Has Adoption of IFRS Increased Non–North American Institutional Investment in the Canadian Stock Markets?

We investigate whether non–North American (non‐NA) institutional investment in firms listed on the Canadian stock markets increased between the pre‐ and post‐IFRS adoption periods relative to such investment in firms listed on the U.S. stock markets. Prior to IFRS adoption, Canada had high‐quality financial reporting standards that were similar to the U.S. standards. As consequences of IFRS adoption, Canadian financial statements became more comparable with European and other IFRS country financial statements and less comparable with neighboring U.S. financial statements. Thus, a question of interest is whether the enhanced comparability with non‐NA companies was beneficial in terms of attracting non‐NA investment to Canadian companies versus U.S. companies. We find that there was no significant change in non‐NA institutional investment in Canadian firms relative to U.S. firms for the very largest (fifth quintile) and for smaller (first, second, and third quintiles) Canadian companies. However, intermediate‐sized Canadian companies in the fourth size quintile lost non‐NA institutional investment relative to their U.S. peer companies, suggesting that non‐NA investors cared more about comparability with U.S. peer companies than non‐NA peer companies for companies in this size quintile.     

IFRS Ten Years on: Has the IASB Imposed Extensive Use of Fair Value? Has the EU Learnt to Love IFRS? And Does the Use of Fair Value make IFRS Illegal in the EU?

Abstract

This paper is a commentary on issues related to the first decade's mandatory use of International Financial Reporting Standards (IFRSs) in the EU. Three specific but related questions are addressed, as in the paper's title. On the first (imposition and use of fair value (FV)), I conclude that the International Accounting Standards Board has not substantially extended the use of FV in its 15 years of work and that most companies hold few assets or liabilities on the FV basis. On the second question (adoption in the EU), I analyse a consultation exercise which strongly suggests that the EU's imposition of IFRSs will continue. On the third question (legality of IFRSs), I explain why recent UK legal opinions that question the legality of reporting under IFRSs are not persuasive.     

The Role and Current Status of IFRS in the Completion of National Accounting Rules – Evidence on Cyprus

Abstract

The case of Cyprus with respect to the adoption of International Financial Reporting Standards (IFRS) is unique given the country’s strong reliance on international business and accounting-related services. As such, Cyprus has required the use of IFRS since 1981 not only for publicly listed firms but also for private companies regardless of their size. Cyprus’ reluctance to fully transpose Directive 2013/34/EU into national law cannot be unrelated to its long-standing requirement of financial statements that are not only prepared under IFRS but are also audited for all types of corporations registered in the Republic. We conclude that transposing the new Accounting Directive in its entirety into national law could have adverse effects on the Government tax revenue, the GDP of the services sector and the credibility of Cyprus as an international business and financial services center.     

Strategic communication in transnational corporations——A case study of Motorola Solutions

Transnational corporations start from global strategy. Strategic communication is essential to a transnational corporation to develop harmonically in different cultural background. This article is to analyze the organizanonal culture and communicational strategies with a case study of Motorola Solutions     

Research on the Transmission of the Influence of the Quantitative Easing Policy on China’s Housing Price Bubble

The Federal Reserve has implemented the second round of quantitative easing monetary policy (QE2) in November 4th 2010, which has dealt a heavy blow upon the liquidity of China.The sudden dollar overhang causes great pressure of RMB appreciation. Based on the analysis of the following chain-reactions, this paper discovers and concludes the potential transmission mechanism of how QE2 influence China’s housing price bubble. At last, related policy recommendations are proposed.     

