Accounting in Emerging Economies: Volume 9

Purpose – The purpose of this study is to empirically examine the extent of adoption of International Financial Reporting Standards (IFRS) within three major South Asian countries – India, Pakistan and Bangladesh.

Design/methodology/approach – We selected 566 non-financial listed companies for the financial year 1997–1998. Fifty-two measurement practices and 72 disclosure practices were drawn from 15 commonly adopted IFRS.

Findings – We find that the overall level of adoption of IFRS regarding measurement and disclosure practices is higher in Pakistan compared with India and Bangladesh. We also find that the adoption level is high for inventories, income statement for the period, research and development costs, retirement benefit costs, foreign currency translations, business combination and accounting for investment in associates, whereas the adoption level is low in the areas of cash flow statements, taxes on income, property, plant and equipment, accounting for leases, accounting for government grants, borrowing costs and consolidated financial statements.

Originality/value – Adoption of IFRS issued by the International Accounting Standards Board (IASB) by listed companies has been a subject of immense interest among accounting standard setters, practitioners and academics throughout the world. South Asian countries have adopted IFRS, either fully or with minor modifications, with a view to improving the quality of financial reporting. This article is one of few that examines this important issue and concludes with some suggestions for improving the adoption levels within South Asia.

Purpose – The purpose of this article is to examine the Internet financial reporting (IFR) practice by listed companies in Egypt as one of the emerging markets (EMs) and investigate empirically some company characteristics as determinants of such practice.

Methodology/approach – Using a 39-item index, content analysis of websites was performed for 88 of the most active Egyptian listed companies on the Egyptian Stock Exchange (EGX). Further, the article employs statistical analysis to test the association between six company characteristics (independent variables) and the extent of the IFR (including three dependent variables).

Findings – Among the sampled companies, only 57 have accessible websites and 45 provide financial information in their websites. The results of univariate analysis, which were verified by multivariate linear regression, show that some company characteristics (e.g. size, profitability, foreign listing and ownership structure) are significantly positively associated with the IFR, while legal form is significantly negatively associated.

Research limitations and implications – The scope of this study is limited to a relatively small sample of Egyptian listed companies and they may not represent all of the possible listed companies. It would be interesting to duplicate this study in other EM countries which have many similarities to the Egyptian environment.

Originality/value – This investigation concerned a country with an EM – Egypt. Few articles have provided insight into the IFR practices of listed companies in Egypt as one of the EM. Unlike previous studies conducted in Egypt, the current study provides evidence regarding two company characteristics, for the first time in Egypt, namely ‘ownership structure’ and ‘legal form’ as explanatory variables of the extent of IFR by listed companies in EGX.

Purpose – The aim of this article is to examine the effects of ownership concentration and board characteristics on the performance of firms domiciled in Jordan.

Design/methodology/approach – The article employs two-stage least square (2SLS) regressions on a sample of 103 firms listed on the Amman Stock Exchange for financial years 2002–2005.

Findings – The empirical results suggest that ownership concentration, multiple directorships and board size are each positive and significant in determining firm performance. Although this result contradicts the findings of some developed country studies, they are consistent with recent emerging market studies.

Implications – The findings of this article echo some of prior researchers’ contention that reforms in corporate governance principles in emerging markets should go beyond adopting the best practice in developed markets and take into account the country- and firm-specific characteristics.

Originality/value – This article exploits a unique dataset of ownership and board characteristics in an emerging market, as well as provides additional evidence on the relation between corporate governance and firm performance. Results of this research provide useful information for policymakers and legislators to understand the environment for corporate control in developing countries.

Purpose of article – Board of Directors are characterized as essential elements in the structure of corporate governance. Hence, this study aimed at identifying the governance practices of Latin-American companies in relation to the fifth principle – “Responsibilities of the Board” – recommended by the Organization for Economic Cooperation and Development (OECD) for this region (Brazil, Argentina, Mexico, and Chile).

Design/methodology/approach – To that end, the legislation and corporate practices of companies in the four countries were studied so as to identify legal provisions on the subject and additional procedures adopted by such companies comparatively to OECD recommendations.

