Introducing International Accounting Standards to an emerging capital market: Relative familiarity and language effect in Egypt

Omneya H. Abdelsalam, Pauline Weetman

Research output: Contribution to journalArticle

Abstract

The purpose of this study is to assess the effect of relative familiarity and language accessibility on the International Accounting Standards (IASs) disclosures when IASs are first introduced in an emerging capital market. The study focuses on the annual reports of listed non-financial companies in Egypt when IASs were first introduced. The method used applies a disclosure index measurement to a sample of listed company annual reports and evaluates relative compliance with IASs in relation to corporate characteristics. The results show that for relatively less familiar requirements of IASs, the extent of compliance is related to the type of audit firm used and to the presence of a specific statement of compliance with IASs. A lower degree of compliance with less familiar IASs disclosure is observed consistently across a range of company characteristics. Consideration of agency theory and capital need theory would lead to prior expectation of a distinction in disclosure practices between different categories of companies. The results were, therefore, counterintuitive to expectations where the regulations were unfamiliar or not available in the native language, indicating that new variables have to be considered and additional theoretical explanations have to be found in future disclosure studies on emerging capital markets. © 2003 Elsevier Science Inc. All rights reserved.

Original languageEnglish
Pages (from-to)63-84
Number of pages22
JournalJournal of International Accounting, Auditing and Taxation
Volume12
Issue number1
DOIs
Publication statusPublished - 2003

Keywords

  • International Accounting Standards
  • emerging markets
  • familiarity
  • language effect

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