IFRS adoption in the United States: An analysis of the role of the SEC’s Chairs

In this paper, we study the role of the SEC’s Chairs in the possible adoption of IFRS in the United States between 2005 and 2017. We mobilize the theoretical framework of institutional entrepreneurship to analyze the multidimensional institutional process which involves the streams of problem recognition, policy development and politics. Our qualitative empirical study finds that the SEC Chairs attempted to couple the three streams to different extents to achieve policy breakthroughs on IFRS adoption. We show how the coupling endeavors of Chair Cox opened a temporal window of opportunity for IFRS adoption, while Chairs Schapiro and White were unsuccessful in coupling the streams due to limited recognition of IFRS adoption as a central problem for the SEC, the inability to develop a practicable policy solution and unfavorable conditions in the policy stream. Our paper offers insights into the reasons for the SEC’s substantial efforts to introduce IFRS to U.S. capital markets and why these efforts never resulted in a formal decision on adopting IFRS for U.S. issuers. Our findings contribute to literatures on IFRS adoption, the temporal dimension of institutional entrepreneurship and the U.S. debate on IFRS.     

IFRS in Europe – An Observer's Perspective of the Next 10 Years

Abstract

What follows is a personal reflection on the challenges that may face the International Financial Reporting Standards (IFRS) Foundation in the next 10 years, and is based on two conference presentations and the debate at those conferences. The suggestion is that the character of the members of the International Accounting Standards Board (IASB) in its second decade is different from that of the founding board, and is more pragmatic than crusading. It is mooted that the board will need to address second-order issues of the organisation and policy, and that Europe will try to take a more influential role. The article observes that existing issues of funding, complexity and differential reporting may become more urgent and will need to be addressed for the organisation to continue to evolve.     

Does Size Influence the Suitability of the IFRS for Small and Medium-Sized Entities? – Empirical Evidence from Germany

This study is set within the context of the IASB's initiative to develop an IFRS for small and medium-sized entities (SMEs). It is based on a questionnaire survey of small and medium-sized entities in Germany exploring the suitability of the IASB's proposed SME standard for entities of different size classes. Quantitative size criteria are used in many national jurisdictions to differentiate financial reporting requirements between entities. However, there is very little empirical evidence on the question whether the economic size of an entity has an impact on the economic issues that should be regulated by accounting rules and on management's preferences for specific accounting methods. This paper addresses these deficiencies by exploring to what extend an entity's economic size has an impact on its international exposure, the relevance of specific accounting issues and preparers’ perceptions on costs and benefits associated with the application of selected accounting methods. Our findings are ambiguous. Size effects are revealed with regard to the structure of entities, their international exposure and to a large extent to the relevance of particular accounting issues. Cost and benefit assessments of accounting methods also differ within and between the size clusters investigated, albeit a generalisation of size as a factor determining the cost-benefit considerations of firms with regard to particular accounting treatments and methods is not supported by the study's results.     

What provides the micro-foundation of monetary policies in the absence of mature economic institutions?

In the absence of mature economic institutions, what provides the micro-foundation of monetary policies? Taking corporate financing of China's firms as a representative example, first, our data suggest that financial access of firms becomes indeed squeezed as the monetary policies require. Then we confirm that government intervention leads firms' financial access to become difficult since the financial contraction policies. We also provide evidence that government intervention indeed promotes severity of access to finance. These evidences confirm that government intervention squeezes financial access after central government's financial contraction policies and that government intervention functions to support the implementation of monetary policies. Therefore, this paper shows that government intervention provides micro-foundation of the monetary policies in the absence of mature economic institutions.     

The impact of the Pension Fund on the decision to work one more year☆

The decision to retire or work one more year is quite complex. One factor that plays a role in this decision is the net salary derived from working one more year. The type of pension a person has, defined benefit or defined contribution, will influence whether the net salary is larger than, equal to, or less than the stated salary. The larger the net salary relative to the stated salary, the more likely an employee is to continue working. This paper defines the net salary percentage for each type of pension plan and looks at empirical estimates for these values.     

Does the adoption of IFRS affect corporate social disclosure in annual reports?

