Firm’s size, mandatory adoption of IFRS and corporate risk disclosure among listed non-financial firms in Saudi Arabia

This study examines the relationship between the mandatory adoption of International Financial Reporting Standards (IFRS) and the disclosures of corporate risk among non-financial firms in Saudi Arabia. Based on the observation of 320 firm-year from 2015 until 2017, this study reveals a positive relationship between the mandatory adoption of IFRS and the corporate risk disclosures. The relationship holds when we decompose corporate risk disclosures into financial and non-financial risk disclosures. The results are consistent for both the pooled Ordinary Least Squares (OLS) and random effects estimations. Additionally, the result is steady with all primary categories except risk management. We also provide evidence that large firms are more likely to adopt IFRS and reveal more risk information than small firms. This study’s findings are relevant for market regulators in their attempt to improve corporate risk disclosures among listed firms in Saudi Arabia.

Impact assessment of contemporary international and national accounting standards adoption: evidence from Greek hotels

PurposeThis paper aims to offer new insights on how the adoption of contemporary international accounting standards can affect the financial performance of a hotel. It provides significant input for strategic decision making in property management, especially in countries where hotels properties are given a choice between different accounting standards.Design/methodology/approachData was collected from 3-, 4- and 5- star hotels in Greece, through primary research with questionnaires, filled by hotel financial managers. Greece was selected because hotels can choose between national and international accounting standards; therefore, the research could focus on actual factors beyond mandatory adoption.FindingsMicroeconomic factors such as category or legal form of the hotel in combination with other factors can affect the perceived benefits of the selected accounting standards. Macroeconomic factors such as the overall tourism development of the destination also affect the perceived impact.Research limitations/implicationsThe research was targeted at hotel executives with knowledge and participation in decision making regarding accounting standards. This requirement limited the sample since all hotels do not have a financial manager position.Practical implicationsThe new knowledge can be utilized in property management as an element of hospitality strategic planning for improved assessment of anticipated effects resulting from the adoption of specific accounting standards.Originality/valueThe research fills a gap in existing knowledge by introducing elements not previously examined; additionally, it expands previous knowledge from other sectors to hospitality and tourism, while verifying or rejecting past findings.

After the Stock Options Boom: Changes in Equity-Based Pay Following the Mandatory Adoption of IFRS 2

This paper investigates the economic consequences of the mandatory adoption of International Financial Reporting Standard 2 (hereafter, “IFRS 2”) on firms’ choices between alternative executive compensation instruments. With a unique, hand-collected dataset that contains design elements of stock option plans, we find that the adoption of IFRS 2 affects both the decision to keep or to give up stock options and the choice of alternative equity compensation instruments. In contrast to recent evidence from the United States, we find that the majority of firms replacing stock options by other equity instruments switched to performance shares, not to restricted stock. Our dataset allows us to relate firms’ reactions to IFRS 2 to the three major rationales explaining stock option compensation practice, namely, optimal contracting, managerial rent extraction, and perceived cost. Our results suggest that all three rationales contribute to explaining changes in compensation design because firms with sophisticated option plans tend to keep their options, whereas design decisions by firms abandoning options are related to a lack of shareholder power.

Intellectual capital reporting and mandatory adoption of post-IFRS – An empirical analysis using computational linguistic tools

PurposeThe study aims to report empirical evidence on the impact of mandatory adoption of International Financial Reporting Standards (IFRS) in India on the voluntary intellectual capital reporting (ICR) and its value relevance. The study also tests the effect of term-weighting schemes used for information retrieval studies in the domain area of ICR.Design/methodology/approachThe study uses computational linguistics tools to measure ICR by Indian firms in the period 2014–2019. The study developed term frequencies for 23 ICR attributes using bag-of-words methodology from the annual reports. The word counts were used to construct two distinct measures of ICR, quantity and quality, deploying different term-weighting schemes, equal weighting and the term frequency-inverted document frequency (TF-IDF) weighting, respectively. A combination of parametric and non-parametric tests has been employed to examine the different hypothesis.FindingsThe quantity of ICR was found to have increased post-IFRS adoption. However, the quality of ICR had fallen significantly, which resulted in the loss of value relevance of ICR. Firms making higher disclosures but of inferior quality experienced suboptimal market returns. Variation in inter-firm ICR has reduced. Size effect and sector effect continue but have attenuated. The study acknowledges the enormous impact of term-weighting schemes, used for information retrieval studies, in the domain area of ICR.Practical implicationsThe study strongly adds to the momentum in favour of a formal ICR standard to improve its quality, restore its value relevance and facilitate more effective decision-making where the valuation of a firm is a critical input. The study presages the firms not to make poor-quality disclosures to avoid suboptimal stock performance.Originality/valueThe study sheds light on the impact of the adoption of post-IFRS on ICR in India. The study establishes the effect of term-weighting schemes, used for linguistic studies, in the domain area of ICR and adds to the literature by explaining one of the critical reasons for the dichotomy in ICR trends.

