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 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

The impact of income smoothing on earnings quality in emerging markets: Evidence from GCC markets

Purpose – The purpose of this paper is to assess the practice of income smoothing in the Gulf Cooperation Council (GCC) emerging markets; Saudi Arabia, Kuwait, United Arab Emirates, Oman and Qatar. Then, to examine the impact of income smoothing on the earnings quality to decide whether income smoothing can serve as either a tool to enhance earnings quality or a tool for opportunistic behavior. Audit quality and corporate governance as additional factors are considered in this study. Design/methodology/approach – The study methodology measures income smoothing behavior based on the coefficient of variation method. Earnings quality is measured as an outcome of the explained variations in stock returns by earnings based on the efficient market hypothesis. Audit quality is measured based on brand as higher quality assigned to auditor from any of the Big 4, while the corporate governance is addressed based on the extent of governmental ownership. The initial study sample comprises 55 companies over a ten year period, from 1999 to 2008; the final sample represents approximately 64 percent of the industrial sector that have public data during the study. Findings – The results suggest that income smoothing behavior in the GCC markets has many variations in practice. Income smoothing, on average, improves earnings quality in three countries out of four, but not significantly for the whole sample based on earnings level. The earnings changes model demonstrated a positive and significant impact of income smoothing on earnings quality. Audit quality and earnings quality have a positive relationship within the region, and companies dominated by the government perform well in accordance with the earnings-return model. Research limitations/implications – The study is limited to the industrial sector of the GCC. Practical implications – The study opens the door to future applications to other sectors within the GCC, same sectors and other sectors for Middle East countries and other emerging markets. Social implications – The study may foster a better understanding of accounting practices in the GCC and Middle East. The study reveals variations in different aspects among GCC countries, this matter should be considered in separate studies across different areas. Originality/value – The study makes an original contribution to being the first to explore this topic in the GCC. Additionally, this study shows that the GCC markets have different characteristics in the practice and impact of income smoothing on earnings’ quality. Further, audit quality and corporate governance was investigated for each country and for the region, in addition to the interaction between these factors with the income smoothing and earnings quality

An Empirical Analysis of Output, Interest and Money: The Case of Jordan

This paper investigates the dynamic interactions among money, interest rates, and output (GDP). The Generalized Impulse Response Functions and the Generalized Forecast Error Variance Decomposition are computed in order to investigate interrelationships within the system. The results reveal that a shock to the interest rate has a negative impact on money (M2). The negative impact on M2 is inconsistent with the view that a rise in the interest rate leads to an increase in deposits or in bank loans, which in turn results in an increase in money supply. The impact of the interest rate on GDP is positive. The positive effect of the interest rate on GDP is in contradiction with a theoretical relationship where interest rates have a negative impact on output

Causal relations among different sizes of stock returns, interest rates, real activity, and inflation

This paper investigates the causal relations and dynamic interactions among the different sizes of stock returns, interest rates, real activity, and inflation. The generalized impulse response functions and the generalized forecast error variance decomposition are computed in order to investigate interrelationships within the system. Results reveal that Unrestricted Vector Auto Regression outcome is a function of the size of stock returns. Specifically, the results suggest that the stock returns for the fifth and tenth deciles are leading indicators for future macroeconomic performance. However, stock return for the first decile leads the inflation rate and real interest rate but does not lead the real economic activity as represented by industrial production. © 2010, Banking and Finance Review

What type of learning journey do students value most? Understanding enduring factors from the NSS leading to responsible decision-making

