September 2016 (Global Review of Accounting and Finance)

September 2016 (Global Review of Accounting and Finance)

Total Articles - 12

Pages 1 – 14

Author: Maria Stefani Osesoga and Jinn-Yang Uang

This study examines the effect of convergence with IFRS in Indonesia on the quality of earnings reporting. Using manufacturing companies listed in the Jakarta Stock Exchange in the years from 2009 to 2014, we find that earnings reported under the IFRS convergence period has a higher earnings response coefficient than earnings reported under the period of previous Indonesian GAAP. This finding lends support to the contention that IFRS convergence can increase investors’ belief in earnings quality. Taken together, this study provides evidence indicating that converging national accounting standards with IFRS in emerging capital markets may improve accounting quality.

Pages 15 – 31

Author: Sakib Bin Amin, Quazi Shafwat Zareen Annoor, Lamia Lazmi Khandker and Hiroto Nakagawa

Electrification has now become the crucial factor that drives economic development in any developing country. Existing literature have shown a direct positive correlation between poverty diminution, increase in employment, an increase in the standard of living, technological and knowledge diffusion with the increasing rate of electrification. Electrification helps induce productivity and skills development by enabling longer work hours by lighting up workplaces and powering up technological devices like computers. Electrification is also expected to improve access to information, social and financial services, and improve access to better healthcare through modern diagnostic machines. Electrification opens up tremendous opportunities to boost the economic development and solve social problems along the way, like the elimination of poverty. The aim of this study is to examine the causal relationship between electrification and economic development in Bangladesh over the period 1990-2015 and to check whether the empirical evidence supports the conventional hypothesis as discussed above. We would like to address the following question: Can electrification enhance economic development? We considered a bivariate model and performed the Augmented Dickey-Fuller (ADF) and test to check if the variables are stationary, either at their level or first differences. Using Johansen cointegration method, the empirical findings show that there exists long run cointegration between the variables. Next, we applied the Granger causality test, and our results revealed that electrification plays a vital role in the economic development in Bangladesh. Thus, Bangladesh should take more rigorous steps for electrification throughout the country.

Pages 32 – 42

Author: Khalid A. Alanzi

The purpose of this study was to expose and assess the influence of lecture attendance (absenteeism) on the academic performance of accounting students studying Cost Accounting. Due to the deficiency and the inconclusive findings of prior studies, this study contributed remarkably to the existing body of research. Correlation and linear regression (OLS) analyses using a sample of 232 students from the College of Business Studies, one of the tributaries of accounting education in Kuwait, during 2013/2014 and 2014/2015 academic years were used to test the study's hypotheses. The results indicated that there was a statistically significant and negative relationship between absenteeism and students' performance, which explained the influence of absenteeism on accounting students' performance, with and without controls for other factors. The study concludes by considering the implications of these findings on the administration of the College of Business Studies and similar educational institutions as well as accounting instructors, and suggests avenues for future research by expanding absenteeism research in other accounting subjects and in different educational environments.

Pages 43 – 56

Author: Jean-Paul Mereaux and Jimmy Feige

Human capital is a strategic resource. Human capital impacts on the stock-exchange valuation of listed companies. It can interest both shareholders and employees when its measure contributes to develop training (Wyatt & Frick 2010). Its assessment requires defining good indicators to measure the value of human capital. Many studies are about human capital accounting. However, measuring human capital is so complicated. In accounting, human capital is then estimated in a very restrictive and careful way. To go beyond this approach, we propose an accounting and financial evaluation model based on triptych payroll knowledge skills. This model has been tested using a research-intervention applied to a company in the distribution sector. The initial results allow us to provide a first accounting and financial assessment of human capital.

Pages 57 – 67

Author: Rafiqul Bhuyan, Mohammad G. Robbani and John D. Russell

In this research, we offer a comparative review of corporate performance through strategic integration. We apply standard event-study method to estimate cumulative abnormal returns and compare performance on banking industry. Our findings indicate similar negative CAR performance for corporation in US, Europe, Singapore, Malaysia, and Indonesia during the T-5 to T+5 days from the event. CAR is relatively high during T+15, T+20, and T+25 from the event date for the United States, whereas, it is almost non-existent in Europe and few Asian countries. The market reaction for corporate shareholders is relatively large and positive in major Asian countries like China, Hong Kong and Taiwan compared to Europe and USA.

Pages 68 – 79

Author: Richard D. Gritta and Brian Adams

The Dow Jones Industrial Average is perhaps the world’s most widely watched stock market index. This paper examines its calculation and highlights key problems limiting its usefulness as a broad market gauge. Stock market indices are important as they are considered to be leading indicators of economic growth and are standards against which investors can measure their performance. It is important, therefore, to examine their strengths/weakness. The Dow is computed as an unweighted arithmetic mean. The paper will also discuss several other important indices, such as the Standard and Poor’s Industrial Average, the S&P average and others, that are in the form of weighted means or index numbers and one that is a geometric mean. This article will also brief explore these and how they handle the problems associated with the Dow and suggest a new calculation for the Dow.

Pages 80 – 92

Author: Jinglin Li and Simon S. Gao

The dynamic trade-off theory and the market timing theory of capital structure are applied to analyze 5,923 Chinese takeover events from 2007 to 2014 with a view to identifying the influence of target capital structure (TCS), market mispricing and their interactions on takeover financing methods. It was found that leverage deviation from TCS had a significant effect on the choice of takeover financing methods and the choice was affected by market timing. Overleveraged bidders and overvalued bidders tended to choose equity financing, compared to underleveraged and undervalued counterparts. Also, the influence of TCS on takeover financing had the market timing effect. The results suggested both the dynamic trade-off theory and the market timing theory of capital structure had explanatory power in interpreting takeover financing choice, although the dynamic trade-off theory seemed to be more influential.

