Journal of Accounting in Emerging Economies

Bashar S. Al‐Yaseen; Husam Aldeen Al‐Khadash

2011 Journal of Accounting in Emerging Economies

doi: 10.1108/20421161111107831

Purpose – This paper seeks to examine the risk relevance of fair value income measures under IAS 39 and IAS 40. Design/methodology/approach – The study sample comprises Jordanian insurance companies. Data were collected from two main sources: Jordanian insurance companies' annual reports, and the official website of the Amman Stock Exchange. The study begins by investigating the volatility of four income measures, calculated by including and excluding holding gains or losses of financial instruments and property investments. Then it examines the association between its four income volatility measures and one stock market‐based risk factor, in order to provide evidence on the risk‐related information content of each income volatility measure. Findings – Income based on fair values reflects income volatility more than historical cost‐based income. It is also found that income is (not) more volatile with the recognition of unrealized fair value gains/losses on financial instruments (investment property). Results of assessing the relative explanatory power of income volatility measures suggest that not all fair value income volatility measures can be a good proxy of the total risk. On the contrary, none of our income volatility measures provides significant incremental risk‐relevant information for total risk. Originality/value – Most prior studies have focused on the value relevance of fair value accounting in Western developed countries, and mainly in the banking sector. This study makes a significant contribution to existing knowledge via exploring the applications of fair value accounting by insurance companies and investigating the implications of mark‐to‐market on risk, instead of share price, in an emerging country – Jordan. The findings of this study are useful to researchers and capital‐market participants interested in explaining accounting and market risk measures.

Omaima A.G. Hassan; Gianluigi Giorgioni; Peter Romilly; David M. Power

2011 Journal of Accounting in Emerging Economies

doi: 10.1108/20421161111107840

Purpose – This paper seeks to examine the association between corporate voluntary disclosure and systematic (market or beta) risk for a sample of Egyptian listed companies. Design/methodology/approach – Using panel data analysis, beta is regressed on the level of voluntary disclosure and the following control variables: dividend payout, asset growth, gearing, firm size and book‐to‐market ratio. Findings – The results generally show a negative relationship between voluntary disclosure level and beta, consistent with predictions of a differential information model and theories about the economic consequences of increased disclosure. The results are dependent on the specification of the model and the market index used to estimate beta, suggesting a need for further research on the link between risk and voluntary disclosure in the context of emerging markets. Practical implications – The main implication of these results is that more voluntary information about listed companies seems preferable to less in order to reduce the perceived riskiness of a company. This should act as an incentive for listed companies to enhance public disclosure. Originality/value – This is one of the first studies to explore the economic consequences of increased disclosure in an emerging capital market using panel data analysis. Another distinctive feature is that market betas are estimated using different measures to obtain greater confidence in the overall conclusions.

Cláudio de Araújo Wanderley; John Cullen; Mathew Tsamenyi

2011 Journal of Accounting in Emerging Economies

doi: 10.1108/20421161111107859

Purpose – The paper seeks to examine the evolution of regulatory accounting within the context of the Brazilian electricity sector reforms. The paper traces the process of the reforms and the development of the regulatory accounting system. Design/methodology/approach – The paper is based on data collected from various documents including those published by the regulator (such as laws, resolutions and technical notes), as well as information from distribution companies and other government agencies. Findings – It is found that regulatory accounting played different roles under the different electricity sector reforms implemented in Brazil. For example, regulatory accounting was minimally used during the first reform, and this brought a range of problems of implementation and consolidation of the electricity sector model. However, regulatory accounting played an essential role in the regulatory framework under the second reform, and this in part contributed to addressing some of the problems of the sector. Originality/value – This is the first study that describes and explains the Brazilian electricity sector reforms by analysing the so‐called core issues in regulatory accounting and tariff review process. The paper contributes to the literature by providing a broader picture of the interconnection between regulatory accounting and the regulator's objectives.

Nadia Albu; Cătălin Nicolae Albu; Ştefan Bunea; Daniela Artemisa Calu; Maria Mădălina Girbina

2011 Journal of Accounting in Emerging Economies

doi: 10.1108/20421161111107868

Purpose – This study aims to investigate in‐depth, and explain the issues related to, the implementation of IAS/IFRS in an emergent country that recently adhered to the European Union, i.e. Romania. Design/methodology/approach – An institutional and structuration theory perspective is used to discuss two stages of IAS/IFRS implementation in Romania. Both primary (11 in‐depth semi‐structured interviews conducted with key actors involved in financial reporting) and secondary data (accounting regulations after the fall of communism, with respect to the implementation of IAS/IFRS) were collected for the purpose of the paper. Findings – It was found that the two stages of IAS/IFRS implementation had different outcomes, with a more profound and qualitative impact of the second phase. The first step was a result of coercive external forces, that is, the influence of the World Bank. Given the lack of other factors to favor the change process, it is argued that the actual implementation of IAS in that period was very limited. Even though the second step meant a reduction in scope to only listed companies in consolidated accounts and financial institutions, it is argued that it was accompanied by a change process more significant than in the previous period. Originality/value – The paper investigates the inter‐play between institutions, routines and politics in the Romanian context and highlights the complexity of accounting change in an emerging country.