Firm Value, Size, Liquidity and the Adoption of Common Accounting Standards: Evidence from Firms Listed on the Amman Stock Exchange
DOI:
https://doi.org/10.26750/Vol(9).No(3).Paper16Abstract
Adopting common accounting standards presents both benefits and challenges to firms and the resultant effects of such adoption vary between firms and countries. The value of firms revolves considerably around the adoption of common accounting standards, firm and country specific factors. Consequently, this study examines the firm size, liquidity and the adoption of common accounting standards on the value of capital and debt market firms listed on the Amman Stock Exchange. A Fixed Effect Model was estimated using data collected from 5 capital market firms and 4 debt market firms listed on the Amman Stock Exchange in Jordan. The data was from the period 2009 to 20018 and was analysed using the aid of Eviews 10. The findings revealed that there is a positive relationship between firm size, liquidity and performance, and stock prices. The disclosure of financial information and an improvement in earnings per share were noted to be causing a decline in stock prices of capital and debt markets in Jordan. Practically, the study implies that sound liquidity, asset and performance management strategies are vital for improving the value of capital and debt market firms listed on any stock exchange. The study also reiterates that improvements in firm value are vital for improving social and economic aspects in any economic context.
References
Ahmed, A.S., Neel, M., & Wang, D. (2013). Does mandatory adoption of IFRS improve accounting quality? Preliminary evidence. Contemporary Accounting Research, 30(4), 1344-1372.
Allison, P.D. (2009). Linear fixed effects models. Fixed Effect Regression Models, 7-27.
Barth, M.E., Clinch, G., & Shibano, T. (1999). International accounting harmonization and global equity markets. Journal of Accounting and Economics, 26(1-3), 201-235.
Barth, M.E., Landsman, W.R., & Lang, M.H. (2008). International accounting standards and accounting quality. Journal of Accounting Research, 46(3), 467-498.
Borenstein, M., Hedges, L.V., Higgins, J. P., & Rothstein, H. R. (2010). A basic introduction to fixed‐effect and random‐effects models for meta‐analysis. Research Synthesis Methods, 1(2), 97-111.
Capkun, V., Collins, D., & Jeanjean, T. (2016). The effect of IAS/IFRS adoption on earnings management (smoothing): A closer look at competing explanations. Journal of Accounting and Public Policy, 35(4), 352-394.
Chalmers, K., Clinch, G., & Godfrey, J. M. (2011). Changes in value relevance of accounting information upon IFRS adoption: Evidence from Australia. Australian Journal of Management, 36(2), 151-173.
Christensen, H. B., Hail, L., & Leuz, C. (2013). Mandatory IFRS reporting and changes in enforcement. Journal of Accounting and Economics, 56(2-3), 147-177.
Christensen, H.B., Lee, E., Walker, M., & Zeng, C. (2015). Incentives or standards: What determines accounting quality changes around IFRS adoption? European Accounting Review, 24(1), 31-61.
Dehuan, J., & Jin, Z. (2008). Firm performance and stock returns: An empirical study of the top performing stocks listed on Shanghai Stock Exchange. Academy of Accounting and Financial Studies Journal, 12(1), 79.
De George, E.T., Li, X., & Shivakumar, L. (2016). A review of the IFRS adoption literature. Review of Accounting Studies, 21(3), 898-1004.
Durbin, J. &Watson, J.D. (1951). Testing for serial correlation in least-squares regression. Biometrika, 38, 159-171.
Gao, P., Jiang, X., & Zhang, G. (2019). Firm value and market liquidity around the adoption of common accounting standards. Journal of Accounting and Economics, 68(1), 101220.
Greene, W. H. (2003). Econometric analysis. Pearson Education, New Delhi, India.
Isidro, H., Nanda, D., & Wysocki, P.D. (2016). Financial reporting differences around the world: What matters? Available at SSRN 2788741.
Jamal, K., & Sunder, S. (2014). Monopoly versus competition in setting accounting standards. Abacus, 50(4), 369-385.
Leuz, C., & Wysocki, P.D. (2016). The economics of disclosure and financial reporting regulation: Evidence and suggestions for future research. Journal of Accounting Research, 54(2), 525-622.
Levin, A., Lin, C.F., & Chu, C.S.J. (2002). Unit root tests in panel data: asymptotic and finite-sample properties. Journal of Econometrics, 108(1), 1-24.
Ray, K. (2018). One size fits all? Costs and benefits of uniform accounting standards. Journal of International Accounting Research, 17(1), 1-23.
Tahat, Y., Omran, M.A., & AbuGhazaleh, N.M. (2018). Factors affecting the development of accounting practices in Jordan: an institutional perspective. Asian Review of Accounting, 26(4), 464-486.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2022 Journal of University of Raparin
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