Purpose The purpose of this research is to support responsible decision-making in Higher Education (HE) settings by understanding what type of learning journey satisfies students most in their HE experience and what they want from the learning. Design/methodology/approach This paper analyses the key tool used to assess satisfaction factors for UK students, the National Student Survey (NSS). It adopts peculiar regression statistical tests to identify the NSS items that influence “overall student satisfaction” by reviewing responses over 9 years from accountancy students at business schools located in England. Findings The findings of the study provide evidence that students are most satisfied with a learning journey where they are part of a course that is “well organised and running smoothly”, which provides “intellectual stimulation” that helps in developing their ability to “present themselves with confidence” and provides “academic advice and support”. The findings of the paper show that students are not satisfied so much by utilitarian aspects of learning but rather those that relate to who they are and where they are in their learning journey, the level of intellectual stimulation they have experienced, the self-confidence they have developed and the supportive relationship they have developed with academics. A factor that did not relate highly was “assessment and feedback” which has been the focus of much university resource. Results show the factors that impacted overall satisfaction are most related to students wanting to develop personal responsibility. These findings shape the key principles of responsible design and management of HE programmes and influence strategic decision-making. Practical implications Focussing on helping students experience, the type of learning journey that develops the virtue of responsibility emergent from the analysis will not only satisfy the student but will also have a knock-on effect of improving NSS scores, university league table ranking and accreditation under the Teaching Excellence Framework. The improved reputation aspects would then feed back into increased student satisfaction (Dean and Gibbs, 2015). The findings will also help HE managers and leaders to evaluate their decisions through three lenses: responsibility, students’ experience and students overall learning journey. Originality/value Much of the information published on the NSS have been predominantly descriptive and has resulted in decisions being made for students based on uninformed analysis of the survey’s results. This study uses advanced statistical modelling to evidence the relationship between factors of the NSS and overall student satisfaction providing key information regarding students’ importance to the type of learning journey they value and that this relates to a desire in wanting to develop responsibility. This study shows the link between factors of the NSS to provide useful lenses for HE managers and leaders to use to support responsible decision-making processes

IFRS Adoption and Financial Reporting Quality in the MENA Region

• Purpose: Global interest in adopting the International Financial Reporting Standards (IFRS) has risen rapidly, however, Middle Eastern and North African (MENA) countries have reacted differently towards the international diffusion. The purpose of this study is to examine the impact of the IFRS adoption/rejection decision on the quality of MENA region firms’ financial reporting. • Study design/methodology/approach: The quality of accounting is examined through five metrics models in order to measure earnings smoothing, managing earnings towards a target, and timely loss recognition. The research sample consists of nine countries over a period of ten years (2006 to 2015) resulting in 3,040 firm-year observations in the main phase, and 2,580 firm-year observations in the additional analysis. • Findings: The findings reveal that the overall sample of IFRS adopters in the MENA region have benefited from the adoption of IFRS, as the results show that there is a reduction in earnings management for IFRS adopters in comparison to local standards adopters. The sub-sample analyses also reveal that firms that adopted IFRS, in both the rentier (oil-dependent states) and non-rentier states, have a higher financial reporting quality than non-IFRS adopters. However, the magnitude of the financial reporting quality was higher for IFRS adopters in rentier states. • Originality/value: The findings of this study contribute to the literature by revealing that countries with medium levels of governance quality have benefited the most from the IFRS adoption, while IFRS adopters in countries with stronger governance quality demonstrate lower financial reporting quality. • Research limitations: Similarly to previous research in this field, this study adopts a strict sample selection approach. Such an approach may limit the sample size, although the researchers have taken every possible step to ensure the use of an adequate sample size. The researchers acknowledge the strict period of ten years, despite having stated its rationale and importance of a more extended period to the quest of the paper. • Practical implications: This research provides valuable input by evaluating the current status of MENA region firms’ financial reporting quality, based on their followed accounting regime. The implications of this paper result in better-informed decisions for investors as the information contents of the annual reports enhance comparisons that facilitate the further flow of investments. This research also provides significant insight into the International Accounting Standards Board (IASB). The findings of this study will assist the IASB in understanding the MENA region by measuring the consequences of the countries’ decisions on the quality of firms’ financial reporting. Keywords: IFRS; Financial Reporting Quality; MENA region; Rentier States; Governance Quality