In common with other countries India has been drawn into a global trend of standardising national accounting practices with international norms to enhance its ability to attract inward foreign investment and gain increased access to global capital markets. In 2004, India committed itself to achieving convergence with International Public Sector Accounting Standards (IPSAS) in the public sector and in 2007 to International Financial Reporting Standards (IFRS) in the private sector. Both sectors have taken the route to convergence with clear cut roadmaps being designed by the national accounting standard setters and the state. However, there has been a striking contrast in the decision-making processes and preparations for convergence in the two sectors. While the public sector made relatively good progress in terms of following the scheduled roadmap, the first roadmap issued for the private sector was scrapped, new deadlines were set and the roadmap was replaced in 2013 due to severe delays in the process which as of August 2016 have not yet been fully resolved. This cross-sector comparison is interesting because the contrasting decision-making scenarios in India exist despite the state being the central decision-maker in both sectors. Hence, while much existing literature on standardisation takes the decision to converge as a given and focuses on the implementation of IFRS or IPSAS, the purpose of this thesis is to examine the processes that led to the convergence decisions. Using a transnational governance theoretical lens, this thesis investigates the chaotic routes through which the idea of convergence travels before being finalised as an implementation decision, in both the public and private sectors in India. The research questions focus on unravelling the development of the convergence decision-making process in India, tracing the networks of national and transnational actors driving the process, analysing the two-way interactive dynamics between actors that shaped the process and examining the role of the state as the central decision-maker in the public and private sectors. The research methods included documentary analysis and in-depth interviews with key individuals in India, with substantial knowledge about the decision making with regards to convergence. Key empirical findings are as follows. Firstly, while in the early phases of decision-making, transnational influences, in the form of international financial institutions and standard setting agencies, were equally apparent in both sectors, in subsequent phases the transnational influences were greater and arguably more successful in the public than the private sector. Secondly, local resistance formed and was successful in delaying the project of IFRS convergence in the private sector. Local actors were successful in raising their concerns about, for example, fair value accounting and the impacts of IFRS accounting on taxation, and in the context of a turbulent political environment, their influence was powerful enough to cause delays. Thirdly, the empirics show the significance of foreign governments and inter-governmental regional networks as an important source of influence on the decision to delay IFRS convergence. Specifically, the study demonstrates how India’s position was also affected by the decision of the US, a major trading partner, to delay its convergence with IFRS, and by the informal links with countries such as Japan, another significant economic counterpart. This thesis has three important areas of contributions. Firstly, it makes a significant methodological contribution by studying convergence as a process rather than an event by tracing the dynamics preceding the actual implementation of international accounting standards. Conducting a study in such a manner entails identifying the multiplicity of actors involved in the convergence project, their concerns and opinions with regards to convergence, the means through which they voice these concerns, and the ultimate drivers of the decision-making behind convergence. Therefore, this study draws attention to the significance of understanding and fully accounting for the pre-implementation phase of convergence as such an understanding has a potential to provide a deeper insight into the primary sources of the difficulties with standards implementation observed in many countries. Secondly, this thesis contributes substantially to the existing standardisation literature. In most prior studies the discussion on accounting standardisation broadly revolves around the advantages and disadvantages of convergence, drivers of convergence and issues of compliance with international accounting standards. While this study finds the significant presence of transnational actors, a deeper analysis into the reasons for convergence delays in India was traced to a variety of legislative, political and economic concerns of stakeholders, especially local actors including potential users of these standards. Thirdly, this study contributes to the literature on global governance by highlighting the importance of not losing sight of the nation state as an important player in the transnational governance arena. Specifically, literature on global (accounting) regulation devotes a great deal of attention to the roles of organisations and agencies with transnational remits (such as global standard setters and donor agencies) while often downplaying the significant impacts of the more traditional cross-country links forged through economic relationships and resource dependencies. The aforementioned influences of India’s links with countries such as US and Japan on the decision-making process as well as India’s regional alliances with neighbouring Malaysia and China provide a vivid indication of the important roles of cross-governmental relationships in the global governance arena and also questions the position of transnational organizations as pervasive powers in such governance. The study’s findings clearly demonstrate that the pursuit of full IFRS convergence strongly favoured by the transnational forces was invariably challenged in the Indian context by the influences of powerful nation states advocating a more cautious approach.

