Development of financial reporting environment in Malaysia

The purpose of our paper is to examine the development of the financial reporting environment in Malaysia. We explore the influence of environmental factors such as social, political, economic, legal and cultural in the development of accounting and Malaysia’s recent move towards the adoption of International Financial Reporting Standards (IFRS). We find that Malaysia’s colonial past and the reformation of corporate governance have significantly influenced the country’s financial reporting practices. Although there are a number of reforms in place more needs to be done in order to improve the transparency of corporate financial reporting practices in Malaysia. Our conclusion suggests the necessity to improve the quality of financial reporting practices and to build the confidence of stakeholders and potential investors. The findings of our study are particularly important to the standard-setters, regulators and accounting professionals to improve the financial reporting practices in Malaysia and other developing countries throughout the world.     

Stock Market Turmoil: Worldwide Effects of Middle East Conflicts

This paper analyzes the effect of recent political conflicts in the Middle East on stock markets worldwide. In particular, it studies how political instability—mainly due to the war in Iraq—has affected the long-term volatility of stock markets, using two approaches, Inclan and Tiao's (1994) iterative cumulative sum of squares algorithm and wavelet-based variance analysis, to detect structural breakpoints in volatility. Controlling for conditional heteroskedasticity and serial correlation in returns, the paper finds that the ongoing Middle East conflicts have had an effect primarily on the stock markets of countries in the Middle East and in emerging Asian countries (e.g., Turkey, Morocco, Egypt, Pakistan, and Indonesia). Further evidence from an international version of the capital asset pricing mechanism shows that political instability in the Middle East has had a heterogeneous effect on the sensitivity of stock returns to market and currency risks.     

Financial and external reporting research: the broadening corporate governance challenge

This study provides a critical examination of contemporary financial and external reporting research from a corporate governance perspective. Adopting Hines' social constructionist approach to financial reporting, the study investigates research into accounting publishing patterns, published reviews of major subject areas within financial and external reporting research, and interviews a sample of accounting professors in British universities. The findings reveal a strong North American economics and finance-based positivist influence, a largely uncritical acceptance of accounting's subservience to the demands of the market, a reluctance to engage major policy questions and broader reporting constituencies. These appear to be conditioned to a large degree by internal features and pressures within the academic research community. Evidence is presented for greater attention to major environmental shifts impacting accounting and communities globally, a reinvigoration of researchers' direct engagement with reporting constituents in the field, a revisiting of major accounting, business, social and environmental policy questions, and a preparedness to address today's major corporate governance concerns of communities and governments.     

The accounting profession in Egypt: Its origin and development

The purpose of this paper is to present a historical review of the evolution of accounting and the accounting profession in Egypt. Such a review aims at providing the perspectives necessary to understand and evaluate the contemporary scene. The origin of accounting practices in Egypt can be traced to ancient Egyptian civilization, and the temples exhibit paintings of early accounting records and activities. Modern accounting practices can be dated from November 1883, when Egypt adopted the Commerce ACT. In the ensuing 125 years (1883–2008), Egyptian accounting practice can be divided into three stages: record keeping (1883–1939); financial reporting under changing economic regimes (1939–1975); and the move to adopt international accounting standards in an attempt to liberalize and integrate the Egyptian economy into the global economy (1975–). Each one of these stages reflects the impact of the socioeconomic conditions prevailing at the time. The evolution of accounting in Egypt demonstrates its ability to adapt in response to changing conditions. While there are several lessons to be drawn, and their relevance is noted, it is especially important for the accounting profession to anticipate changes in order to be responsive, in a timely manner, to the changing needs of the society.     

Accounting development in Pakistan

This paper examines the origins, growth, and the development of accounting practices and disclosures in Pakistan and the factors that influenced them. We trace the early days of accounting in the Indian subcontinent and discuss the British colonial influence. We examine the development of accounting in Pakistan through three eras: Independence through 1971, Post 1971-1984, and 1984 to present. We describe how the colonial past and later the international financial institutions such as the Asian Development Bank and the International Monetary Fund played key roles in shaping accounting and reporting practices of the country. Pakistan's adoption of International Financial Reporting Standards as national standards has not led to improvement in the quality of financial reporting. We argue that Pakistan, even though classified as a common law country in literature, exhibits most of the properties of code law countries. We conclude that lack of investor protection (e.g., minority rights protection, insider-trading protection), judicial inefficiencies, and weak enforcement mechanisms are more critical to explaining the state of financial reporting in Pakistan than are cultural factors. This insight has policy implications for developing countries that are making efforts to improve the quality of the financial reporting of their business entities.     

