Search results

1 – 10 of 575
Article
Publication date: 1 March 2002

S.P. Bandyopadhyay, A.S. Hilton and G.D. Richardson

Explains that Canada is currently deciding whether to harmonize with US or international accounting standards and whether to allow Canadian SEC registrants to file their financial…

Abstract

Explains that Canada is currently deciding whether to harmonize with US or international accounting standards and whether to allow Canadian SEC registrants to file their financial statements using US standards, outlines previous research on the information content of US/Canadian differences and tests the relative and incremental information content of 156 interlisted firms 1996‐1998. Explains the methodology and presents the results, which suggest that there is little difference in the relative information content of the two sets of standards although each provides information incremental to the other. Concludes that investors will not be harmed either by harmonization or by allowing financial reporting under US standards.

Details

Managerial Finance, vol. 28 no. 3
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 4 April 2016

Oliver N. Okafor, Mark Anderson and Hussein Warsame

The purpose of this paper is to investigate whether financial information prepared and disclosed under International Financial Reporting Standards (IFRS) has incremental value…

2840

Abstract

Purpose

The purpose of this paper is to investigate whether financial information prepared and disclosed under International Financial Reporting Standards (IFRS) has incremental value relevance vs information prepared under generally accepted accounting principles (GAAP) in Canada.

Design/methodology/approach

The authors employ a difference in differences methodology and estimate value relevance using: first, the adjusted R2 of regressions of stock price on book value and earnings; second, the adjusted R2 of regressions of stock returns on earnings and changes in earnings; and third, a time series incremental association return estimation. The authors use multiple models including a model similar to the Ohlson (1995) model and a modified Balachandran and Mohanram (2011) model to investigate value relevance in the period 2008-2013.

Findings

The authors provide empirical evidence, based on unique Canadian environment, that accounting information prepared and disclosed under IFRS exhibits higher price and returns value relevance than accounting information prepared previously under local GAAP. Sensitivity analyses and yearly trends regressions produce collaborating evidence.

Originality/value

The study provides early empirical evidence that value relevance increases in mandatory IFRS adoption, based on unique Canadian adoption. The Canadian adoption is unique because Canada: first, is the first G7 non-European country to adopt IFRS; second, had pursued a dual strategy of harmonizing with the US GAAP while supporting IFRS convergence; third, provided information environment that mitigates the problems associated with measuring the effects of IFRS adoption in the European countries where IFRS or its predecessor – international accounting standards – had permeated the reporting environment prior to the mandatory adoption in 2005; and fourth, allowed firms listed on the US exchanges to continue to use or adopt the US GAAP for financial reporting and thus, provided a group of benchmark firms drawn from the same social-political and economic environment as the treatment firms. The study clarifies prior inconsistent results from European samples.

Details

International Journal of Managerial Finance, vol. 12 no. 2
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 20 February 2017

Thomas Schneider, Giovanna Michelon and Michael Maier

The purpose of this paper is to encourage accounting regulators to address diversity in practice in the reporting of environmental liabilities. When Canada changed to…

1831

Abstract

Purpose

The purpose of this paper is to encourage accounting regulators to address diversity in practice in the reporting of environmental liabilities. When Canada changed to International Financial Reporting Standards (IFRS) in 2011, Canadian regulators asked the IFRS Interpretations Committee to interpret whether the discount rate to value environmental liabilities should be a risk-free discount rate. Old Canadian GAAP, and current US GAAP, allow for a higher discount rate, resulting in commensurately lower liabilities. International regulators refused to address this issue expecting no diversity in practice in Canada.

Design/methodology/approach

The focus is on a sample of Canadian oil and gas and mining firms. These domestic industries play a major role internationally and have significant environmental liabilities. The method is empirical archival, tracking firm characteristics and discount rate choice on transition to IFRS.

Findings

There is significant diversity in practice. About one-third of the sample firms choose a higher discount rate, avoiding a major increase in environmental liabilities on transition to IFRS. The evidence suggests that these firms have relatively larger environmental liabilities and that the discount rate decision is a strategic choice.

Research limitations/implications

The sample is based on one country and may only be reflecting local anomalies that have no broader implications.

