Relationship Financial Report With International Accounting Standard Accounting Essay

Published:

International Financial Reporting Standards or International Accounting Standards are standards which based on principles, framework and the explanations approved through the International Accounting Standard Board (IASB).Several of the standards forming component of IFRS are recognized by their first name of International Accounting Standards (IAS).The International Accounting Standard Committee (IASC) was published the IASs between 1973 and 2001. On 1st April 2001, the latest IASB acquired the IASC in respect of the accountability for setting and publishing International Accounting Standards. All through its earliest meeting the latest Board take on the recent SICs and IAS. The IASB has continued to build up standards known as the newest standards IFRS.

Pakistan has been following the International Accounting Standards since 1985(currently identified as the International Financial Reporting Standards). In 1970 Securities and Exchange Authority an independent organization produced by the government, which developed definite regulations and in 1972 it became effective to advance the practice of financial reporting in Pakistan. The interim accounts were first time made necessary for listed companies. In 1974 Pakistan became a member of The International Accounting Standard Committee (ISAC), shortly after the development of this committee. Pakistan became a member in 1974. To follow the Accounting Standards was not necessary for the listed companies, until the endorsement of the Companies Ordinance 1984, Section 234 for listed companies merely. The unlisted companies are still not obligatory to follow IFRS. Companies Ordinance 1984 was the Fourth along with Fifth agenda, providing the requirements of disclosures for listed as well as unlisted companies, correspondingly. So it is necessary for the listed companies to follow the IFRS as well as Fourth schedule. In 1999 the SEA was converted into Security and Exchange Commission of Pakistan.

Lady using a tablet
Lady using a tablet

Professional

Essay Writers

Lady Using Tablet

Get your grade
or your money back

using our Essay Writing Service!

Essay Writing Service

The structure for the presentation and preparation of financial reports describes fundamental IFRS ethics. The FASB also IASB frameworks are within the procedure of being converged and modernized. The main objective of this plan which is known as joint conceptual framework plan is to filter and update the current theory to reveal the alteration in the markets, company performance along with the financial surroundings that have take place in the two or more decades while the perceptions were primary developed. Its general goal is the creation of foundation which will be sound for future standards for accounting that are rule based, internationally converged and internally reliable. Hence the FASB and the IASB are taking responsibility of this project in cooperation. Further, International Financial Reporting Standards are the set of accounting values build up by an autonomous, not-for-profit organization. The objective of IFRS and IASB is to give a universal framework to how the entities organize and disclose their financial reports. IFRS presents broad direction or ways for the presentation of financial reports, relatively setting regulations for industry's detailed reporting. The Pakistani entities are required to organize their financial reports in compliance with International Accounting Standards. Compliance with IFRS applies to both public and private sectors. It is necessary for all the companies which are listed in Pakistan or in stock exchange in Pakistan to follow all the accounting standards which are issued by IASB excluding the following:

IAS 39 as well as IAS 40: The state bank of Pakistan seized the compliance of these standards for DFIs and Banks. All over the world where the listed entities working are required to prepare their Financial Reports in compliance with some principles like International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles known as US GAAP. In Pakistan it is necessary for all the companies which are listed in Karachi Stock Exchange (KSE) to prepare their Financial Reports in compliance with the IFRS.

Purpose Statement

Listed companies are playing a crucial part in the economy of Pakistan. It is one of the largest growing sectors of Pakistan. The performance of listed companies is much better than the performance of non listed companies. the performance of the listed companies directly affect on the Pakistan economy so it's really important for the company's growth the financial system working properly and give benefit to the organization. So the present study was the attempt to identify the linkage of factors effect on compliance with the international accounting standard. Factors effect on compliance with international accounting standards by listed companies in Pakistan. So the objective of the study was to determine the linkage of Factors with international accounting standards by listed companies in Pakistan. The present study took as the financial reports, accounting transparency and corporate governance independent variables of the study while the International accounting standard as the dependent variables of the study.

1.2 Research Objective

Lady using a tablet
Lady using a tablet

Comprehensive

Writing Services

Lady Using Tablet

Plagiarism-free
Always on Time

Marked to Standard

Order Now

To determine the impact of financial reports on the international accounting standard listed companies of Pakistan.

To determine the impact of accounting transparency on the international accounting standard listed companies of Pakistan. of Pakistan.

To determine the impact of corporate governance on the international accounting standard listed companies of Pakistan. of Pakistan.

1.3Significance of the Study

The present study determined the Factors effect on compliance with international accounting standards by listed companies in Pakistan. The study also aimed to find out the role of factors of compliance and international accounting standard listed companies of Pakistan.

The present study broadens the understanding regarding international accounting standard of in order to maximize their efficiency and profitability of the listed companies. Since there is very little research studies in understanding such scope in international accounting standard of Pakistan, so this study aimed to add knowledge to the existing researches.

The present study helps the higher authorities to made decision regarding the financial rules of treating accounts to increase the profitability and efficiency which in then contribute to the performance of such companies.

Lastly, this study is significant in a way that it provides the conceptual understanding of the relationship among financial reports, Accounting transparency, corporate governance and International accounting standard in the context of Pakistan.

1.4 Research Questions and Hypothesis

1.4.1 Main Research Question

Does actors effect on compliance with international accounting standards by listed companies in Pakistan?

1.5 Theoretical Model

Financial reports

Corporate governance

Accounting transparency

International accounting standard

1.5.1 Hypothesis

H1: Financial reports has relationship international accounting standard.

H2: Accounting transparency has relationship with international accounting standard.

H3: Corporate governance has relationship international accounting standard.