In this exploratory study we investigate the impact of the implementation of IFRS on corporate social disclosures (CSD) within the context of stakeholder theory. We measure the level of CSD in annual reports using a disclosure instrument based on the United Nations Conference on Trade and Development report “Guidance on Corporate Responsibility Indicators in Annual Reports”. We find that IFRS adoption had a differential effect on CSD based on a firm's institutional setting i.e., the stakeholder–management relationship prevalent in their institutional environment. Firms in the stakeholder countries did not have a significant change in the level of CSD following the mandatory adoption of IFRS while firms from the shareholder countries experienced a significant increase over the same period resulting in shareholder countries providing an overall higher level of CSD after IFRS adoption than stakeholder countries. These findings suggest that firms' reactions to the requirements of IFRS and the stakeholder pressure to provide additional CSD are influenced by institutional environment. Further, our results provide support for the use of stakeholder theory to predict the level of CSD.     

Does Investment Horizon Matter? Disentangling the Effect of Institutional Herding on Stock Prices

This study finds that, over short horizons, herding by short‐term institutions promotes price discovery. In contrast, herding by long‐term institutions drives stock prices away from fundamentals over the same periods. Furthermore, while the positive predictability of short‐term institutional herding for stock prices is more pronounced for small stocks and stocks with high growth opportunities, the negative association between long‐term institutional herding and stock prices is stronger for stocks whose valuations are highly uncertain and subjective. Finally, we show that the destabilizing effect of institutional herding persistence documented in the recent literature is entirely driven by persistent herding by long‐term institutions.     

The Role and Current Status of IFRS in the Completion of the National Accounting Rules – Evidence from Estonia

Abstract

The main purpose of this paper is to provide an overview of International Financial Reporting Standards (IFRS) application in Estonia. After restoration of independence, development of the Accounting and Financial Reporting System in Estonia has been based on internationally accepted accounting principles where IFRS and EU Directives have had an important role. From 2003 to 2013, the system based on the Full IFRS and after that, the switch from the Full IFRS to the IFRS for Small and Medium-sized Entities (SMEs) took place. Estonian position on IFRSs is very positive. IFRSs were heavily used in the system of setting local guidelines and despite switching to the IFRS for SMEs as base for the local guidelines, they are still used as a very important reference point and source of interpretation for national accounting rules based on the EU Accounting Directive.     

On the convergence of management accounting and financial accounting – the role of information technology in accounting change

In this article we theorize and conceptualize the recent convergence of management accounting (MA) and financial accounting (FA) with the advancements in information technology (IT), and explicate not only how this convergence is manifested in the technical and technological domain, but also how it is reflected in their convergence at the behavioral and organizational level.Drawing on the analytical model by Hemmer and Labro (2008), in which the forward-looking perspective of FA leads to forward-looking MA, we build a conceptual framing to analyze this convergence. According to this framing, information technology (IT) serves as a facilitator, catalyst, motivator, or even an enabler for the convergence of MA and FA. We further argue that convergence is a much broader phenomenon than claimed by Hemmer and Labro. It firstly covers the technical and technological domain, including the intentional integration of information systems and software, as well as the intentional combination of methods or standards, extending thereafter to the behavioral and organizational domain with the (un)intentional alignment regarding both functions and processes as well as the (un)intentional convergence regarding both work and roles. The applicability of this conceptual framing is illustrated with a set of examples.We present illustrations of the manifestations and outcomes of convergence in both the technical and technological domain (related to accounting standards, discretionary reporting, performance measurement, transfer pricing, competitor, customer and contractor analysis, due diligence in M&As), and the behavioral and organizational manifestation domain (related to accounting processes, work and the role of accountants, incentive systems, accounting and control in multinational companies, the control of business networks, the board of directors and venture capitalists). Based on our observations, we conclude that the forward-looking FA elements are often intertwined with MA, and vice versa, and that convergence in the technical and technological domain appears to precede convergence in the behavioral and organizational domain. In most of our observations, IT plays an important or even crucial role in this convergence process. In the light of these convergence observations, we open several avenues for further research.     

