The bridge to quality financial reporting: Audit committees’ mediating role in IFRS implementation for emerging markets

Kateb, Ines

doi:10.1002/jcaf.22664

Cited by 11 publications

(7 citation statements)

References 99 publications

(257 reference statements)

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“…Although the findings of the study contradict the literature that indicates IFRS negatively affect financial performance FP (Major & Marques, 2009;Nepal & Deb, 2023), many contend that such relationship is insignificant and unclear (Păşcan & Ţurcaş, 2012;Ofoegbu & Odoemelam, 2018). The findings of the study can be justified by agency theory, which suggests that the IFRS enhances the corporate governance measures (Kateb, 2023), which per se results in the better FP. Thus, our findings demonstrate that developing economies, following the traditional GAAP-based standards, can be significantly benefited by transitioning to IFRS.…”

Section: Discussioncontrasting

confidence: 72%

Does the Ind AS moderate the relationship between capital structure and firm performance?

M N,

Shenoy,

Chakraborty

et al. 2023

J Corp Accounting Finance

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In line with the wide implementation of IFRS around the globe, the significant shift in the Indian accounting system appertained to the Ind AS is expected to have a substantial impact on the firm‐level information environment. Nevertheless, the question of whether the adoption of such standards moderates the relationship between leverage and firm performance remains unanswered. In this backdrop, we aim to close this research gap employing 3120 firm‐year observations from 401 Indian non‐financial firms for a period from 2013 to 2022. Notably, we found that the leverage among Indian firms discourages profitability. Further, the adoption of Ind AS negatively moderates the leverage and firm performance association. The findings suggest that the enhanced transparency and the firm's reporting quality dissuade risk‐averse investors from investing in highly levered companies. As a result, investors avoid risky investments, and firms must strive to foster their trust and motivation. The conclusion of the present research draws significant implications for management and policymakers while also contributing to the ongoing debate on capital structure and firm performance.

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Section: Discussioncontrasting

confidence: 72%

Does the Ind AS moderate the relationship between capital structure and firm performance?

M N,

Shenoy,

Chakraborty

et al. 2023

J Corp Accounting Finance

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“…Another study found no significant relationship between the adoption of IFRS and share price and EPS as components of price value relevance (Kumaravel, 2022). Also, a study on emerging markets (EM) found that IFRS adoption has a negative and significant impact on EM practices (Kateb, 2023). Therefore, it can be concluded that the relationship between IFRS adoption and CG is complex and may vary depending on the context and the specific factors involved.…”

Section: Discussionmentioning

confidence: 99%

Digital accounting system and its effect on corporate governance: An empirical investigation

Al‐Hattami,

Almaqtari,

Abdullah

et al. 2024

Strategic Change

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This empirical investigation explores the impact of the digital accounting system (DAS) on corporate governance (CG). The rapid advancement of technology has revolutionized various aspects of business operations, including accounting processes. The transition from traditional manual accounting systems to digital platforms has been accompanied by significant changes in corporate governance practices. This study aims to investigate the influence of DAS effectiveness (bookkeeping system, DAS security, IFRS adoption, and budgeting system) and the success of DAS (system quality, information quality, and service quality) on CG. The study determined the relationship by conducting a questionnaire survey of 264 senior managers, accountants, and department heads of pharmaceutical companies in Yemen. Partial Least Squares (PLS) was used for data analysis. The results supported all assumed relationships except the relationship between the budgeting system and CG. Specifically, unlike all supposed relationships, the budgeting system had no significant impact on CG. Despite the fact that prior studies have investigated these issues from different aspects in developed countries, the evidence in less developed countries is still unknown. Further, revisiting DAS and CG aspects with different new insights and measures, particularly bookkeeping system, DAS security, IFRS adoption, budgeting system, system quality, information quality, and service quality, has not been the subject of prior studies. As a result, the present study bridges a serious gap in the existing stock of knowledge in DAS and CG studies. Moreover, this piece of research has useful implications for managers, investors, practitioners, academicians, and decision‐makers.

