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Title: Implications of international financial reporting standards on small and growing sector : the alternative investment market experience
Author: Ali, Arshad
ISNI:       0000 0004 2733 5505
Awarding Body: University of Liverpool
Current Institution: University of Liverpool
Date of Award: 2012
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This study evaluates the extent to which the adoption of International Accounting Standards has affected the small and growing companies quoted on the Alternative Investment Market (AIM). Following the 2002 EU regulation, companies listed on the main London Stock Exchange have adopted International Accounting Standards from 2005, while for AIM companies this requirement to comply with international standards was extended until 2007. At the same time, these companies were allowed to follow International Financial Reporting Standards (IFRS) on a voluntary basis from 2005, resulting in the provision of a unique setting to investigate the pre and post mandatory regime. In addition, AIM companies are comparatively different with respect to size, regulation, and ownership structure. It has been observed in previous literature that accounting rules will provide different :esults in different economic and institutional settings. This study takes this opportunity to analyse the importance and magnitude of implications of the International Accounting Standards to the companies quoted on the Alternative Investment Market by using -a dual theoretical lens: positive accounting theory and decision usefulness theory. A multi-method approach IS applied 111 the pursuit of discovering the implications of international accounting standards on small quoted companies. A questionnaire survey was used as the main research tool for collecting data from the senior financial executives of the sampled companies. This was followed by analysis of the reconciliation statement: a mandatory transitional document produced upon each company's adoption of International Financial Reporting Standards (IFRS). Finally, semi-structured interviews were conducted to supplement and check the reliability of the findings of the questionnaire survey and the reconciliation statement analysis. Both parametric and non-parametric statistics were applied to examine any variation between the opinions of the respondents. The results suggest that the senior financial executives of the sampled companies perceive the introduction of International Accounting Standards as nothing more than a technical accounting exercise, due to its effects on the outside world. The findings also reveal that the companies have not observed the purported benefits of reporting under IFRS. Moreover, the results demonstrate that voluntary adopters, relatively bigger in size, have been benefiting to some extent. On the other hand, most of the companies who waited until the adoption of IFRS became obligatory consider it as an additional burden and a costly exercise for very little or no benefit. More specifically, the results suggest that these implications are closely associated with the size of companies and conclude that size matters in both the adoption and implications of IFRS. These results would be useful for non-listed small and medium size entities and large private entities likely to use IFRS on a mandatory basis on or after 2014. As later evidence than 2005 listed companies, implementation reflects system learning and increased regulatory convergence of the UK and IFRS. This study therefore contributes to the impact of adoption in terms of compliance costs and improved disclosures rather than just reporting measurement differences for AIM quoted companies. As such, this study provides cost-benefits information on a major change in accounting regulations, which may inform future regulatory changes, including the introduction of IFRS for private companies.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available