Testing the Level of Compliance of International Accounting Standard IAS 38: Evidence from Bahrain

Abstract

This research aims to examine the level of compliance of International Accounting Standard 38 (IAS 38, intangible assets) among the listed companies of Bahrain Bourse. This paper employs the method of equal weighted disclosure index to determine if the listed firms are complying with the disclosure requirements of the IAS 38. The required data for the year 2016 has been obtained from Bloomberg. The research found that firms have a compliance of 35.4%. The regression analysis results showed that there is a correlation between IAS 38 disclosure and the size of audit firms, leverage, profitability and industry type. There is a lack of relationship between IAS 38 disclosure and age & size of the company. This research serves as the basis of a future study on IAS 38 in different countries in emerging markets.In order to assure high performance and implementation of IAS 38, all firms listed in Bahrain Bourse ought to increase the level of compliance.

Compliance with IFRS 16 Mandatory Presentation and Disclosure Requirements and Company Characteristics: Evidence from an Emerging Market

“…Some studies came in a line with the theory and provided evidence that the leverage has positive association with level of IFRS compliance (Al-Shammari et al, 2008;Samaha & Stapleton, 2009). Another study reported correlation between these leverage and compliance with IFRS (Hassan et al, 2019). On the other hand, (Kumar & Saini, 2016); and Sarea and Abdulla (2015) found negative significant association while Tsegba et al 2017reported negative but not significant association.…”

“…They found that the level of compliance differed by industry type and the investment sector has highest while the insurance industry has the lowest. In other study, Hassan et al (2019) studied the level of compliance of IAS 38 by companies listed on Bahrain stock market for the year 2016. They found that the level of compliance is 35.4% and the audit firm size, profitability, leverage and industry type are correlated with it, while age and company size is not.…”

“…Numerous studies provide evidence that the company size has positive association with the level of compliance (Akhtaruddin, 2005;Al-Shammari et al, 2008;Alsaeed, 2006;Dumontier & Raffournier, 1998;Juhmani, 2012;Kumar & Saini, 2016;Samaha & Stapleton, 2009;Sarea & Abdulla, 2015;Tsegba et al, 2017). Few studies showed no relationship between level of compliance and MDR (Glaum et al, 2013;Hassan et al, 2019).…”

“…Regarding the association between the compliance level with IFRS and company profitability, the accounting literature provide mixed results and inconsistent findings. Some researchers reported significant positive association (Akhtaruddin, 2005;Al-Shammari, 2011;Al Mutawaa & Hewaidy, 2010;Hassan et al, 2019;Tsegba et al, 2017). On the other hand, some researchers found that profitability is not significantly linked compliance with IFRS.…”

“…The accounting literature provided evidence that a high quality of external auditor is highly associated with the compliance level with MDR (Al Mutawaa & Hewaidy, 2010;Dumontier & Raffournier, 1998;Glaum et al, 2013;Hassan et al, 2019;Juhmani, 2012;Sarea & Abdulla, 2015) document a positive association or correlation between size audit firm and the disclosure level. On the other hand, few studies reported non-significant association (Al-Shammari, 2011; Al Mutawaa & Hewaidy, 2010).…”