Value relevance of earnings: Evidence from Middle Eastern and North African Countries

Researchers as well as regulators are increasingly more interested in enhancing their understanding of the factors that influence value relevance of reported earnings in financial statements. In the light of globalization and increased exposure to international accounting practices, a better comprehension of factors contributing to or reducing value relevance of earnings is essential. This paper investigates the value relevance of earnings and its components for a number of Middle Eastern and North African (MENA) countries. Additionally, the paper examines how differences in levels of mandated disclosures, source of accounting standards, and legal systems moderate the informativeness of earnings to investors. We find that mandated disclosure and source of accounting standard, (especially non-governmental source) are positively associated with earnings informativeness. Additionally, MENA countries with French civil law and systems have lower value relevance relative to countries in our sample with English and related legal codes. Further, the firms that have adopted international financial reporting standards have higher value relevance than firms in MENA countries which adhere to local standards.     

Mandatory Environmental Disclosures by Companies Complying with IASs/IFRSs: The Cases of France,Germany, and the UK

This study investigates whether the adoption of a single set of accounting standards, such as IASs/IFRSs, guarantees the harmonization of accounting practices within a country and across countries, or whether differences in reporting practices persist because of dissimilarities in reporting habits and institutional settings. To this end, we investigate whether the level of environmental disclosure under IFRSs is related to the size of the reporting firm, and the strength of legal and regulatory constraints on environmental disclosures in the country where the firm is domiciled. Results indicate (1) that environmental disclosures imposed by IFRSs increase with firm size, and (2) that firms domiciled in countries with constraining environmental disclosure regulations (i.e., France and the UK) report more on environmental issues than firms domiciled in countries with weakly constraining regulations (i.e., Germany). This suggests a strong impact of national regulations on IFRS reporting. Taken as a whole, our results support the view that IFRSs are not applied consistently across firms and across countries, notably because of persistence of reporting traditions and discrepancies in national legal requirements.     

Islam, nature and accounting: Islamic principles and the notion of accounting for the environment

Islamic principles are suggestive of a variety of implications for governance and accounting. Reflecting upon Islamic principles, we here engage with the notion of accounting for the environment. Drawing from key Islamic texts and relevant prior literature, we elaborate and discuss key Islamic principles of relevance and delineate what they suggest for accounting. Our endeavours here are consistent with a concern to contribute to a critical theoretical project seeking to develop a progressive and emancipatory universalism that is respectful of difference, a project with its accounting implications. In concluding, we point, among other things, to the irony whereby Western transnational corporations have sought to promote their particular brand of corporate social (and environmental) responsibility accounting in Arab countries, variously influenced by Islam, with little to no mention of a notion of accounting for the environment integral to and deeply rooted in Islam.     

‘We do good things,don’t we?’: ‘Blended Value Accounting’ in social entrepreneurship

This paper presents an exploratory analysis of the emergent reporting practices used by social entrepreneurs in terms of their institutional settings and strategic objectives. These reporting practices not only account for financial performance but also disclose more nuanced and contingent social and environmental impacts and outcomes. Furthermore, they act as symbolic objects expressing the market orientation of many socially entrepreneurial organizations in that they aim to provide more complete and transparent disclosure of a variety of performance impacts. Conceptually, this paper draws upon approaches developed within the sociology of accounting as institutional practice and uses three theoretical interpretations to conceptualize the function and effects of reporting, disclosure, and audit in social entrepreneurship: positivist; critical theorist; and interpretative. A discussion of five case studies leads to the development of a new theoretical construct – ‘Blended Value Accounting’ – that constitutes a spectrum of disclosure logics used by social entrepreneurs to access resources and realize organizational mission objectives with key stakeholders. Conclusions consider some further questions around socially entrepreneurial reporting practices and strategies and suggest some new lines of research going forward.     