Chapter .2

Literature review

2.1 Relationship Financial report with international accounting standard

(Fekete & Lukács, 2008) Conducted research the topic of factors influencing the extent of corporate compliance with IFRS. The case of Hungarian listed companies. The purposed of this researched article was check the relationship between factors that relate with international financial standard. Independent variables were Company size, Profitability, Leverage, Listing status, International visibility (exports) and Type of industry dependent variable was international accounting standard. This article examine whether Hungarian listed corporation obey through IFRS revelation necessities, recognize a quantity of factors linked with the height of observance. Even though the question of consolidation is not a unique subject for Hungarian expert, the analysis center on the revelation features of consolidation because publishing consolidated accounts is measured unmoving a difficult field (Fekete, 2008).

This researched article used both data collection (sample and variable definition) and analysis (econometric model, tests applied). Hungarian stock market is a comparatively petite marketplace evaluate to its additional west European, American or Asian complement. It now comprehends 42 individual absent of which 22 was a tier listed (blue chips) and 20 belong to tier B. in this researched measured for the study only A tier companies listed on December 31, 2006 due to exposure deliberation, beginning which researched disqualified a quantity of since of their particularities, i.e. banks. Results suggested that business dimension and manufacturing type (additional purposely organism in the IT&C division) be statistically linked among the degree of fulfillment with IFRS discovery necessities. This proposed that big, high tech business comply best to IRFS rules, maybe since they was able to advantage the most from them (Fekete, 2008).

(Abdullah Al Mutawaa, 2010) Conducted researched on the topic of disclosure level and compliance with IRFSS: an empirical investigation of Kuwaiti companies. This researched study empirically examine the degree of observance of Kuwaiti listed companies with IAS/IFRSs revelation supplies and offer proof of the issue linked with the height of fulfillment. The aspects examined were: corporation size, profitability, leverage, liquidity, type of industry, type of auditor, and company age.

For this purpose a revelation directory is urban counting 101 discovery substance instead of 12 IASs. The yearly information of a example of 48 non-financial companies cautiously scrutinize beside the revelation index. The answer of the study point in the direction of that the overall fulfillment height for the sample corporation averages 69% of the disclosure necessary by the principles experienced. Declining consequences point toward that only corporation dimension and kind of manufacturing have optimistic friendship with IAS-required confession and their coefficients are extensively dissimilar from zero. Additional descriptive variables were established statistically insignificant (Abdullah Al Mutawaa, 2010).

Lady using a tablet
Lady using a tablet

This Essay is

a Student's Work

Lady Using Tablet

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Examples of our work

(Bader Al-Shammari a & Tarca, 2008) Conducted researched on the topic of an investigation of compliance with international accounting standards by listed companies in the Gulf Co-Operation Council member states. The purposed of this researched article was examined the amount of completion by method of worldwide accounting standards (IASs) by company in the Gulf Co-Operation committee (GCC) associate states (Bahrain, Oman, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates). Based on a example of 137 corporation (436 company-years) research found that compliance increased more than time, from 68% in 1996 to 82% in 2002. Regardless of strong financial and educational ties among the GCC states, there was important among fatherland difference in fulfillment and surrounded by corporation based on dimension, leverage, internationality, and industry.

The revise offer proof of de jure other than not de facto harmonization in the province. Non compliance replicated some uselessness in the purpose of outside assessor and enforcement dead body, which may be of interest to countries that have adopted IASs recently (Bader Al-Shammari a & Tarca, 2008).

(Massoudi, 2009) Conducted research on the topic of prejudice or not put in danger? Factors that affect the application of IAS 36 in Australia and the United Kingdom. This study study the incidence, quantity and level of conformity to the weakening of capital of IAS 36 reported by the Australian companies enumerated and BRITISH of the industrialist, discretionary consumer and industrial sectors of technology information during the four years adoption according to IFRS (174 years of company).It is supposed it that practices as regards report of weakening are led by the incentives managers, which peroxide by variables such as the book for launching on the market (BTM) and the reports of profitability, the preoccupations with a violation of commitment of debt and the change of President.

The level of conformity as revealed in annual reports is measured using a checklist auto--built of revelation based on the conditions of report of IAS 36. The incidence of weakening proves to be negatively related to the level of the cover of interest and to be frankly related to the change of BTM and CEO. On an annual base, the loss before weakening and industry are the only explanatory variables which are significant and frankly related with the incidence of weakening for three over the four years of the study. The companies which record a higher amount of weakening are to have lower BTM, lower profitability, lower cover of interest and to record a loss after weakening (Massoudi, 2009).

Other explanatory factors for the quantity of weakening include the weakening of recording during the financial year 2008/2009, not enumerating with a foreign Stock Market and higher levels of concentration of property. Compared to IAS 36 requirements of publicity, we find the type of auditor, concentration of property and industry is related to conformity, the concentration of property and the financial year 2008/2009 are appreciably related to total conformity with IAS 36 for the taken companies (Massoudi, 2009).

(Stella Fearnley, 2002) The Adoption of International Accounting Standards in the UK: A Review of Attitudes. In June 2002 the Council of Ministers of EU adopted a requiring reglementation of all the companies enumerated within the EU to employ international standards of accounting (IAS) for consolidated explains periods starting above or after January 1st, 2005. All the people interviewed accept the concept of the common total standards but do not believe that the level of the financial information with RU will improve. Doubts are expressed about Europe being the initial center of an initiative of harmonization, feasibility to establish common standards where there can be differences in interpretation and the consequences of possible convergence with the USA GAAP Education and training is considered the largest transition issue, with audit firms expected to play a key role.

By examining the request of IAS at the not registered companies and the accounts of the various companies which are the subsidiaries of the enumerated groups, a multiplicity of routes at a sight true and right is not constant. However, there is concern concerning the load that requiring of all the BRITISH companies to adopt IAS would impose (Stella Fearnley, 2002).

(Srijunpetch, 2005) Conducted research on the topic the implementation of international accounting standards in Thailand. This research studies the point to which the period of reform-of a accounting it where, as an element of its efforts to internationalize the economy, the government inhabitant of Thailand supported the adoption of normal international accounting have like consequence the changes in the contents of the statements of the financial account and perceptions of quality of the financial information inhabitants of Thailand. The degree of conformity between the matter inhabitants of Thailand practices of accounting and the conditions of the international standards of accounting (IASs) was measured at three times by the index of conformity for a selected number of sectors of accounting, because in various articles required by standards in each sector, and for various companies against all IASs included in the study.

