Search results for: IFRS for SMEs

Authors: Uyanga Jadamba

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Globalisation of the world economy has necessitated the development and implementation of a comparable and understandable reporting language suitable for use by all reporting entities. The International Accounting Standard Board (IASB) provides an international reporting language that lets all users understand the financial information of their business and potentially allows them to have access to finance at an international level. The study is based on logistic regression analysis to investigate the factors for the adoption of theInternational Financial Reporting Standard for Small and Medium sized Entities (IFRS for SMEs). The study started with a list of 217 countries from World Bank data. Due to the lack of availability of data, the final sample consisted of 136 countries, including 60 countries that have adopted the IFRS for SMEs and 76 countries that have not adopted it yet. As a result, the study included a period from 2010 to 2020 and obtained 1360 observations. The findings confirm that the adoption of the IFRS for SMEs is significantly related to the existence of national reporting standards, law enforcement quality, common law (legal system), and extent of disclosure. It means that the likelihood of adoption of the IFRS for SMEs decreases if the country already has a national reporting standard for SMEs, which suggests that implementation and transitional costs are relatively high in order to change the reporting standards. The result further suggests that the new standard adoption is easier in countries with constructive law enforcement and effective application of laws. The finding also shows that the adoption increases if countries have a common law system which suggests that efficient reportingregulations are more widespread in these countries. Countries with a high extent of disclosing their financial information are more likely to adopt the standard than others. The findings lastly show that the audit qualityand primary education levelhave no significant impact on the adoption.One possible explanation for this could be that accounting professionalsfrom in developing countries lacked complete knowledge of the international reporting standards even though there was a requirement to comply with them. The study contributes to the literature by providing factors that impact the adoption of the IFRS for SMEs. It helps policymakers to better understand and apply the standard to improve the transparency of financial statements. The benefit of adopting the IFRS for SMEs is significant due to the relaxed and tailored reporting requirements for SMEs, reduced burden on professionals to comply with the standard, and provided transparent financial information to gain access to finance.The results of the study are useful toemerging economies where SMEs are dominant in the economy in informing its evaluation of the adoption of the IFRS for SMEs.

Keywords: IFRS for SMEs, international financial reporting standard, adoption, institutional factors

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Authors: Satinder Bhatia

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Limited Liability Partnerships (LLPs) was a concept introduced in India in 2009. Ever since then, there has been a fierce growth in the number of organizations registered as LLPs outpacing the number of registrations as private companies. Among other benefits extended to LLPs, the audit being mandated only for LLPs having a turnover of at least Rs 40 lakhs or capital contribution of Rs 25 lakhs, has been a major attraction. This has resulted in only about 10 per cent of LLPs coming under mandatory audit. Even for such companies, the accounting standards to be followed in the preparation of financial statements have not been specified. The Revised Indian Accounting Standards (Revised IndAS) which are aligned with IFRS to a great extent, may apply to LLPs only under limited conditions. Thus, the veracity of even the audited financial statements of LLPs can be questioned. If in future, these LLPs would like to list on a stock exchange to raise capital, there can be serious hurdles if investors do not find the financial statements to be reliable and consistent. LLPs are generally governed by country-specific rules in the area of accounts and audit. Thus, such rules vary across UK, EU and the USA. Some countries have adopted the IFRS for SMEs and since LLPs can be referred to as SMEs; they would come under the ambit of these IFRS provisions. Besides, as the scope of audit widens to cover qualitative information in addition to quantitative data, audit of LLPs has now acquired a new meaning and a new urgency as demands for at least limited purpose audits are arising from different stakeholders including lenders, suppliers, customers and joint venture partners.

Keywords: audit disclosures, audit quality, guidance for SMEs, non-audit services

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Authors: M. S. Turan, Dimple

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Due to implementation of IFRS by several developed and developing countries, India has no option other than to converge their accounting standards with IFRS. There are over 10,000 listed companies required to implement IFRS in India. IFRS based financial information presented by a company is different from the same information provided by Indian GAAPs. In this study, we have brought out and analyzed the effect of IFRS reporting on the financial statements of selected companies. The results reveal that convergence with IFRS brought prominent positive variations in the values of quick ratio, debt/equity ratio, proprietary ratio and net profit ratio, while negative variation is brought in the values of current ratio, debt to total assets ratio, operating profit ratio, return on capital employed and return on shareholders’ equity ratios. It also presents significant changes in the values of items of balance sheet, profit and loss account and cash flow statement.

