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The Impact of Adoption of IFRS
on Shareholders’ Wealth:
A Study of Select Indian Companies
--Samta Ordia and Shurveer S Bhanawat
International Financial Reporting Standards (IFRS) are designed as a common set of language for business affairs so that company accounts could be understandable and comparable across international boundaries. IFRS leads to changes in the financial statement of the company. In order to check whether shareholders’ wealth is affected or not by adoption of IFRS, the present research has been carried out. The objectives of the present paper are to determine the shareholders’ wealth in terms of EVA (absolute and relative) before and after adoption of IFRS for Indian companies and to examine the different components of EVA before and after adoption of IFRS in India. To check the impact, paired data t-test has been administered for testing significance. The results of the study reveal that there is no improvement in EVA and EVA-related financial parameters due to IFRS adoption. For consistency concern, coefficient of variation has also been calculated. The results indicate that consistency in EVA and EVA-related financial parameters is observed after adoption of IFRS. It may also be concluded that the fundamental principle of accounting, i.e., consistency, is supported to a large extent by IFRS adoption.
© 2017 IUP. All Rights Reserved.
Small Businesses and Accounting Skills: A Study on Entrepreneurs of Ahmedabad City
--Himani Sardar
Entrepreneurs are agents and drivers of development in most economies of the world. Basically, more focus is laid on the entrepreneurial process of a firm rather than of individuals. Entrepreneurship leads to the development of new ideas, but old ideas are needed to create a balance. Accounting skill is found to be of great value in entrepreneurial performance, and as such, entrepreneurs are advised to embark on capacity building in accounting skill for financial management and record keeping. With reference to location of knowledge and structure of accounting policies, this research has been conducted to view the familiarity, awareness and usage of accounting information carried out by small entrepreneurs of Ahmedabad city. The basic objective of the study is to examine the status of familiarity and application of accounting. For this purpose, primary data was collected through a questionnaire comprising 12 questions. The 70 responses considered were tabulated and analyzed. Questions like information about different accounting methods, adoption of different methods, etc. were covered. It is found that more than 15% of the respondents are unaware of different kinds of accounting system, while about 25% are familiar with Desi-nama system. From the findings, it is concluded that awareness regarding accounting principles and methods is prevalent, but still entrepreneurs need accountants to help them with numbers as they lack the skill.
© 2017 IUP. All Rights Reserved.
Value Relevance of Accounting Information: An Empirical Study on Construction Companies Listed
on Bombay Stock Exchange
--Geetanjali Purswani and Anuradha P S
This study aims at providing empirical evidence related to value relevance of earnings per share, book value per share, dividend per share, price-to-book value per share, cash flow from operations, net worth and assets turnover ratio on the share price of construction contract of real estate companies listed on Bombay Stock Exchange (BSE). The study is conducted using secondary data. Two panel data techniques, i.e., fixed-effect model and random effect model, are employed to examine the value relevance of accounting information in construction companies listed on BSE. Earnings per share and price-to-book value per share are reported to have positive and statistically significant relationship with share price.
© 2017 IUP. All Rights Reserved.
Evaluating the Financial Performance
of Select Indian Banks Using
Eagles Model
--G Santhoshi Kumari and M S V Prasad
Banking sector plays an important role in the economic development of a country. In India, Eagles model is capable of measuring and comparing banks’ performance in a more determinate, objective and consistent manner. There is no subjectivity involved in Eagles model, and the banks are judged purely on the output ratios and ranked based on these parameters. The present study uses 10 years’ data of selected 10 public and private sector banks. The results reveal that Yes Bank is in top position in terms of Return on Assets (ROA), gross NPA, and Provision Coverage Ratio (PCR). This indicates that Yes Bank has more earning capacity as compared to the remaining selected banks. Kotak Mahindra Bank is also performing efficiently in terms of investment-to-deposit and Capital Adequacy Ratio (CAR), which indicates that private sector banks are performing well as compared to public sector banks. Among public sector banks, State Bank of India is performing efficiently in loans and deposits component. The study proves that there is a significant difference in the performance of selected public and private sector banks.
© 2017 IUP. All Rights Reserved.
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