US GAAP Conversion To IFRS: A Case Study Of The Cash Flow Statement

International Reporting Standards (IFRS) has become the required framework for most of the world financial market economies as of January 1, 2011. This includes, in a non-comprehensive listing, the many European Union countries - Canada, Australia and New Zealand. In the United States, US Generally Accepted Accounting Principles (GAAP) is still required. However, plans are presently in place by the SEC to abandon US GAAP and to adhere to IFRS requirements by as early as for the period ending December 31, 2014. As such, it is important to introduce IFRS accounting rules in the college curriculum and make it a major component of accounting classes. This case study takes a US GAAP Prepared Cash Flow Statement and, based on the facts of the case, requires students to prepare an IFRS-based Cash Flow Statement. The need to understand both US GAAP and IFRS rules is required to adequately address this case study, which is most suitable for an Intermediary Accounting, Accounting Theory and a Financial Statement Analysis class, as well as an Investment Finance course, at the graduate level

Development of Payment System: Case of Central Bank in Bahrain

This study analyses the payment system of the Central Bank of Bahrain based on interviews with bankers in addition to distributing 70 questionnaires to seven banks. The study presents the historical development of the Central Bank of Bahrain and reviews related studies. The results show that the value relevance of the payment system is important and there are various new tools for implementing this system. Further, the analysis reveals that there is a need to develop the infrastructure to fit the needs of Bahrain as the financial capital of the Middle East

The Information Content of Economic Value Added and Residual Income - Evidence from Jordan

The objective of this study is to supply independent empirical evidence on the information content of Economic Value Added (EVA), accounting earnings measures and residual income (RI). The other objective of this study is to boost interest in EVA in the business press, along with boosting the use of EVA by companies and increasing its use in the field of academics. 39 Jordanian industrial shareholders companies represent the study sample from 2002 to 2010. The study findings reveal that net income (NI) exceeds residual income (RI) and economic value added (EVA) in forecasting ability for stock returns. It should be noted that the findings do not back Stern Stewart & Co. claims that economic value added is better in comparison to different methods in accounting for stock prices and returns. Keywords: Information Content, Economic Value Added, Amman Stock Exchange, residual income, Stock Returns

Earnings and Stock Returns Models: Evidence from Jordan

Customary accounting performance measures, like that of ROA, ROE and EPS is all frequently being used as the foundation when it comes to appraising a company’s operating performance. It is the foundation of managerial compensations when it comes to bonus plans. All empirical research studies have shown that accounting based performance measures have a positive association when it comes to stock returns and it clarifies the important proportions of variations of stock returns. (67) Companies represent the study sample for the period 2004-2011, the number of observations is (460) company-years measures. The main findings indicate that the three models show that earnings and stock prices are positively and significantly related and the forecasting ability of return and differenced models are lower than price models. Based on these results we recommend that improvement of the return-earnings relation through aggregation of stock earnings and returns over a long period of time. Keywords: Stock Returns, EPS, Return-Earnings Models, Amman Stock Exchange

The Incremental Information Content of Net Value Added An Empirical study on Amman Stock Exchange

The aim of this study is to examine the information content of net value added in regard to enterprise profitability and its market value. Moreover, the study attempts to examine whether net value added information has incremental information content above that of earnings figure and the enterprise book value. (40) Industrial and service companies listed in Amman Stock Exchange represent the study sample during the period 2001-2010. Regression analysis is employed to examine the study's hypotheses. The study reached to the following results: 1- There is a significant and positive relationship between earnings figure of the current year and earnings figure of the next year. 2. Net value added does not have an incremental information content regarding future profitability above that of current profitability. 3. There is positive significant relationship between market value of common equity and book value of common equity. 4. The earnings figure provides incremental information content regarding market value above that of book value. 5. Net value added does not have an incremental information content regarding market value above that of book value and earnings figure.   Keywords: Net Value Added, return on equity, Information Content, Jordan

