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Article
Publication date: 8 May 2018

Dmitrij Rubanov and Matthias Nnadi

The purpose of this paper is to examine the effect of international financial reporting standards (IFRS) on the performance of UK investment closed-end trust funds with…

1036

Abstract

Purpose

The purpose of this paper is to examine the effect of international financial reporting standards (IFRS) on the performance of UK investment closed-end trust funds with domestic equity focus using Carhart’s Four-Factor model.

Design/methodology/approach

The paper is based on the Efficient Market Hypothesis, which argues that all available information is already included in the price of assets, and therefore, investors cannot beat the market or generate abnormal returns.

Findings

The results show that on average, UK investment trusts neither do generate abnormal returns, nor is their performance persistent. This paper provides empirical evidence to support the efficient market hypotheses and provides proof that the adoption of IFRS has, on average, a decreasing impact on the excess returns generated by UK investment trusts.

Originality/value

The findings of this paper have business policy implications for investment trust in the UK.

Details

Accounting Research Journal, vol. 31 no. 1
Type: Research Article
ISSN: 1030-9616

Keywords

Article
Publication date: 11 May 2020

Sailesh Tanna, Ibrahim Yousef and Matthias Nnadi

The purpose of this paper is to investigate whether the probability of deal success/failure in mergers and acquisitions (M&As) transactions is influenced by a range of…

Abstract

Purpose

The purpose of this paper is to investigate whether the probability of deal success/failure in mergers and acquisitions (M&As) transactions is influenced by a range of deal, firm and country-specific characteristics which tend to affect acquirers’ shareholder returns. The specific hypotheses under investigation relate to the method of payment (cash versus stock), target status (listed versus non-listed), diversification (domestic versus cross-border and industry-wide) and acquirers’ prior bidding experience. Additionally, the authors also investigate whether announced deals reflect an expectation about likelihood of deal completion.

Design/methodology/approach

The authors analyse the probability of deal success/failure in M&As by combining event study and probit regression-based methods. The authors use the standard event study methodology to calculate acquirers’ abnormal returns for up to 10 days before and after the announcement date. In the probit model, the dependent variable is the probability of deal i being failure depending on four sets of explanatory variables: method of payment, target status, diversification and acquirer bidding experience, along with a set of control variables.

Findings

The findings from event study confirm that market reaction is indifferent to whether announced deals are likely to be successfully completed or not, consistent with the efficient markets hypothesis. However, the results from cross-sectional, cross-country regressions confirm that the aforementioned deal characteristics, as well as certain firm and country level attributes do influence the likelihood of whether an announced deal is subsequently completed or terminated.

Originality/value

In examining whether the specific characteristics affecting the likelihood that M&A transactions, once announced, will ultimately succeed or fail, it seems natural to ask whether the market reaction at the time of deal announcement reflects an expectation regarding deal completion. This could be associated with specific deal or firm-level characteristics influencing shareholder returns or risk, and represents a unique contribution of this study, over and above the use of a global sample of M&A data. The empirical analysis investigates these issues by using an extensive, global sample of 46,758 M&A transactions from 180 countries and 80 industries, which took place between the years 1977 and 2012.

Details

Journal of Financial Economic Policy, vol. 13 no. 1
Type: Research Article
ISSN: 1757-6385

Keywords

Article
Publication date: 2 August 2013

Matthias Nnadi and Sailesh Tanna

This paper aims to examine value gains to acquirers in large commercial bank mega‐mergers (with transaction values over £1 billion) that occurred in the European Union…

1785

Abstract

Purpose

This paper aims to examine value gains to acquirers in large commercial bank mega‐mergers (with transaction values over £1 billion) that occurred in the European Union during the period 1997‐2007, distinguishing between domestic and cross‐border transactions.

Design/methodology/approach

Based on a sample of 62 bank mega‐mergers, an event study methodology is employed using a market model to determine cumulative standardised abnormal returns (CSAR) to acquiring banks around the announcement date of merger deals. This is followed by cross‐sectional regression to determine specific characteristics driving acquirers' CSAR.

Findings

Cross‐border bank mergers have been more frequent in recent years, reflecting a growing trend of banking sector consolidation in the EU. However, such mergers are found to yield significant negative announcement period acquirer returns, while domestic deals have marginally negative but insignificant returns. The operational cost efficiency and capital strength of acquiring banks are found to be significant in influencing excess returns.

Research limitations/implications

Constraints on data availability limited the scope for sensitivity analysis and incorporation of target characteristics in the cross‐sectional regression of drivers affecting acquirers' CSAR. Further research is aimed to address these issues.

Practical implications

Event study and regression results indicate that potential downside risks are judged by market participants to outweigh the benefits from cross‐border M&As in the retail banking market despite evidence of increased financial sector consolidation in the EU.

Originality/value

The study reflects the recent period of increased cross‐border banking consolidation in the EU and reveals findings that differ in some respects from previous studies on EU bank M&As.

Details

Managerial Finance, vol. 39 no. 9
Type: Research Article
ISSN: 0307-4358

Keywords

Book part
Publication date: 4 March 2015

Matthias Nnadi, Kamil Omoteso and Yi Yu

This paper provides evidence on the impact of regulatory environment on financial reporting quality of transitional economies. This study compares the financial reporting…

Abstract

This paper provides evidence on the impact of regulatory environment on financial reporting quality of transitional economies. This study compares the financial reporting quality of Hong Kong firms which are cross-listed in mainland China with those of Hong Kong firms cross-listed in China using specific earnings management metrics (earnings smoothing, timely loss recognition, value relevance and managing towards earnings targets) under pre- and post-IFRS regimes.