This research aims to study the effects of legal liability rules on auditing quality in order to devise and implement a guideline for the optimal liability rules that can be applied to the auditing profession within society, and thus encourage investment. In an emerging market like Kuwait state, there is a weakness in the legal system, which may cause users to place less reliance on financial reports and auditing services. This environment does not encourage investment. The position in Kuwait state will be studied as an example of how emerging economies can add to the understanding of the role of the auditor, for the purposes of improving audit quality and encouraging a greater amount of investment. Where this position can be understood, this study gives a strong impression of how the legal liability of external auditors can impact on the auditing quality and, importantly, the chances of obtaining investment. For this reason the study is applied in Kuwait state. This research differs from the other literature in several important ways. First, the study has been performed in an environment of weak governance. Second, it studies the effects of the civil legal liability system from two views at the same time, so the research is carried out in relation to two different sides: first, the demand side of the auditing services represented by the users of financial information; and second, the supply side of the auditing services represented by the auditors. This has been done through two questionnaires, one distributed for each side. The results of users' questionnaire revealed that the existence of civil legal liability will increase the demand for auditing service. Also, consideration is directed towards the main determinant of auditing quality, which is the legal liability system, more so than other factors. As well as, through increasing auditor liability, trust in financial information will be enhanced, subsequently prompting investment within society. Moreover, the users, besides their needs for auditing services, require auditors to provide collateral for their investment process in order to increase their investment level. On other side, the results of auditors' questionnaire detected that the auditors hold the view that the demand for auditing services by companies will not be affected by the existence or non-existence of the liability rules. However, auditors believe that the existence of legal liability rules will make financial statement users more trustful in financial information, thereby increasing the number of users of audited financial reports. Also, the auditors do not agree that their liability should be increased since this will make auditing services more costly through the need to collect more evidence, increase the time of auditing, increase the sample size, etc. The increase in liability will also limit their acceptance of risky clients, make them increase their efforts, and due care. Furthermore, the introduction of legal liability may cause them to reduce their supply of audit services. Finally, a statistical test is carried out to compare the answers of the two groups. It is found that there are differences in views concerning the effects of the existence of legal liability on the demand for auditing. As well as, there are differences regarding their preferences about the alternative civil legal rules. The results of this study will help legislators by comparing the effects of available legal rules on audit quality and investment level. Accordingly, legislators can select the appropriate legal structure for auditors’ liability that achieves benefits to the business environment.

Whistle-blowing has garnered widespread attention in many countries, including the U.K. Whistle-blowing has been seen as one of the most effective ways to cater with illegal and unethical practices in organisations. Whistle-blowing describes the action of a worker disclosing (internally or externally) questionable practices, from within an organisation, to the parties that can take remedial actions. Nevertheless, whistleblowing is a risky action where the worker might lose his/her job for making the disclosure. In the early years of whistle-blowing practice, not much whistle-blowing protection legislation has been introduced. In the U.K. whistle-blowing protection legislation, known as the Public Interest Disclosure Act, was only enacted in 1998. Since then, various amendments to the Act have been made to give better protection to whistle-blowers. Many other policies have been introduced by policy makers in an effort to encourage whistle-blowing practice. Nevertheless, it is still an action that an individual might be disinclined to undertake. The purpose of this study is to identify factors that influence internal auditors in the U.K. to blow the whistle. Seven individual-level, independent variables (attitude, injunctive norm, descriptive norm, perceived behavioural control, self-efficacy, organisational professional conflict and awareness of the whistle-blowing protection legislation) are examined for their relationship with the dependent variable (intention to blow the whistle). Moral intensity is examined for its moderating effect on the relationships that exist between the seven independent variables and the dependent variable. Multiple regression analysis found positive and significant relationships involving six independent variables and the dependent variable. The six independent variables are attitude, injunctive norm, perceived behavioural control, self-efficacy, organisational-professional conflict and awareness of whistle-blowing protection legislation. The moderated multiple regressions found significant moderating effects of moral intensity in a relationship between injunctive norm and whistle-blowing intention, and descriptive norm and whistle-blowing intention. Overall, the findings suggest that, individual-level variables also play significant role in determining internal auditors’ intention to blow the whistle. Relative to individuallevel variables, organizational-level and situational level variables have received much attention among researchers in the past. Therefore, the findings suggest that future researches should also put emphasis and consideration on individual-level variables along with organizational and situational level variables in their future work. Also, intention to whistle-blow among internal auditors in the U.K. is high especially in a scenario involving a wrongdoing that may harm public safety than in scenario involving falsified invoices and collusion and tiers of hierarchy. The spirit of whistle-blowing can be infused if more efforts were taken by government, media and many other parties. The efforts include promoting the encouragement for whistle-blowing and institutionalise effective whistle-blowing policies and procedures in organizations.