(Srijunpetch, 2005) This study indicates that the degree of conformity in the conditions of IAS significantly increased in the course of time. She concludes that the adoption of IAS in regulations inhabitant of Thailand changed the contents of the statements of the financial account. Investigation and interviews of questionnaire, opinions were expressed that the adoption of IAS in Thailand increased the reliability and the validity of financial information. To a certain extent, the standards of IASB are considered suitable and there was support that standards of accounting inhabitants of Thailand could be based on IASs but with the recognition of the need located with the environment (Srijunpetch, 2005).

(Alfaraih, 2009) Conducted research on the topic of Compliance with International Financial Reporting Standards (IFRS) and the Value Relevance of Accounting Information in Emerging Stock Markets: Evidence from Kuwait, Since the 1960s and the value relevance of accounting information has been an important topic in accounting research. The value relevance research provides evidence as to whether accounting numbers relate to corporate value in a predicted manner (Beaver, 2002). Such research is not only important for investors but also provides useful insights into accounting reporting effectiveness for standard setters and other users. Both the quality of accounting standards used and the effectiveness associated with implementing these standards are fundamental prerequisites for high value relevance (Hellstrom, 2006). However, while the literature comprehensively documents the value relevance of accounting information in developed markets, little attention has been given to emerging markets where the quality of accounting standards and their enforcement are questionable. Moreover, there is currently no known research that explores the association between level of compliance with International Financial Reporting Standards (IFRS) and the value relevance of accounting information.

Motivated by the lack of research on the value relevance of accounting information in emerging markets and the unique institutional setting in Kuwait, this study has three objectives. First, it investigates the extent of compliance with IFRS with respect to firms listed on the Kuwait Stock Exchange (KSE). Second, it examines the value relevance of accounting information produced by KSE-listed firms over the 1995 to 2006 period. The third objective links the first two and explores the association between the level of compliance with IFRS and the value relevance of accounting information to market participants. Since it is among the first countries to adopt IFRS, Kuwait provides an ideal setting in which to explore these objectives. In addition, the Kuwaiti accounting environment provides an interesting regulatory context in which each KSE-listed firm is required to appoint at least two external auditors from separate auditing firms (Alfaraih, 2009).

Based on the research objectives, five research questions (RQs) are addressed. RQ1 and RQ2 aim to determine the extent to which KSE-listed firms comply with IFRS and factors contributing to variations in compliance levels. These factors include firm attributes (firm age, leverage, size, profitability, liquidity), the number of brand name (Big-4) auditing firms auditing a firm's financial statements, and industry categorization. RQ3 and RQ4 address the value relevance of IFRS-based financial statements to investors. RQ5 addresses whether the level of compliance with IFRS contributes to the value relevance of accounting information provided to investors. Based on the potential improvement in value relevance from adopting and complying with IFRS, it is predicted that the higher the level of compliance with IFRS, the greater the value relevance of book values and earnings (Alfaraih, 2009).

2.2 Relationship with accounting transparency and international accounting standard

(Agyei-Mensah, 2012) Impact to adopt the international standards of accounting 1 (IAS 1) in Ghana: Extent of the revelations, and their relations with the characteristics of company this document studies the extent of the revelation by companies being in conformity with IAS 1. The examined principal relations are between the extent of the revelation and the company size, profitability, the liquidity, the lever and the size of auditor. The results of the level of revelation, means of 60.9%, indicate that most companies dimensioned on the Stock Market of Ghana were not in conformity primordially with the requirements of publicity of IAS 1. The result of the multiple analysis of regression proves that only the liquidity is statistically associated withan important rate with regard to the width with the revelation.

transparency

(Mark, Karl, & Maffett, 2009) examine Transparency, Liquidity, and Valuation: International Evidence. The purpose of this researched article was determined the relationship between transparency, stock market liquidity and assessment for a global sample of firms. Independent variable was transparency, stock market liquidity and dependent valuation. For this research data was collected DataStream advanced and sample size for this researched study were 21 countries including Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, and the U.K . The result shows this study that they have positive relationship between transparency and liquidity.

(Agyei-Mensah B. , 2012) Describe the impact of adopting International Accounting Standards 1 (IAS 1) in Ghana: The extent of disclosures, and their relationship to corporate characteristics. The purpose of this researched article was find out the relationship between extent of disclosure and company size, profitability, liquidity, leverage and auditor size. Independent variable in this study was extent of disclosure and company size dependent variable profitability liquidity and leverage. For this study data were collected from annual reports of the companies in the sample and all of the reports accessed from the companies web sites. Multiple regression analysis were applied for infer the result and result of regression clearly shows just liquidity have positive relationship with extent of disclosure.

(Smith, 2003) Describe transparency, financial accounting information and corporate Governance. The purpose of this research article was checking the relationship between accounting transparency, financial accounting information and corporate governance. Independent variables were used in this study was corporate reporting, governance disclosures, timeliness of disclosures, accounting policies, credibility of disclosures and dependent variable corporate governance for this study data collected through different yearly financial reports of 150 companies and for result purpose used descriptive method by using SPSS. Result of this researched article was clearly defined accounting transparency affect on corporate governance.

(Kothari, 2002) Describe the role of financial reporting in reducing financial risks in the market. The purpose of this researched article was determine the relationship financial repotting and financial risk. Independent variable in this study financial reporting and dependent variable financial risk, Data was collected from the annual reports and balance sheet of years 1997-2001 of sample companies. The result of the study showed that for all the financial reporting significant relationship with financial risk.