Keywords: IFRS, reporting standards, convergence process, results

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Authors: Feddaoui Amina

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This paper aimed to help researchers and international companies to the differences and similarities between IFRS (International financial reporting standards) and UK GAAP or UK accounting principles, and to the accounting changes between standard setting of the International Accounting Standards Board and the Accounting Standards Board in United Kingdom. We will use in this study statistical methods to calculate similarities and difference frequencies between the UK standards and IFRS standards, according to the PricewaterhouseCoopers report in 2005. We will use the one simple test to confirm or refuse our hypothesis. In conclusion, we found that the gap between UK GAAP and IFRS is small.

Keywords: accounting, UK GAAP, IFRS, similarities, differences

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Authors: Catalina Florentina Pricope

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The last two decades witnessed a movement towards harmonization of international financial reporting standards (IFRS) throughout the global economy. This investigation seeks to identify the factors that could explain the adoption of IFRS by poor jurisdictions. While there has been a considerable amount, of literature published on the effects and key drivers of IFRS adoption in both developed and developing countries, little attention has been paid to jurisdictions with less developed capital markets and low-income levels exclusively. Drawing upon the Institutional Isomorphism theory and analyzing a sample of 45 poor jurisdictions between 2008 and 2013, the study empirically shows that poor jurisdictions are driven by legitimacy concerns rather than by economic reasoning to adopt an international accounting perspective. This in turn has implications for the IASB, as it should seek to influence institutional pressures within a particular jurisdiction in order to promote IFRS adoption.

Keywords: IFRS adoption, isomorphism, poor jurisdictions, accounting harmonization

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Authors: Edward Chamisa, Colin C. Smith, Hamutyinei H. Pamburai, Abdul C. Abdulla

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South Africa (SA) adopted International Financial Reporting Standards (IFRS) for listed firms effective 1 January 2005. However, it was not until 2011 that substantial financial reporting enforcement changes were introduced, which were meant to ensure compliance with IFRS. This innovative setting allows us to examine the value relevance of accounting amounts during the (1) pre-IFRS adoption period (2002-2004); (2) post-IFRS adoption, but pre-enforcement changes period (2006-2010); and (3) post-enforcement changes period (2011-2012). The results show that accounting amounts were most value relevant in the post-enforcement changes period (R2, 75.5%) compared to both the pre-IFRS adoption period (adjusted R2 is 24.3%) and the period after IFRS adoption but before enforcement changes (adjusted R2 is 37.5%). Also, during the 2008 financial crisis, the equity book value per share was significantly value relevant (at 1%) but not earnings per share, whereas before the crisis, the opposite was true. We make two important contributions to the literature. First, we identify SA as an innovative setting that allows researchers to examine separately the effects of IFRS adoption and enforcement changes on capital markets and accounting quality. This is a departure from prior studies that are dominated by the European Union setting, where IFRS adoption occurred contemporaneously with enforcement and other regulatory changes. Second, we provide preliminary findings which suggest that while the adoption of IFRS seems to have improved the financial reporting quality of accounting amounts of SA listed firms, its impact appears to be limited unless combined with effective enforcement.

Keywords: international financial reporting standards (ifrs), ifrs adoption, financial reporting enforcement, value relevance, price model, equity book value, earnings per share

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Authors: Khaldoon G. Albitar, Hassan Y. Kikhia, Jin P. Zhang

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Since 2007, all companies listed on both Shanghai Stock Exchange and Shenzhen Stock Exchange are required to prepare their consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). This study investigates the impact of adopting IFRS on accounting quality for a sample of listed on Chinese companies during the period 2003-2013 with sample of 10846 observations over a four-year period before and a five-year period after the adoption of IFRS. This study tests whether the level of earnings management is significantly lower after the adoption of IFRS, and reported earnings is more value relevant during the IFRS period by using the Ohlson model and Jones model, as modified by Dechow. The empirical results show that accounting quality improved with lower earnings management and higher value relevant after the adoption of IFRS in China. The current study contributes to the literature on IFRS adoption and earning quality in two ways. First, As most of the existing studies on earnings quality and IFRS have been conducted on data from the U.S and European countries, this study fills a gap in the existing literature by studying the effect of adoption of IFRS on earnings quality in an emerging market. Second, the findings of our study have important implications for policymakers, auditors, multinational firms, and users of financial reports. As the rapid growth of China's economy gains global recognition, the Chinese stock market is capturing the attention of international investor.

