with IAS 1 disclosure requirements. Practical implications This study should be particularly relevant to regulatory bodies in Bahrain for strategizing and encouraging compliance with IAS 1 by listed firms. Originality/value Additionally, the study contributes to financial reporting literature relating to the Gulf Cooperation Council countries, mainly Bahrain. Bahrain is a financial hub, and it is interesting to examine how it presents its financial statements to investors and the degree of its compliance with International Financial Reporting Standards since its adoption in 2007.

GAAP-adjusted earnings disclosures by New Zealand companies

2015 ◽  
Vol 27 (3) ◽  
pp. 329-352 ◽  
Author(s):  
Liz Rainsbury ◽  
Carol Hart ◽  
Nonthipoth Buranavityawut
Keyword(s):  
New Zealand ◽  
Financial Reporting ◽  
Global Financial Crisis ◽  
Relevant Information ◽  
Annual Reports ◽  
Content Type ◽  
Future Earnings ◽  
Reporting Practices ◽  
Financial Reporting Standards ◽  
The Global Financial Crisis

Purpose – This paper aims to examine motivations for the reporting of generally accepted accounting practice (GAAP)-adjusted earnings by New Zealand companies. Design/methodology/approach – The study uses multivariate analysis of data from New Zealand company annual reports for the period from 2004 to 2012. Findings – Evidence suggests that management of some New Zealand firms are motivated to use GAAP-adjusted earnings to provide a more favourable impression of earnings. However, across firms, these adjusted earnings provide a better predictor of future earnings and provide more value-relevant information to the market than GAAP earnings. Thus, a desire to disclose a more accurate indicator of permanent earnings appears to be a strong factor in the reporting of GAAP-adjusted earnings. Research limitations/implications – The study uses firms listed on the New Zealand share market. The number of firms examined is small, but we compensate by studying the entire population, thus avoiding sampling issues. The results suggest that New Zealand’s regulatory response of recommending guidelines for reporting alternative earnings measures is appropriate. Originality/value – The study contributes to the literature on the relationship between reporting statutory earnings and non-GAAP earnings. It uses a period that includes three major events in the New Zealand economy and reporting environment: the adoption of international financial reporting standards, a change in tax law and the global financial crisis. Recognition of these events allows us to better interpret the GAAP-adjusted reporting practices taken by managers.

Compliance with international financial reporting standards: the case of listed firms in Ghana

2016 ◽  
Vol 14 (1) ◽  
pp. 131-156 ◽  
Author(s):  
Kingsley Opoku Appiah ◽  
Dadson Awunyo-Vitor ◽  
Kwame Mireku ◽  
Christian Ahiagbah
Keyword(s):  
Financial Reporting ◽  
Firm Size ◽  
Developing Economies ◽  
Random Effect ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Firm Age ◽  
Content Type ◽  
Listed Firms ◽  
Financial Reporting Standards

Purpose This study aims to examine the association between five firm-specific characteristics and the level of compliance with International Financial Reporting Standards (IFRS) by companies listed on Ghana Stock Exchange. The five firm-specific characteristics are firm size, profitability, leverage, auditor type and firm age. Design/methodology/approach The study uses dataset from 31 listed Ghanaian firms from 2008 to 2012. Random effect is used to examine the influence of the predictive variables on the level of IFRS corporate compliance. Findings The result reveals a positive significant relationship between the level of compliance and firm size, auditor type, cross-listing and sector (information and communications technology (ICT) and agro-forestry). On the contrary, the level of compliance exhibits a negative significant association with leverage and firm age. It is observed that the level of compliance is not related to profitability. The results are robust to different model specifications. Practical implications This study identifies firm-specific characteristics that influence IFRS compliance by listed firms in Ghana. This would aid accounting policy makers to institute strategies to encourage compliance with IFRS by the listed firms. Originality/value The study contributes to financial reporting literature relating to developing economies and Ghana, in particular.