Nicht börsennotierte Unternehmen stellen in den meisten Volkswirtschaften die Mehrzahl der Unternehmen, leisten einen erheblichen Beitrag zur Wirtschaftskraft der Länder und beschäftigen eine Vielzahl von Arbeitnehmern. Bisher ist jedoch nur in geringem Ausmaß darüber bekannt, welche Rolle die Institution „Abschlussprüfung“ bei diesen Unternehmen spielt. Der bisherige Befund der internationalen und nationalen Prüfungsforschung fokussiert sich überwiegend auf das relativ kleine Prüfungsmarktsegment der börsennotierten Unternehmen, vernachlässigt dabei aber den Markt der nicht börsennotierten Prüfungsmandate. Die vorliegende Studie beschäftigt sich deswegen mit den Fragen, welche Bedeutung der Institution „Abschlussprüfung“ bei nicht börsennotierten Unternehmen zukommt und wie dieses Segment des Prüfungsmarktes charakterisiert werden kann. Anhand der Untersuchung von Prüfungshonoraren und der Prüferwahlentscheidung werden Faktoren identifiziert, die das Angebot und die Nachfrage nach Prüfungsqualität bei großen, nicht börsennotierten Unternehmen beeinflussen. Besonders beleuchtet werden die Bedeutung von Agency-Konflikten im Hinblick auf den Prüfungsqualitätsbedarf bei nicht börsennotierten Unternehmen, die Rolle von mittelgroßen Prüfungsgesellschaften und das Angebot und die Erbringung von Nichtprüfungsleistungen. Die multivariaten Analysen zeigen, dass sich vor allem Agency-Konflikte sowie Größen- und Komplexitätsfaktoren auf Angebot und Nachfrage nach Prüfungsqualität auswirken. Honorarprämien für große und mittelgroße Prüfungsgesellschaften sprechen für eine mehrstufige Qualitätsdifferenzierung innerhalb der Gruppe der Anbieter von Prüfungsleistungen. Auch die gleichzeitige Erbringung von Beratungsleistungen durch den Abschlussprüfer übt einen signifikanten Einfluss aus. Diese Ergebnisse sprechen dafür, dass die Institution „Abschlussprüfung“ auch bei nicht börsennotierten Unternehmen eine wichtige Rolle spielt. Zudem zeigt die Studie auch, dass sich das Prüfungsmarktsegment für diese Mandate in einigen Punkten wesentlich vom börsennotierten Marktsegment unterscheidet. / In most economies private companies form the majority of all firms, account for a relevant portion of countries` economic power and employ a large part of economies` employees. While the main part of audit research is focused on the small market segment of listed companies little is known about the role of auditing in the market segment for private firms despite their economic importance. Thus, the present dissertation concentrates on answering questions about the importance of auditing and market characteristics in the private client segment. By analyzing audit fees and auditor choice the present work identifies determinants which are influencing the supply and demand for audit quality in large, private firms. The focus is on the importance of agency-conflicts with regard to the demand for audit quality, the role played by second-tier audit firms and the supply and demand for non-audit services. Multivariate analyzes show that supply and demand for audit quality is driven by agency-conflicts and companies` size and complexity. Fee premia for BIG-4 and second-tier auditors suggest a multilevel differentiation of audit quality within the group of auditors in this market segment. The provision of non-audit services by the auditor shows influence as well. Overall, the results indicate that auditing plays an important role in the audit market segment of private companies. Furthermore, the work highlights some important differences in this market segment compared to the listed clients segment.

The Statement of Auditing Standards 220 (Materiality and the audit, 1995) requires auditors to assess both the quantitative and qualitative aspects of materiality. However, the SAS has not specified the quantitative measurement of materiality. This research assesses the need in the UK for having a specific mathematical guideline in addition to the qualitative aspect of materiality. It evaluates the outcomes of legal cases in both the UK and the US, looks at the accounting statements issued by accounting bodies in other countries on materiality, and responses to the then exposure draft of the SAS 220. Questionnaires were sent in the UK to 1000 auditors (25.6% responded) and 1000 non auditors (26.4% responded), and telephone surveys followed with non respondents and selected individuals. The case studies contained in the questionnaires are materiality impact on losses on discontinuation of a production line, changes in accounting policies, contingent liabilities, and cash defaulcation. Results showed that there are inconsistencies in legal decisions on materiality. Countries having materiality guidelines adopted 10% net profit before tax as the norm. The 10% of net profit before tax is the favourite guideline for materiality from questionnaire respondents and telephone interviewees. Consistency in the results suggest the need for having a standard mathematical measurement of materiality in the UK.