Keywords: international financial reporting standards (ifrs), accounting quality, earnings management, value relevance, china

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Authors: Omar Juhmani

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This paper examines the relation between internal corporate governance and the level of corporate compliance with mandatory IFRS disclosure requirements. The internal corporate governance is measured by board and audit committee characteristics. Using data from Bahrain Stock Exchange, the results show that board independence is positively and significantly associated with level of compliance with IFRS disclosure requirements. This suggests that internal corporate governance mechanisms are effective in the financial reporting practices by increasing the level of compliance with IFRS disclosures. Also, the results of the regression analyses indicate that two of the control variables; company size and audit firm size are significantly positively associated with the level of corporate compliance with mandatory IFRS disclosure requirements in Bahrain.

Keywords: Bahrain, board and audit committee characteristics, compliance, disclosure, IFRS

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Authors: Angela McCaskill

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Accounting graduates in most United States universities are not being adequately taught International Financial Reporting Standards (IFRS). As such they are not prepared with the knowledge and skills necessary to remain competitive in international businesses. One of the reasons behind the ill preparation is the lack of specific international accounting instruction available in the U.S. This paper explores the importance of IFRS education through the lenses of graduate accounting majors. The paper specifically explores graduate accounting major’s preparedness in IFRS based on their recent completion of a Master in Accountancy degree where IFRS had been integrated. The data for the study was collected via face-to face and telephone/Skype interviews and questionnaires. After the interview the participants also agreed to answer two supplementary questions. The participants were to determine the amounts that should be reported on the balance sheet under (1) IFRS and (2) U.S. GAAP. These questions intended to test their knowledge of both sets of standards. The sample consisted of on-line and brick and mortar university students enrolled in their graduate program during the period from spring semester 2016 to summer semester 2016. This study shows that a separate course should be devoted to teaching IFRS and convergence related issues. There is a direct correlation between the knowledge level of those students taking an IFRS course and the successful completion of the supplementary questions compared to those who only had IFRS instruction mixed into their U.S. GAAP based instruction. Students who took an international accounting course were better prepared for the IFRS conversion than those who did not have a separate course. Academically, universities need to take a deeper look into the needs of their students and do better at incorporating international standards in their curriculum.

Keywords: accounting education, global accounting standards, international accounting, IFRS and U.S. GAAP convergence, IFRS, U.S. GAAP

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Authors: Misun Kim, Beomsoo Park

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Korean government has strongly supported SMEs financially and technically. It has also changed R&D manpower management so that SMEs can benefit from the knowledge of highly qualified experts. This study evaluates the impacts of such policy on SMEs and analyzes the factors affecting the growth of the firms. Then we compare the characteristics of high growth companies to general companies. This factors could be use in the future for identifying firms that would significantly benefit from manpower help.

Keywords: dispatch human Ccapital, high growth, science and technology policy, SMEs

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Authors: Dwi Wijiastutik, Tarjo, Yuni Rimawati

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The purpose of this empirical study is to analyse how to the market reaction and the conservative degree changes on the adoption of International Financial Reporting Standart (IFRS) through Jakarta Islamic Index. The study also has given others additional analysis on the profitability, capital structure and size company toward IFRS adoption. The data collection methods used in this study reveals as secondary data and deep analysis to the company’s annual report and daily price stock at yahoo finance. We analyse 40 companies listed on Jakarta Islamic Index from 2010 to 2014. The result of the study concluded that IFRS has given a different on the depth analysis to the two of variance analysis: Moderated Regression Analysis and Wilcoxon Signed Rank to test developed hypotheses. Our result on the regression analysis shows that market response and conservatism principle is not significantly after IFRS Adoption in Jakarta Islamic Index. Furthermore, in addition, analysis on profitability, capital structure, and company size show that significantly after IFRS adoption. The findings of our study help investor by showing the impact of IFRS for making decided investment.

