Value relevance of accounting information in selected Middle East countries

In the past, stock markets in the Middle East have been widely ignored by international investors due to imposed limitations on foreign stock ownership, the lack of common accounting standards and corporate transparency, or they have been simply dismissed on the basis of economic and political uncer...

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Main Author:	Khanagha, Jamal Barzegari
Format:	Thesis
Language:	English
Published:	2010
Subjects:	Accounting - Middle East Accounting - Standards - Middle East Stock exchanges - Middle East
Online Access:	http://psasir.upm.edu.my/id/eprint/19660/1/GSM_2010_11.pdf
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spelling	my-upm-ir.196602015-05-19T03:12:12Z Value relevance of accounting information in selected Middle East countries 2010-12 Khanagha, Jamal Barzegari In the past, stock markets in the Middle East have been widely ignored by international investors due to imposed limitations on foreign stock ownership, the lack of common accounting standards and corporate transparency, or they have been simply dismissed on the basis of economic and political uncertainty. Currently, most of the Middle East countries had some economic reforms and structural adjustment programs (e.g. changes on institutional setting and regulations such as establishing security market regulation, investor protections, trading rules based on shared regulatory responsibility, etc.). Following improvements in financial markets, the Middle East accounting standards have also been reformed to improve the quality of accounting information. Thus, the role of the Middle East stock exchanges have recently become more effective in the international financial system due to the efforts made to increase development in the areas of financial markets, accounting and economic growth. Despite their effective role, the review of literature showed that there is no comprehensive study to identify the value relevance of accounting information and effects of accounting reforms in this region. This study investigates the value relevance of accounting information through three main objectives a) determine the value relevance of accounting information in selected Middle Eastern countries, b) investigate the effect of reform and enforcement of accounting standards in the selected Middle East markets and c) investigate the effect of different classifications of transaction on value relevance of cash flow statement in the Middle Eastern countries. The study uses both the regression-variations and the portfolio-returns approaches to measure the value relevance. Using both approaches provides different perspective on the issue of value relevance of accounting information. Overall, the findings in selected countries showed that firstly, accounting information in all of selected countries is value relevant. Secondly, the results for each country showed, there is a significant difference in value relevance between the periods before and after reform. In other words, accounting standards reforms had impact on the value relevance of accounting information in all of the selected countries. The results showed that accounting standards reforms have improved value relevance of accounting information in Bahrain and Saudi Arabia’s stock exchanges, while for the UAE and Iran reforms did not improve value relevance of accounting information. The results of control variables for selected countries indicated difference in value relevance of accounting information in large and small companies. Findings also revealed greater value relevancy of accounting information of small companies in Bahrain, UAE, and Iran than the large companies, whereas for Saudi Arabia the results are reverse. Results in selected countries revealed differences in value relevance of accounting information in different industries. The results also indicated that information content of cash flow statements based on International Financial Reporting Standards (IFRS) is more value relevant than statement based on the Financial Accounting Standards Board (FASB). Overall, the relevancy of accounting information in selected countries is consistent with the literature. Inconsistent with expectations, the reforms initiated in different countries to improve quality of selected financial information did improve value relevance in only some countries. Accounting - Middle East Accounting - Standards - Middle East Stock exchanges - Middle East 2010-12 Thesis http://psasir.upm.edu.my/id/eprint/19660/ http://psasir.upm.edu.my/id/eprint/19660/1/GSM_2010_11.pdf application/pdf en public phd doctoral Universiti Putra Malaysia Accounting - Middle East Accounting - Standards - Middle East Stock exchanges - Middle East Graduate School of Management
institution	Universiti Putra Malaysia
collection	PSAS Institutional Repository
language	English
topic	Accounting - Middle East Accounting - Standards - Middle East Stock exchanges - Middle East
spellingShingle	Accounting - Middle East Accounting - Standards - Middle East Stock exchanges - Middle East Khanagha, Jamal Barzegari Value relevance of accounting information in selected Middle East countries
description	In the past, stock markets in the Middle East have been widely ignored by international investors due to imposed limitations on foreign stock ownership, the lack of common accounting standards and corporate transparency, or they have been simply dismissed on the basis of economic and political uncertainty. Currently, most of the Middle East countries had some economic reforms and structural adjustment programs (e.g. changes on institutional setting and regulations such as establishing security market regulation, investor protections, trading rules based on shared regulatory responsibility, etc.). Following improvements in financial markets, the Middle East accounting standards have also been reformed to improve the quality of accounting information. Thus, the role of the Middle East stock exchanges have recently become more effective in the international financial system due to the efforts made to increase development in the areas of financial markets, accounting and economic growth. Despite their effective role, the review of literature showed that there is no comprehensive study to identify the value relevance of accounting information and effects of accounting reforms in this region. This study investigates the value relevance of accounting information through three main objectives a) determine the value relevance of accounting information in selected Middle Eastern countries, b) investigate the effect of reform and enforcement of accounting standards in the selected Middle East markets and c) investigate the effect of different classifications of transaction on value relevance of cash flow statement in the Middle Eastern countries. The study uses both the regression-variations and the portfolio-returns approaches to measure the value relevance. Using both approaches provides different perspective on the issue of value relevance of accounting information. Overall, the findings in selected countries showed that firstly, accounting information in all of selected countries is value relevant. Secondly, the results for each country showed, there is a significant difference in value relevance between the periods before and after reform. In other words, accounting standards reforms had impact on the value relevance of accounting information in all of the selected countries. The results showed that accounting standards reforms have improved value relevance of accounting information in Bahrain and Saudi Arabia’s stock exchanges, while for the UAE and Iran reforms did not improve value relevance of accounting information. The results of control variables for selected countries indicated difference in value relevance of accounting information in large and small companies. Findings also revealed greater value relevancy of accounting information of small companies in Bahrain, UAE, and Iran than the large companies, whereas for Saudi Arabia the results are reverse. Results in selected countries revealed differences in value relevance of accounting information in different industries. The results also indicated that information content of cash flow statements based on International Financial Reporting Standards (IFRS) is more value relevant than statement based on the Financial Accounting Standards Board (FASB). Overall, the relevancy of accounting information in selected countries is consistent with the literature. Inconsistent with expectations, the reforms initiated in different countries to improve quality of selected financial information did improve value relevance in only some countries.
format	Thesis
qualification_name	Doctor of Philosophy (PhD.)
qualification_level	Doctorate
author	Khanagha, Jamal Barzegari
author_facet	Khanagha, Jamal Barzegari
author_sort	Khanagha, Jamal Barzegari
title	Value relevance of accounting information in selected Middle East countries
title_short	Value relevance of accounting information in selected Middle East countries
title_full	Value relevance of accounting information in selected Middle East countries
title_fullStr	Value relevance of accounting information in selected Middle East countries
title_full_unstemmed	Value relevance of accounting information in selected Middle East countries
title_sort	value relevance of accounting information in selected middle east countries
granting_institution	Universiti Putra Malaysia
granting_department	Graduate School of Management
publishDate	2010
url	http://psasir.upm.edu.my/id/eprint/19660/1/GSM_2010_11.pdf
_version_	1747811436200984576

Value relevance of accounting information in selected Middle East countries

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