DO INTERNATIONAL FINANCIAL REPORTING STANDARDS AID IN PROVIDING HIGH-QUALITY DATA AND CONTRIBUTE TO OPEN AND PRECISE ACCOUNTING STATEMENTS?

• Author: Frijat, Yaser Saleh Al

INTRODUCTION

The accounting standards' international harmonisation debate has been ongoing since the 1960s. The International Financial Reporting Standards (IFRS) acknowledgement has been significantly furthered by the European Union's (EU) implementation of it in 2002. EUregistered organizations also implemented IFRS three years later (Bebbington & Song, 2007). According to Bae, Tan, and Welker (2008), the international initiatives concerning the coordinating of national accounting standards have officially begun in 1973 as a result of the formation of the International Accounting Standards Committee (IASC). Dubbed by Carmona and Trombetta (2010), as one of the most ambitious and far-reaching efforts in history, there was fast-paced and far-reaching IFRS implementation during and after 2005, with concern over its possible influence on the U.S. financial reporting (Jackling, Howieson, & Natoli, 2012). Further, novel accounting philosophy possessing enhanced business and economic alignment was a sideeffect of IASB. Regulation, particularly concerning attention to the data related requirements of capital markets, was implemented (Jermakowicz, 2004).

According to Kabir, Laswad, and Islam, (2010), IFRS has recently grown to be an essential topic when it comes to financial report planning and usually adds to investors' trust as a result of its tendency to improve data quality (Dos Santos, Favero; & Distadio, 2016). This is due to the assumption that its proficiency in contrasting financial reports written in varying countries will probably be improved as a result of the presence of a large agreement on a group of accounting standards (Bryce, Ali, & Mather, 2015). In addition, IFRS leads to financial statement disclosures (Schipper, 2005; Whittington, 2005; Brown, Preiato & Tarca 2014). Furthermore, the necessity of IASC implementation was emphasised by a number of researchers due to the fact added to required accounting data availability (e.g., Ismail, et al, 2013; Iatridis & Rouvolis, 2010; Tsalavoutas & Dionysiou, 2014). Henceforth, one will communicate via one accounting tongue within Europe, in terms of similar financial statements and investor advantages (Hoogendoorn, 2006).

As pointed out by Jackling, Howieson, and Natoli, (2012), current accounting practitioners, general users, and investors will need to relearn financial data when transitioning to IFRS from local generally accepted accounting principles (GAAP) and in the essentiality behind international standards, especially when considering the fact that in a previous investigation, U.S. investment was the central topic being explored because IFRS is acknowledged to be a globally accepted accounting standards, like that of GAAP (Shima & Gordon, 2011). Further, there is a new necessity found behind the harmonising of global accounting standards as a result of international financial market globalisation (Bryce, Ali, & Mather, 2015). In addition, IASB is seeking to harmonise varying international markets' corporate financial statements and tends to support such countries' involvement in extreme capital progressions (Dos Santos, Favero, & Distadio, 2016).

There has been noteworthy advancement in terms of clarity standards within countries following IAS, thus leading to increased influence on capital markets (e.g., enhanced investor protection) (Daske et al., 2013; Christensen, Hail; & Leuz 2013). According to Gordon, Loeb, and Zhu, (2012), a capital market activity foundation of high availability is given by an internationally approved standards set. In the same vein, Turki, Wali, and Boujelbene (2017) pointed out the influence of IFRS implementation on the data asymmetry level via the estimations of the financial analysts and the capital costs, whilst a number of other investigations focused on the essentiality behind IAS implementation.

In the context of European IFRS implementation, the way in which financial analysts' portfolios and decisions aided by the enhancement of earnings forecast reliability which was also explored in a study by Beuselinck et al. (2017). Similarly, Gordon, Loeb, and Zhu, (2012) pointed out that Foreign Direct Investment (FDI) inflow's surge via developing countries' economies was the ultimate cause of the final rise in IFRS implementation. It was founded in 2011 that, when merged with a sturdy regulatory environment, U.S. investors found mandating IFRS appealing (Shima & Gordon, 2011). Further, as a noteworthy forecaster of post-IFRS period of equity market worth, the IFRS influence on EPS was explained by (Nijam & Jahfer, 2018; Chandrasekar & Kumar, 2016). In addition, pinpointing a surge in a variety of ratios, namely: liquidity; financial indicators; marginal increase in debt-equity; and interest coverage. Conversely, profitability ratios demonstrated no noteworthy surge, exception the slight increase witnessed in the net profit ratio.