Keywords: IFRS, earnings response coefficient, conservatism principle

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Authors: Ugbede Onalo, Mohd Lizam, Ahmad Kaseri

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In view of dearth of studies on changes in accounting standards and banks’ earnings management particularly in the context of emerging economies, and the recent Malaysia and Nigeria change from their respective local GAAP to IFRS, this study deemed it overwhelming to investigate the effects of the switch on banks’ earnings management focusing on LLP as the manipulative device. This study employed judgmental sampling to select twenty eight banks- eight Malaysia and twenty Nigeria banks as sample covering period 2008-2013. To provide an empirical research setting in pursuant of the objective of this study, the study period is further partitioned into pre (2008, 2009, 2010) and post (2011, 2012, 2013) IFRS adoption periods. This study consistent with previous studies models a LLP regression model to investigate specific discretionary accruals of banks. Findings suggest that Malaysia and Nigeria banks individually use LLP to manage reported earnings more prior to IFRS implementation. Comparative overall results evidenced that the pre IFRS adoption or domestic GAAP era for both Malaysia and Nigeria sample banks is associated with higher prevalent earnings management through LLP than the corresponding post IFRS adoption era in diverse magnitude but in favour of Malaysia banks for both periods. With results demonstrating that IFRS adoption is linked to lower earnings management via LLP, this study therefore recommends the global adoption of IFRS as reporting framework. This study also endorses that Nigeria banks embrace and borrow a leaf from Malaysia banks good corporate governance practices.

Keywords: accounting standards, IFRS, FRS, SAS, LLP, earnings management

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Authors: Abdullah Almulhim

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The International Accounting Standards Board (IASB) was established in 2001 to develop International Financial Reporting Standards (IFRS) that bring transparency, accountability, and efficiency to financial markets around the world. In addition, the IFRS provide a unified accounting language, which is especially important in the era of globalization. However, the establishment of a single set of high-quality international accounting standards is a matter of growing importance, as participants in the increasingly integrated world capital market demand comparability and transparency of financial reporting worldwide. Saudi Arabia became the 149th member of the World Trade Organization (WTO) on 11 December 2005, which has increased the need to convert to IFRS. Currently, the Saudi Arabian Monetary Authority (SAMA) requires banks and insurance companies in Saudi Arabia to report under IFRS Standards. However, until the end of 2016, SOCPA standards were applied to all other companies, listed and unlisted. From 2017, listed Saudi companies would be required to report under IFRS Standards as adopted by SOCPA effective 2017. This paper is to investigate the expected benefits gained and highlight the challenges faced by adopting IFRS by the listed companies in the Saudi Stock Exchange. Questionnaires were used as the main method of data collection. They were distributed to listed companies in the Saudi Capital Market. Data obtained through the questionnaires have been imported into SPSS statistical software for analysis. The expected results of this study will show the benefits of adopting IFRS by Saudi Listed Companies. However, this study will investigate the challenges faced by adopting IFRS by the listed companies in the Saudi Arabian Stock Market. Findings will be discussed later upon completion of initial analysis.

Keywords: challenges, IAS, IFRS, opportunities, Saudi, SOCPA

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Authors: Deborah O. Ajumobi, Michael Kyobe

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Studies show that women entrepreneurs are constrained and faced with challenges that inhibit the growth and performance of their businesses. However, with their human competencies, mobile technology and the appropriate business strategy, women-led SMEs can steer their businesses to better performance. While the need for SMEs to align these three elements has been suggested, there is limited knowledge on how SMEs can achieve this and no studies to the authors’ knowledge have examined this in women-led SMEs. This study therefore seeks to fill this gap by investigating how Women-led SMEs can best align these three elements to enhance business performance. In light of this, extensive literature review and theoretical work on the phenomenon has been conducted. Given the existence of the interplay between these three elements, we argue that the perspective of alignment as gestalts is most appropriate in determining the best way women-Led SMEs may align these aspects.

