...Choosing Cost versus Fair Value: International Evidence from the European Real Estate Industry Upon Adoption of IFRS Karl A. Muller, III Pennsylvania State University Edward J. Riedl * Harvard Business School Thorsten Sellhorn Ruhr-Universität Bochum PRELIMINARY – PLEASE DO NOT QUOTE WITHOUT PERMISSION December 2007 ABSTRACT: We examine the determinants of investment property firms’ choice to use the cost or fair value model to account for their primary asset, real estate. Our examination exploits the European Union’s adoption of International Financial Reporting Standards, which require firms to make this choice under IAS 40 – Investment Property. We hypothesize and find evidence that firms are more likely to choose the fair value model when the firm’s pre-IFRS domestic standards permitted or required fair values on the balance sheet, and when the firm exhibits a greater commitment to reporting transparency. We also find limited evidence that firms are more likely to choose the fair value model when ownership is more dispersed, and when the property market in which they operate has higher liquidity. Overall, our results reveal both the occurrence and causes of variation in firms’ reporting choices when differing accounting treatments are permitted. Key Terms: Fair value, accounting choice, IFRS, real estate, investment property, IAS 40 JEL Classification: M41, G15, G38 Acknowledgements: We appreciate useful discussion and data assistance...
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...European Journal of Accounting, Auditing and Finance Research Vol.4, No.7, pp.23-42, July 2016 ___Published by European Centre for Research Training and Development UK (www.eajournals.org) EFFICIENCY AND ACCOUNTABILITY OF PUBLIC SECTOR REVENUE AND EXPENDITURE IN NIGERIA (1970-2014) Omodero Cordelia Onyinyechi and Prof. M.C. Okafor 1 Doctoral Student of Accounting, Micheal Okpara University of Agriculture, Umudike, Umuahia, Abia State, Nigeria. 2 Department of Accounting, Micheal Okpara University of Agriculture, Umudike, Umuahia, Abia State, Nigeria. ABSTRACT: Nigeria is the sixth largest producer of oil and gas in the world, but the average Nigerian on the street is poor and there is poor infrastructure like power supply, roads, hospitals etc. This study examines the efficiency and accountability of public sector revenue and expenditure in Nigeria (1970-2014). Data on total federal government revenue and expenditure, state governments’ revenue and expenditure were collected from Statistical bulletin from the Central Bank of Nigeria from 1970-2014. The results were analysed using relevant statistical tools. The findings reveals that the level of accountability is very poor in Nigeria because the attributes of accessibility, comprehensiveness, relevance, quality, reliability and timely disclosure of financial information, social and political information about government activities are completely non available or partially available for the citizens to assess the performance...
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...What is the effect of mandatory IFRS adoption on earning management ABSTRACT: International Accounting Standard play a important role in the world. More and more countries trend to adopt international accounting standard. Beginning in 2005, public companies in the member states of the European Union (EU) are required to apply IFRS. Ten years have passed, what is the effect of mandatory IFRS adoption on these countries, and how IFRS affect on earning management. In the paper, I will discuss this question based on some previous finding. Next, I will use IFRS 9 as a specific case for my conclusion. Finally, I will give my opinion on the effect of mandatory IFRS adoption on earning management. Key Words: Accounting Standard, earning management, IFRS, Financial Instrument, bank, impairment of asset, IAS39, IFRS 9 I. The effect of mandatory IFRS adoption on earning management 1.1 In 2012, Yi Lin Chua, Chee Seng Cheong. And Graeme Gould publish a article named “The Impact of Mandatory IFRS Adoption on Accounting Quality: Evidence form Australis. This article examines the impact of IFRS on accounting quality by focusing on threes perspectives: (1) earning management, (2) timely loss recognition, and (3) value relevance. In my paper, I will focus on earning management. First, the author talk about the reason he choose Australia. Because Australia is one of the first countries located outside of the EU that has mandated IFRS and is also the first non-EU adopting...