(Bignon.v & Breton.R, 2006) Describe corporate transparency and the cost of capital. The purpose of this research article was examined the relationship between corporate transparency, and precise accounting standards can lead to a higher cost of capital. Independent variable was corporate transparency and dependent variable was accounting standards. The population of the study was 148 manufacturing companies listed in IDX. The study took 78 manufacturing companies listed in stock exchange as the sample of the study. Data was collected from the financial statements of years 2001-2005 of sample companies. Uninformed traders were balanced liquidity traders that look forward to that they lose because of informed trading. Reduction in market liquidity therefore leads to higher cost of external capital. The "agency cost" comes from asymmetries among investors.

(Bapat.a & Raithatha.m, 2008) Describe corporate transparency through implementation of Indian accounting standards. The purpose of these researched articles was examined the relationship between corporate account transparency with accounting standards. Independent variable corporate account transparency and dependent variable accounting standards. This researched study experimental examination on sample of listed companies to conclude the amount of compliance with secretarial standards principal to transparency in their financial statements. The paper is based on primary survey of Annual reports. Indian Accounting Standards mandatory for the listed companies are compared with disclosures made by the companies. The paper examines whether a significant relationship exists between disclosure in financial reporting and a number of key corporate characteristics like size, profitability, leverage, age of company etc. The collected data is being analyzed with Regression Analysis. Indian companies have shown high degree of compliance with disclosure requirements of Accounting Standards.

(Naughton.j, 2012) Worked on article the impact of footnote transparency on managerial discretion: evidence from fas132r pension disclosure. The purposed of this researched article was determined the relationship between accounting transparency and managerial discretion. Independent variable used in this research was accounting transparency and dependent variable was managerial discretion. This researched found that the marketplaces act in response to the new revelation. Stock profits were extremely additional linked with retirement fund cost in the post-FAS132R era, which was reliable with a development on the whole excellence of annuity cost. Furthermore, organizations practiced were unenthusiastic irregular revisit if they exposed a high use of judgment in their first FAS132R discovery, which is reliable with the marketplace organism talented to distinguish the excellence of annuity expenditure diagonally organizations. The dimension and sponsored position of the annuity map influenced how organizations responded to the amplified revelation necessities.

(PCAOB, 2011) Describe transparency of institutions and the enforcement of accounting Standards. The purpose of this researched paper was examined the relationship between accounting transparency with enforcement of accounting standards. Independent variable was used in this researched study accounting transparency and dependent variable was used accounting standards. Data collected from 88 countries company's reports of 16 years data. The major consequences were: primary, jointly compact point and examiner stage enforcement were every absolutely linked with transparency. Subsequent, firm stage enforcement is depressingly (positively) linked with USA GAAP (IAS/IFRS) use.

(Rajgopal.s & Venkatachalam.M, 1997) Describe the role of institutional investors in corporate governance: an empirical investigation Institutional investors, who now own a significant portion of equity in U.S. firms, are often described as transient and myopic owners with no incentives to involve themselves in governance. We examine the validity of this assertion by examining whether institutional owners curb managerial discretion by constraining earnings manipulation. Specifically, we investigate the relation between institutional ownership and discretionary accounting behavior, as measured by discretionary accruals. Our findings are consistent with institutional monitoring and inconsistent with institutional investors encouraging myopic management behavior. We also perform triangulatory tests that examine the capital market pricing implications of managerial. discretion, across different levels of institutional ownership. Results from additional analyses further strengthen our earlier findings. Overall, we find evidence inconsistent with allegations that institutions, due to their transient disposition or otherwise, do not monitor the firms they invest in.

(Srijunpetch, 2005) This study indicates that the degree of conformity in the conditions of IAS significantly increased in the course of time. She concludes that the adoption of IAS in regulations inhabitant of Thailand changed the contents of the statements of the financial account. Investigation and interviews of questionnaire, opinions were expressed that the adoption of IAS in Thailand increased the reliability and the validity of financial information. To a certain extent, the standards of IASB are considered suitable and there was support that standards of accounting inhabitants of Thailand could be based on IASs but with the recognition of the need located with the environment (Srijunpetch, 2005).

(Alfaraih, 2009) Conducted research on the topic of Compliance with International Financial Reporting Standards (IFRS) and the Value Relevance of Accounting Information in Emerging Stock Markets: Evidence from Kuwait, Since the 1960s and the value relevance of accounting information has been an important topic in accounting research. The value relevance research provides evidence as to whether accounting numbers relate to corporate value in a predicted manner (Beaver, 2002). Such research is not only important for investors but also provides useful insights into accounting reporting effectiveness for standard setters and other users. Both the quality of accounting standards used and the effectiveness associated with implementing these standards are fundamental prerequisites for high value relevance (Hellstrom, 2006). However, while the literature comprehensively documents the value relevance of accounting information in developed markets, little attention has been given to emerging markets where the quality of accounting standards and their enforcement are questionable. Moreover, there is currently no known research that explores the association between level of compliance with International Financial Reporting Standards (IFRS) and the value relevance of accounting information.

Motivated by the lack of research on the value relevance of accounting information in emerging markets and the unique institutional setting in Kuwait, this study has three objectives. First, it investigates the extent of compliance with IFRS with respect to firms listed on the Kuwait Stock Exchange (KSE). Second, it examines the value relevance of accounting information produced by KSE-listed firms over the 1995 to 2006 period. The third objective links the first two and explores the association between the level of compliance with IFRS and the value relevance of accounting information to market participants. Since it is among the first countries to adopt IFRS, Kuwait provides an ideal setting in which to explore these objectives. In addition, the Kuwaiti accounting environment provides an interesting regulatory context in which each KSE-listed firm is required to appoint at least two external auditors from separate auditing firms (Alfaraih, 2009).

(Risberg, 2005) Determine corporate governance and accounting quality is bad news good news. The purpose of this researched article was checking the impact of quality of accounting on goor cash flow on the business. Independent variable quality of accounting and dependent variable corporate governance. For data collection purpose used financial reports of 11 European countries, data collected through financial reports of the company. The result propose that organization point out that firms in lower pyramid deposit was destructive reporters of economic growth but loose reporters of economic losses evaluate to independent firms. The difference in sell overseas policy might be linked to ownership concentration.

