Muhammad Jahangir Ali

Disclosure compliance with national accounting standards by listed companies in South Asia

Abstract This paper empirically examines the level of compliance with disclosure requirements mandated by 14 national accounting standards for a large sample of companies within the three major countries in South Asia, namely India, Pakistan and Bangladesh, and evaluates the corporate attributes which influence the degree of compliance with these standards. Using a scoring system to develop a total compliance index (TCI) for each sample company, the results indicate significant variation in total disclosure compliance levels across countries and different national accounting standards. Compliance levels are found to be positively related to company size, profitability and multinational-company status, and unrelated to leverage levels and the quality of external auditors.

The association between privatisation and voluntary disclosure: Evidence from Jordan

Abstract This paper investigates the impact of privatisation on the extent of corporate voluntary disclosure in Jordan.We conduct a longitudinal examination using 243 annual reports of 27 privatised firms in Jordan over a period of nine years from 1996 to 2004. Employing univariate and pooled regression models our results show that privatisation is positively associated with voluntary disclosure. Specifically, we find that accounting regulation reforms and foreign investments accompanying privatisation have a significant impact on the levels of accounting disclosure in Jordan. Our study provides evidence on the role of privatisation in improving the disclosure culture as an important pre‐condition for the development of active capital markets.

The legal and institutional framework for corporate financial reporting practices in South Asia

While most of accounting research concentrates mainly on Europe and developed countries, the South Asian region has not been substantially explored. The purpose of this paper is to examine the legal and institutional environment for corporate financial reporting practices in three South Asian countries of the South Asian Association for Regional Cooperation (SAARC), namely Bangladesh, India and Pakistan. On the basis of examining similarities and differences in environmental factors, classification of South Asian countries and the legal and institutional framework for corporate financial reporting, this paper also explores the possibilities of regional harmonization. It is observed that the three South Asian countries share similar social, political, economic and other environmental factors. Although greater similarities are observed in areas of financial reporting requirements in company law, minor differences are found in the areas of securities exchange law and the standard-setting processes among the three countries. The paper concludes that the prevailing similarities in political, legal, economic, business ownership, accounting profession, culture and institutional structures in the three countries should have facilitated regional accounting harmonization. However, the accounting professional bodies within each country have adopted IASs as the basis of national accounting standards, mostly driven external investments need and the policies pursued the governments in recent years within the region. Since the South Asian countries are important in the context of global capital markets, this paper will help future researchers and regulatory bodies to understand more clearly the comparative current accounting and reporting regulations within the region.

Harmonization of accounting measurement practices in South Asia

This study examines the extent of harmonization of selected accounting measurement practices in three South Asian countries, India, Pakistan and Bangladesh. The study is based on a sample of 566 non-financial companies for the financial year 1997–1998. The degree of harmonization is measured using Van der Tass (1988) I index and Archer, Delvaille, and McLeays (1995) modified C index. The values of the I index and the C index show a relatively higher degree of harmonization in the areas of property, plant and equipment, foreign currency translation and long-term investment, and a lower level of harmonization in the areas of inventory, amortization of goodwill and leases. The results suggest that low harmonization levels are both due to the degree of flexibility available in selecting benchmark treatments in some International Accounting Standards (IAS) and also to non-compliance by companies with IAS-mandated requirements. Significant further work is required by South Asian Federation of Accountants and the other regional accounting bodies if the goals of regional and international accounting harmonization are to be achieved.

Has the harmonisation of accounting practices improved? Evidence from South Asia

Purpose - – This paper aims to examine whether the level of harmonization of accounting measurement practices in three South Asian countries – Bangladesh, India and Pakistan – has improved since 1998 as a result of the changes, in recent years, globally in accounting measurement practices due to the substantial efforts of the International Accounting Standards Board (IASB). South Asian countries have taken a number of steps and made changes in accounting regulations to support the IASB’s harmonization programme. Design/methodology/approach - – In all, 370 non-financial companies for the financial years 1997-1998 and 2007-2008 were used, and consistent with Ali Findings - – It was found that the level of measurement harmonization has significantly improved over the years in selected South Asian countries. Originality/value - – The results suggest that the harmonization of accounting will most likely ensure a greater level of transparency and uniformity in corporate reporting practices (measurement) in South Asian countries and throughout the world as promoted by the IASB.

The adoption of international financial reporting standards (IFRS) in emerging economies: The case for South Asia

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.

Disclosure harmonization of accounting practices: the case for South Asia

Purpose – The purpose of this study is to examine the extent of disclosure harmonization in selected accounting disclosure practices in three South Asian countries, namely, India, Pakistan and Bangladesh. Design/methodology/approach – The study is based on a sample of 566 non-financial companies for the financial year 1998. A total of 91 disclosure items were selected from 13 common IAS-based accounting standards. The I index and chi-square statistics are used to measure the degree of disclosure harmonization. Findings – The values of the I index show a relatively higher degree of disclosure harmonization in the areas of inventories, cash flow statements, consolidated financial statements, investment in subsidiaries, and borrowing costs. A lower level of harmonization is observed in the areas of taxes on income, leases, retirement benefit costs, and investments. Originality/value – These finding have implications for the national standard setters and regulators as well as the International Accounting Standards Board (IASB) and the South Asian Federation of Accountants (SAFA). These bodies may work together for the improvement of comparability of financial reporting in the region.

Auditor independence and accounting conservatism: Evidence from Australia following the corporate law economic reform program

Purpose - – The purpose of this paper is to examine the efficacy of the current legislative provisions that protect auditor independence in Australia. The collapses of several high-profile companies (Enron and WorldCom in the USA, HIH insurance and OneTel in Australia) in the early 2000s has raised questions about audit quality and independence. In response, regulators have introduced new regulations and guidance to improve audit quality. In Australia, the Corporations Act 2001 (2001) was amended via the Corporate Law Economic Reform Program Act 2004. This study poses the question: do non-audit service fees influence the level of accounting conservatism? Design/methodology/approach - – The sample used in this analysis consists of all available Australian listed companies from the years 2006 till 2010. Findings - – Using multiple measures of accounting conservatism and the auditor-client economic bond, our results suggest that the level of the economic bond between the auditor and the client does not significantly influence the level of accounting conservatism. Originality/value - – Our results demonstrate that the combination of intrinsic market mechanisms and regulation in Australia sufficiently protect auditor independence.

Determinants of accounting policy choices under international accounting standards: Evidence from South Asia

Purpose - The purpose of this paper is to examine the determinants of accounting policy choices under International Accounting Standards (IASs) of listed firms in South Asia. Design/methodology/approach - We selected three IASs-based accounting policy choices from 369 listed companies in India, Pakistan and Bangladesh for the financial year 2007-2008. Findings - Our results show that firm size, investment opportunity set, leverage and ownership by the general public are significant determinants of accounting policy choice in South Asian countries. However, we do not find a significant relationship between firms’ accounting policy choices and profitability, assets-in-place and taxes. Practical implications - Our results suggest that as some flexibility exists in IASB’s accounting standards, this may allow managers to use income-increasing/decreasing methods. There is scope for regulators and standards setters to reduce the alternative methods which are likely improve firms’ reporting quality. Originality/value - Our study contributes to the understanding as to what determines managers’ choice of a particular accounting method allowed in IAS.