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...European Journal of Economics, Finance and Administrative Sciences ISSN 1450-2275 Issue 44 (2012) © EuroJournals, Inc. 2012 http://www.eurojournals.com/EJEFAS.htm Relevance of Income Levels and Income Components for Determining Firm Value Hashem Valipour Assistant Professor, Accounting Department, Firouzabad Branch Islamic Azad University, Firouzabad, Iran Tel: 00989173086986 E-mail: h.valipour@gmail.com Alireza Shahabi Accounting Department, Marvdasht Branch Islamic Azad University, Marvdasht, Iran E-mail: arshahaby@gmail.com Javad Moradi Assistant Professor, Accounting Department, Marvdasht Branch Islamic Azad University, Marvdasht, Iran E-mail: jmoradi2005@yahoo.com Abstract Income levels and its components which are presented in income statement, are the first criteria for assessing financial operation, users are quite interested in this criterion. So investigating the effect of this attraction on firm value is important. The present paper studies this matter. Statistical population is listed companies in Tehran Stock Exchange (TSE). Based on considered preconditions 49 companies selected over 1999 to 2008 and classified into three groups based on their size, small, medium and large. Regression has used for analyzing data. Findings indicate that income level and components prepare relevant information for users. Other findings show that considering firm size has negligible impact on value relevance of income level and components. Keywords: Income Statement, Relevant...
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...AFX 5860 Assignment International Studies in Banking & Finance Visit 1: UN Food and Agricultural Organization [pic] Place: Rome Italy Brief Introduction: The Food and Agriculture Organizaiton of the United Nations (FAO) is a special agency of the United Nations that leads international efforts to defeat hunger. FAO acts as a forum where all nations meet equally to negotiate agreements and debate policy, it also a source of knowledge and information which help developed and developing countries in transition modernize and improve agriculture, forestry and fisheries practices and ensure good nutrition for all (FAO, 2010). Rome Italy is head quarters. It has 191 member states as well as Europe Union and the Faroe Islands, which are associated members (FAO, 2010). FAO is composed of 8 different departments, the meeting is conducted by finance division. Relevant Key Points & Issues The fist half of the presentation briefly introduced the FAO’s role as UN’s agency, its structure, business environment and management. FAO’s mandate is contribute to the growth of world economy and to increase the level of nutrition, with the mission of helping build a food secure world. In order to achieve such mandates, they involves 4 activities which are putting information within reach, sharing policy expertise, providing a meeting place for nations and bringing knowledge to the field. It used result- based management which is an approach that integrates strategy, people,...
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...The European Accounting Review 2002, 11:1, 119–151 Accounting and capital markets: a survey of the European evidence Pascal Dumontier ` Pierre Mendes-France University, Grenoble Bernard Raffournier University of Geneva ABSTRACT The relationship between accounting information and capital markets has been the subject of numerous studies, especially in the US. The purpose of this article is to examine the corresponding evidence in Europe. This review classi es the European literature into three groups: studies of the market reaction to newly released accounting information; studies of the long-term association between stock returns and accounting numbers; studies devoted to the use of accounting data by investors and to the impact of market pressure on accounting choices. The paper reviews and summarizes the main results related to each of these topics. It also addresses some methodological issues and provides suggestions for future research. 1. INTRODUCTION Since the pioneering work of Ball and Brown (1968), the relationship between accounting information and capital markets has attracted considerable attention, to the point that it is probably one of the most popular issues in the accounting literature. The interest for this subject is legitimate, given the generally accepted statement that accounting gures are aimed at providing investors with relevant information for their investment decisions. Even if accounting data are used in various contexts such as the contracting...
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...44780 Bochum, Germany Phone: +49(0)234-32 28300 E-mail: sellhorn@iur.rub.de First Version, June 2006 This Version, July 2006 Forthcoming in: Betriebswirtschaftliche Forschung und Praxis, 58 (4), 2006. We thank Karsten Detert for some of the data used in this study. Applying IFRS in Germany – Determinants and Consequences Abstract: We address three research questions motivated by the recent ascent of International Financial Reporting Standards (IFRS) in Europe. First, analyzing the determinants of voluntary IFRS adoption by publicly traded German firms during the period 19982004, we find that size, international exposure, dispersion of ownership, and recent IPOs are important drivers. Second, using the results from this determinant model to construct propensity score-matched samples of IFRS and German-GAAP (HGB) firms, we document significant differences in terms of earnings quality: IFRS firms have more persistent, less predictable and more conditionally conservative earnings. Third, analyzing information asymmetry differences between IFRS and HGB firms, we show that IFRS adopters experience a decline in bid-ask spread of 70 base points and an average of 17 more days with price changes per year. On the other hand, IFRS adopter’s stock prices seem to be more volatile. In the light of some important limitations of our study, we discuss IFRS-related research opportunities in post-2005 Europe. Keywords: IFRS, earnings quality, earnings attributes, information asymmetry, standard...