(Wilson, 2000 ) Describe emerging as in developed markets, companies that adopt strict corporate-governance practices are being rewarded by institutional investors. The purpose of this research article was checking the relationship between institutional investors and corporate governance practices. Independent variables corporate governance practices and dependent variable corporate governance. Without a doubt, investigation propose that institutional shareholder determination compensate as a large amount as 28 percent additional meant for the shares of well governed companies in emerging markets. Do such shareholder perform with the intention of they lecture? To discover away, this research looked at 188 companies from six emerging markets-India, Malaysia, Mexico, South Korea, Taiwan, and Turkey-and tested the link between the market valuation and the corporate-governance practices of these companies in 2001.

(Bapat.a & Raithatha.m, 2008) Describe corporate transparency through implementation of Indian accounting standards. The purpose of these researched articles was examined the relationship between corporate account transparency with accounting standards. Independent variable corporate account transparency and dependent variable accounting standards. This researched study experimental examination on sample of listed companies to conclude the amount of compliance with secretarial standards principal to transparency in their financial statements. The paper is based on primary survey of Annual reports. Indian Accounting Standards mandatory for the listed companies are compared with disclosures made by the companies. The paper examines whether a significant relationship exists between disclosure in financial reporting and a number of key corporate characteristics like size, profitability, leverage, age of company etc. The collected data is being analyzed with Regression Analysis. Indian companies have shown high degree of compliance with disclosure requirements of Accounting Standards.

(Naughton.j, 2012) Worked on article the impact of footnote transparency on managerial discretion: evidence from fas132r pension disclosure. The purposed of this researched article was determined the relationship between accounting transparency and managerial discretion. Independent variable used in this research was accounting transparency and dependent variable was managerial discretion. This researched found that the marketplaces act in response to the new revelation. Stock profits were extremely additional linked with retirement fund cost in the post-FAS132R era, which was reliable with a development on the whole excellence of annuity cost. Furthermore, organizations practiced were unenthusiastic irregular revisit if they exposed a high use of judgment in their first FAS132R discovery, which is reliable with the marketplace organism talented to distinguish the excellence of annuity expenditure diagonally organizations. The dimension and sponsored position of the annuity map influenced how organizations responded to the amplified revelation necessities.

2.3 Relationship with corporate governance and international accounting standard

(Ravichandra & Vasudevan, 2007) Determine corporate governance and accounting standards make use of accounting information for investor protection and awareness. The purpose of this researched article was verify the relationship between governance and accounting standards investor protection and awareness. Independent variable in this research study corporate governance, accounting standers and dependent variables investor protection and awareness. In this study used documents analysis for infer the result. This result of this study that positive relationships between the practice of prescribed norms/standards and the effect thereof on shareholders.

(Shankaraiah.k & Rao.D.N., 2004) corporate governance and accounting standards in oman: an empirical study on practices The method used occupies Disclosure Index calculation, and also SPSS information processing, investigation and explanation of consequences. Data gathering involves a variety of businesses and a comprehensive read through all their consolidated financial statements. Research progress is being continuous by definite investigation criteria, such as: time period, headquarter market capitalization and company profile. They use ten countries for selection of entities and use data of from 2005 to 2009. They selected total 92 entities and used seven variables and made a model. They conclude that the model is applicable and there is a correlation among information disclosures in relation with IAS 23 and the considered variables.

(Nicolò.G, Laeven.l, & Ueda.k, 2006) Corporate Governance Quality: Trends and Real Effects Sample selected consist of all industrial and service entities listed in Italian Stock Exchange and use t-test analysis. The Italian firms are not fully complying with IFRS and the researcher found that the IFRS is more beneficiary for Italian entities than GAAP. Italian accounting system and some discrepancy with some IFRS region concerning to revenue recognition, deferred taxation, impairment reviews, leasing, fair valuations, capital allocation, and employee benefits. So there is a need for Italian accounting system to accept a universal or comprehensive financial reporting model that will facilitate entities to take part in a worldwide market.

According to the prior research in this study the (Gazzar, 1999) explains that from some previous years the number of entities accept to follow the International Accounting Standards (IAS) in the presentation of their Financial Reports. In his study he inspects the enthusiasm and distinctiveness of the entities following the IAS. His research point out the scale of entities foreign operations, financing policy, attachment of definite environmental trade mass in the European Union (EU) and numerous on foreign stock markets are extensively linked with multinationals act in accordance with IAS.

(SOLOMON.d & BRYAN-LOW.c, 2004) Determine companies complain about cost of corporate-governance rules. The purpose of this research article was verified the relationship between company complain and corporate governance rules. In this study corporate governance was treating independent variable and companies complain was dependent variable. The data was collected from the financial statements of five years (1999-2003) of the sample companies. Statistical analysis was applied to analyze the data. The results of the study showed that corporate governance rules has significant effect on the companies complain of the firm over the 5 years.

(Bichut.D, 2005) as according to this researcher many companies in the world began to use this new process to financial reporting. According to him the European Union (EU) conceded a guideline that entails the listed companies to organize their financial reports according to the requirements of IFRS in 2005. He discussed the steps of sustainable reporting which can pick up the management of entities. For this purpose the entity must have organizational structure, policy, process, data competency and people in place. If the company is following IFRS then they must have good process and control in respect of ensuring the reporting. By using IFRS company can make long term benefits and also look at the prospect opportunities.

(Fagerstroma., Hassel, & Cunningham, 2007) In their study they discussed about the key issue of IFRS compliance in the countries of Europe and other countries. This resultant reading uses field- studies of secondary's of multinationals in three states to investigate stage of non-compliance for vertical alterations when merging. The degree of agreement and degree of dissimilarities be utilized to examine the facts. At the end of research the consequences of considerable non-compliance and some causes of nonconformity, especially income smoothing.

