scholarly journals The Value Relevance of Aged Goodwill: A South African Study

2019 ◽  
Vol 23 ◽  
Author(s):  
Fatima Zahra Omarjee ◽  
Yaeesh Yasseen ◽  
Waheeda Mohamed
Keyword(s):  
South African ◽  
Financial Reporting ◽  
Value Relevance ◽  
Accounting Standards ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Accounting Practice ◽  
African Context ◽  
Subsequent Measurement ◽  
Is Value

The purpose of this study was to determine whether goodwill, which is measured in accordance with International Financial Reporting Standard 3 (IFRS 3), is value relevant at acquisition and as time progresses, for a period of two years after acquisition. Using the Ohlson model, 126 JSE firm-year observations were tested. It was subsequently found that goodwill was not value relevant at acquisition date but did become value relevant as time progressed. The possible reasons for goodwill not being value relevant at acquisition are attributed to the manner in which IFRS 3 requires goodwill to be measured, the allowance of provisional values under IFRS 3, and the complexities associated with complying with IFRS 3. Goodwill being value relevant as time progresses is attributed to the subsequent measurement requirements of IFRS 3, in particular the annual impairment testing requirement as opposed to the previous amortisation requirements. This study was conducted in a South African context where limited studies on goodwill have taken place. The results are deemed to be useful to investors and standard setters as they hold implications for goodwill accounting practice and changes to goodwill accounting standards.

scholarly journals A critical analysis of the meaning of the term ‘value’ in Section 30(6)(e) of the Companies Act

2018 ◽  
Vol 21 (1) ◽  
Author(s):  
Mareli Dippenaar
Keyword(s):  
South African ◽  
Financial Reporting ◽  
Intrinsic Value ◽  
Historical Analysis ◽  
Fair Value ◽  
Research Approach ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Intended Meaning ◽  
African Context

Background: Sections 30(4) and 30(5) of the Companies Act 71 of 2008 (the Act) require, inter alia, disclosure of the remuneration received by each director in a company’s annual financial statements. Section 30(6) defines the term ‘remuneration’, which includes, inter alia, in Section 30(6)(e) the ‘value’ of any option or right granted to a director, as contemplated in Section 42, which deals with options for the allotment or subscription of securities or shares of a company. It is uncertain what the intended meaning of the term ‘value’ is in this context and it is interpreted differently by different companies in practice. Aim: The objective of this study was to understand the meaning of the term ‘value’ in Section 30(6)(e) of the Act (including the date of measurement thereof), as intended by the legislature. Setting: This article examined existing literature in a South African corporate and legislative environment. Method: A non-empirical study of existing literature was conducted by performing a historical analysis within a South African context. A doctrinal research approach was followed. Results: Possible interpretations of the term ‘value’ include the grant date fair value of the rights, the fair value at reporting date, the fair value on vesting date, the expense calculated in terms of the International Financial Reporting Standard on share-based payments, the gain on exercise of the rights and the intrinsic value on reporting date. It is submitted that the most likely meaning is the grant date fair value. Conclusion: It was found that the meaning of the term ‘value’, for purposes of Section 30(6)(e) of the Act, is unclear and interpreted differently by different companies. It is, therefore, recommended that the wording of Section 30(6)(e) is amended to reflect the meaning intended by the legislature.

scholarly journals Lobbying na Regulação Contábil: Evidências do Setor Petrolífero

2014 ◽  
Vol 25 (65) ◽  
pp. 124-144 ◽  
Author(s):  
Odilanei Morais dos Santos ◽  
Ariovaldo dos Santos
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Status Quo ◽  
International Accounting ◽  
International Accounting Standards ◽  
Discussion Paper ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
International Accounting Standards Board

Este trabalho tem como objetivo identificar os fatores determinantes à submissão de cartas comentários, como estratégia de lobbying no contexto da regulação contábil, à audiência pública do Discussion Paper Extractive Activities do International Accounting Standards Board IASB).Os resultados mostram o tamanho como fator determinante, em todas as modelagens utilizadas, indicando que grandes empresas petrolíferas possuem maior probabilidade para realizar lobbying. Essa propensão é verificada para posicionamentos essencialmente desfavoráveis às propostas apresentadas pelo IASB, o que implica em considerar que a revisão/substituição do International Financial Reporting Standard -IFRS6 será um processo complexo e sujeito a pressões por parte das empresas petrolíferas para manter o status quo.

