An analysis of the factors affecting the adoption of international accounting standards by developing countries

The purpose of this study is to identify the factors that could explain the adoption of international accounting standards by developing countries. The following factors have been selected: economic growth, education level, the degree of external economic openness, cultural membership in a group of countries, and the existence of a capital market.Our results indicate that developing countries with the highest literacy rates, that have capital markets, and that have an Anglo-American culture are the most likely to adopt international accounting standards.     

Fair valuation of insurance liabilities via mean-variance hedging in a multi-period setting

A general class of fair valuations which are both market-consistent (mark-to-market for any hedgeable part of a claim) and actuarial (mark-to-model for any claim that is independent of financial market evolutions) was introduced in Dhaene et al. [Insurance: Mathematics & Economics, 76, 14–27 (2017)] in a single period framework. In particular, the authors considered mean-variance hedge-based (MVHB) valuations where fair valuations of insurance liabilities are expressed in terms of mean-variance hedges and actuarial valuations. In this paper, we generalize this MVHB approach to a multi-period dynamic investment setting. We show that the classes of fair valuations and MVHB valuations are equivalent in this generalized setting. We derive tractable formulas for the fair valuation of equity-linked contracts and show how the actuarial part of their MVHB valuation decomposes into a diversifiable and a non-diversifiable component.     

Developing the e-scape software system

Most innovations have contextual pre-cursors that prompt new ways of thinking and in their turn help to give form to the new reality. This was the case with the e-scape software development process. The origins of the system existed in software components and ideas that we had developed through previous projects, but the ultimate direction we took with e-scape evolved through a sometimes scary but always fascinating collaboration with TERU at Goldsmiths University of London. The literature refers to ‘agile development’ (Highsmith 2002) and it is certainly a good name for the process we undertook with TERU. It is tempting to believe that one can specify a system, agree it with the clients, and then build it. But not so, … or at least not so in this case. We of course did draw up detailed specifications, but as soon as we started to build it, we or the TERU team would see how much better it could be if only we could just …. In the end, understanding of what is required evolves as the understanding of what is possible develops. So specifications morphed from do-able to maybe; from the firm ground of known technologies to the more shaky territory of the half-known and the “I’ve read about that somewhere”. But the underlying reality was always time and money. The system had to work robustly with enough time ahead of the national pilots for the TERU team to do all the necessary trials and training in schools. And it had to be done within fixed costs agreed at the outset. In this paper I outline the principal challenges that we met along the way and summarise our approach to resolving them.     

An unprecedented privatisation of mandatory standard-setting: The case of European accounting policy

The EU-member States have long intended to harmonise their respective accounting rules in order to facilitate the comparison between European companies. This process was brutally accelerated by a 2002 regulation announcing that as of 2005, listed companies would be required to comply with the accounting standards enacted by the IASB (International Accounting Standards Board), a private body which, until then, had no public mandate.After having tried to harmonise internally the respective standards of its members, the EU has thus decided to resort to private subcontracting, an even more puzzling decision when one realizes that at the time, the EU had simply no statutory control means on the IASB.Building on this striking episode of privatisation of the regulatory process, we first examine the structure and governance of the IASB, and the process leading to the transplantation of its norms into EU law. In a second part, we argue that while diverse, the reasons behind such relinquishment of public authority lie primarily within the EU itself. In a third part, we show that in the area of accounting, such transfer of competences went well beyond known forms of delegation to private sector. In a final part, we discuss the subsequent—and so far successful attempt of the EU to reassert its authority as well as its agenda in this area.     

Monitoring basic characteristics of various economic-geographic regions for economic integration possibility

Motivation of virtually all regional economic integration initiatives has been prospect of enhanced economic growth. Lower transaction costs for business, lower risks associated with investment, expansion of markets, pooling of regional resources, better utilization of economies of scale in production, and more efficient allocation of resources, are part of benefits of economic integration. However, it is indisputable that in order to achieve some of these benefits, strong national economic policies will need to be made by collecting accuracy and pure information about the possible economic partner region. Therefore in this study, the basic characteristics of various economic-geographic regions such as demographic trends, economic performance, structure of trade, technology diffusion ＆ creation and energy sources are investigated for economic integration possibility of these regions.     