The Impact of Adopting International Accounting Standards on the Harmonization of Accounting Practices

Over the past few decades numerous organizations have been actively participating in the efforts to improve the comparability of financial reporting. Many studies have discussed the benefits and drawbacks of comparability. This study investigated the affect on the harmonization, or comparability, of accounting practices when a sample of companies choose to use international accounting standards (IASs) when preparing financial reports.This study analyzed trends in the I index, a measure of concentration for the use of a particular accounting practice introduced by van der Tas, to determine if the choice of accounting methods by a sample of Swiss companies became more aligned with a sample of companies from three other countries. The study included a control sample of Swiss companies that did not switch from reporting using local Swiss standards during the same time period, 1988 through 1995. Four accounting practices were included; depreciation, inventory, financial statement cost basis, and consolidation practices. The practices used were compared with a sample of companies from three countries; Japan, the UK, and the US.The results indicated that across the 8-year period, the majority of the I indices comparisons were positive and statistically significant. However, the results did not support that these increases were due primarily to the adoption of IASs.     

Modeling Time-Varying Volatility and Expected Returns: Evidence from the GCC and MENA Regions

The aim of this study is to investigate empirically the underlying nexus of stock market returns and volatility in the Gulf Cooperation Council (GCC) countries and Middle East and North Africa (MENA) region by using the GARCH-M model. We find that volatility is time-varying in all countries, which indicates substantial variation in the degree of risk across time. However, we do not find empirical support that this time-varying volatility significantly explains expected returns, except in the case of Kuwait, United Arab Emirates, and the MENA region portfolio. Our findings show that stock return volatility is negatively correlated with stock returns in these three markets under the assumption of investor risk aversion. This lends some support to the hypothesis of a volatility-driven negative relationship in the literature. The policy implications of our results are discussed.     

The Effect of IFRS Adoption and Investor Protection on Earnings Quality Around the World

This study examines the effects of mandatory IFRS adoption and investor protection on the quality of accounting earnings in forty-six countries around the globe. The results suggest that earnings quality increases for mandatory IFRS adoption when a country's investor protection regime provides stronger protection. This study extends the current literature that shows that accounting practices are influenced by country-level macro settings. The results highlight the importance of investor protection for financial reporting quality and the need for regulators to design mechanisms that limit managers' earnings management practices.     

Accountability and transparency in relation to human rights: A critical perspective reflecting upon accounting, corporate responsibility and ways forward in the context of globalisation

In this paper we critically theorise accountability and transparency, and accounting, in relation to human rights. Consistent with our perspective, we articulate human rights as a complex and very important construct. We link human rights to notions of accountability and transparency (and hence to accounting) and elaborate how theoretical debates and developments in the humanities and social sciences refine but do not displace the argument that governance for human rights is a meaningful pursuit and policy. Indeed, they in some ways promote the mobilisation of accounting in the context. We go on to elaborate further how accounting (we especially focus upon corporate accounting and reporting) may come to the service of human rights. Developing our critical perspective more concretely and positively, we reflect, giving consideration to real world happenings and relevant illustrations, upon the interface of accounting, various actors (especially corporations) and human rights in the context of globalisation. And we reflect upon ways forward.     

Perceptions of accounting professionals in the adoption and implementation of a single set of global accounting standards: Evidence from Bahrain

In the quest for a single set of global accounting standards, the International Accounting Standard Board (IASB) continues to work with regulators in other countries toward adoption of IFRS. This study reports on an exploratory study of Bahrain's accounting and auditing professionals' perceptions about important issues relevant to developing and implementing global accounting standards. Bahrain is a financial hub of the Middle East with distinct features that could provide some insights to harmonization issues. The respondents' views portray optimism by auditors and non-auditors that harmonization of accounting standards is a worthwhile objective that can be fairly, but gradually accomplished. However, the survey data indicate expected challenges in applying the IFRS principles-based accounting standards. The survey findings suggest that there will be a growing demand for detailed application guidance for IFRS. Also, it appears that nationalism may well continue to be a major impediment to global adoption of IFRS.     