The financial reporting quality of Chinese A-share companies and Hong Kong listed companies are examined using earnings management measures. Using 2007 as base year, the study used a cumulative of −5 and +5 years of convergence experience which provide a total of 3,000 firm-year observations. In addition to regression analyses, we used the difference-in-difference analysis to check for the impact of regulatory environments on earnings management.

Through the lens of contingency theory, our results indicate that the adoption of the new substantially IFRS-convergent accounting standards in China results in better financial reporting quality evidenced by less earning management. The empirical results further shows that accounting data are more value relevant for Hong Kong listed firms, and that firms listed in China are more likely to engage in accrual-based earnings management than in real earnings management activities. We established that different earnings management practices that are seemingly tolerable in one country may not be tolerable in another due to level of differences in the regulatory environments.

The findings show that Hong Kong listed companies’ exhibit higher level of financial reporting quality than Chinese listed companies, which implies that the financial reporting quality under IFRS can be significantly different in regions with different institutional, economic and regulatory environments. The results imply that contingent factors such as country’s institutional structures, its extent of regulation and the strength of its investor protection environments impact on financial reporting quality particularly in transitional and emerging economies. As such, these factors need to be given appropriate considerations by financial reporting regulators and policy-makers interested in controlling earnings management practices among their corporations.

This study is a high impact study considering that China plays a significant role in today’s globalised economy. This study is unique as it the first, that we are aware of, to compare real earnings activities against accrual-based earnings management in pre- and post-IFRS adoption periods within the Chinese and Hong Kong financial reporting environments, distinguishing between cross-listed and non-cross-listed firms.

Details

Neo-Transitional Economics
Type: Book
ISBN: 978-1-78441-681-2

Keywords

Content available
Article
Publication date: 6 November 2017

1057

Abstract

Details

Journal of Accounting in Emerging Economies, vol. 7 no. 4
Type: Research Article
ISSN: 2042-1168

Book part
Publication date: 4 March 2015

Abstract

Details

Neo-Transitional Economics
Type: Book
ISBN: 978-1-78441-681-2

Content available
Book part
Publication date: 4 March 2015

Abstract

Details

Neo-Transitional Economics
Type: Book
ISBN: 978-1-78441-681-2

Article
Publication date: 14 June 2022

Achraf Haddad

The purpose of this research is to compare the board quality's (BQ) impacts on the financial performance (FP) of conventional and Islamic banks (IBs) after the Subprime…

Abstract

Purpose

The purpose of this research is to compare the board quality's (BQ) impacts on the financial performance (FP) of conventional and Islamic banks (IBs) after the Subprime financial crisis. The main reason is to help financial stakeholders choose the best performing and most appropriate bank type with its engagement based on the BQ index.

Design/methodology/approach

Based on the existing gap in previous researches and by using the GLS method (Generalized Least Squares method), the author compared the BQ's impacts on the FP of conventional and IBs. Settings of the FP and BQ were collected from 30 countries located on 4 continents. Two equal samples were tested; each of them is composed of 112 banks. The author concentrated only on the banks that have published regularly the banks' annual reports over the period 2010–2018.

Findings

Cylindrical panel results revealed that in conventional banks (CBs), the BQ has negatively affected banks' FP, while in IBs the BQ's impacts on the banks’' FP is ambiguous. Nevertheless, the positive impacts are more significant on the IBs' FP than the negative impacts on the IBs' FP.

Practical implications

The main practical contribution is the identification and distinction between the impacts of board determinants' quality on the shareholders' profits in the case of conventional and IBs. Hence, conventional or IBs which have a bad BQ will generate less FP and will be classified as a lender of bankruptcy danger for the bank customer. Besides, whatever the bank type, in a financial stable period, good BQ positively influences FP and provides a good impression to stakeholders. Otherwise, FP indicates that the banks suffer from the weaknesses of the board quality determinants.

Originality/value

Returning to the finance and banking governance literature, the author's article provides the first conditional and demonstrative analysis that detailed a logical comparative process to analyze the correlation between the board determinants' quality and the financial performance of conventional and IBs. However, previous research has always discussed the main role of the board as an internal governance mechanism on the FP separately in each bank type.

Details

Journal of Accounting in Emerging Economies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2042-1168

Keywords

Article
Publication date: 8 May 2018

Duc Phan, Mahesh Joshi and Bruno Mascitelli

The purpose of this paper is to examine the effects of perceived implications of International Financial Reporting Standards (IFRS) adoption on the willingness to adopt IFRS.

Abstract

Purpose

The purpose of this paper is to examine the effects of perceived implications of International Financial Reporting Standards (IFRS) adoption on the willingness to adopt IFRS.

Design/methodology/approach

The study analysed the causal relationships between perceptions and the willingness of the accountants to adopt IFRS.

Findings

The findings revealed that perceived benefits drove the willingness to adopt IFRS whereas the perceived disadvantages and challenges diminished the willingness. Knowledge of IFRS enhanced the willingness towards IFRS adoption. Also, legitimacy desire enhanced the association between the perceived implications and the willingness to adopt IFRS.

Originality/value

The study contributes significantly to theory and practice as Vietnamese policy makers recently announced their strategic planning to full IFRS adoption by 2025.

Details

Asian Review of Accounting, vol. 26 no. 2
Type: Research Article
ISSN: 1321-7348

Keywords

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