Sharia accounting standard for sukuk (Islamic bond) accounting in Indonesia

2018 ◽  
Vol 9 (3) ◽  
pp. 434-447 ◽  
Author(s):  
Dodik Siswantoro
Keyword(s):  
Interest Rate ◽  
Financial Reporting ◽  
Accounting Standards ◽  
Islamic Banks ◽  
Accounting Standard ◽  
Content Type ◽  
Financial Reporting Standards ◽  
Islamic Bank ◽  
Before And After ◽  
Suitable Standard

PurposeThis paper aims to analyze the need of Islamic banks for specific Statement of Financial Accounting Standards (SFAS) No. 110 for sukuk accounting in Indonesia. In fact, some Islamic banks have already prepared International Financial Reporting Standards (IFRS), and accordingly, a suitable standard is needed for this case. Design/methodology/approachThe research methodology involved interview with a senior accounting manager of an Islamic bank focusing on relevant topics in sukuk to sharpen the analysis. Equally important, research reviewed and compared financial statements on sukuk accounting among Islamic banks, before and after adoption of sukuk accounting standard. FindingsIFRS require market valuation based on interest rate. As interest rate is unlawful in Islamic teaching, IFRS may not accordingly be suitable. Therefore, SFAS No. 110 was issued by the Indonesian Institute of Accountants (Ikatan Akuntan Indonesia). Considering the fact that this standard did not explicitly adopt the IFRS paradigm, there have been consequent conflicts in Islamic bank management because of preference of global recognition to IFRS. Adopting IFRS would be more compatible with other countries’ general accounting standards. In addition, significant differences are found in sukuk accounting treatments by Islamic banks before and after the standard adoption. Research limitations/implicationsThis research only focuses on such question of why specific accounting standard for sukuk accounting is needed by Islamic banks in Indonesia, while only few Indonesian Islamic banks were initially aware of the issue. Originality/valueThis paper may be the first paper discussing the response to and need for sukuk accounting in Indonesian Islamic banks.

Factors that influenced the adoption of IFRS by Islamic banks in the UAE

2020 ◽  
Vol 33 (1) ◽  
pp. 75-91 ◽  
Author(s):  
Mohammad Haroun Sharairi
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Accounting Standards ◽  
Adoption Process ◽  
Islamic Banking ◽  
Reporting Standards ◽  
Islamic Banks ◽  
Content Type ◽  
Financial Reporting Standards ◽  
The Relationship

Purpose This paper aims to investigate the factors that influenced the current adoption of the international financial reporting standards (IFRS) by Islamic banks in the UAE. This paper examined the relationship between the theoretical aspects and practical components of the research investigation regarding the factors that influence the adoption of IFRS. This paper will contribute to the existing knowledge and practices in not only Islamic countries but also Western countries in terms of a deeper understanding of the adoption of IFRS by the Islamic banks and how the factors could influence the Islamic banking adoption, process, activities and financial reporting. Design/methodology/approach Several theories of regulation were considered in this paper to explain the existence of Islamic accounting regulations and understand why some of the Islamic accounting prescriptions became formal regulations, while others did not. Data was collected for this purpose by conducting a survey with professionals and managers of four Islamic banks in the UAE. Findings This paper revealed that factors, such as religion, culture and local investors, may have limited influence on the current adoption of accounting standards in the Islamic banks. Furthermore, this paper uncovered a concern among respondents of issues that developed when Islamic banks commenced the adoption of IFRS. This paper also indicated that respondents’ opinion does not reflect a perception that all IFRS are suitable for the application of Shariah transactions. Originality/value This study is unique as no study has yet explored the factors that influenced the adoption of the IFRS by Islamic banks in the UAE.