Sharia supervisory boards,governance structures and operational risk disclosures: Evidence from Islamic banks in MENA countries

This paper examines the impact of Sharia supervisory board (SSB) and governance structures on the extent of operational risk disclosures (ORDs), using a sample of 63 Islamic banks from 10 (i.e., Bahrain, Egypt, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, and the UAE) countries in the Middle East and North Africa (MENA) region for the fiscal years 2006 to 2013. Drawing on Sharia compliance, Islamic banking and corporate governance literature, our findings are as follows. We find that SSB, block ownership, board independence, and country-level governance quality are statistically significant and positively associated with ORDs. Our results are robust when controlling for several bank- and country-level variables. Our study has implications for policy-makers and regulators in the MENA region with respect to the development and implementation of SSB and governance mechanisms that can improve operational risk disclosures. Finally, the findings highlight the need to enhance current understanding of SSB structures and governance mechanisms that can best help Islamic banks towards engaging in effective compliance with recent governance and accounting reforms.     

行业类别与增值税纳税义务人选择: 来自中小企业的经验证据

从国际比较上看，无论发达国家、新兴工业国家，还是发展中国家，都存在大量且在经济发展中扮演了重要角色的中小企业，研究中小企业财务报告的行为特征十分必要。本文通过对中小企业的行业类别与增值税纳税义务人选择行为进行实证分析后发现，税收法规是影响中小企业会计政策选择的关键因素；减低税负是规范中小企业财务报告行为的有效途径之一。     

International Variations in the Connections Between Tax and Financial Reporting

This paper constructs a method for assessing the degree of connection between tax rules and practices and financial reporting rules and practices in a country. Five types of connection and disconnection are suggested, and 15 arenas of accounting are proposed for assessment on this basis. The method is applied to four countries, partly in order to test the claim of a clear distinction between Anglo-Saxon and continental European countries.     

A comparative analysis of theological and critical perspectives on emancipatory praxis through accounting

This paper examines the insights that the interface between critical theory and different theologies can bring to our understanding of accounting's emancipatory potential. The paper begins with a comparative analysis of critical perspectives and Jewish and Christian theological perspectives on emancipatory praxis, with a particular emphasis on emancipation from spiritual alienation. The theological perspectives are based on the two creation stories in the biblical book of Genesis and what they teach about human relationships, social justice, and spiritual development. The paper then illustrates what a theological education might be like within the context of an accounting or management degree, where the objective is to encourage business students to think reflectively, ethically, and spiritually about themselves, their profession, and other people. Next, the paper considers how alternative accounting reporting and disclosure practices can promote the spiritual development of individual persons and their communities. The conclusion discusses structural constraints that would shape and be shaped by the proposed emancipatory accounting practices, and acknowledges that other spiritual traditions besides Western theology also can be mobilized to promote emancipatory accounting education and practice in a pluralistic society.     

The Development of Accounting Regulation in Iraq and the IFRS Adoption Decision: An Institutional Perspective

This paper reviews the historical development of accounting regulation in Iraq and analyzes, from an institutional perspective, both the decision to adopt International Financial Reporting Standards (IFRS), and the factors likely to impact the expansion of IFRS application beyond listed companies. We find that all three forms of institutional isomorphism (coercive, mimetic, and normative) explain the initial decision to adopt IFRS. The most significant force in the decision to adopt IFRS is coercive pressure, from western forces following the fall of the Ba'ath regime, and from international aid organizations. Further, we find that the accounting system in Iraq is likely to be further advanced due to mimetic and normative pressures from Iraq's trade partners, multinational corporations, and the accounting profession. The paper concludes with a discussion of lessons that can assist other developing nations, and in particular countries in the Middle East in their decision to adopt IFRS. It is important that IFRS adoption is accompanied by reform to governance and investor protection regimes, together with investment in education and training to support ongoing implementation. Otherwise, IFRS adoption may be perceived as merely symbolic.     

IAS/IFRS and financial reporting quality: Lessons from the European experience

This paper discusses the effects of the adoption of IAS/IFRS in Europe on the quality of financial reporting. In doing so, it adopts the perspective of stock market investors and focuses on value-relevance research. The adoption of IAS/IFRS in Europe is an example of accounting standardization among countries with different institutional frameworks and enforcement rules. This allows investigating whether, and to what extent, accounting regulation per se can affect the quality of financial reporting and leads to convergence in financial reporting. This is a key issue for standard setting purposes as IAS/IFRS have been adopted in very diverse countries all over the world, and many others are likely to adopt them in the near future.