Spillover Effects among European,the US and Moroccan Stock Markets before and after the Global Financial Crisis

ABSTRACT

This paper assesses return and volatility spillovers among stock markets in Morocco, the US, UK, France and Germany represented respectively by MASI, S&P 500, FTSE 100, CAC 40 and DAX 30 indices, both before and after the global financial crisis (GFC) of 2008. The daily frequency data cover the period from January 2nd, 2002 to June 30th, 2016. Using the Diebold and Yilmaz approach, the results show varying financial connectedness between the Moroccan and the above mentioned developed stock markets. In fact, the significant increase of spillover index during the post-financial crisis period demonstrates that the US and European stock markets were the most affected. On the other hand, despite a relative increase of spillover effects coming from the US and German equity markets, our results show decline in the total net spillovers experienced by the Moroccan market after the recent financial crisis. These findings may provide some useful information to support decision-making and trading strategies for international investors.     

Searching for value relevance of book value and earnings: a case of premium versus discount firms

We examine the premium/discount firm characteristic that fundamentally affects the value relevance of two key accounting line items, earnings and book values. We argue that from the perspective of both the residual income and option-style valuation models, the relative valuation roles of earnings and book values differ fundamentally between firms that trade at a premium vis-à-vis discount to book value. We find that book values play a significantly more important role in equity valuation than earnings when firms trade at a discount. We also find that other known influential conditions, such as the sign of earnings (Collins et al. in Acc Rev 74(1):29–61, 1999) or the relative levels of earnings and book value (Burgstahler and Dichev in Acc Rev 72(2):187–215, 1997), become inconsequential when the premium/discount condition of the firm is controlled for. The discovered relationships between the relative valuation roles of book values and earnings and the discount/premium characteristics of the firm are robust to the effect of time, information environment and the industry of the firm.     

The Nature and Rationale of a Conceptual Framework for Financial Reporting by Islamic Banks

Islamic banks have to abide by the revealed doctrines in Islam in conducting their business and financial transactions. They employ in-house religious advisers—often referred to as Shari'a Supervisory Board (SSB)—who issue a special report to inform users of financial statements whether or not the bank has adhered to the Islamic principles. Recently, a private standard-setting body—the Financial Accounting Organization for Islamic Banks and Financial Institutions (FAOIBFI)—has been set up to externally regulate the financial reporting by Islamic banks. The FAOIBFI has published two statements on the objectives and concepts of financial reporting to act as a framework in setting accounting standards for Islamic banks. This paper examines the FAOIBFI's approach for developing objectives and concepts of financial accounting and investigates its need for such a theoretical framework. It is argued that the FAOIBFI's objectives and concepts would not be useful in mandating accounting standards on issues that are affected by religious ruling. This does not necessarily mean that such a framework may not be useful in legitimating the FAOIBFI's role and in setting accounting standards for issues that are not governed by revealed moral doctrines although it will be subject to similar limitations to those found by other standard-setting bodies in utilising and applying their framework. However, it implies that the more the FAOIBFI sets accounting standards that incorporate religious ruling, the less it would tend to find its own objectives and concepts useful. The ambiguities that may arise from different interpretations of the religious rules will require resolutions primarily by reference to religious rather than accounting authority.     

Local indirect least squares and average marginal effects in nonseparable structural systems

We study the scope of local indirect least squares (LILS) methods for nonparametrically estimating average marginal effects of an endogenous cause X on a response Y in triangular structural systems that need not exhibit linearity, separability, or monotonicity in scalar unobservables. One main finding is negative: in the fully nonseparable case, LILS methods cannot recover the average marginal effect. LILS methods can nevertheless test the hypothesis of no effect in the general nonseparable case. We provide new nonparametric asymptotic theory, treating both the traditional case of observed exogenous instruments Z and the case where one observes only error-laden proxies for Z.     

On Quantile‐based Asymmetric Family of Distributions: Properties and Inference

In this paper, we provide a detailed study of a general family of asymmetric densities. In the general framework, we establish expressions for important characteristics of the distributions and discuss estimation of the parameters via method‐of‐moments as well as maximum likelihood estimation. Asymptotic normality results for the estimators are provided. The results under the general framework are then applied to some specific examples of asymmetric densities. The use of the asymmetric densities is illustrated in a real‐data analysis.