Pages 93 – 111

Author: Alhassan Haladu, Usman Sani Kofar Wambai and Mohammed Sani Abubakar

The study is primarily aimed at determining whether any significant relationship exists between environmental reporting and the economic performance of local and foreign companies in the petroleum industry. Pollution with regards to oil spillage, gas flaring and other ecological damages like toxic release by the petroleum industry have attained a level of devastating proportion leading to insecurity and human sufferings of epidemic proportion. True accountability in the sector will go a long way in alleviating these sufferings. All oil and gas firms quoted in the NSE were used in this research with four independent variables representing profitability, company size, financial leverage and market-to-book value. Data obtained was analysed with the use of robust regression tool of analysis. Results showed among other things, a significant relationship between environmental reporting and the economic performance of companies in the petroleum industry in general. Also local firms have a stronger environmental disclosure rate than foreign firms even though the rate of influence of foreign firms is more significant. Moreover, the research applied the latest version of GRI (G4) to examine a developing economy. In the light of this it is highly advisable that the current level of environmental disclosure be maintained and improved and mandatory environmental disclosure policies be embarked upon. The major limitation of this study however, lies in the fact that only registered firms in the NSE were considered.

Pages 112 – 128

Author: Rosnia Masruki, Khaled Hussainey and Doaa Aly

A good report should satisfy the expectations of the users based on their need of information. The present study views the users as a wide range of stakeholder groups as the concerned under the banner of public accountability, in which it explicates the right of the public to information about public sector organisations in discharging their accountability. Due to this, public managers are accountable to provide satisfactory information to the public for their actions and inactions to prevent any sanctions. SIRCs are not exempt. This study aims to identify the stakeholders’ expectations of information disclosure from the SIRCs annual reports by conducting an online questionnaire survey. Such annual reports consist of financial and non-financial information, the fact that the annual report is the only single document that can provide information comprehensively about the reporting entity as that commonly practiced among the companies. The findings reveal that both financial and non-financial information disclosure are important. External stakeholders expected more information from the SIRCs’ annual reports than SIRCs themselves. However, on average there is no significant difference in the responses of the disclosure items between internal and external stakeholders. But, there is significant difference across the six sub-stakeholder groups. Strategic information is the only information category significantly different. Nevertheless, comparing means for each of the disclosure item in every category of information, it infers several significant differences in their information expectations. As such, this study can be an avenue for future development of reporting framework to fairly satisfy the expectations of multiple stakeholders specifically for SIRCs in Malaysia yet it might be useful also for other not-for-profit (NPO), charities, religious bodies and public sectors in other countries.

Pages 129 – 139

Author: Aduldech Klong Klaew, Behrooz Gharleghi, Tan Hui Min and Benjamin Chan Yin Fah

The purpose of this study is to identify the major challenges toward inward foreign direct investment in Thailand by examining some critical factors. According to the UNCTAD World Investment Report 2013, Thailand was among the 8 priority destinations for foreign investment for the period of 2013-2015, gaining fourth place in the previous year. As a result, Thailand is an important destination of Foreign Direct Investment. Thailand has always been referred to as a developing country which has been successful in pursuing an export-led growth strategy (Brimble and Sibunruang, 2002). Although, Thailand is one of the best countries to invest on the business by foreigners, at the same time there are some factors that may challenge the foreign investors such as management of Thai’s government, complexity of commercial law in the country and the problem of marketing system. A quantitative research approach is carried out to identify the significance of the above factors toward inward FDI. Self-administrated questionnaire distributed through convenient non-probability random sampling method to collect the data for above challenges and finally 197 usable questionnaires out of 220 is utilized to obtain the results. Reliability test, Pearson correlation test, and regression analysis were implemented to identify the relationship among these variables. The results indicate that poor management as well as complexity of commercial law are the major challenges faced by investors. While marketing system found to be insignificant.

Pages 140 – 156

Author: Rima Rosa Chaar Hakim

Nowadays, accounting graduates are expected to possess a wide set of technical and generic skills to meet the requirements of the work place. Most employers find that accounting university programs are unable to provide graduates with the skills that are required by the profession. The aim of this research is to examine accounting graduates’ self- assessment and employers’ assessments of skill sets acquired in the accounting university programs. During the period April – May 2014, a quantitative study was done involving data collection from 70 accounting employees at entry level and 70 practitioners. The study also assesses the perception of employees and employers of the importance of technical and non-technical skills at entry level employment in accounting. Moreover, the fresh graduate’s job satisfaction during their first year of work was investigated. Findings suggest that there is an existing perception gap between employers and the newly hired employees about the preparedness of the latters and about the importance of the skills required by the profession. Results revealed that there is a positive significant relationship between the employee’s self-assessment and his/her job satisfaction. This empirical study provides a deeper understanding of the skills expected for accountants to succeed in their professions. It also assesses the accounting education in Lebanon, a representative middle-eastern developing country, and suggests approaches to narrow the education gap.

Pages 157 – 173

Author: Yee-Chy Tseng, Ruey-Dang Chang, Chun-Ju Fang and Chih-Feng Liu

The purpose of the study is to investigate the value-relevance of the accounting information of the affiliated business groups and how the concept of “main auditing auditors” moderates the above value-relevance. Empirical results of data obtained from Taiwan indicate that the value-relevance of book value is significantly higher for the non-affiliated business groups, but the earnings information of the affiliated business groups obtains more trust and approval from investors. As for the external monitoring mechanism, when the affiliated business groups are audited by the same auditors, the value-relevance of accounting information is higher and the same effect would take place when the affiliated business groups are audited by the Big 4 auditors.

Total Articles- 12

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