Expectation Gap Analysis in Corporate Financial Reporting Practices in India
01 Feb 2021-Management and labour studies (SAGE PublicationsSage India: New Delhi, India)-Vol. 46, Iss: 1, pp 38-58
TL;DR: In this paper, the expectation gap of the practitioners and investors on the selected four parameters regarding India's corporate reporting practices and in a curtail period of Inteface period was assessed.
Abstract: This article assesses the expectation gap of the practitioners and investors, if any, on the selected four parameters regarding India’s corporate reporting practices and in a curtail period of Inte...
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01 Jan 2005
TL;DR: In this paper, the authors investigate whether German companies that have adopted IFRS engage significantly less in earnings management compared to German companies reporting under German generally accepted accounting principles (GAAP), while controlling for other differences in earningsmanagement incentives.
Abstract: Abstract This paper addresses the question whether voluntary adoption of International Financial Reporting Standards (IFRS) is associated with lower earnings management. Ball et al. (Journal of Accounting and Economics, 36(1–3), pp. 235–270, 2003) argue that adopting high quality standards might be a necessary condition for high quality information, but not necessarily a sufficient one. In Germany, a code-law country with low investor protection rights, a relatively large number of companies have chosen to voluntarily adopt IFRS prior to 2005. We investigate whether German companies that have adopted IFRS engage significantly less in earnings management compared to German companies reporting under German generally accepted accounting principles (GAAP), while controlling for other differences in earnings management incentives. Our sample, consisting of German listed companies, contains 636 firm-year observations relating to the period 1999–2001. Our results suggest that IFRS-adopters do not present different earnings management behavior compared to companies reporting under German GAAP. These findings contribute to the current debate on whether high quality standards are sufficient and effective in countries with weak investor protection rights. They indicate that voluntary adopters of IFRS in Germany cannot be associated with lower earnings management.
533 citations
TL;DR: In this paper , the effect of the converged version of the International Financial Reporting Standards (IFRS) on the performance of the Indian-listed manufacturing firms has been investigated and the results indicated that full adoption rather than convergence could reap the benefits of the IFRS.
Abstract: PurposeThe study has endeavored to assay the nexus between the converged version of the International Financial Reporting Standards (IFRS) on the performance of the Indian-listed manufacturing firms.Design/methodology/approachThe study has randomly accessed the data of the Bombay Stock Exchange (BSE) listed Indian manufacturing firms using the Prowess IQ database. It has covered 2014–2016 as pre-IFRS and 2017–2020 as the post-IFRS convergence period. Moreover, the study has followed a longitudinal research design with cross-sectional time-series data and has used the difference-in-difference (DiD) technique to assess the effect of the IFRS convergence on firm performance (FP).FindingsThe results have indicated that the adoption of the Indian Accounting Standards (Ind AS) has unlikely reported better FP. It has concurred policy implications as full adoption rather than convergence could reap the benefits of the IFRS.Originality/valueIt has contributed to the existing body of knowledge by assaying the effect of the IFRS convergence on FP in developing economies like India using the DiD methodology. The study is an original piece of research and is free from plagiarism.
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TL;DR: In this paper, the authors examine the associations between four economic outcomes of the 2005 mandatory adoption of International Financial Reporting Standards (IFRS) and concurrent changes in two important accounting constructs, accounting comparability and reporting quality.
Abstract: This study examines the associations between four economic outcomes of the 2005 mandatory adoption of International Financial Reporting Standards (IFRS) and concurrent changes in two important accounting constructs, accounting comparability and reporting quality. My primary purpose is to evaluate the relative importance of cross-country accounting comparability and firm-specific reporting quality in explaining previously documented increases in Tobin's Q, stock liquidity, analyst forecast accuracy, and analyst forecast agreement following IFRS adoption. Given that improvements in both comparability and reporting quality are primary stated objectives of the International Accounting Standards Board (IASB), it is important to understand their relative roles in shaping the information environment of financial statement users following IFRS adoption. Using 1,861 first-time adopters in 23 countries, I find that firms with a larger improvement in comparability have larger increases in Q, liquidity, forecast accuracy, and forecast agreement following adoption, relative to other adopters. In contrast, improvements in reporting quality around adoption appear to have only a second-order effect that is generally limited to Q effects among those adopters with concurrent improvements in comparability. These results are robust to alternative design and variable specifications. Finally, I continue to find these results for samples restricted to countries with weaker pre-adoption institutional environments and countries that did not initiate proactive financial statement reviews, indicating that strong institutions and regulatory improvements are not driving the results. Overall, my results suggest that improvements in cross-country accounting comparability played an important role in the previously documented economic benefits that accrued to 2005 mandatory IFRS adopters.
71 citations
TL;DR: In this paper, the authors examine the perceptions of accounting practitioners and users about implementation challenges with International Financial Reporting Standards (IFRSs) at the pre-implementation stage, and explore the responses of accounting professionals and the banking industry professionals in India to challenges in IFRS implementation.
Abstract: Purpose
This study aims to examine the perceptions of accounting practitioners and users about implementation challenges with International Financial Reporting Standards (IFRSs) at the pre-implementation stage. Under institutional pressures, India conveyed its decision to implement IFRS beginning 1 April 2016, despite initial reluctance to adopt IFRS. It specifically explores the responses of accounting professionals (preparers) and the banking industry professionals (users) in India to challenges in IFRS implementation, rather than more widely researched dimensions of IFRS implementation such as reasons for adoption, experience effects and diversity in practice.