Keywords: women-led SMEs, human Competencies, mobile technology, business strategy, alignment

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Authors: Bhumika Gupta, Jeayaram Subramanian, Hardik Vachhrajani, Avinash Shivdas

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Indian food processing industry is one of the largest in the world in terms of production, consumption, exports and growth opportunities. SMEs play a crucial role within this. Large manufacturing firms largely dominate innovation studies in India. Innovation sources used by SMEs are often different from that of large firms. This paper focuses on exploring various sources of innovation adopted by food processing SMEs in Kerala, South India. Outcome suggests that SMEs use various sources like suppliers, competitors, employees, government/research institutions and customers to get new ideas.

Keywords: food processing, innovation, SMEs, sources of innovation

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Authors: Alexander Kelisek, Stanislava Strelcova

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Developing of business in small and medium-sized enterprises (SMEs) is a specific especially for its flexibility and rapid adaptation to the conditions of turbulent market environment compared to large enterprises. Therefore, an importance of SMEs is growing rapidly in Slovakia but also in other EU countries. Small and medium enterprises are characterized by transparent organizational structure, as it allows the realization of direct management and information flow without significant negative aspects. In the national economy small and medium-sized enterprises represent a significant potential when performs a several important functions (e.g. social, economic, export-import, etc.) The significance of these enterprises is not only at national, but also at transnational level. Importance of SMEs is also aware of the EU, which declared this statement in a key document for SMEs called Small Business Act. In this document, SMEs are characterized, as the backbone of the EU economy and also as a key source of jobs opportunities. In addition to these aspects, SMEs attaches high innovation and development potential. The authors of the article are dealing with the current status of SMEs development in the Slovak Republic and highlight the current challenges that entrepreneurs face in their small and medium enterprises.

Keywords: small and medium enterprises (SMEs), business support, SMEs development, SMEs funding

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Authors: Ichiro Mukai

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The purpose of this study is to investigate whether firms applying International Financial Reporting Standards (IFRS), provide high-quality and comparable earnings information that is useful for decision making of information users relative to firms applying local Generally Accepted Accounting Principles (GAAP). Focus is placed on the earnings quality of listed firms in several developed countries: Australia, Canada, France, Germany, Japan, the United Kingdom (UK), and the United States (US). Except for Japan and the US, the adoption of IFRS is mandatory for listed firms in these countries. In Japan, the application of IFRS is allowed for specific listed firms. In the US, the foreign firms listed on the US securities market are permitted to apply IFRS but the listed domestic firms are prohibited from doing so. In this paper, the differences in earnings quality are compared between firms applying local GAAP and those applying IFRS in each country and industry category, and the reasons of differences in earnings quality are analyzed using various factors. The results show that, although the earnings quality of firms applying IFRS is higher than that of firms applying local GAAP, this varies with country and industry category. Thus, even if a single set of global accounting standards is used for all listed firms worldwide, it is difficult to establish comparability of financial information among global firms. These findings imply that various circumstances surrounding firms, industries, and countries etc. influence business operations and affect the differences in earnings quality.

Keywords: accruals, earnings quality, IFRS, information comparability

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Authors: Amritpal Slaich, Mark Elshaw

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This paper explores the development of a decision support framework for the introduction of business intelligence (BI) through operational research techniques for application by SMEs. Aligned with the goals of the new Midlands Enterprise Initiative of improving the skill levels of the Midlands workforce and addressing high levels of regional unemployment, we have developed a framework to increase the level of business intelligence used by SMEs to improve business decision-making. Many SMEs in the Midlands fail due to the lack of high quality decision making. Our framework outlines how universities can: engage with SMEs in the use of BI through operational research techniques; develop appropriate and easy to use Excel spreadsheet models; and make use of a process to allow SMEs to feedback their findings of the models. Future work will determine how well the framework performs in getting SMEs to apply BI to improve their decision-making performance.