Findings – The results showed that Mexico was the country with the highest level of full compliance with OECD recommendations, followed by Argentina, Brazil, and lastly by Chile. They also showed that a lot of improvement still needs to be made so as to ensure the responsibilities of the board in terms of integrity, efficacy remuneration dissemination, and technical competence.

Research limitations/implications – This study was restricted to only four countries in Latin America: Brazil, Argentina, Mexico, and Chile. This procedure is justifiable by the fact that OECD designed its recommendations based on these four countries. It is also important to point out that this study has focused only on Principle V of OECD (2004), concerning the Responsibilities of the Board of Directors.

Originality/Value of article – This study is justified by the need to understand and disseminate Latin-American practices in face of the region-specific governance recommendations designed by OECD, notably on the behavior of the Board of Directors. This region has developing countries with an active stock market. The region presents great potential for economic development, hence the need for these types of studies.

Purpose – Previous reviews of Corporate Social Reporting (CSR) literature have tended to focus on developed economies. The aim of this study is to extend reviews of CSR literature to emerging economies.

Design/methodology/approach – A desk-based research method, using a classification framework of three categories.

Findings – Most CSR studies in emerging economies have concentrated on the Asia-Pacific and African regions and are descriptive in nature, used content analysis methods and measured the extent and volume of disclosures contained within the annual reports. Such studies provide indirect explanation of the reasons behind CSR adoption, but of late, a handful of studies have started to probe managerial motivations behind CSR directly through in-depth interviews finding that CSR agendas in emerging economies are largely driven by external forces, namely pressures from parent companies, international market and international agencies.

Originality/value – This is the first review and analysis of CSR studies from the emerging economy perspective. Following this analysis, the authors have identified some important future research questions.

Purpose – During the past decade in Malaysia, there has been a rise in the number of companies engaging in a rudimentary form of social and environmental reporting, and this has coincided with high-profile media coverage of environmental disasters in the country. The purpose of this article is to explore the perceptions of accounting practitioners in Malaysia to social and environmental accounting (SEA).

Methodology/approach – The study utilises a mixed-method approach and involves 245 survey questionnaire respondents, 7 in-depth interviews and the qualitative data from 123 of the survey respondents.

Findings – The level of knowledge and awareness of accounting practitioners in Malaysia of SEA is low. They are sceptical about quantification and valuation issues, but are able to see that reform, which would have to be driven by legislation, and could improve business performance regarding social justice and environmental quality.

Research limitations/implications – This study enables the development of SEA and reporting framework as a vehicle for further discussions on business communication and the participants’ perceptions relating to social and environmental accountability in Malaysia. It postulates the strong likelihood that SEA will take root in Malaysia given the strong undercurrents of accounting and business malpractices and the clarion call by many for the reinstatement of the ethical dimension of the profession.

Originality/value of the article – While most research on SEA and reporting in the context of Malaysia focuses on the disclosure aspects, this article explores the perceptions of accounting practitioners and establishes their insights on the issue of social and environmental accountability and reporting.

Purpose – This empirical paper seeks to explore how the shift from traditional budgetary accounting toward accrual accounting declared by the Russian state has affected accounting practices of one public university.

Design/methodology/approach – The empirical data for this research are based on a case study conducted in one state-sponsored university of Russian tertiary education. Our approach is to look at the emergence and implementation of new accounting practices and technologies at the university within the context of broader public sector policy changes occurring in Russia.

Findings – The present study demonstrates that changes at state level have had their initial and most direct impact on formal rules at the university, but little or no impact on its everyday management activity. We claim that the intended changes have so far resulted in more rhetoric than reality, and the changes envisaged have yet to be implemented in university practice.

Research limitations/implications – Since the time frame devoted to this research does not allow the assessment of the final results of the declared reforms, this paper approaches new accounting techniques before they become an established practice at the university. It is also beyond the scope of this research to judge whether these results are applicable to other settings, such as other Russian higher educational establishments.

Practical implications – The paper raises concerns as to whether the old compliance mentality of the Russian state will bring about the desired reform outcome.

Originality/value – This paper provides insights into the nature of Russian public sector accounting change, both at central level and in a specific organizational setting.