Design/methodology/approach
A quantitative research approach was adopted, using a questionnaire survey that provided 192 responses from accounting practitioners and banking professionals working in India.
Findings
The findings convey IFRS implementation preparedness perceptions of participants with respect to education, training and information technology (IT) infrastructure. Respondents acknowledged the efforts and capability of the accounting body, the Institute of Chartered Accountants of India, but expressed reservations about training, cost, interpretation, IT infrastructure and staffing. The accounting practitioners and the users have similar perspectives on the subject of awareness and preparedness challenges of IFRS implementation.
Practical implications
The study heightens awareness of the challenges facing jurisdictions who express initial reluctance, although they ultimately decide to adopt IFRS on account of institutional pressures. The analysis suggests that the International Accounting Standards Board should increase focus on implementation issues, in addition to updating and making IFRSs.
Originality/value
The study is distinct from the studies in abundance on the creation of accounting standards, implementation benefits and their implication in a specific geography.
29 citations
"Expectation Gap Analysis in Corpora..." refers background in this paper
...…technology support and trained accountants, taxation and investors’ protection issues, substantial enhancements in audit fees and other related accounting costs, slack in availability of IFRS literature, continuous amendments in IFRS and translation-related bottlenecks (Sharma et al., 2017)....
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TL;DR: In this paper, the authors investigate the reasons why "adoption" of one set of globally accepted accounting standards is presently unachievable and propose an internationally respected regulator and suggest the IOSCO for this role through its participation in the IFRS Foundation Monitoring Board for policing and enforcement of IFRS for cross-listed firms reporting in compliance with IFRS so that the IASB's output legitimacy may be achieved globally.
Abstract: We investigate the reasons why “adoption” of one set of globally accepted accounting standards is presently unachievable. By “adoption” we mean that a jurisdiction incorporates IFRS instantly as its national accounting as issued by the IASB. We state that the IASB has used a Legitimacy Theory strategy to gain acceptance of its standards by more than 120 countries across the globe but it has only gained pseudo-“adoption” (not as published by the IASB) of its standards by many countries. We contend that achieving policing and enforcement of its standards globally has proven to be empirically illusive. This legitimacy deficit may explain why convergence between the IASB and FASB is currently idle. We offer a possible solution to bridging the legitimacy gap of global adoption of IFRS. We propose an internationally respected regulator and suggest the IOSCO for this role through its participation in the IFRS Foundation Monitoring Board for policing and enforcement of IFRS for cross-listed firms reporting in compliance with IFRS so that the IASB’s output legitimacy may be achieved globally.
16 citations
TL;DR: In this article, the authors examined the cost of equity capital for foreign firms listed in the US stock exchanges during 2004-2009, a period that the Securities and Exchange Commission (SEC) shifted from requiring foreign issuers to comply with the US GAAP reconciliations to permitting the choice of IFRS in financial reporting.
Abstract: Purpose – The purpose of this paper is to examine the cost of equity capital for foreign firms listed in the US stock exchanges during 2004‐2009, a period that the Securities and Exchange Commission (SEC) shifted from requiring foreign issuers to comply with the US GAAP reconciliations to permitting the choice of IFRS in financial reporting.Design/methodology/approach – The cost of equity of foreign firms in the IFRS reporting period was compared to that in the US GAAP reconciliation period. Also, the cost of equity of foreign firms was compared to that of matched US firms during the two periods.Findings – The results show that the cost of equity in foreign firms is higher during the IFRS reporting period (2007‐2009) than the US GAAP reconciliation period (2004‐2006); foreign firms exhibit a constantly higher cost of equity than that of matched US firms in both periods; and the size of cost of equity difference remains the same with respect to the regulatory change. Further, it is shown that the change in...
10 citations
"Expectation Gap Analysis in Corpora..." refers result in this paper
...Costs of Capital Studies concluded that the voluntary IFRS adoptions have yielded mixed results like significantly reduced capital costs in the USA, Cyprus, the EU countries and Germany (Han & He, 2013), while no evidence could be traced in other countries (Daske et al., 2009)....
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TL;DR: In this paper, the authors extended the prior auditing literature by examining audit engagement challenges arising during government tax compliance audits and concluded that the path to resolution depended a great deal on the individual auditor's judgment, interpretation of the Code of Federal Regulations (CFRs), and willingness of the auditee to change the methods and techniques they use in operating and reporting wine operatio...
Abstract: Purpose – The aim of this paper is to extend the prior auditing literature by examining audit engagement challenges arising during government tax compliance audits. The prior auditing literature has examined how audit engagement challenges have been resolved through auditor/auditee negotiations. Design/methodology/approach – The empirical evidence for the paper was gathered during a participant observation study conducted by the primary researcher over a period of six years while working as an auditor for the Alcohol and Tobacco Tax and Trade Bureau (TTB) of the US Department of Treasury. Findings – This paper discusses various challenges faced by government auditors and how these challenges were resolved. The path to resolution was not always clearly marked. Resolution depended a great deal on the individual auditor’s judgment, interpretation of the Code of Federal Regulations (CFRs), and the willingness of the auditee to change the methods and techniques they use in operating and reporting wine operatio...
9 citations
"Expectation Gap Analysis in Corpora..." refers methods in this paper
...The survey strategy is preferred for accessing its underlying benefits and the rationale for adopting the online survey is indicated in accounting literature as well (Hayes & Baker, 2014)....
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