Keywords: SMEs, decision support framework, business intelligence, operational research techniques

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Authors: Javad Izadi, Sahar Majioud

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This study presents an approach of assessing the choice of performance measures of companies in the United Kingdom after the application of IFRS in 2005. The aim of this study is to investigate the effects of IFRS on the choice of performance evaluation methods for UK companies. We analyse through an econometric model the relationship of the dependent variable, the firm’s performance, which is a nominal variable with the independent ones. Independent variables are split into two main groups: the first one is the group of accounting-based measures: Earning per share, return on assets and return on equities. The second one is the group of market-based measures: market value of property plant and equipment, research and development, sales growth, market to book value, leverage, segment and size of companies. Concerning the regression used, it is a multinomial logistic regression performed on a sample of 130 UK listed companies. Our finding shows after IFRS adoption, and companies give more importance to some variables such as return on equities and sales growth to assess their performance, whereas the return on assets and market to book value ratio does not have as much importance as before IFRS in evaluating the performance of companies. Also, there are some variables that have no impact on the performance measures anymore, such as earning per share. This article finding is empirically important for business in subjects related to IFRS and companies’ performance measurement.

Keywords: performance’s Measure, nominal variable, econometric model, evaluation methods

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Authors: Mohamed Zaher Bouaziz

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Our study examines the Ohlson Model, which links a company's market value to its equity and net earnings, in the context of the evolution of the Canadian accounting model, characterized by more extensive use of fair value and a broader measure of performance after IFRS adoption. Our hypothesis is that if equity is reported at its fair value, this valuation is closely linked to market capitalization, so the weight of earnings weakens or even disappears in the Ohlson Model. Drawing on Canada's adoption of the International Financial Reporting Standards (IFRS), our results support our hypothesis that equity appears to include most of the relevant information for investors, while earnings have become less important. However, the predictive power of earnings does not disappear.

Keywords: fair value accounting, Ohlson model, IFRS adoption, value-relevance of equity and earnings

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Authors: Khalid Hassan Abdesamed, Kalsom Abd Wahab

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Economic development and growth are significantly linked to the consistent and sustainable sector of small and medium enterprises (SMEs). Banks are the frontrunners in financing and advising SMEs. The main objective of the study is to assess the tendency of SMEs to use the Islamic bank. Model was developed using quantitative method with a hypothetical-deductive testing approach. Model (N = 364) used primary data on the tendency of SMEs to use Islamic banks gathered from questionnaire. It is found by Mann-Whitney test that the tendency to use Islamic bank varies between those firms which consider formal financing with the ones relying on informal financing with the latter tends more to use Islamic bank. This study can serve academic researchers, policy makers, and developing countries as a model of SMEs’ desirability to Islamic banking.

Keywords: formal financing, informal financing, Islamic bank, SMEs

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Authors: C. Li, G. Coates, N. Johnson, M. Mc Guinness

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In the UK, flooding is responsible for significant losses to the economy due to the impact on businesses, the vast majority of which are Small and Medium Enterprises (SMEs). Businesses of this nature tend to lack formal plans to aid their response to and recovery from disruptive events such as flooding. This paper reports on work on how an agent-based model (ABM) is being developed based on interview data gathered from SMEs at-risk of flooding and/or have direct experience of flooding. The ABM will enable simulations to be performed allowing investigations of different response strategies which SMEs may employ to lessen the impact of flooding, thus strengthening their resilience.

Keywords: ABM, flood response, SMEs, business continuity

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Authors: T. Miková

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This paper analyzes the effect of a single uniform accounting rule on reporting quality by investigating the influence of IFRS on earnings management. This paper examines whether earnings management is reduced after IFRS adoption through the use of “loss avoidance thresholds”, a method that has been verified in earlier studies. This paper concentrates on two European countries: one that represents the continental code law tradition with weak protection of investors (France) and one that represents the Anglo-American common law tradition, which typically implies a strong enforcement system (the United Kingdom). The research investigates a sample of 526 companies (6822 firm-year observations) during the years 2000 – 2013. The results are different for the two jurisdictions. This study demonstrates that a single set of accounting standards contributes to better reporting quality and reduces the pervasiveness of earnings management in France. In contrast, there is no evidence that a reduction in earnings management followed the implementation of IFRS in the United Kingdom. Due to the fact that IFRS benefit France but not the United Kingdom, other political and economic factors, such legal system or capital market strength, must play a significant role in influencing the comparability and transparency cross-border companies’ financial statements. Overall, the result suggests that IFRS moderately contribute to the accounting quality of reported financial statements and bring benefit for stakeholders, though the role played by other economic factors cannot be discounted.