Practical implications

Diversity in practice in accounting for environmental liabilities is not acceptable. Accounting regulators should act to create consistent and comparable reporting practice.

Social implications

Firms and managers facing larger environmental liabilities can choose to minimize environmental liabilities under IFRS, while it is the general public and society at large that bear the ultimate risk.

Originality/value

The paper pushes forward the debate on whether recognized environmental liabilities should reflect the interests of equity investors, or if other investors and stakeholders should be taken into account.

Details

Accounting, Auditing & Accountability Journal, vol. 30 no. 2
Type: Research Article
ISSN: 0951-3574

Keywords

Article
Publication date: 5 March 2018

Theresa Hilliard and Presha Neidermeyer

This study examines how International Financial Reporting Standards (IFRS) are applied, disaggregates the cumulative effect of the IFRS transition into magnitude measurements of…

Abstract

Purpose

This study examines how International Financial Reporting Standards (IFRS) are applied, disaggregates the cumulative effect of the IFRS transition into magnitude measurements of the standard-to-standard differences (by standard) and management discretionary choices (by choice) and tests which transitory effects at every level of disaggregation alter investor behavior.

Design/methodology/approach

Using hand-collected data from the IFRS 1 disclosures, the research design consists of eight regression models which test fluctuations in investment behavior as a function of varying measures of IFRS adjustments at aggregated and disaggregated levels including magnitude measurements of pronouncements and management choices.

Findings

Findings from the study identify specific standards and management discretionary choices associated with market reaction. Evidence from this study demonstrates the value of disaggregated measures to obtain a more comprehensive understanding of market reaction and associations with transitory effects of IFRS. Findings from the study suggest that the market favors management discretionary choices that decrease retained earnings and potentially increase future net income. Overall, model results suggest that a more comprehensive understanding of the specific standards is obtained that alters market behavior and how the market responds to positive and negative equity adjustments.

Originality/value

This study contributes to the literature examining the capital market effects of IFRS by decomposing the generally accepted accounting principle (GAAP) transition into magnitude measurements of specific standard-to-standard differences (by standard) and management discretionary choices (by choice) to understand how the market responds to the transitory effects of a GAAP change. This is important because it puts regulators, standard setters, investors and researchers on notice that the way in which the authors analyze and measure equity components could be consequential to the authors ability to assess a GAAP change. This study informs all jurisdictions which have adopted or are deliberating the adoption of IFRS how IFRS is being implemented and which areas of application are relevant to investors. Further, market reactions to accounting information pertaining to a GAAP change may only be revealed at the disaggregated and decomposed levels of the retrospective application of the GAAP implementation.

Details

International Journal of Accounting & Information Management, vol. 26 no. 1
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 24 October 2008

Russell Craig and Joel Amernic

This paper is the third in a trilogy of papers to explore the use of accounting as a fundamental element in senior management's narrative regarding the privatization of a major…

4324

Abstract

Purpose

This paper is the third in a trilogy of papers to explore the use of accounting as a fundamental element in senior management's narrative regarding the privatization of a major transportation enterprise, Canadian National Railway (CN). The paper aims to examine how two accounting performance benchmarks (the operating ratio, and free cash flow) were deployed to help sustain a rhetoric of post‐privatization success. The aptness (and the danger) of accounting language in strategic narrative is highlighted.

Design/methodology/approach

The paper describes the importance of senior management discourse in the aftermath of a privatization. A narrative perspective is adopted, in which an imagined future post‐privatization era initially articulated in accounting language is then told and re‐told as the post‐privatization years unfold. Accounting performance measures highlighted in the story of success of the privatization in the Annual Letters to Shareholders by the CEOs of CN in the ten years following privatization in 1995, and celebrated in the Annual Report, are examined critically.

Findings

The results emphasize the important features and role of accounting language and accounting‐based performance benchmark measures in the narrative construction of the success of a privatization by corporate leaders.

Research limitations/implications

Case studies possess the strength of specific instance detail and interpretation, and the ostensible weakness of interpretation of a sample of one. But such research can provide for a reframing of conceptual perspectives and stimulate additional efforts to interrogate the role of accounting language in events of major social change.

Practical implications

The paper strongly endorses the adoption of a critical analytical perspective by those affected by a major social change (such as a privatization) in which the role of accounting language is subtle, but nonetheless persuasive and enduring.