Purpose of paper: A growing number of studies of the issues of budget process and budget participation have recently emerged in management accounting literature. This paper extends this literature by explaining budget process and budget participation. This research explores the budget process in JPUs, studies the level of budget participation in these universities, and highlights the views and perceptions of budget preparers about the government budget format.

Design/methodology/approach: Nineteen interviews were conducted in 11 universities in Jordan and in the Ministry of Higher Education during 2008.

Findings: The data suggest that the budget usage varies between JPUs, and budget participation in some universities is not consistent where management is centralized. Although respondents understand the importance of budget usage, most of them are dissatisfied with the ministry budget format.

Research implications: The influence of budget participation on the university's overall performance and on performance of head of department may consider one of the important topics to be researched in the future. While, studying the impact of the ministry budget format on the university performance, the reverse impact and relation might be of vital interest to verify the government's expectation about the universities’ compliance and to highlight the importance of implementing a unique standard for all Jordanian universities.

Originality/value of paper: This study contributes to the literature as prior studies have researched budget process and participation in commercial companies in developed countries; this study combines the budget process, participation level while researching the governmental budget format in HEIs in a developing country.

Purpose – The aim of the study is to contribute to a better understanding of activity-based costing (ABC) implementation systems in the context of a developing country such as Jordan. The main objectives of the study were to determine the extent of ABC implementation within the Jordanian industrial sector and identify the factors that facilitate and motivate the decision to implement ABC. Additional objectives include determining the problems associated with ABC implementation and assessing the degree of success of ABC implementation.

Design/methodology/approach – A questionnaire survey was conducted during 2008 among 88 Jordanian industrial companies that are listed on the Amman stock exchange. Eighty-eight questionnaires were distributed and 61 were returned giving a rate of response of 69.3%.

Findings – The survey findings indicate that ABC implementation among the Jordanian industrial companies is quite satisfactory. The rate of ABC implementation is about 55.7%. The most cited factors that facilitate the decision to implement ABC were that adequate training was provided for designing ABC and operating data in the information system are updated in real time: followed by the fact that adequate training was provided for using ABC. The most influential factors that motivate the process of ABC implementation are among others the increasing proportion of overhead costs, growing costs, including product costs and administrative costs, and currently the increasing number of product variants. Further factors are identified in the paper.

Originality/value – Most previous studies focused only on the implementation of ABC in western developed countries. The results of this study make a contribution to existing knowledge in the area of the implementation of ABC, especially in eastern developing countries such as Jordan. In addition, the current study used a multi-attribute to measure success of ABC implementation within the Jordanian industrial sector. This multi-attribute was composed of satisfaction with ABC implementation, the degree of using ABC in decision making and the success of ABC implementation.

Purpose – Although the proportion of women accountants is rising steadily, their number in partnership position remains constant. This article explores this phenomenon in an attempt (a) to identify the reasons behind it and (b) clarify which are the barriers that hinder female accountants from being in the top echelon of the accounting practice in an emerging economy like Cyprus.

Methodology/approach – The study reported in this article builds on two previous studies, quantitative in nature, carried out by one of the present authors. Utilising the findings of the two earlier studies, the authors use a qualitative approach to further explore the reasons as to why there is a ‘concrete wall’ for women in accounting practices at partnership level.

Findings – In contrast to other studies, the present study found that the prohibiting factor creating the barrier is not motherhood but the cultural attitudes and expectations of men imposed on mothers. Another finding is that despite the fact that there is a bigger pool of women today in senior manager positions, it is uncertain if the proportion of female partners will rise in a decade.

Research limitations – Although the qualitative study utilising interviews of both genders identified interesting concerns for the local accounting profession, these findings cannot be representative of all emerging economies.

Practical implications – The article adds to existing knowledge by clarifying the reasons discouraging women accountants from reaching partnership positions. Findings are of interest to industry stakeholders who wish (a) to attract more women accountants to partnership positions and (b) to develop an environment that addresses women's concerns and enhances their career aspirations towards reaching the top echelon of their profession.

Originality/value of article – Most research in this field utilises quantitative or qualitative research independently. In this research we utilise the results of the quantitative studies to indentify in depth the ‘real’ rather than the ‘imaginary’ barrier facing women accountants from entering partnership. Furthermore, this is the first time this is studied in an emerging economy, whereas all other studies are in developed economies.