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...European Journal of Business and Management ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.7, No.28, 2015 www.iiste.org Impact of Firm Size on Earnings Management; A Study of Textile Sector of Pakistan Usman Ali MS Business Administration National University of Modern Languages (NUML) Islamabad, Faisalabad Campus Muhammad Afzal Noor Lecturer Department of Management Sciences National University of Modern Languages (NUML) Faisalabad Campus Muhammad Kashif Khurshid Lecturer Department of Management Sciences National University of Modern Languages (NUML) Faisalabad Campus Akhtar Mahmood MS Business Administration National University of Modern Languages (NUML) Islamabad, Faisalabad Campus Abstract The study was conducted to evaluate the impact of firm size on earnings management for the textile sector of Pakistan. For this purpose annual ten years data was obtained from 2004 to 2013 for fifty selected firms from the textile sector of Pakistan. Natural logarithm of total assets was used as the proxy of firm size. On the other hand earning management was the dependent variable of this study. Earnings management was measured through discretionary accruals by using modified Jones model. Descriptive statistics, correlation and panel data analysis was used for capturing the impact of firm size on earnings management. The statistical results of this study revealed that there is positive and significant impact of firm size on earnings management. Keywords:...
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...Resources Accounting for Emission Rights Introduction Accounting for greenhouse gas emissions remains a challenge, and market participants continue to wait for clear guidance from accounting standards setters. Formative efforts on the part of those standards setters have proven unsuccessful. The International Financial Reporting Interpretations Committee (“IFRIC”) initially took on this task, and issued IFRIC 3, Emission Rights. Unfortunately, considerable pressure from both the business community and European politicians, who objected to the financial statement consequences of applying that interpretation, led to its withdrawal by the International Accounting Standards Board (“IASB”) within a year of its issuance. In the US, the Emerging Issues Task Force (“EITF”) also attempted to address the related accounting issues in EITF Issue 03-14, Participants’ Accounting for Emissions Allowances under a “Cap and Trade” Program. However, it was never finalized, and ultimately removed from the EITF’s agenda. More recently, organizations have been advised of informal views from both the Financial Accounting Standards Board (“FASB”) and the Securities and Exchange Commission (“SEC”) on the appropriate accounting for emissions allowances held, especially since EITF 03-14 was tabled. As a consequence, many companies remain confused about the appropriate accounting treatments under both International Financial Reporting Standards (“IFRS”) and generally accepted accounting principles in...
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...Energy & Resources Accounting for Emission Rights Introduction Accounting for greenhouse gas emissions remains a challenge, and market participants continue to wait for clear guidance from accounting standards setters. Formative efforts on the part of those standards setters have proven unsuccessful. The International Financial Reporting Interpretations Committee (“IFRIC”) initially took on this task, and issued IFRIC 3, Emission Rights. Unfortunately, considerable pressure from both the business community and European politicians, who objected to the financial statement consequences of applying that interpretation, led to its withdrawal by the International Accounting Standards Board (“IASB”) within a year of its issuance. In the US, the Emerging Issues Task Force (“EITF”) also attempted to address the related accounting issues in EITF Issue 03-14, Participants’ Accounting for Emissions Allowances under a “Cap and Trade” Program. However, it was never finalized, and ultimately removed from the EITF’s agenda. More recently, organizations have been advised of informal views from both the Financial Accounting Standards Board (“FASB”) and the Securities and Exchange Commission (“SEC”) on the appropriate accounting for emissions allowances held, especially since EITF 03-14 was tabled. As a consequence, many companies remain confused about the appropriate accounting treatments under both International Financial Reporting Standards (“IFRS”) and generally accepted...
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...popular due to its complexity during the global financial crisis. There were many critisms about the IAS -39 like: 1. Fair Value accounting was said to have created cycles of accounting write downs and distressed selling of assets during the financial Crisis. 2. The application of IAS-39 impairment model for loan loss provisions results in delayed recognition of losses. 3. The over complexity of IAS-39 such as mined valuation models, multiple impairment approaches, complicated transfer rules and hedge accounting requirement. Due to the above mentioned criticisms the IASB received calls to reduce the complexity of the accounting standards from G-20, European Union and regulators and other stakeholders from around the world. Thus, the new IFRS 9 comes to light to replace IAS 39. What is IFRS 9? IFRS 9 replaces the multiple classification and measurement models in IAS 39 with a single model that has only two classification categories: a) Amortized cost b) Fair value. Classification under IFRS 9 is driven by the entity’s business model for managing the financial assets and the contractual characteristics of the financial assets. A financial asset is measured at amortized cost if two criteria are met: a) The objective of the business model is to hold the financial asset for the collection of the contractual cash flows, and b) The contractual cash flows under the instrument...