Originality/value

The paper examines a case study in which the narrative framing of success is made rhetorically potent by deploying accounting performance measures. The paper reinforces the view that accounting is not an innocent bystander in the political and narrative manoeuvrings associated with a privatization. Accounting does not axiomatically provide an objective measure of some underlying financial truth, but is part of an arsenal of rhetoric to achieve political ends.

Details

Accounting, Auditing & Accountability Journal, vol. 21 no. 8
Type: Research Article
ISSN: 0951-3574

Keywords

Article
Publication date: 5 March 2020

Shahid Khan, Khaled Abdou and Sudip Ghosh

The purpose of this study is to investigate if non-US/non-Canada (international) equity listings in the Canadian stock exchanges increased with the adoption of International…

Abstract

Purpose

The purpose of this study is to investigate if non-US/non-Canada (international) equity listings in the Canadian stock exchanges increased with the adoption of International Financial Reporting Standards (IFRS) in Canada. A question of interest is whether the adoption of common global accounting standards (IFRS) was beneficial in attracting international firms to the Canadian exchanges.

Design/methodology/approach

The authors use difference-in-difference ordinary least square methodology to conduct inter-country (between Canada and the USA) and intra-country (between the Toronto Stock Exchange [TSX] and the TSX Venture Exchange [TSXV]) tests to investigate whether there is increased listings of international firms on Canada’s exchanges associated with mandatory adoption of IFRS in Canada compared to such listings in the American exchanges.

Findings

The authors did not find evidence of a relative increase in listings by international firms on the TSX and the TSXV after Canadian adoption of IFRS, but they did find that listings by international firms on the TSX, Canada’s primary exchange, increased when the authors include the year before mandatory Canadian adoption as part of the IFRS adoption period. The authors also find that international listings from outside the North American, European and Australasian regions increased on the TSXV, consistent with IFRS adoption making the smaller Canadian exchange more attractive to listers from these regions.

Originality/value

With the increasing use of IFRS throughout the world, US regulators, the US Congress and other capital market participants seek to understand the costs and benefits of potential IFRS adoption in the USA. The authors contribute to this debate by examining the effect of Canada’s adoption of IFRS on growth in international stock listings in the Canadian stock exchanges.

Details

Journal of Financial Regulation and Compliance, vol. 28 no. 3
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 1 August 2013

Marie‐Josée Ledoux and Denis Cormier

The purpose of this paper is to investigate the incidence of International Financial Reporting Standard (IFRS) on stock market assessment of intangibles and voluntary disclosure…

2091

Abstract

Purpose

The purpose of this paper is to investigate the incidence of International Financial Reporting Standard (IFRS) on stock market assessment of intangibles and voluntary disclosure about innovation.

Design/methodology/approach

The authors develop three regression models. The first model investigates the stock market valuation of intangible assets and disclosure about innovation. The second model desegregates earnings to assess the relevance of components related to intangibles. The third model investigates how intangible expenses and voluntary disclosure affect analysts forecast dispersion.

Findings

Results show that the value relevance of intangible assets and expenses improves with the adoption of IAS 38. Overall, results indicate a decrease in the value relevance of voluntary disclosure about innovation under IFRS. More specifically, results suggest some overlap in the information content of mandated and voluntary disclosure for stock market valuation of intangible assets under IFRS. Findings also suggest that voluntary disclosure moderates market's assessment of expensed intangibles under both Canadian GAAP and IFRS.

Research limitations/implications

IAS 38 requires entities to recognize an intangible asset if certain criteria are met and to disclose specific information about it. In such a context, market participants may refer to a greater extent to financial reporting and to a lesser extent to voluntary disclosure when valuating intangibles.

Practical implications

Managers will have an incentive to better target their communications to ensure a degree of complementarity with financial reporting. In this sense, this study contributes to the voluntary disclosure literature.

Originality/value

To the best of the authors' knowledge, this is the first study to investigate the relationship between mandatory disclosure and voluntary disclosure about intangibles and evaluate the impact of IFRS on this matter.