(Erkens.D, Hung.M, & Matos.p, 2009) Determine corporate governance in the 2007-2008 financial crisis: evidence from financial institutions worldwide. The purpose of this researched article was examined the role of corporate governance in the 2007-2008 credit disaster, by sole dataset of 306 monetary firms beginning 31 state that were at the middle of the crisis. Moreover, the result find that firms that used CEO compensation contracts with a heavier stress on yearly bonuses knowledgeable better wounded throughout the disaster and get additional threat previous to the disaster. On the whole, result suggested with the intention of as governance is absolutely linked through the penalizing of decision-making for losses incurred during the crisis period; it did not prevent these losses, but instead exacerbated them by encouraging executives to focus on short-term performance.

(Chatham, 2004) Explains whether the compliance and adoption of IFRS is profitable for entities and to which extent the companies are complying with IFRS. He selected companies of France, Sweden, and Switzerland because he found big gap in the presentation of financial statements of these countries. He use IAS compliance a variable of the study and also explains the indicator of non-compliance like unusual items in the financial report and the assessment of inventories etc. He used correlation data analysis and found that the Switzerland comprise the maximum average percentage IAS compliance score which is (85.3%).

(Al-Shammari.B, Brown.P, & Tarca.A, 2003)They conducted a study to check the stage of compliance with IFRS at Gulf. They selected a sample of 137 companies of Gulf and used regression analysis for their research purpose. They measured the compliance with self-constructed compliance checklist. They found that the companies are following the International Accounting Standards and the compliance is increasing day by day, 68% in 1992 to 82% in 2002.

(Jamil, Idrees, & Mamdouh, 2013) Describe corporate governance and its impact on the quality of accounting information in the industrial community shareholding companies listed in Amman financial market- Jordan. The purpose of this researched article was examined the relationship between governance and quality of Accounting Information on industrial firms listed in Amman Financial Market. Independent variable governance and dependent variable quality of accounting information in Amman industries. Data collected in two ways primary and secondary questionnaire for this study structured questionnaire was developed and distributed in 50 industrial firms and for analysis purpose used SPSS for infer the result. In addition establish to present was effectual completion of the main beliefs of corporate governance influence the quality of financial reporting, makes it more accurate and quality in a community study.

(Srijunpetch, 2005) Conducted research on the topic the implementation of international accounting standards in Thailand. This research studies the point to which the period of reform-of a accounting it where, as an element of its efforts to internationalize the economy, the government inhabitant of Thailand supported the adoption of normal international accounting have like consequence the changes in the contents of the statements of the financial account and perceptions of quality of the financial information inhabitants of Thailand. The degree of conformity between the matter inhabitants of Thailand practices of accounting and the conditions of the international standards of accounting (IASs) was measured at three times by the index of conformity for a selected number of sectors of accounting, because in various articles required by standards in each sector, and for various companies against all IASs included in the study.

(Srijunpetch, 2005) This study indicates that the degree of conformity in the conditions of IAS significantly increased in the course of time. She concludes that the adoption of IAS in regulations inhabitant of Thailand changed the contents of the statements of the financial account. Investigation and interviews of questionnaire, opinions were expressed that the adoption of IAS in Thailand increased the reliability and the validity of financial information. To a certain extent, the standards of IASB are considered suitable and there was support that standards of accounting inhabitants of Thailand could be based on IASs but with the recognition of the need located with the environment (Srijunpetch, 2005).

(Alfaraih, 2009) Conducted research on the topic of Compliance with International Financial Reporting Standards (IFRS) and the Value Relevance of Accounting Information in Emerging Stock Markets: Evidence from Kuwait, Since the 1960s and the value relevance of accounting information has been an important topic in accounting research. The value relevance research provides evidence as to whether accounting numbers relate to corporate value in a predicted manner (Beaver, 2002). Such research is not only important for investors but also provides useful insights into accounting reporting effectiveness for standard setters and other users. Both the quality of accounting standards used and the effectiveness associated with implementing these standards are fundamental prerequisites for high value relevance (Hellstrom, 2006). However, while the literature comprehensively documents the value relevance of accounting information in developed markets, little attention has been given to emerging markets where the quality of accounting standards and their enforcement are questionable. Moreover, there is currently no known research that explores the association between level of compliance with International Financial Reporting Standards (IFRS) and the value relevance of accounting information.

Motivated by the lack of research on the value relevance of accounting information in emerging markets and the unique institutional setting in Kuwait, this study has three objectives. First, it investigates the extent of compliance with IFRS with respect to firms listed on the Kuwait Stock Exchange (KSE). Second, it examines the value relevance of accounting information produced by KSE-listed firms over the 1995 to 2006 period. The third objective links the first two and explores the association between the level of compliance with IFRS and the value relevance of accounting information to market participants. Since it is among the first countries to adopt IFRS, Kuwait provides an ideal setting in which to explore these objectives. In addition, the Kuwaiti accounting environment provides an interesting regulatory context in which each KSE-listed firm is required to appoint at least two external auditors from separate auditing firms (Alfaraih, 2009).

(Bova.F & Pereira.R, 2008) Describe the public and private companies of Kenya to check the compliance with international accounting standards. There are two questions or objectives of this research the first one is what factors influence IFRS compliance subsequent IFRS implementation in a weak enforcement situation? Second, does IFRS compliance improve a firm's information environment in a weak enforcement financial system? In this study the researcher use correlation analysis and this analysis include the 2006 FiRe award assessment data which is based on the 2005 annual financial statements of 78 dissimilar companies. In the result they found that the publicly traded companies have greater impact of IFRS in contrast of privately traded companies.

Chapter 3

Methodology

3.0 Introduction

The purpose of this chapter is to explain the research methodology used for collecting and analyzing data used to test the research model. Factors effect on compliance with international accounting standards by listed companies in Pakistan. In this chapter data collection method, population and sampling, measures, reliability and validity and data analysis are discussed.