Keywords: accounting standards, earnings management, international financial reporting standards, loss avoidance, reporting quality

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Authors: Muhammad Farid, Jen Der Day

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The purpose of this study is to explore the construct of service innovation model for Small and medium-sized enterprises (SMEs) in automotive service industries. A case study of repair shop of the motorcycle at Makassar city illustrates measure innovation implementation, the degree of innovation, and identifies the type of innovation by the service innovation model for SMEs. In this paper, we interview 10 managers of SMEs and analyze their answers. We find that innovation implementation has been slowly; only producing new service innovation 0.62 unit average per year. Incremental innovation is the present option for SMEs, because they choose safer roads to improve service continuously. If want to create radical innovation, they still consider the aspect of cost, system, and readiness of human resources.

Keywords: service innovation, incremental innovation, SMEs, automotive service industries

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Authors: Monica Santi, Evita Puspitasari

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International Financial Reporting Standard (IFRS) has developed the principle based accounting standard. Based on this, IASB then eliminated the conservatism concept within accounting framework. Conservatism concept represents a prudent reaction to uncertainty to try to ensure that uncertainties and risk inherent in business situations are adequately considered. The conservatism concept has two ingredients: conditional conservatism or ex-post (news depending prudence) and unconditional conservatism or ex-ante (news-independent prudence). IFRS in substance disregards the unconditional conservatism because the unconditional conservatism can cause the understatement assets or overstated liabilities, and eventually the financial statement would be irrelevance since the information does not represent the real fact. Therefore, the IASB eliminate the conservatism concept. However, it does not decrease the practice of unconditional conservatism in the financial statement reporting. Therefore, we expected the earnings quality would be affected because of this situation, even though the IFRS implementation was expected to increase the earnings quality. The objective of this study was to provide empirical findings about the unconditional conservatism and the earnings quality before and after the IFRS adoption. The earnings per accrual measure were used as the proxy for the unconditional conservatism. If the earnings per accrual were negative (positive), it meant the company was classified as the conservative (not conservative). The earnings quality was defined as the ability of the earnings in reflecting the future earnings by considering the earnings persistence and stability. We used the earnings response coefficient (ERC) as the proxy for the earnings quality. ERC measured the extant of a security’s abnormal market return in response to the unexpected component of reporting earning of the firm issuing that security. The higher ERC indicated the higher earnings quality. The manufacturing companies listed in the Indonesian Stock Exchange (IDX) were used as the sample companies, and the 2009-2010 period was used to represent the condition before the IFRS adoption, and 2011-2013 was used to represent the condition after the IFRS adoption. Data was analyzed using the Mann-Whitney test and regression analysis. We used the firm size as the control variable with the consideration the firm size would affect the earnings quality of the company. This study had proved that the unconditional conservatism had not changed, either before and after the IFRS adoption period. However, we found the different findings for the earnings quality. The earnings quality had decreased after the IFRS adoption period. This empirical results implied that the earnings quality before the IFRS adoption was higher. This study also had found that the unconditional conservatism positively influenced the earnings quality insignificantly. The findings implied that the implementation of the IFRS had not decreased the unconditional conservatism practice and has not altered the earnings quality of the manufacturing company. Further, we found that the unconditional conservatism did not affect the earnings quality. Eventhough the empirical result shows that the unconditional conservatism gave positive influence to the earnings quality, but the influence was not significant. Thus, we concluded that the implementation of the IFRS did not increase the earnings quality.

Keywords: earnings quality, earnings response coefficient, IFRS Adoption, unconditional conservatism

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Authors: S. B. Tende, H. L. Abubakar

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It is acknowledged that small and medium enterprises (SMEs) may encounter different ethical issues and pressures that could affect the way in which they strategize or make decisions concerning the outcome of their business. Therefore, this research aimed at assessing entrepreneurial ethics in the business of SMEs in Nigeria. Secondary data were adopted as source of corpus for the analysis. The findings conclude that a sound entrepreneurial ethics system has a significant effect on the level of performance of SMEs in Nigeria. The Nigerian Government needs to provide both guiding and physical structures; as well as learning systems that could inculcate these entrepreneurial ethics.