Purpose – This study investigates the status of related party disclosure in an emerging economy, that is, India. The reason behind concentrating on India is due to its opening of the economy in 1991 to attract foreign investment. Hence, it is significant that investors are provided with credible information. The accounting value of ‘secrecy’ underlying India and the voluntary nature of detailed reporting about related parties in this country further motivated the present study.

Methodology/Approach – The research method includes a content analysis of the ‘related party disclosure’ section of annual reports of a sample of Indian companies for the financial years 2002–2006.

Findings – Indian companies disclosed more than the required minimum level of related party disclosure as required in the Indian accounting standard. No association between related party disclosure with market capitalization, industry affiliation and foreign listing was found for the year 2006. However, when the scores of all the five years 2002–2006 were considered manufacturing and automotive companies disclosed more about related parties than diversified, service and technology.

Research Limitations – The limitations of our findings rests upon the fact that we have not examined the effect of factors such as the composition of management of each company and the presence of Indians/Non-Indians in management.

Originality/Value of the Paper – Most studies exploring disclosure practices are directed towards developed countries. The disclosure practices in developing countries is an under researched area. This paper contributes towards the existing literature by taking the case of an emerging economy, that is, India.

Purpose – The audit expectation gap has been the subject of research in many countries and in different forms. However, such research of the nature and dimensions of the gap has been limited, if done at all, in the developing countries of West Africa. This study assesses its existence and investigates the factors that have been influencing it.

Design/methodology/approach – Survey responses from questionnaires administered to preparers and users of audited financial statements were analysed.

Findings – Financial statements users have significantly different perceptions about assurances provided by auditors’ reports, whereas the views of company accountants are quite close to those of auditors.

Originality/value – Although the validity of the results of this for international comparison may be limited by the number of financial statements users covered and the socio-cultural characteristics of the Ghanaian business environment, it should be recognised as one of the few to investigate the existence and nature of the expectation gap in the context of a developing country in the West African subregion. It thus adds the literature and points to the need for the adoption of multidisciplinary measures by the accounting profession and financial statements users with the view to eliminating or at the least minimising its persistence and escalation among the various relevant players.

Purpose – Focusing on reporting for financial instruments, the paper tries to capture the role that regulations play within the complex mechanism of capital markets. The outcome of financial reporting represents useful information for decision making. Meanwhile the mechanisms of the capital markets determine reactions on behalf of accounting regulatory bodies who take action through standard setting. It is these standards that will have a big influence on the aforementioned outcome of financial reporting. Beside, there are other influential factors such as accounting practices, the accounting profession, national history, culture, and economy acting at different levels. It was this reasoning that motivated this research demarche of achieving a complete diagnosis of two emergent capital markets, shaped into a SWOT analysis for financial instruments’ reporting and the current financial crisis.

Design/methodology/approach – A special emphasize is put on analyzing formal harmonization on issues related to financial instruments by performing an empirical study. Moreover, the analysis is completed by a descriptive approach of the influential factors such as economic, cultural, and political background of the two nations. The paper also comparatively positions the foresights of the national, European, and international referential. Statistical indicators help quantifying the similarity and dissimilarity degree.

Findings – In times of financial crisis, when everybody is trying to point his finger on somebody else, an empirical analysis of national accounting regulations proving a high level of formal harmonization with and among the international referential and European directives proves an interesting point. The results make us think twice before designating a scapegoat.

Research limitations/implications – The paper only creates the framework proving that individual experiences should be put into good use especially in an area that is continuously exposed to financial engineering. Further developments completing the study focusing on accounting regulations with accounting practices should indicate more precise actions to be taken.

Practical implications – Findings show a significant similarity level between the two national accounting standards, and most importantly between the international referential and the European accounting regulations, and should determine us to furthermore rationally approach the accounting regulation process instead of impulsive reacting to the current financial crisis.

Original aspects – The originality of the paper consists in offering insights on the specific case of Romania and Czech Republic, correlating the state of facts with the foresights of national accounting regulations, by reference to the international referential and the current financial crisis.