The Theory of Monopolistic Competition.

Using a sample from 22 countries, I investigate the relations between the accuracy of analysts’ earnings forecasts and the level of annual report disclosure, and between forecast accuracy and the degree of enforcement of accounting standards. I document that firm-level disclosures are positively related to forecast accuracy, suggesting that such disclosures provide useful information to analysts. I construct a comprehensive measure of enforcement and find that strong enforcement is associated with higher forecast accuracy. This finding is consistent with the hypothesis that enforcement encourages managers to follow prescribed accounting rules, which, in turn, reduces analysts’ uncertainty about future earnings. I also find evidence consistent with disclosures being more important when analyst following is low and with enforcement being more important when more choice among accounting methods is allowed. ∗University of Toronto. I appreciate the helpful comments on various versions of this paper by Joel Amernic, Hollis Ashbaugh, Ray Ball (editor), Sudipta Basu, Jeff Callen, Bjørn Jørgensen, Peter Pope (referee), Beverly Walther, and participants at the 2001 EIASM Workshop on Accounting and Regulation, 2002 European Accounting Association Meeting, 2002 Journal of Accounting Research conference, 2002 Canadian Academic Accounting Association meeting, and 2002 American Accounting Association annual meeting. All errors are my own. I gratefully acknowledge the financial support of the Norwegian School of Economics and Business Administration. I thank IBES International Inc. for providing earnings forecast data.

Disclosure Practices, Enforcement of Accounting Standards, and Analysts' Forecast Accuracy: An International Study

This paper reviews the literature on the effects of International Financial Reporting Standards (IFRS) adoption. It aims to provide a cohesive picture of empirical archival literature on how IFRS adoption affects: financial reporting quality, capital markets, corporate decision making, stewardship and governance, debt contracting, and auditing. In addition, we also present discussion of studies that focus on specific attributes of IFRS, and also provide detailed discussion of research design choices and empirical issues researchers face when evaluating IFRS adoption effects. We broadly summarize the development of the IFRS literature as follows: The majority of early studies paint IFRS as bringing significant benefits to adopting firms and countries in terms of (i) improved transparency, (ii) lower costs of capital, (iii) improved cross-country investments, (iv) better comparability of financial reports, and (v) increased following by foreign analysts. However, these documented benefits tended to vary significantly across firms and countries. More recent studies now attribute at least some of the earlier documented benefits to factors other than adoption of new accounting standards per se, such as enforcement changes. Other recent studies examining the effects of IFRS on the inclusion of accounting numbers in formal contracts point out that IFRS has lowered the contractibility of accounting numbers. Finally, we observe substantial variation in empirical designs across papers which makes it difficult to reconcile differences in their conclusions.

A review of the IFRS adoption literature

Intellectual capital (IC) is considered to be a wealth generator and driver of financial performance thus creating competitive advantage and sustainability in business. This paper empirically investigates the impact of IC on financial performance and sustainable growth in the Korean manufacturing industry. Multiple regression models are applied with data collected from 390 manufacturing companies listed on the Korean Stock Exchange during 2012–2016. The results of the analysis show that IC has a positive impact on financial performance and companies’ sustainable growth. In addition, companies’ performance and sustainable growth are positively related to physical capital, human capital (HC), and relational capital (RC). RC is found to be the most influencing factor. Finally, innovative capital captures additional information on structural capital (SC) which negatively affects the performance of Korean manufacturing companies. The results extend the understanding of IC in creating corporate value and building sustainable advantages in emerging economies.

Intellectual Capital, Financial Performance and Companies’ Sustainable Growth: Evidence from the Korean Manufacturing Industry

The purpose of this paper is to explore and compare the extent of intellectual capital (IC) and its four components in high-tech and non-high-tech small and medium-sized enterprises (SMEs) operating in China’s manufacturing sector, and to examine the relationship between IC and the performance of high-tech and non-high-tech SMEs.,The study uses the data of 116 high-tech SMEs and 380 non-high-tech SMEs listed on the Shenzhen stock exchanges during 2012–2016. The modified value added intellectual coefficient (MVAIC) model is used incorporating four components, namely, capital employed, human capital, structural capital and relational capital. Finally, multiple regression analysis is utilized to test the proposed research hypotheses.,The findings of this paper reveal that there is significant difference in MVAIC between high-tech and non-high-tech SMEs. The results further indicate a positive relationship between IC and financial performance of high-tech and non-high-tech SMEs. Specifically, IC is positively associated with firms’ earnings, profitability and operating efficiency. Additionally, capital employed efficiency, human capital efficiency and structural capital efficiency are found to be the most influential value drivers for the performance of two types of SMEs while relational capital efficiency possesses less importance.,This paper will provide a valuable framework for executives, managers and policy makers in managing IC within the Chinese context.,To the best knowledge of the authors, this is the first empirical study that has been conducted on high-tech and non-high-tech SMEs in the manufacturing sector in China.

The impact of intellectual capital on SMEs’ performance in China: Empirical evidence from non-high-tech vs. high-tech SMEs

Purpose




The purpose of this paper is twofold: first, to fill a gap in the intellectual capital (IC) literature by providing insights into the relationship between IC and corporate performance among Arab companies and second, to challenge the validity of the Value Added Intellectual Coefficient (VAIC) as a measure of IC’s contribution to performance.