Book part
Publication date: 3 February 2022

Can Öztürk

This chapter focuses on the diversity of financial reporting frameworks in the airline industry considering past and present. While diversity of financial reporting frameworks…

Abstract

This chapter focuses on the diversity of financial reporting frameworks in the airline industry considering past and present. While diversity of financial reporting frameworks existed in the past, currently, the majority of listed and non-listed airlines, whose financial statements are publicly available, are inclined to adopt International Financial Reporting Standards (IFRS), leading toward uniformity in financial reporting frameworks because their country of incorporation or the stock exchange where they are listed either require or permit them to do so. Airlines operating in the United States prepare their financial statements under United States Generally Accepted Accounting Principles and some of Asian-Pacific countries still use their own national accounting standards in financial reporting. In addition, this research points out that the primary determinant of IFRS adoption in the airline industry is the fact that the majority of airlines are listed in national or foreign stock exchanges where IFRS adoption is required, but there are some company-specific determinants for listed and non-listed IFRS adopting airlines. Finally, this chapter also sets forth that there are jurisdictional versions of IFRS in the global context from the perspective of financial statements of airlines leading to some obstacles in understanding the financial reporting framework.

Details

Perspectives on International Financial Reporting and Auditing in the Airline Industry
Type: Book
ISBN: 978-1-78973-760-8

Keywords

Article
Publication date: 21 August 2020

Philippe Touron and Peter Daly

The paper analyzes four cases of IAS adoption (Aérospatiale in 1989; Usinor in 1991; Coflexip in 1993; and Péchiney in 1995) to better understand the instructional logics behind…

Abstract

Purpose

The paper analyzes four cases of IAS adoption (Aérospatiale in 1989; Usinor in 1991; Coflexip in 1993; and Péchiney in 1995) to better understand the instructional logics behind the use of alternative or additional standards by French companies in the early 1990s.

Design/methodology/approach

The study employs multiple case studies to explain how and why the heterogeneity of adoption (IAS versus US GAAP) is a response to institutional complexity.

Findings

This research shows that French companies adopted IAS as long as they were not required to use US GAAP by their financial backers. The results highlight how the companies combine logics to respond to the complexification of the field. The authors outline how endorsement of logics by outside carriers (auditors, financial analysts, stock exchange commissions) and framing of logics by managers evolve in time and space within this complexification process.

Research limitations/implications

This study contributes to the institutional complexity literature in that it focuses on distinct organizational responses to multiple institutional logics. More precisely, the choice of standards in primary consolidated accounts are viewed as an organizational response to compatible and conflicting demands from several levels: home countries, transnational areas and host countries with the aim of raising funds in the US.

Originality/value

This research makes a distinct link between institutional complexity and international accounting standards and US GAAP.

Details

Accounting, Auditing & Accountability Journal, vol. 33 no. 8
Type: Research Article
ISSN: 0951-3574

Keywords

Article
Publication date: 4 December 2020

Kate Hodson, Alan Wong and Simon Schilder

To introduce, compare and contrast the new regulatory regimes for closed-ended funds recently enacted in the Cayman Islands and the British Virgin Islands (BVI).

109

Abstract

Purpose

To introduce, compare and contrast the new regulatory regimes for closed-ended funds recently enacted in the Cayman Islands and the British Virgin Islands (BVI).

Design/methodology/approach

Explores similarities and differences between the two regimes, as well as practical implications for fund managers, with respect to (1) the regulatory frameworks governing the funds; (2) the definitions of the types of funds covered by the regulations; (3) registration requirements and associated timing; (4) operating requirements, including responsibilities for portfolio management, valuation and safekeeping of fund property; the number of directors; audits; valuation procedures; safekeeping of fund assets; cash monitoring; identification of securities; offering documents, term sheets and marketing materials; and representation in the respective jurisdictions; and (5) additional requirements, including numbers and qualifications of investors.

Findings

The new legislation has been enacted in order to respond to certain European Union and other international recommendations and has the effect of aligning the regulatory regimes applicable to such funds structured in Cayman and BVI to the regulatory regimes applicable to such funds in other jurisdictions.

Originality/Value

Expert guidance from lawyers with extensive experience in fund management, fund structuring and Cayman Islands and British Virgin Islands laws and regulations.

Details

Journal of Investment Compliance, vol. 21 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

1 – 10 of 575