Audit committee effectiveness, isomorphic forces, managerial attitude and adoption of international financial reporting standards

2019 ◽  
Vol 9 (4) ◽  
pp. 502-526 ◽  
Author(s):  
Juma Bananuka ◽  
Arafat Walugyo Kadaali ◽  
Veronica Mukyala ◽  
Bruno Muramuzi ◽  
Zainab Namusobya
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Explanatory Power ◽  
Mediating Effect ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Microfinance Institutions ◽  
Content Type ◽  
Financial Reporting Standards ◽  
The Relationship

Purpose The purpose of this paper is to report the results of a study carried out to establish the contribution of audit committee (AC) effectiveness, isomorphic forces and managerial attitude to the adoption of international financial reporting standards (IFRS). Design/methodology/approach This study is cross-sectional and correlational. Data were collected through a questionnaire survey of 67 MFIs that are members of the Association of Microfinance Institutions of Uganda (AMFIU). Findings Both AC effectiveness, isomorphic forces and managerial attitude significantly contribute to the adoption of IFRS. However, the explanatory power of managerial attitude is subsumed in isomorphic forces and AC effectiveness. Results further indicate that AC effectiveness partially mediates the relationship between isomorphic forces and adoption of IFRS. In terms of control variables, ownership and capital structure are not significant predictors of adoption of IFRS. Originality/value To the authors’ knowledge, this is the first study to investigate the contribution of AC effectiveness, isomorphic forces and managerial attitude to the adoption of IFRS in MFIs using evidence from a developing country on the African scene like Uganda. Further, earlier literature has not tested the mediating effect of AC effectiveness in the relationship between isomorphic forces and the adoption of IFRS which has been reported in this paper.

Real Effects of Intangibles Capitalization—Empirical Evidence from Voluntary IFRS Adoption in Japan

2020 ◽  
Vol 19 (3) ◽  
pp. 19-36
Author(s):  
Yoshiaki Amano
Keyword(s):  
Financial Reporting ◽  
Intangible Assets ◽  
Intangible Asset ◽  
Generally Accepted Accounting Principles ◽  
Financial Reporting Standards ◽  
Real Effects ◽  
Ifrs Adoption ◽  
Intangible Investments ◽  
Voluntary Adoption ◽  
The Relationship

ABSTRACT This study examines how firm behaviors are affected by the voluntary adoption of International Financial Reporting Standards (IFRS) in Japan, which has expanded the scope for the capitalization of intangible assets compared with the Japanese Generally Accepted Accounting Principles. Prior research suggests that capitalization of intangibles is preferred by firms with larger intangibles and that it enables them to increase intangible investments. Using empirical data from Japanese IFRS adopters, this study analyzes the relationship between firms' intangible asset amounts and their voluntary adoption of IFRS. The results show that (1) the more intangibles firms possess, the more likely they are to adopt IFRS, and (2) once firms decide to adopt IFRS, their intangible assets increase compared with matched non-adopters. Additional analysis shows that this increase is partly attributable to an increased volume and value of mergers and acquisitions after IFRS adoption, suggesting that the real actions of the adopters changed.

IFRS adoption and accounting conservatism in Latin America

2020 ◽  
Vol 33 (3/4) ◽  
pp. 301-320
Author(s):  
Harold Lopez ◽  
Mauricio Jara ◽  
Adriana Cabello
Keyword(s):  
Latin America ◽  
Latin American ◽  
Financial Reporting ◽  
Accounting Conservatism ◽  
Content Type ◽  
Listed Firms ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Mandatory Adoption ◽  
The Impact

Purpose The purpose of this paper is to analyze the impact of IFRS mandatory adoption on accounting conservatism and to shed light on the drivers of such impact. Design/methodology/approach Using a sample of listed firms for five Latin American countries, the authors analyze the relation between mandatory adoption of International Financial Reporting Standards and the conditional accounting conservatism of earnings. Findings The authors find evidence that IFRS adoption boosts earnings conservatism. This result is robust and heterogeneous. The results also show that the effect of IFRS differs across firms and countries. Specifically, the impact of IFRS adoption is higher for low-earnings-quality firms and for firms with high levels of investment opportunities. Practical implications The results suggest that IFRS adoption in Latin America has enhanced comparability of financial information both across and within countries. Originality/value This paper contributes to the literature by providing new evidence on the drivers of the impacts of IFRS adoption in emerging markets.

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