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“…To investigate the impact of EM on RL within Saudi non-financial firms, we use DACC as a proxy for EM and use the performance matched model (PMM) outlined by Kothari et al (2005). This model is preferred due to its theoretical relevance in analyzing EM, as well as its empirical robustness, evidenced by studies in similar contexts (Gerged et al, 2020;Kateb, 2024;Kateb and Youssef, 2023;Habbash and Alghamdi, 2017;Almarayeh et al, 2024). Unlike traditional models like the Jones (1991) Model and the Modified Jones Model (Dechow et al, 1995), PMM incorporates firms' financial performance, facilitating a more accurate detection of DACC by considering performance variations over time.…”

Section: Ijaim 324mentioning

confidence: 99%

“…Empirical research has a notable gap in examining the impact of IFRS implementation on the relationship between relevance and reliability of financial reporting, especially in emerging markets and GCC countries, with exceptions like the studies by Kateb (2024) and IJAIM 32,4 Alruwaili et al (2023). Kateb's research revealed a decline in EM after the adoption of IFRS in 2017 among listed companies in Saudi Arabia, highlighting the initial effects of IFRS adoption on financial reporting practices.…”

Section: Introductionmentioning

confidence: 99%

Reporting lag in the GCC region: exploring the nexus of earnings management and IFRS transition

Kateb

2024

IJAIM

Self Cite

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Purpose The purpose of this study is to delve into the complex interplay between earnings management (EM), the International Financial Reporting Standards (IFRS) implementation and the reporting lag (RL) within the specific context of the Gulf Cooperation Council (GCC) region, with a particular emphasis on the Saudi context, offering insights into their influence on financial reporting practices. Design/methodology/approach Using a panel data set of 135 Saudi companies over an eight-year period, covering four years before and after the mandatory adoption of IFRS in 2017, this study investigates the Saudi financial reporting landscape. It uses interaction moderation analysis to explore variable effects and includes robustness analyses to validate the findings. Findings The findings reveal three key outcomes. First, they challenge conventional expectations by showing no significant impact of discretionary accruals (DACC) on RL, contrary to established accounting theories. This deviation is attributed to unique market characteristics within the GCC region, including family-owned businesses, government involvement and distinct regulations, with specific insights relevant to Saudi Arabia. Second, an unexpected positive association between IFRS adoption and RL in Saudi Arabia emerged. Several contextual factors contribute, including transition costs, compliance expenses, institutional dynamics and reconciling IFRS with local Shariah principles. Most importantly, IFRS adoption significantly reduced RL, especially for companies with high DACC levels. This highlights IFRS’s transformative role, emphasizes aligning EM with international standards for investor confidence and mitigating nonconformity risks in the GCC region’s business landscape. Practical implications The research findings carry significant practical implications for companies operating within the GCC region, accentuating the strategic imperative of timely financial reporting to bolster credibility, align with international standards and fortify investor confidence. Moreover, regulators and policymakers are urged to consider tailoring accounting regulations to accommodate the distinctive GCC context, thereby adeptly addressing the intricacies stemming from the interplay of EM, IFRS adoption and RL dynamics in the region. Originality/value This study adds to the current body of literature by highlighting the significant moderating influence of IFRS transition on the nexus between DACC and RL. It underscores the crucial role of this global accounting framework in reshaping financial reporting practices.

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The bridge to quality financial reporting: Audit committees’ mediating role in IFRS implementation for emerging markets

Cited by 11 publications

References 99 publications

Does the Ind AS moderate the relationship between capital structure and firm performance?

Does the Ind AS moderate the relationship between capital structure and firm performance?

Digital accounting system and its effect on corporate governance: An empirical investigation

Reporting lag in the GCC region: exploring the nexus of earnings management and IFRS transition

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