Currently, about 90 countries have conducted IFRS implementation. According to Al-Htaybat (2018), an additional 30 countries are allowing IFRS utilization for financial reporting reasons. One government conducting such implementation to enhance credit was explored by Dos Santos, Favero, and Distadio (2016). In order to obtain shared objectives, Jordan's government is primarily focused on planning financial statements possessing sufficient accounting standards due to its economic growth in terms of its investment environment and its emergence as a global market and its newfound communication channels with global organisations that also implement IASC. The market in Jordan has not fully abided by the IASC due to the fact that there has been a shortage of appealing investment atmospheres and organizations possessing large-scale cosmopolitan capitals despite the fact that Jordan was among the first Middle Eastern economies to instigate IFRS implementation (Al-Htaybat, 2018).

This study evaluates the initial Jordanian IFRS implementation in Amman stock exchange's industry field to find out whether the implementation of IFRS helped in providing high-quality provision and contributed to open and precise accounting statements.

LITERATURE REVIEW

When it comes to the quality of accounting, international accounting literature reviews have generally recognized IFRS implementation as being effective in casting a positive influence. Post IFRS implementation investigations 2005 (e.g. Hung & Subramanyam, 2007; Chen et al., 2010), have largely centred on countries in the EU. Studies in Australia also focused on IFRS adoption and its impact on accounting quality (Chua, Cheong & Gould, 2012; Bryce, Ali, & Mather, 2013). There were similar studies in developing countries (e.g. Misirlioglu, Tucker, & Yukselturk, 2013; Al Frijat, 2016; Terzi, Oktem, & Sen, 2013).

On this note, an investigation conducted in 2007 provided a direction and context for those exploring the shift in the quality of accounting after the IFRS implementation in European countries (Soderstrom & Jilan Sun, 2007). Similarly, data backing the idea that foreign investments require sturdy IFRS was further uncovered by Shima and Gordon (2011). A wealth of other investigations were reported, debating the varying functions necessary for effective IFRS implementation in terms of organization execution and accounting quality enhancement (e.g., Naranjo, Saavedra & Verdi 2015; Gao & Sidhu, 2014; Dos Santos, Favero, & Distadio, 2016).

In the same vein, an investigation conducted by Downesa, Flagmeierb, and Godsellc (2018) revealed that necessary implementers create additional finances after IFRS implementation. Houqe, Easton, and Zijl, (2014) also proposed that mandatory IFRS adoption in low investor protection countries lead to an improvement in information quality. In terms of the conclusions drawn from the investigation conducted by Turki, Wali, and Boujelbene (2017), global standards lessened financial analysts' forecast distribution and capital costs considerably after a two-year implementation period. Meanwhile, a study conducted by Beuselinck et al. (2017) concluded that European IFRS implementation enhanced the industry valuation scope and lessens the finances needed for information processing.

Brochet, jagolinzer, and riedl (2013) conducted a study concerning capital market advantages via improved comparability that was initiated through compulsory IFRS implementation. The conclusions drawn from this study indicated that such advantages are strongly linked with such comparability. Meanwhile, the results from a separate investigation by Neel (2017) (concerning the essential quality of specific organizational reporting and crosscountry accounting comparability in terms of enhancing stock liquidity, Tobin's Q, and analyst prediction agreement and accuracy post-implementation of IFRS) showed that enhancement of accounting comparability in the context of cross-country accounting was pivotal when it comes to increasing the advantages of IFRS implementation.

Another relevant study focused on organizations in Jordan and the way in which they were influenced by IFRS implementation with regard to the quality of accounting information in the stock market (Saaydah, 2012). The conclusions from this study inferred that the industrial firm market's value would be more accurately predicted with the aid of book value and earnings, discretional accruals and operating cash flows meanwhile serve as more optimal/effective bank market value estimators. In the same year, Pascan and Turcas (2012) aimed to calculate and pinpoint the way in which listed organisations in Romania execute their performance when influenced by initial IFRS implementation. This particular study produced no conclusive results, instead vaguely showing that IFRS implementation has a minimal effect on the net income of Romanian companies.

Masoud (2017) evaluated compulsory IFRS implementation and the influence it wields on financial analysts' accuracy in their earnings predictions. It...