EPS and EVA Forecasting Ability for Industrial Jordanian Companies

This study investigates the relationship between Economic Value Added (EVA) and Earnings per Share (EPS) and provides empirical evidence on the information content of EVA from Manufacturing Corporation listed on Amman Stock Exchange. The problem statement to be analyzed in this study is: Does current economic value added have incremental information content relative to current earnings per share components when predicting future earnings per share? Based on correlation and multiple regression analyses, we show that current earnings can predict future earnings, current earnings components can predict future earnings and current economic value added does not have incremental information content relative to current earnings components when predicting future earnings. Keywords:Earnings per Share, Economic Value Added, Accruals, Cash Flow from Operating Activities

Naive Investor Hypothesis Application in Jordan

When it comes to the manipulation of earnings the use of accounting accruals is preferred because it maximizes incentives. A study sample consisting of 44 industrial companies, listed in Amman Stock Exchange during the period (2004-2011), examining the five models of the study’s hypotheses is done using Regression analysis to present the relationship between accruals, risks and stock prices. The incremental information content for the variables was obtained using (Adjusted-R2) and found the following results: Future profitability in Jordanian companies can't be predicted by stock market prices, and; accruals have incremental information content when predicting future profitability relative to stock market prices and profitability. Lastly, naive investor hypothesis is tested and the findings indicate that there is a relationship between bankruptcy and systematic risks in one side and accruals in the other. Keywords: Accruals, Abnormal Accruals, naive investor hypothesis, Financial Risks, Stock prices

The impact of foreign ownership on corporate governance: evidence from an emerging market

This research explores the influence of foreign ownership on non-financial public shareholding firms in the Amman Stock Exchange (ASE). The study involved an investigation into the connection between non-Jordanian ownership and the company growth opportunity, stock liquidity, leverage, dividend policy and business output. The results highlight that foreign ownership can provide improved corporate governance practices by playing a decisive role in increasing the growth opportunity and enhancing the firms’ market valuation, as measured by Tobin’s Q. Moreover, the findings indicate that companies with foreign board membership have better operating performance and higher firm value. The rewards were reaped by foreign investors based on their superior monitoring ability, which affects the decisions made and actions taken by management

The Long-term Relationship Between Enterprise Risk Management and bank Performance : the missing link in Nigeria

This study investigates the relationship between Enterprise Risk Management adoption and implementation, and the performance of banks using a sample of four out of the seven Strategically Important Banks (SIB) listed on the Nigerian Stock Exchange covering the period from 2005 q1 to 2015 q2. In this study, we determined a measure for Enterprise Risk Management (ERM) adoption or implementation (ERM index) using an integrated Enterprise Risk Management measurement model for the banking sector suggested by Soliman and Mukhtar (2017). A time series Johansen’s cointegration test was used to obtain evidence of the long-term association between ERM and performance, while Vector Error Correction Model (VECM) analysis was performed to gather evidence of causality relationship between ERM and performance. Finally, Generalized Impulse Response Function was used to obtain evidence of how performance responds to the introduction of a shock on Enterprise Risk Management. This study makes significant contributions to the existing body of knowledge, as it yields the first Enterprise Risk Management-performance-based empirical results that indicate a long-term relationship, causation effects, in addition to responding to performance ERM

Earnings manipulation in acquiring companies: An overview

This study addresses earnings manipulation actions under certain circumstances. Many studies have shown that bidding companies experience abnormal negative returns after undertaking bids. This anomaly requires an explanation from an accounting perspective, as a linkage between accruals and stock returns would yield insight into such observations. This paper addresses earnings manipulation in general and in the context of takeover bids, describes potential factors related to mergers and acquisitions, and suggests a methodology to provide empirical evidence to explain the decline in bidding companies' performance post takeover that causes abnormal negative returns. This study seeks to extend earnings manipulation studies using a takeover perspective and suggests a link between accounting policies around a takeover and stock return behaviour during the same period