This thesis explored the dynamics of cost accounting systems (CAS). It focused on particular situations in which CAS can become institutionalised, embodying settled patterns of action and thought common to an organisation (Burns & Scapens, 2000). In such context, it is argued that the greater the degree of institutionalisation of CAS, the more difficult they are to change, and vice versa. This thesis has investigated the conditions and processes through which CAS can change and/or persist (i.e., remain relatively unchanged) through time. Exploring when, how and why institutional change and/or resistance may occur in CAS, is the specific motivation of this thesis. The following investigates CAS at a large oil refining organisation operating in Libya (RefCo). RefCo was undertaken as an interpretive case study, involving data collected through interviews, archives, internal company documentation and general (formal and informal) observations. The CAS in RefCo was subject to two change initiatives in a relatively short space of time. The first source of change was a requirement of its parent company to shift from a traditional production-orientation to a more commercial-orientation. With minimal resistance, the highly institutionalised CAS of RefCo evolved to become much more geared towards commercial decision-making. The second source of change originated in the recommendations of an external consulting organisation, who recommended that RefCo changed its CAS to take on more ‘best-practice’ principles, but also as part of a wider initiative of implementing Enterprise Resource Planning systems (ERPs). However, this particular change initiative faced significant resistance. Analysis of the case was informed by institutional theory using, in particular, the concepts of deinstitutionalisation (Oliver, 1992), institutionalisation (Burns & Scapens, 2000), and politics and power mobilisation (Hardy, 1996). In contrast to the more conventional view that institutionalised practices (e.g., CAS in RefCo.) are difficult to change, this thesis has shown how such practices can be destabilised and changed through the configuration of a complex and dynamic process of costing system change. It suggests an institutional interdependence that underpins the interrelation between various components of the organisational system, and exemplifies an intertwining between CAS and operation control. While CAS change processes were shaped by ongoing changes in operation control, the outcomes of the former provided an institutional basis from which to make sense of the operational activities (Scapens, 1994). This interdependence helps sustain day-to-day organisational life in RefCo and contributes to our understanding of both change (processes) and resistance in relation to institutionalised practices. Moreover, we observed that a great deal of such change and/or resistance could be understood and explained in terms of politics and power mobilisation.

International accounting scandals around the world have triggered a wave of interest and discussion on the transparency and integrity of financial statements. Prior literature has stated that due to a variety of motivations and by using different techniques, the management of corporations might intend to influence the figures in financial reporting. The preferred term used in the accounting literature to describe this issue is 'earnings management', which is a very interesting and topical issue for researchers. Therefore, this research investigates the earnings management phenomenon in the Libyan environment. In this research, secondary data, which was accruals-based models, and primary data analysis, which included a questionnaire survey combined with semi-structured interviews, were used to achieve the objectives of this research, that are: to determine the existence and the direction of earnings management in the Libyan context; the motivations and techniques behind that; and the earnings management constraints, which include internal accounting standards, corporate governance mechanism and audit quality. The analysis of secondary data examined the existence and the direction of earnings management in Libyan companies. Accruals-based models were applied on a sample of state-owned and private companies. The results indicated that the majority of the companies that engaged in earnings management by using income-increasing policies accruals were state-owned companies. However, the majority of the companies that engaged in earnings management by using income-decreasing policies accruals were private companies. The above results indicated that there are linkages between the direction of earnings management and the nature of company ownership in the Libyan environment. Further, as regards the relationship between the direction of earnings management and company size, the results of the state-owned companies group indicated that company size was positively and significantly associated with discretionary total accruals. On the other hand, the results of the private companies group indicated that company size was negatively and significantly linked to discretionary total accruals. The primary data analysis was used to investigate three main issues: the motivations behind the practice of earnings management; the most frequently used techniques to practice earnings management; and the earnings management constraints, which include accounting standards, internal corporate governance mechanism and audit quality. These subjects were investigated by using a questionnaire survey administered to external auditors, financial managers and senior accountants, internal auditors, lenders, tax officers and accounting academics. Also, a series of semistructured interviews was combined with the questionnaire survey, which was conducted with selected respondents to the survey. Results indicated that the main incentives for practising earnings management in Libyan state-owned companies were: to mitigate the threat of displacement (i.e. safeguard job position) and/or enhance management reputation, to report profits, to increase the value of management compensation, and to meet regulatory objectives. On the other hand, the main incentives for the private companies were to decrease the amount of taxes and to enhance the chance of obtaining bank loans. Further, the results showed that manipulation of the value of inventory, improper assets revaluation, incorrect capitalising rather than expensing of expenditures, manipulation of accrual estimation, incorrect use of expenses on asset acquisition, and related-party transactions were the most frequently used techniques to practice earnings management in Libya. Finally, the results showed a consensus among respondents on the importance of accounting standard. internal corporate governance mechanisms, audit quality as policies to constraint earnings management in the Libya environment.