Accounting Standards and Earnings Quality — Evidence from Registered ADRs

2018 ◽  
Vol 21 (04) ◽  
pp. 1850022
Author(s):  
Yaseen S. Alhaj-Yaseen ◽  
Kean Wu ◽  
Leslie B. Fletcher
Keyword(s):  
Financial Reporting ◽  
Earnings Quality ◽  
Accounting Standards ◽  
Securities And Exchange Commission ◽  
High Quality ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
The Us ◽  
Us Gaap

This paper examines the changes in earnings quality of registered American Depositary Receipts (ADRs) as a result of switching accounting standards. We aim to shed light on the potential impact of International Financial Reporting Standard (IFRS) adoption on US firms. A suboptimal approach to achieve this goal is through examination of US firms’ surrogates such as ADRs. Unlike previous studies, we made a distinction between registered and unregistered ADRs and affirmed that registered ADRs are the closest surrogates with which to conduct our analysis because they are exclusively required to adhere to the Securities and Exchange Commission (SEC)’s stringent disclosure requirements. When cross-listing their equity on the US exchanges, foreign issuers can file their financial reports with the SEC using IFRS, US GAAP (generally accepted accounting principles), or their domestic GAAP with reconciliation to US GAAP. An improvement in earnings quality is documented when ADRs adopt US GAAP or IFRS versus domestic GAAP. However, when the comparison is made between US GAAP and IFRS, no difference in earnings quality is documented. These results indicate that switching to high-quality accounting standards is likely to improve earnings quality. This improvement is maximized when the difference between reporting standards is high and minimized if otherwise. Our conclusion is that the adoption of IFRS in the US is unlikely to change earnings quality of local issuers. Moreover, we drew a distinction between reconciliation with and adoption of high-quality accountings standards and find that while the former can enhance earnings quality, the latter can further improve it.

scholarly journals The Value of Discretion in Africa: Evidence from Acquired Intangible Assets Under IFRS 3

2020 ◽  
Vol 55 (02) ◽  
pp. 2050008
Author(s):  
Abongeh A. Tunyi ◽  
Dimu Ehalaiye ◽  
Ernest Gyapong ◽  
Collins G. Ntim
Keyword(s):  
Financial Reporting ◽  
Intangible Assets ◽  
Value Relevance ◽  
Managerial Discretion ◽  
African Countries ◽  
Target Firm ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Main Hypothesis

This paper examines the value of managerial discretion in financial reporting by exploring the value relevance of intangible assets acquired in business combinations (AIA) before and after the 2008 International Financial Reporting Standard (IFRS) 3 amendment. The 2008 IFRS 3 amendment gave managers the discretion to recognize previously unrecognized intangibles in the target firm, hence, we posit that if managerial discretion improves the quality of financial reporting, we should observe an increase in the value relevance of AIA after the amendment. Our empirical analysis is based on a dataset of 603 mergers announced between 2004 and 2016, across seven African countries. Consistent with our main hypothesis, we find that the value relevance of AIA, predominantly acquired goodwill (AGW), increased after the amendment, suggesting that managerial discretion improves the quality of financial information. Our results further show that the value of discretion is moderated by the underlying institutional quality, with the value relevance of AIA being greater in high-quality institutional contexts. Our findings are robust to alternative measures of AIA, alternative models for testing value relevance, and various controls for endogeneity. Overall, our findings have important implications for accounting standard-setters, governments, investors, and practitioners.

scholarly journals Does integrated reporting enhance the value relevance of organizational capital? Evidence from the South African context

2019 ◽  
Vol 20 (5) ◽  
pp. 642-661 ◽  
Author(s):  
Maroua Tlili ◽  
Hakim Ben Othman ◽  
Khaled Hussainey
Keyword(s):  
South African ◽  
Financial Reporting ◽  
Quantitative Methods ◽  
Value Relevance ◽  
South African Context ◽  
Organizational Capital ◽  
The South ◽  
Integrated Reporting ◽  
Content Type ◽  
African Context

Purpose Despite the growing literature on integrated reporting (IR) adoption and the emphasis on integrated thinking capitals, prior research works only focused on the financial and non-financial reporting rather than the cornerstones of IR. In order to fill this gap, the purpose of this paper is to investigate the value relevance of organizational capital (OC) after the mandatory adoption of IR in South Africa over the period 2006–2015. Design/methodology/approach The authors have used quantitative methods to test the hypotheses. The South African context is unique since the Johannesburg Stock Exchange is the first to mandate listed firms to adopt IR following King III report in March 2010. Findings The findings provide the first evidence, to the best of the authors’ knowledge, on the positive and significant impact of IR adoption on the value relevance of OC. Originality/value The authors contribute to IR literature by providing new insight on the value relevance of one capital from a new perspective addressing the importance of resources as inputs to the business model highlighted by integrated thinking in the IR framework. The findings derive various implications for the International Integrated Reporting Council, managers, decision makers and the research community.

