Suja Sarah Thomas, Manish Bansal and Ibrahim Elsiddig Ahmed
This study aims at investigating banks’ compliance with the disclosure requirements of Basel III in two emerging market economies, namely, the United Arab Emirates (UAE) and…
Abstract
Purpose
This study aims at investigating banks’ compliance with the disclosure requirements of Basel III in two emerging market economies, namely, the United Arab Emirates (UAE) and India. This study also examines the impact of economic factors on the extent of disclosures.
Design/methodology/approach
The authors compare the Basel disclosure practices between UAE and Indian listed banks and have used panel data regression models to investigate the compliance and level of reporting based on three market variables, namely, size, leverage and profitability of listed banks.
Findings
After examining Basel reporting for each of three categories of independent factors, size was found to be the predominant factor influencing the Basel disclosures, followed by profitability and degree of financial leverage. It is prudent for all the banks irrespective of size to capitalize on themselves with an intent to tide over the frequent economic crises and prevent every economic crisis from becoming a full-blown financial crisis.
Practical implications
The findings suggest that there is an urgent need for a high level of concerted action in the context of listed banks in the selected emerging market nations to direct more resources to ensure full compliance with Basel III. The findings inform practitioners in emerging countries of compliance and plan expanded future applications. Investors should consider the BASEL compliance level of Banks before parking their funds in the bank’s stocks. The banks having a higher degree of compliance are expected to be safer than their counterparts having lower Basel compliance.
Originality/value
Many previous studies have examined the implementation of Basel III in general. This study is specific in assessing the compliance with disclosure requirements as prescribed by Pillar III of the Basel norms. To the best of the authors’ knowledge, this is the first research to compare market discipline in emerging markets. Existing studies have either assessed the level of compliance in one individual or similar types of markets. However, this study made a pioneering attempt to compare two different countries in the same category (emerging markets).
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Athanasios Fassas, Michail Nerantzidis, Ioannis Tsakalos and Ioannis Asimakopoulos
This study aims to investigate the association between firm valuation and earnings quality in several European countries. Also, it examines if country-level governance and market…
Abstract
Purpose
This study aims to investigate the association between firm valuation and earnings quality in several European countries. Also, it examines if country-level governance and market development are important determinants of firm valuation.
Design/methodology/approach
Using a sample of 5,002 non-financial firms in 37 European countries over the years 2004 to 2019, the authors evaluate the research question using regression models.
Findings
The authors find a significant positive relationship between firm valuation and a multi-factor earnings quality measure based on four components (accruals, cash flows, operating efficiency and exclusions). The authors further show that stock market development is also a driver of firm value, while country-level governance is significant only in the case of a firm fixed effect model with time effects. The results are robust to alternative model specifications that control for endogeneity, sample heterogeneity and alternative proxies for firm valuation.
Practical implications
Policy makers and market participants could benefit from the findings, by exploiting the advantages of earnings quality in terms of high-ranking stocks whose earnings are backed by cash flows and other sustainable sources.
Originality/value
To the best of the authors’ knowledge, this study is the first to empirically test the relationship between earnings quality and firm value in the European setting during a period that incorporates the adoption of IFRS. This is quite interesting as it permits cross-border comparability in terms of financial reporting and provides deeper and more representative evidence.
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Abdulfatah Abdullah Abdulkareem Shayf, Mohd Abdullah, Mosab I. Tabash, Shahrukh Saleem, Asiya Chaudhary, Ammar Ali and Mushahid Ali Shamsi
The study evaluates whether an application of Ind-AS that converged with IFRS in India has enhanced financial reporting quality (FRQ) and how that is reflected in financial…
Abstract
Purpose
The study evaluates whether an application of Ind-AS that converged with IFRS in India has enhanced financial reporting quality (FRQ) and how that is reflected in financial performance (FP).
Design/methodology/approach
Design/methodology/approach: The study uses discretionary accruals (DACC) to measure FRQ. In addition, it uses ordinary least square (OLS) regression to examine the association between Corporate Governance attributes, FRQ, and financial performance for a sample of 24 textile companies from 2010 to 2021.
Findings
The results indicate that adopting IFRS has a role in monitoring CG attributes to enhance FRQ; this means the financial reporting qualit improves somewhat with some CG attributes under Ind-AS. In addition, the results demonstrate that financial reporting quality positively influences FP.
Practical implications
There are significant effects on authorities and decision-makers. The findings from this research can benefit lawmakers by providing Ind-AS policy enforcement with more consideration. The results are also helpful for policymakers who want to improve CG and need proof of the significance of high FRQ in this respect.
Originality/value
Given the dearth of research on FRQ in India, the study extends prior literature on FRQ by examining the quality of financial reporting according to the transformation to IFRS in Indian textile firms. The theoretical contribution of the current study is the testing of agency theory towards practices of corporate governance mechanisms on FRQ and FP in the context of the textile sector.