What is the behavior of selected sample regarding the IFRS topic

Answer

Introduction

1. The IFRS sample conducted was in accordance with the performance of the reforms that were carried out both in UAE and also in Bahrain concerning the IFRS value relevance in provision of accounting information (Barzegari, 2011). Value relevance of the accounting information is supported by the findings of the price and also the return model that have been selected from the respective countries stock exchange. The analysis carried out on the both the periods after and before the adoption of the IFRS and which were based on regression and portfolio calculation concepts reflected the improvement in performance of the stock market in value relevance of the IFRS accounting information after the reforms were carried in Bahrain stock market. The results from the UAE stock market however reflected a decline in the value relevance of the IFRS accounting information after the reforms were carried out. Hence it was concluded that IFRS in UAE stock market did not improve the value relevance in IFRS accounting information.
2. As documented from the research carried out in both the UAE and Bahrain stock markets, value relevance of the accounting information in UAE after the reform period decreased. From previous research carried out (Dontoh, Radhakrishnan, & Roneh; Bryant, 2003; Collins, Maydew, & Weiss, 1977) the decreased value relevance of the IFRS accounting information are influenced by other factors that are not related directly with the accounting numbers or the usefulness of the adopted accounting information. According to Cho (2005) the absolute magnitude that relates to the change in price is directly associated with the available accounting information hence the changes in price is a major reason for the changes in R2 as in the case of UAE. According to Barzegari (2010) the price, stock market index and returns in the securities stock market in Abu Dhabi after the reform years were generally more than the available absolute magnitude of the relevant accounting information. This was mainly due to the limited availability of one year return model data and the two year data price model during the period before the reform was carried out. The other factors that may have contributed to the reduce relevance of the accounting information is also the prevailing economic conditions that existed at the time of the reform and the recession in the world economy.
3. The major advantage of IFRS is that it encourages convergence with the existing accounting standards in a country. It also provides a uniform framework for evaluating the performance and profitability of companies globally. The performance of different companies across the world can be uniformly compared and their achievement rated. IFRS provides a platform for regulating the international standards for financial reporting.
4. The findings of the research undertaken in UAE, the adoption of IFRS did not improve the value relevance of the IFRS accounting information (Barzegari, 2011). The results were gathered from the regression and portfolio methods of calculations on value relevance of accounting information in UAE.
5. The major reasons for the deviation are similar to the Abu Dhabi research findings where other factors beside the usefulness of accounting information could have contributed significantly to the results of the research (Dontoh, Radhakrishnan, & Roneh; Bryant, 2003; Collins, Maydew, & Weiss, 1977). Limited information and the interference of the stock market by external forces contributed significantly to the decreased value on the relevance of IFRS accounting information (Barzegari, 2010). Also the individual value relevance in different transactions like changes in cash, earnings per share, return on equity indicated that they were affected differently by value relevance of the IFRS accounting information. Small and large companies are also affected differently as small companies include start-ups in Abu Dhabi securities market.
6. The major advantage of IFRS is that it encourages convergence with the existing accounting standards in a country. It also provides a uniform framework for evaluating the performance and profitability of companies globally. The performance of different companies across the world can be uniformly compared and their achievement rated. IFRS provides a platform for regulating the international standards for financial reporting.