3.1 Research Paradigm

There are three types of research paradigms. First one is the positivism in which quantitative research approach is used. In positivism existing theory is verified. To verify the existing theory assumptions are made. In positivism the numeric data is collected. The collected data is analyzed through SPSS.

The second one is interpretivisim which is a qualitative research approach. In interpretivism a new theory is generated. The data is collected through observations and interviews are used to collect the data. The collected data is analyzed through images and words in interpretivism approach.

The third approach is pragmatism approach in which both (quantitative and qualitative) approaches are used to collect and analyzed the data.

So the present study uses the positivism research approach because present study employs the quantitative research method to verify the existing theories. The present study also uses the questionnaire approach to collect the data which is normally used in quantitative research approach. The present study also uses the numeric data and social packages for the analysis of the data.

3.2 Data Collection

In order to find the data on the Factors effect on compliance with international accounting standards by listed companies in Pakistan. The data was collected on four variables namely financial reports, accounting transparency and corporate governance and international accounting standard. The present study used the positivism research approach which is a quantitative research approach. The present study used the numeric the data on the variables because quantitative method vastly used by social sciences. Questionnaires were developed to collect the data on the variables of the study.

3.3 Sample and Sampling Technique

3.3.1 Population

The population of the present study was the employees of different listed companies. ( Bank Al-Habib Limited, Bank Al-Falah Limited, Askari Bank Limited and Apna Microfinance Bank Limited)

3.3.2 Sample size

The data of the study was collected from the 70 employee of listed companies ( Bank Al-Habib Limited, Bank Al-Falah Limited, Askari Bank Limited and Apna Microfinance Bank Limited)

3.3.3 Sampling technique

Convenience sampling technique was used to collect the data of the present study. The reason for choosing convenience sampling technique is that it consumes less time to collect the data.

3.4 Measures

In order to measure the Factors effect on compliance with international accounting standards by listed companies in Pakistan only filled questionnaire was used. The survey contained 17 questions in which the respondents respond according to their own perceptions using a Likert-type scale with five responses (1 strongly disagree, 2 disagree, 3 neutral, 4 agree, 5 strongly agree). Measure for each variable is defined below:

Financial reports:

Financial reports was measured by asking the four questions by using a Likert-type scale with five responses (1 strongly disagree, 2 disagree, 3 neutral, 4 agree, 5 strongly agree).

Accounting transparency:

Accounting transparency was measured by asking the four questions by using a Likert-type scale with five responses (1 strongly disagree, 2 disagree, 3 neutral, 4 agree, 5 strongly agree).

Corporate governance:

Corporate governance was measured by asking the four questions by using a Likert-type scale with five responses (1 strongly disagree, 2 disagree, 3 neutral, 4 agree, 5 strongly agree).

International accounting standard:

International accounting standard was measured by asking the five questions by using a Likert-type scale with five responses (1 strongly disagree, 2 disagree, 3 neutral, 4 agree, 5 strongly agree).

3.5 Reliability and validity

3.5.1 Reliability

Through SPSS 16.0 software the reliability test was employed to the questionnaire to check whether the data of the study reliable or not. The value of the cronbach Alpha determined the reliability of the data of the study.

Reliability Test

3.5.2 Validity

To check the validity of the data the present study employed the face validity technique. The reason for choosing the face validity was that the questionnaires were made by consulting previous literature on variables of the study so the questionnaires was also checked by the experts in research field to check their validity.

3.6 Data Analysis

The collected data of the study is analyzed by using SPSS 16.0 software. The data was analyzed by using descriptive statistics, correlation, and regression analysis.

3.6.1 Descriptive Statistics

The objective of the descriptive statistics was to find the frequency of the data. Descriptive statistics also tells the minimum and maximum range of the data.

3.6.2 Histograms

Histograms were applied to check the graphical representation of the entire data whether it is normally distributed or not. The bell curved shapes of the data in histogram verify that the data is normally distributed.

3.6.3 Scatter Plots

Scatter plots were applied to the data to check the relationship between variables. Scatter plots also confirm the linear or non linear relationship between two variables.

3.6.4 Correlation

Correlation is used to check the inter relationship among variables. For checking the relationship we will make two hypotheses: null (H0) and alternative (H1). We interpret the findings on the acceptance or rejection of the hypothesis. We used correlation matrix to check the mutual relationship of different variables.

3.6.5 Regression Analysis

Regression analysis is a statistic technique used to investigate the relationships between a dependent variable and one or more independent variables. In regression analysis technique the strength of the relationship among the variables is checked. Applied regression analysis to check the significance of the relationship and R-test tells about the dependence of variables on each other. F-test is also applied to check the influence of the independent variable on the dependent variable in regression analysis.

CHAPTER 4

RESULTS AND ANALYSIS:

Reliability analysis:

Sr#

Variables

Items

Cronbach;s Alpha

1

Financial reports

4

.803

2

Accounting transparency

4

.833

3

Corporate governance

4

.840

4

International accounting standard

4

.709

Interpretation:

For checking the reliability of the data and check our instrument is reliable or not we apply inter item consistence test and check our data reliable first variable Financial reports in this research have 4 question and value of cronbach's alpha is .803 that's shows data or instrument are valid next variable accounting transparency factors and have 4 question and value of .833, next variable increase Corporate governance factors and have 4 question and value of .840 also shows our data are valid for this research and last variable International accounting standard used 4 question and value of cronbach's alpha .701 shows data are reliable because if the value of cronbach's alpha is greater than .7 than data is reliable and our instrument for this research valid.