International Financial Reporting Standards and Value Relevance of Accounting Information: A Mult-Institutional Perspectives from Nigeria Quoted Firms

2018 ◽  
Vol 2 (2) ◽  
pp. 1-14
Author(s):  
Davies Stanley Diepiriye
Keyword(s):  
Financial Reporting ◽  
Oil And Gas ◽  
Value Relevance ◽  
Accounting Information ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Financial Reporting Standards ◽  
Oil And Gas Firms

This study examined the effect of International Financial Reporting Standards on value relevance of accounting information of quoted firms in Nigeria. The objective is to examine if International Financial Reporting Standards affect value relevance of accounting information. The study focus on the commercial banks, manufacturing firms, insurance, government agencies and the oil and gas firms, questionnaires were structured and administered to accountants and finance managers. The data analyses adopted was the simple percentages and correlation coefficient. The results found a coefficient of 85.1 %, R2   and adjusted R2   of 60.3% and 51.4 %. We conclude that there is significant relationship between International Financial Reporting Standard and value relevance of accounting information   of quoted firms in Nigeria. We therefore recommend full compliance to the International Financial Reporting Standard, audit firms should adopt fully the International Financial Reporting Standard and Nigerian accounting bodies such as Institute of Chartered Accountants of Nigeria and Association of National Accountants of Nigeria should endeavor to encourage the auditing firms on the relevance of adopting International Financial Reporting Standard.

Power of Capitalism on Banking Accounting Practice in Indonesia

2015 ◽  
Vol 11 (1) ◽  
Author(s):  
Nanang Shonhadji ◽  
Unti Ludigdo ◽  
Gugus Irianto ◽  
Ari Kamayanti
Keyword(s):  
Financial Reporting ◽  
Historical Materialism ◽  
Basic Structure ◽  
Capitalist Class ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Economic Interests ◽  
Global Society ◽  
Accounting Practice ◽  
History Of

Marxists argue that the history of human civilization is based on economic interests or basic structure. The International Financial Reporting Standard (IFRS) in Indonesia is part of historical materialism, conceived in the form of ideas and concepts by the organic intellectuals of the respective social organization, economy, and international politics. This study explores the interest of the global society toward the IFRS implementation. This is done to promote the spirit of liberalism, which must be as more profitable for the capitalist class. The bankers and accounting associations were interviewed. It was found that IFRS is the political and economic interest of the global society for making the banking practice in Indonesia. It was also found that the creation of capitalism hegemony is formed through the consensus of the interests of capitalist society.

scholarly journals The extent of segmental reporting and its value relevance: cross-country evidence

2018 ◽  
Vol 8 (2) ◽  
pp. 279-299 ◽  
Author(s):  
Ghassan H. Mardini ◽  
Yasean A. Tahat ◽  
David M. Power
Keyword(s):  
Financial Reporting ◽  
Value Relevance ◽  
Annual Reports ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Equity Prices ◽  
Policy Makers ◽  
Content Type ◽  
Share Prices ◽  
Ifrs 8

Purpose The purpose of this paper is to examine the extent of segmental reporting disclosure and its value relevance to a sample of Qatari and Jordanian listed companies following the implementation review of the International Financial Reporting Standard (IFRS) 8. This was the first standard to be subjected to a post-implementation review. Annual reports are initially analyzed to investigate the level of segmental information that was published by companies in these two countries. Design/methodology/approach Using the Ohlson (1995) model, the study employs regression analysis to test the hypotheses relating to the value relevance of the segmental disclosures uncovered. In addition, one-way ANOVA and Kruskal-Wallis tests are used to investigate any variation in segmental reporting among sectors. Findings The findings indicate that the amount of segmental information disclosed by the sample firms differs across sectors. Moreover, the segmental information provided (including the number of segments and the amounts of disclosure) is value relevant and can explain the variations in firms’ share prices. Practical implications The results of the current investigation have implications for policy makers, including the International Accounting Standards Board, as well as for accounting regulators in Jordan and Qatar. They suggest that the segmental disclosures supplied under IFRS 8 are value relevant for equity prices in a developing country context. Compliance with IFRS 8 should thus be monitored to ensure that all firms provide the segmental disclosures that they are meant to supply under the terms of the standard. Originality/value This paper is one of the few to provide empirical evidence on the role of segmental reporting following the post-implementation review that was conducted for IFRS 8.

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