A Move Towards Intelligent Economy: Indian Evidence

The current study accounts for a transitional move initiated by NITI Aayog and Securities and Exchange Board of India (SEBI) recently in the form of adoption of artificial intelligence (AI) in Indian economy. Empirical analysis of data of top 500 Indian companies reveals that adoption of this transformation is likely to enhance firm performance. The annual reports of Indian companies mention the use of AI in the business, which clearly indicates that Indian economy has initiated a move towards intelligent economy. It is observed that the banking companies are using AI and chatbots at a wider scale. Firms belonging to other sectors are gradually following the adoption of AI in the business process which results in improved financial performance. The findings of the study suggest that Indian legislators should gradually move towards mandatory adoption of AI in business economy at large in line with the global trend, which began its footprints through Digital India.

اجتہاد کی اصولی مباحث اور ابن حزم کا نقطۂ نظر: تجزیاتی مطالعہ

Ibn e Ḥazm was a notable and leading scholar of al-Ẓāhirīyyah. He extended enormous research work in the multiple Islamic sciences such as principles of jurisprudence (‘Uṣūl), fiqh, and comparative study of religions & Islamic philosophy. He presents novel idea regarding juristic effort or Islamic legal reasoning (Ijtihād). Ibn e Ḥazm negates the very concept of analogical reasoning (Qiyās) and calls for mandatory adoption of ijtihad on everyone. Moreover, he mandates few necessary requirements for an Islamic jurist (mujtahid). Further elaborating his notion on this point, he presents different rankings of a mujtahid regarding their right and wrong inferences while performing juristic work. This paper presents such ideas especially discourses of principles of Ijtihād by Imām Ibn e Ḥazm.

The impact of mandatory adoption of XBRL on firm’s stock liquidity: a cross-country study

Purpose The purpose of this paper is to examine the impact of the mandatory adoption of eXtensible Business Reporting Language (XBRL) on firm’s stock liquidity. Design/methodology/approach Using a random-effects model, this study examines the impact of the mandatory adoption of XBRL (ADOPXBRL) on firm’s stock liquidity of 980 companies pertaining to 13 countries for a period from 2000 to 2016. Findings This paper finds that the mandatory ADOPXBRL affects negatively and significatively Amihud’s (2002) illiquidity ratio. Therefore, mandatory XBRL adoption enhances the firm’s stock liquidity. In addition, this paper finds that the impact of the mandatory ADOPXBRL on firm’s stock liquidity is more pronounced in civil law countries than in common law countries. Originality/value This paper contributes to the literature on the advantage of XBRL especially for the civil law countries by examining the impact of the mandatory ADOPXBRL on firm’s stock liquidity.

Audit committee quality and audit report lag: the role of mandatory adoption of IFRS in Saudi companies

This paper aims to examine the effect of audit committee characteristics on audit report lag, and also explores whether this effect will vary between before and after mandatory adoption of IFRS in Saudi listed companies. Based on a Saudi sample of 388 firm-year observations from 2015 to 2018, the Poisson regression analysis shows that among audit committee characteristics, only audit committee financial experience significantly influences the timing of financial reporting. The result indicates a weak influence of audit committees on timeliness of financial reporting, which is consistent with the results of most of previous studies. On the other hand, the results show a strong impact of the adoption of IFRS on the context of that relationship, where the results show the impact of IFRS on audit report lag, audit committee quality and the association between them.

The impact of IFRS mandatory adoption on KPIs disclosure quality

The aim of this study is to investigate context, the impact of International Financial Reporting Standards (IFRS) on the Key Performance Indicators’ (KPIs) disclosure quality in the United Kingdom (UK). We used the UK listed firms FTSE 350 in the stock exchange market during the pre-IFRS period and the post-IFRS period (2003 to 2004, and 2006 to 2013). In particular, we examine special events such as the emergence of the 2006 UK Accounting Standard Body (ASB) Guidelines for KPIs best practice, the 2010 IFRS Management Commentary, and the phenomenon of the 2008 financial crisis. The results of this paper show that the UK’s mandatory adoption of IFRS has had a positive and significant effect on the KPIs’ disclosure quality. The results demonstrate, also, that together with the emergence of the 2006 UK ASB Guidelines, the 2008 financial crisis, and the 2010 IFRS Management Commentary have had a positive and significant influence on the quantity and quality of the KPIs’ disclosure.