The Role and Current Status of IFRS in the Completion of National Accounting Rules – Evidence from the UK

Abstract

Drawing on secondary data, we examine the transposition of the Accounting Directive 2013 into UK GAAP with a specific focus on references to IFRS. The process involved consultation and regulatory impact assessment on the options in the Accounting Directive and proposed changes to accounting standards for non-publicly accountable entities. This led to an IFRS-based approach from 2016 with three tiers: EU-adopted IFRS for group listed companies and other publicly accountable entities, an adaptation of IFRS for SMEs for non-publicly accountable entities, and a simplified version for micro-entities incorporating the requirements of the Accounting Directive. This outcome is not surprising since the UK was one of the founding members of the original International Accounting Standards Committee and a strong proponent of little GAAP. Indeed, the UK’s former Financial Reporting Standard for Smaller Entities provided a model for the IFRS for SMEs. In the past, there were few references to IFRS by the UK’s enforcement and interpretation bodies. Today, guidance is taken from IFRS Interpretations Committee. We contribute to the literature by describing the main processes involved in implementing the Accounting Directive and the move to an IFRS-based approach in UK GAAP. Our analysis should be of interest to researchers and policymakers alike.     

The Role and Current Status of IFRS in the Completion of National Accounting Rules – Evidence from the Netherlands

Abstract

Dutch law (B2T9) is positive towards IFRS. IFRS may be used by all entities, there is a specific option for entities using IFRS in the consolidated financial statements to apply an IFRS-friendly version of B2T9 in its separate financial statements, and IFRS for SMEs can be used by non-listed and non-regulated companies in combination with B2T9. In the process of adoption of the 2013 EU Accounting Directive only limited references have been made to IFRS. This is not an indication of a reduced interest in IFRS, but is a result of limiting the changes of B2T9 to those that are necessary as a result of changes at the EU level. The Dutch Accounting Standards Board, issuing Dutch Accounting Standards (DAS), considers IFRS when developing and changing its standards. In addition to the IFRS option DAS often include one or more additional optional treatments that are considered suitable for non-listed companies. The Dutch regulatory authority AFM is also positive towards IFRS and even advocates elimination of non-IFRS options from Dutch GAAP as much as possible. The number of major differences between Dutch GAAP and IFRS is relatively limited, with only a few differences that cannot be avoided by an entity when preparing financial statements under Dutch GAAP.     

New development: The courts and multi-level governance—some comparative perspectives on the emerging jurisprudence of the UK Supreme Court

In federal systems the courts are accorded the important role of policing the boundaries of the constitutionally specified powers given to the legislature and the executive. The devolution statutes enacted by the UK parliament have created a semi-federal system, in which the courts increasingly have been called upon to adjudicate on whether sub-national legislative bodies have acted ultra vires. Following a comparative overview of the theory and practice of court adjudication in overseas systems of multi-level governance, the leading cases of the British Supreme Court and the House of Lords are considered. It is proposed that Britain—almost by default—has become a semi-federal court somewhat akin to the US Supreme Court and the German Bundesverfassungsgericht.     

Perceptions on the accessibility of Islamic banking in the UK—Challenges,opportunities and divergence in opinion

This study examines the views of UK-based Muslims, Islamic Scholars and Islamic banking employees on the current state of the latter industry, both in practical terms and as regards engagement with the nation’s large, but often marginalised Islamic community. The British Government has recently championed the Islamic banking sector and committed to supporting it as a means of addressing financial services needs and consolidating London’s position as the global centre for Islamic investment. The analysis adds to the substantive literature in two principal ways: (i) by contextualising the evidence via the notions of empowerment, engagement and social justice that underpin both the state’s attempts to foster growth and the central tenets of Islam; and (ii) by placing comparison of the opinions of key groups at the heart of the investigation. The findings reveal that while progress has been made, UK-based Muslims see several substantive impediments to access, including the complex terminology of Islamic banking products, the lack of internet banking facilities and branch networks as well as a generalised lack of interest in marketing on the part of the institutions. Whilst some coincidence of perception is evident, the views of bankers are shown to be out of line with those of the other parties in a number of key areas. For example, bankers appear to see less potential in the role of the internet as a medium for spreading awareness than do either potential customers or religious scholars. The paper therefore concludes with a call for multi-party Ijtihad and Qiyas (deductive analogy) that will encourage industrial outreach and, in so doing, support long-term growth.