The effect of the adoption of international financial reporting standards on capital market integration in the Gulf cooperation сouncil сountries

Alnodel, Ali A.

doi:10.22495/rgcv6i4siart4

Cited by 10 publications

(11 citation statements)

References 40 publications

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“…By presenting the most substantial variability among the four adopter categories of ISAs, stock market return ( SMRT ) data that is relevant to the LTMJA group is consistent with the findings of previous studies (Alnodel, 2016; Key and Kim, 2017; Klimczak, 2011; Escaffre and Sefsaf, 2011; Loureiro and Taboada, 2012).…”

Section: Resultssupporting

confidence: 86%

Financial market consequences of early adoption of international standards on auditing: international evidence

Elmghaamez

Gerged²,

Ntim

2020

MAJ

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Purpose This paper aims to investigate the effects of the early adoption of International Standards on Auditing (ISAs) on Financial Market Indicators (FMIs) from a diffusion of innovation (DOI) theory perspective. Design/methodology/approach Using panel data from 110 countries in a period that spans from 1995 to 2014, this study applies an ordinary least squares regression model to investigate the financial consequences of adopting ISAs. This analysis was supplemented with estimating a fixed-effects and two-stage least squares regression models to address any concerns regarding the possible existence of endogeneity problems. Findings This study reports three key findings. First, the authors find that early ISAs adoption has a negative effect on several financial market consequences, namely stock market integration, market capitalisation, market turnover, market return, market development, stock price volatility and stock trading volume. Second, using an alternative measure to the one that is proposed by DOI theory, the authors found that some financial indicators have been significantly improved after ISAs adoption, but only for listed firms that prepared their financial statements under International Financial Reporting Standards and audited by ISAs simultaneously. Finally, the financialindicators of European stock markets, however, have insignificantly shrank post the mandatory adoption of ISAs in 2006. Practical implications The empirical evidence raises questions about how ISAs were enforced and implemented. For example, countries that adopted ISAs at early stages may have been dominated mostly by recently established stock exchanges. This implies a crucial need to determine and apply the best type of auditing regime that can increase investors trust and enhance the credibility of stock markets information, which might ultimately advance the FMIs over time significantly. Originality/value To-date, studies investigating the impact of the adoption of ISAs on FMI from a DOI theory perspective are virtually non-existent. The study, therefore, seeks to contribute to the extant literature by examining the influence of ISAs adoption on a wide range of FMIs.

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Section: Resultssupporting

confidence: 86%

Financial market consequences of early adoption of international standards on auditing: international evidence

Elmghaamez

Gerged²,

Ntim

2020

MAJ

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“…In terms of integration, empirical research indicates that IFRS adoption promotes integration into capital markets (inter alia Covrig et al 2007;Cai and Wong 2010). Alnodel (2014) shows that the adoption of IFRS by GCCs stock markets does not affect the integration into the capital market, explaining that some other institutional elements may block the role of common accounting standards. Indeed, the lack of qualified accounting professionals, the ineffectiveness of external auditors, the existing accountant and legal framework, the organization of the financial market, and the lack of education on IFRS are documented as factors that justify the noncompliance to IFRS in GCCs (Al-Shammari et al 2008;Aljifri 2013;Hassan et al 2014;Al-Mannai and Hindi 2015;Nurunnabi 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

Foreign Direct Investment in GCC Countries: The Essential Influence of Governance and the Adoption of IFRS

Siriopoulos

Τσαγκανός

Svingou

et al. 2021

JRFM

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This paper presents an analysis of the factors affecting foreign direct investments, focusing on governance quality and adoption of International Financial Reporting Standards on countries of the Gulf Cooperation Council, which are a special case of study due to their idiosyncratic characteristics, rich natural resources and geographical position. Panel data analysis was conducted, implementing three different models (Fixed Effect, Random Effect, and Arellano Bond Dynamic Model). The results show that the adoption of International Financial Reporting Standards is a strong determinant that promotes foreign direct investments. As regards the governance quality, the block of Gulf Cooperation Council countries has fulfilled the minimum level of governance pre-conditions relative to foreign direct investments. In addition, governance indicators associated with law, rules, and corruption are more influential determinants for foreign direct investments.

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“…They reported a number of suggestions to improve the educational requirements in order to apply IFRS in the Saudi context. Alnodel (2016) examined the effect of the adoption of IFRS on the integration of capital market in the Gulf Cooperation Council (GCC) countries. He reported no significant impact of the adoption of IFRS on the integration of the GCC stock markets.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of IFRS Adoption on the Value Relevance of Accounting Information: Evidence from the Insurance Sector

Alnodel¹

2018

IJBM

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This paper aims to investigate whether the adoption of International Financial Reporting Standards (IFRS) increases the value relevance of accounting information for insurance firms listed in the Saudi stock market. The study employs the Ohlson model (1995) and the Easton-Harris valuation model (1991) in order to examine the association among stock market value and book value and earnings per share. The data was collected for 21 insurance companies listed in the Saudi stock market during the period 2007-2014, which covered pre-/ post-IFRS periods. The results reveal that the book value of equity becomes less value relevant whereas earnings are more value relevant. Further analysis suggests that the increase in the value relevance of accounting information is positively influenced by companies' attributes, especially profitability and size rather than IFRS adoption. These results highlight the importance of institutional factors in the determination of the value relevance of accounting information in emerging stock markets. These results also expand IFRS research through a consideration of the insurance industry, which is more vulnerable to the accounting evaluation model.

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The effect of the adoption of international financial reporting standards on capital market integration in the Gulf cooperation сouncil сountries

Cited by 10 publications

References 40 publications

Financial market consequences of early adoption of international standards on auditing: international evidence

Financial market consequences of early adoption of international standards on auditing: international evidence

Foreign Direct Investment in GCC Countries: The Essential Influence of Governance and the Adoption of IFRS

The Impact of IFRS Adoption on the Value Relevance of Accounting Information: Evidence from the Insurance Sector

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