Five figure summary

Descriptive Statistics

N

Minimum

Maximum

Mean

Std. Deviation

Financial report

70

1.25

4.75

3.3893

.85829

Accounting transparency

70

1.50

4.75

3.4786

.94863

Corporate governance

70

1.00

4.75

3.5929

.93848

International accounting standard

70

1.50

4.50

3.6107

.67919

Valid N (listwise)

70

Interpretation:

Table presents the summary of all scale variables. For this study likert scales of 5 options (strongly agree, agree, neutral, disagree, and strongly disagree). Total number of respondent of each variable is 70 for this research,In this research for understanding of numeric data we apply the descriptive statistic analysis of our scale variable to summarizing data and apply that test our all variables Financial reports, Accounting transparency, Corporate governance and International accounting standard in which we apply the five figure summary in which first column shows number of respondent are 70 which we chose for this study next column shows mean of all variables mean of Financial reports mean value 3.38 minimum value is1.25, the maximum value is 4.75 and standard deviation .85 next variable accounting transparency first column number of respondent 70 minimum value 1.50, maximum 4.75, mean is 3.47 and standard deviation .94 and next variable Corporate governance mean 5.59 , minimum value is1.00, the maximum value is 3.5 and standard deviation .93 next last variable International accounting standard number of respondent are 70 minimum value 1.50, maximum value 4.50, mean 3.61 and standard deviation .67.

Histogram:

Interpretation:

Strongly agree = 1

Agree = 2

Neutral = 3

Disagree = 4

Strongly disagree = 5

Interpretation:

The above table shows the data normality of financial reports variable to check the distribution of data apply histogram and used five point likert scales for this purpose. Histogram shows most of the respondent lies on 2.5- 3.5 that's shows out of 70 respondent most of the respondent chose disagree and neutral and rest of other respondent chose high and low value and data of financial reports factors is normally distributed.

The second table shows the data normality of accounting transparency factors variable to check the normally distribution of data apply histogram and used five point likert scales for this purpose. Histogram shows most of the respondent lies on 2.0- 3.0 that's shows out of 70 respondent most of the respondent chose agree and neutral and rest of other respondent chose high and low value and normal curve shows data is normally distributed of accounting transparency.

Third table shows the data normality of Corporate governance variable to check the normally distribution of data apply histogram and used five point likert scales for this purpose. Histogram shows most of the respondent lies on 3- 4 that's shows out of 70 respondent most of the respondent chose agree, neutral and rest of other respondent chose high and low value and normal curve shows data of corporate governance is normally distributed

Fourth table shows the data normality of International accounting standard variable to check the normally distribution of data apply histogram and used five point likert scales for this purpose. Histogram shows most of the respondent lies on 2.5- 3.5 that's shows out of 70 respondent most of the respondent chose agree, neutral and rest of other respondent chose high and low value and normal curve shows data of international accounting standard is normally distributed.

Scatter plot:

Interpretation:

The above table shows a scatter plot matrix which shows the three scale variables i.e. financial reports, accounting transparency and corporate governance. The overall pattern of dots show that there is diagonal upward straight regression line predicting positive relationship between all variables financial reports, accounting transparency and corporate governance and apply Pearson correlation to check the mutually relationship between all variables.

Correlations

Correlations

Financial report

Accounting transparency

Corporate governance

Financial report

Pearson Correlation

1

.665**

.696**

Sig. (2-tailed)

.000

.000

N

70

70

70

Accounting transparency

Pearson Correlation

.665**

1

.796**

Sig. (2-tailed)

.000

.000

N

70

70

70

Corporate governance

Pearson Correlation

.696**

.796**

1

Sig. (2-tailed)

.000

.000

N

70

70

70

Interpretation:

To confirm if there was a statistically significant association among financial reports, accounting transparency, corporate governance and international accounting standard, a correlation matrix was computed. All the variables were approximately normal and there is linear relationship between them hence fulfilling the assumption for Pearson correlation. r calculated of financial reports and accounting transparency is r=.665, p value is less than 0.05 that's shows there is positive relationship between financial reports and accounting transparency according to Cohen's (1988) the effect size is moderate that's shows there is strong relationship. Similarly the financial reports and corporate governance value of r=.696, p=.000 is shows the highly significant and moderate relationship between financial reports and corporate governance. Similarly the accounting transparency and corporate governance value of r=.796, p=.000 is shows the highly significant and strong relationship between accounting transparency and corporate governance. Over all correlation matrix shows that there is significance relationship between all the variables.

In the first hypothesis, H1 is accepted which shows there is relationship between financial reports and accounting transparency. In the second hypothesis, H1 is also accepted and H0 is rejected which means there is also a significant relationship between accounting transparency and corporate governance. Similarly the third hypothesis, H0 is also rejected which states that there is significant relationship between accounting transparency and corporate governance.

Regression analysis:

Model Summary

Model

R

R Square

Adjusted R Square

Std. Error of the Estimate

1

.860a

.740

.728

.35415

a. Predictors: (Constant), corporate governance, financial report, accounting transparency

ANOVAb

Model

Sum of Squares

df

Mean Square

F

Sig.

1

Regression

23.551

3

7.850

62.592

.000a

Residual

8.278

66

.125

Total

31.829

69

a. Predictors: (Constant), corporate governance, financial report, accounting transparency

b. Dependent Variable: international accounting standard

Interpretation:

The value of the coefficient of determination (R2) is .74. This shows financial reports, accounting transparency and corporate governance jointly affects the international accounting standards with 72% and rest of the impact is due to other factors. The value of F-statistic is statistically significant at less than five percent that exhibits that in the estimated model at least one of the partial regressions coefficients is different from zero that's shows the model is good fit.

Coefficientsa

Model

Unstandardized Coefficients

Standardized Coefficients

t

Sig.

B

Std. Error

Beta

1

(Constant)

1.172

.187

6.275

.000

Financial report

.183

.072

.231

2.561

.013

Accounting transparency

.125

.077

.174

1.623

.009

Corporate governance

.385

.081

.533

4.776

.000

a. Dependent Variable: international accounting standard

The coefficient table presents the results of the regression analysis. The objective of the regression in this study is to find such an equation that could be used to find the that factors effect o