Keywords: culture, entrepreneurial ethics, performance, SME

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Authors: Muhammad Waseem Akram

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The current study attempts to analyze the impact of business constraints on the growth potential and performance of Small and Medium Enterprises (SMEs) in the electrical industry of Pakistan. Primary data have been utilized for the study collected from the electrical industry cluster in Sargodha, Pakistan. OLS regression is used to assess the impact of business constraints on the performance of SMEs by controlling the effect of Technology Level, Innovations, and Firm Size. To associate business constraints with the growth potential of SMEs, the study utilized Tetrachoric Correlation and Logistic Regression. Findings reveal that all the business constraints negatively affect the performance of SMEs in the electrical industry except Political Instability. Results of Tetrachoric Correlation show that all the business constraints are negatively correlated with the growth potential of SMEs. Logistic Regression results show that Energy Constraint, Inflation and Price Instability, and Bad Business Practices, all three business constraints cause to reduce the probability of income growth in sample SMEs.

Keywords: SMEs, business constraints, performance, growth potential

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Authors: Natalia Strobel, Jan Kratzer

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Achieving effective innovation is a complex task and during this process firms (especially SMEs) often face obstacles. However, research into obstacles to innovation focusing on SMEs is very scarce. In this study, we propose a theoretical framework for describing these obstacles to innovation and investigate their influence on the innovative performance of SMEs. Data were collected in 2013 through face-to-face interviews with executives of 49 technology SMEs from Germany. The semi-structured interviews were designed on the basis of scales for measuring innovativeness, financial/competitive performance and obstacles to innovation, next to purely open questions. We find that the internal obstacles lack the know-how, capacity overloading, unclear roles and tasks, as well as the external obstacle governmental bureaucracy negatively influence the innovative performance of SMEs. However, in contrast to prior findings this study shows that cooperation ties of firms might also negatively influence the innovative performance.

Keywords: innovation, innovation process, obstacles, SME

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Authors: Ugbede Onalo, Mohd Lizam, Ahmad Kaseri, Otache Innocent

Abstract:

Giving the paucity of studies on IFRS adoption and quality of banks accounting quality, particularly in emerging economies, this study is motivated to investigate whether the Nigeria decision to adopt IFRS beginning from 1 January 2012 is associated with high quality accounting measures. Consistent with prior literatures, this study measure quality of financial statement information using earnings measurement, timeliness of loss recognition and value relevance. A total of twenty Nigeria banks covering a period of six years (2008-2013) divided equally into three years each (2008, 2009, 2010) pre adoption period and (2011, 2012, 2013) post adoption period were investigated. Following prior studies eight models were in all employed to investigate earnings management, timeliness of loss recognition and value relevance of Nigeria bank accounting quality for the different reporting regimes. Results suggest that IFRS adoption is associated with minimal earnings management, timely recognition of losses and high value relevance of accounting information. Summarily, IFRS adoption engenders higher quality of banks financial statement information compared to local GAAP. Hence, this study recommends the global adoption of IFRS and that Nigeria banks should embrace good corporate governance practices.

Keywords: IFRS, SAS, quality of accounting information, earnings measurement, discretionary accruals, non-discretionary accruals, total accruals, Jones model, timeliness of loss recognition, value relevance

Procedia PDF Downloads 432

Authors: Zanjbeel Tabassum, Cahit Ali Bayraktar, Asfa Muhammad Din, Murat Durucu

Abstract:

Six Sigma is a widely adapted quality improvement methodology applied throughout the world. Through this paper, an attempt has been made to identify Critical Success Factors (CSF) for successful implementation of Six Sigma in Pakistani Small and Medium-sized Enterprises (SMEs). A survey methodology was used to collect the data from SMEs in Pakistan. The results of this exploratory empirical research reflect the importance of different CSFs of Six Sigma implementation in SMEs in Pakistan. On the basis of extracted factors, a framework has been proposed for successful Six Sigma implementation in Pakistani SMEs. This study will provide a base for Pakistani SMEs and future researchers working in Six Sigma implementation and help them to prepare a road map to eradicate the hurdles in Six Sigma implementation.

Keywords: critical success factors, small medium enterprises (SMEs), six sigma, Pakistan

Procedia PDF Downloads 309