Motivation: The IASB and the UK ASB have adopted different financial reporting rules for different classes of company. The IASB have IFRS and IFRS for SMEs. In the UK, currently companies follow IFRS (for public companies), UK GAAP (for medium-sized companies) or FRSSE (for small companies). Furthermore, some companies are exempt from audit. It is difficult to evaluate the efficacy of this approach to regulation since the ASB (and IASB) do not specify what consequences should follow. Do they expect public companies have higher accounting quality than medium and small companies? Or do they expect accounting quality to be the same across different groups of companies? Objective: The main objective of this study is to examine accounting quality in order to inform the future policy and discussion about the differential reporting framework. We examine the effects of accounting standards across public, medium and small companies. However, companies also face reporting discipline from market forces, and consequently we also examine the impact of debt-holders on reporting quality across and within medium and small companies. Methodology: We measure accounting quality from different aspects. For the assessment of differential accounting standards, we use: the level of accruals (ratio of cash flows to earnings), earnings smoothing, and target beating. For the assessment of any debt-holders effect, we use aspects that are suited to their needs, namely: earnings conservatism, and earnings persistence. Main Findings: Under the discipline of accounting standards, we find that the financial reporting behaviour of medium sized entities is significantly different from public and small companies. This suggests that accounting standards do not equalise accounting quality. The impacts of debt-holders on accounting quality are generally weak within medium and small companies. This implies that accounting standards are the main discipline for financial reporting for medium and small companies, which is consistent with the suggestions of Ball and Shivakumar (2005). However, we raise a few issues concerning the interpretation of the accounting quality measurements (earnings conservatism and earnings persistence) and provide theoretical and empirical support for the discussion. Recommendations: We suggest the accounting regulations for private companies may need to be further strengthened, especially for medium-sized companies.

This thesis examines the interplay between country level governance and accounting systems considering the role of the World Bank and other donors in the development of both governance and accounting in Africa. The purpose of the research is threefold. The first is to assess the state of accounting systems on the continent using Ghana and Benin as illustrative cases. The second purpose is to examine the link between accounting and governance, and the current donors’ approach to the development of governance and accounting in Africa. The third purpose relates to the examination, through the lens of political economy, of the factors hampering the development of sound governance and accounting systems in Africa. The research is conducted through a case-study and cross-national design with four data collection methods: interview, observation, survey and documents. The study finds that accounting systems in Benin and Ghana are very weak despite the reform initiatives undertaken in the area, and that the main difference between the two systems relates to the relatively higher level of accounting information available to the public in Ghana compared with Benin. Further, the findings suggest that there is a potential causal relationship between accounting and governance. With regard to the World Bank and other donors’ approach, it is found that the approach to governance and accounting reforms in Africa suffers from a lack of contextual and cultural fit. The study also identifies and explains the various political and economic forces and interests that shape the development of governance and accounting in Africa. These findings complement, extend and challenge existing studies in the field.

This thesis combines different empirical strategies and econometric techniques to study the role of capital-market imperfections on the financial and operational activities of Small and Medium Enterprises (SME). It is mainly composed of four different but interlinked empirical chapters as follows. The first and the second chapters use longitudinal data from 9417 French SME start-up during period 1994-2000. The first empirical paper discusses develops and estimates a model of SME survival under credit rationing, we find that Asset- and human capital-based credit rationing exists but is mitigated by greater profitability and better human capital. The second chapter discuss how the collateral and human capital can be used as remedy for the credit rationing. The third one, we estimate the investment model by using switching regression approach by using panel data form 7,185 SME in the UK over year 2003–2011. The last chapter presents the investment cash flow sensitivity (ICFS) and Cash-cash flow sensitivity (CCFS) estimation for 14 European countries and we find that there is a positive and significant effect of cash flow on investment and cash holding on cash flow which indicating that there is some friction in the financial market in EU area.