Design/methodology/approach




The research sample included 100 publicly traded Arab companies selected by Forbes Middle East and ranked as top performers in terms of sales, profits, assets, and market value. The methodology included assessing the impact of IC components on company earnings, profitability, efficiency, and market performance for the period between 2011 and 2015. Research hypotheses were tested through the presentation of descriptive statistics, normality tests, correlation matrix, and multiple regression models.




Findings




The research yielded ambiguous results. Earnings and profitability were significantly affected by structural and physical capital; efficiency was determined primarily by physical capital; and market performance was mainly influenced by human capital.




Research limitations/implications




The main limitation of the research comes from disadvantages of VAIC as the measure of IC’s contributions to performance.




Originality/value




The paper fills a void in the study of IC and corporate performance among Arab companies.

Impact of intellectual capital on corporate performance: evidence from the Arab region

Problem statement: The main goal behind this study is to identify whether banks are working at full efficiency or not and spot the changes in efficiency for banks operating in Lebanon after 2007 financial crisis. Approach: This study was conducted to examine the technical efficiency of 40 banks operating in Lebanon over the two sub-periods 2002-2006 and 2006-2009 using Data Envelopment Analysis (DEA). Results: The results from DEA show that the extent of technical efficiency varies across the banks. Citibank, HSBC, BBAC, IBL and FBL are found to be working at fully technical efficiency, while RBA, HBA, BCN, SGBL, BLA and SLCB are found to be prominently inefficient. Technical efficiency is the highest in large banks and lowest in small banks. Conclusion: After 2007 financial crisis, foreign banks have suffered more with technical efficiency decreasing in foreign banks, while local banks had a significant increase in technical efficiency. Small and medium banks are found to be working at increasing returns to scale, while large banks are working at decreasing returns to scale.

Banking Efficiency in Lebanon: An Empirical Investigation

The fundamental objective of portfolio diversification is to construct a portfolio of uncorrelated or mildly correlated assets so as to maximize the risk-adjusted returns on a portfolio. Portfolio Optimization is one of the techniques used by investment professionals to explore the potential of different assets in maximizing the risk-adjusted returns of the portfolio by adjusting the weight of each asset using simulations or constrained scenarios. A significant amount of research has already been conducted in the area of portfolio diversification that helps investors in devising their investment strategies and policies. Cryptocurrencies in general, and Bitcoin in particular, have aroused significant interest among investment professionals, policymakers, and regulators alike. Although much research has primarily focused on the legal and technological aspects of Bitcoin, the examination of other financial, diversification, hedge, and safe-haven aspects of Bitcoin has not progressed as far. This study explores the potential of Bitcoin as an alternative asset, and its potential in portfolio diversification, by using the portfolio optimization approach. The study employs the portfolio optimization approach under multiple constraining scenarios to evaluate the effectiveness of Bitcoin in portfolio diversification. A Monte-Carlo Simulation approach is then employed to evaluate the outcomes under each scenario by randomizing the outcomes of portfolio optimization. This study suggests that Bitcoin, due to its exotic nature, unwavering appeal, and unknown set of drivers, could at best act as a diversifier rather than a hedge or a safe-haven.

/pdf/bitcoin-and-portfolio-diversification-a-portfolio-bf6kh32g84.pdf

Bitcoin and Portfolio Diversification: A Portfolio Optimization Approach

We investigate the relationship between IFRS adoption and firms’ cash holdings in ten Arab countries in the MENA. We first show that IFRS adoption reduces the cash holdings of the firms. The effect...

The Effect of IFRS Adoption on Corporate Cash Holdings: Evidence from MENA Countries

This study investigates the performance of Bitcoin as a diversifier under different constraining portfolio optimization frameworks. The study employs different constraining optimization frameworks that seek to maximize risk-adjusted returns (Sharpe ratio) of the portfolio by optimizing allocations to each asset class (asset allocation). The performance attributes are evaluated by comparing the portfolios both with and without Bitcoin under frameworks ranging from equal-weighted, risk-parity, and semi-constrained to unconstrained. This study suggests that Bitcoin, due to its exotic nature, unwavering appeal, and unknown set of drivers, could act as a diversifier in normal market conditions, and it might also have some borderline hedge to safe haven properties. The results further suggest that while Bitcoin may be a potential diversifier for a risk-seeking investor, the risk-averse investor must exercise caution by limiting their exposure to Bitcoin in their portfolios, as unnecessary exposure may increase the probability of losses in extreme market conditions.

https://www.mdpi.com/1911-8074/14/7/282/pdf

Nasser Elkanj

Papers

Impact of intellectual capital on corporate performance: evidence from the Arab region

Banking Efficiency in Lebanon: An Empirical Investigation

Bitcoin and Portfolio Diversification: A Portfolio Optimization Approach

The Effect of IFRS Adoption on Corporate Cash Holdings: Evidence from MENA Countries

Bitcoin and Portfolio Diversification: A Portfolio Optimization Approach