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...2007-2008 Content downloaded/printed from HeinOnline (http://heinonline.org) Thu Oct 17 14:15:18 2013 -- Your use of this HeinOnline PDF indicates your acceptance of HeinOnline's Terms and Conditions of the license agreement available at http://heinonline.org/HOL/License -- The search text of this PDF is generated from uncorrected OCR text. -- To obtain permission to use this article beyond the scope of your HeinOnline license, please use: https://www.copyright.com/ccc/basicSearch.do? &operation=go&searchType=0 &lastSearch=simple&all=on&titleOrStdNo=1053-6736 EXCHANGE CONSOLIDATION AND MODELS OF INTERNATIONAL SECURITIES REGULATION Bo HARVEY* INTRODUCTION In recent years, globalization and a growing demand for capital have increased competition within the capital markets for the business of issuers and investors.! This has led stock and derivatives exchanges to change their business models from mutual business entities, run for the benefit of their members, to demutualized corporations, run for the benefit of shareholders Consequently, as for-profit corporations, exchanges have looked to position themselves more competitively in an internationalized securities market. Part of such positioning has included increasing exchange alliances and acquisitions on a global scale. This is highlighted by the recent merger between the New York Stock Exchange (NYSE) and Euronext (the new entity to be known as NYSE-Euronext). With financial markets now spilling across national borders, demutualized...
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...1 Background and Overview Part 2 US GAAP and IFRS Part 3 China GAAP and IFRS Part 4 Summary of Convergence Process Part 5 Pros & Cons of Convergence Part 6 The reasons for differences in accounting practice ww.ifrs.org + The International Accounting Standards Board + The International Accounting Standards Committee (IASC) Foundation + Objective – a single set of global financial reporting standards + Aim – convergence between national standards and international standards + IFRS Framework + IFRS SMEs + Supported by the Group of 20 Leaders (G20) who, at their September 2009 meeting in Pittsburgh, US. Country Status for listed companies as of April 2010 Argentina Required for fiscal years beginning on or after 1 January 2011 Australia Brazil Canada Required for all private sector reporting entities and as the basis for public sector reporting since 2005 Required for consolidated financial statements of banks and listed companies from 31 December 2010 and for individual company accounts progressively since January 2008 Required from 1 January 2011 for all listed entities and permitted for private sector entities including not-for-profit organizations Country China Status for listed companies as of April 2010 Substantially converged national standards European All member states of the EU are required to use IFRSs as adopted by the EU for listed Union companies since 2005 France Germany India Indonesia Italy Japan Mexico Required via EU adoption...
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...04 06 08 10 12 14 16 17 18 20 21 Time to engage Exploring the issues Key themes The academic research Is goodwill impairment testing relevant? Is goodwill impairment testing effective? What are the difficulties? Do we need all of these disclosures? What are some of the alternatives? We have three unanswered questions A call to action Appendix 1: The interviewees Appendix 2: References and notes Acknowledgements © 2014 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. Who cares about goodwill impairment? | 1 TIME TO ENGAGE On 30 January 2014, the IASB launched the public phase of its post-implementation review of business combinations accounting when it released a Request for Information.1 We believe that a key aspect of the review is the impairment-only accounting model for goodwill, which was introduced in 2004. Comments are due to the IASB by 30 May 2014, so now is the time for all stakeholders to provide their feedback on this emotive topic. The Request for Information essentially asks three questions in relation to goodwill impairment testing. • How useful have you found the information obtained from annually assessing goodwill for impairment? • Do you think that improvements are needed regarding the information provided by the impairment test? • What are the main implementation, auditing or enforcement challenges in testing goodwill for impairment? With this in mind, we interviewed a sample of stakeholders to find out what they think...
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...contemporaneous returns-earnings association set by previous empirical researches may be explained by lack of timeliness of accounting numbers. It hypothesises that if the criteria for accounting recognition yield a multi-period lag in earnings recognitions of economic events and if these events affect an informed market immediately when they occur, then future periods’ earnings would have explanatory for current returns as well as current earnings. To assess the significance of future earnings as an explanatory variable for stock returns we regress at first step annual returns on current earnings and at second step, annual returns on current earnings and successively next period and next two periods’ earnings. Results show that future earnings continue to explain current returns. The evidence is characteristic of a substantial recognition lag in earnings that extends to the immediate next period. However, over one year, earnings do not seem reflecting any relevant economic event impounded in security prices at previous period. The earnings recognition lag seems to decrease after one year. Keywords: Value-relevance, Accounting earnings, Lack of timeliness. INTRODUCTION Accounting recognition is “the process of formally recording or incorporating an item in the accounts and financial statements of an entity” (FASB 1980, SFAC N°. 3 par. 83)1. Most accounting standards have strict requirements regarding “recognition and...
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