The Impact of Mandatory IFRS Reporting Requirement on Accounting Quality of Public and Private Companies in Kazakhstan
研究了哈萨克斯坦强制采用国际财务报告准则后，上市公司与私营公司会计信息质量的差异，发现上市公司盈余质量更低，但海外交叉上市或外国发行人的质量较高。
Synopsis The research problem I examine properties of accounting information of private and public International Financial Reporting Standards (IFRS) reporters in Kazakhstan, which was the first post-Soviet country to mandate IFRS reporting rules for public and large private companies (2004–2006). Kazakhstan’s early decision to adopt IFRS, which many argued was premature, was dictated by a high level of competition for foreign direct investments among the constituents of the same region. Motivation The motivation for this study is twofold. First, it addresses the ongoing debate on the differences in financial reporting outcomes for private versus public companies. In this regard, I find support for the “opportunistic behavior” hypothesis, as opposed to the “demand for public information” hypothesis. Second, the study responds to the call for examination of capital market transformation processes in countries of the former Soviet Bloc that, with the exception of Russia, remain understudied. The test hypotheses The first hypothesis is that the accounting information of public IFRS reporters is value relevant to investors. The second hypothesis is that public IFRS reporters have a higher quality of earnings as compared with private IFRS reporters. Target population The study examines private and public IFRS reporters in Kazakhstan. Public reporters are local firms listed on the Kazakhstan Stock Exchange (KASE), local firms cross-listed overseas (predominantly in London), and foreign issuers listed on KASE. Adopted methodology The study is based on empirical models adopted in prior research examining properties of reported information under the IFRS reporting regime. Analyses The study’s examination period is 2010–2021, and financial information was collected predominantly from Datastream. I use OLS regression to investigate value relevance of information and earnings smoothing and a probit model to examine the propensity of Kazakh firms to report small positive earnings. Findings Earnings and book value of equity of public Kazakhstani IFRS-reporting companies are value relevant to investors, and this effect is greater for foreign issuers listed on KASE. Nevertheless, public IFRS reporters have a lower quality of reported information compared with private firms, although this is not the case for local firms cross-listed overseas or for foreign issuers listed on KASE. Overall, stringent reporting rules, strict enforcement at a domestic market, and enhanced monitoring by global investors are crucial to improving reporting quality under the IFRS mandate.