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This study evaluates the extent to which the adoption of International Accounting Standards has affected the small and growing companies quoted on the Alternative Investment Market (AIM). Following the 2002 EU regulation, companies listed on the main London Stock Exchange have adopted International Accounting Standards from 2005, while for AIM companies this requirement to comply with international standards was extended until 2007. At the same time, these companies were allowed to follow International Financial Reporting Standards (IFRS) on a voluntary basis from 2005, resulting in the provision of a unique setting to investigate the pre and post mandatory regime. In addition, AIM companies are comparatively different with respect to size, regulation, and ownership structure. It has been observed in previous literature that accounting rules will provide different :esults in different economic and institutional settings. This study takes this opportunity to analyse the importance and magnitude of implications of the International Accounting Standards to the companies quoted on the Alternative Investment Market by using -a dual theoretical lens: positive accounting theory and decision usefulness theory. A multi-method approach IS applied 111 the pursuit of discovering the implications of international accounting standards on small quoted companies. A questionnaire survey was used as the main research tool for collecting data from the senior financial executives of the sampled companies. This was followed by analysis of the reconciliation statement: a mandatory transitional document produced upon each company's adoption of International Financial Reporting Standards (IFRS). Finally, semi-structured interviews were conducted to supplement and check the reliability of the findings of the questionnaire survey and the reconciliation statement analysis. Both parametric and non-parametric statistics were applied to examine any variation between the opinions of the respondents. The results suggest that the senior financial executives of the sampled companies perceive the introduction of International Accounting Standards as nothing more than a technical accounting exercise, due to its effects on the outside world. The findings also reveal that the companies have not observed the purported benefits of reporting under IFRS. Moreover, the results demonstrate that voluntary adopters, relatively bigger in size, have been benefiting to some extent. On the other hand, most of the companies who waited until the adoption of IFRS became obligatory consider it as an additional burden and a costly exercise for very little or no benefit. More specifically, the results suggest that these implications are closely associated with the size of companies and conclude that size matters in both the adoption and implications of IFRS. These results would be useful for non-listed small and medium size entities and large private entities likely to use IFRS on a mandatory basis on or after 2014. As later evidence than 2005 listed companies, implementation reflects system learning and increased regulatory convergence of the UK and IFRS. This study therefore contributes to the impact of adoption in terms of compliance costs and improved disclosures rather than just reporting measurement differences for AIM quoted companies. As such, this study provides cost-benefits information on a major change in accounting regulations, which may inform future regulatory changes, including the introduction of IFRS for private companies.

This thesis investigates, firstly, the meaning of the phrase "high quality financial reporting". The use of the phrase in the academic literature, and by professional and regulatory bodies, is examined critically to contribute to a deeper understanding of the phrase. Disclosure in the annual reports of all 47 companies listed on the Nairobi Stock Exchange is examined to see if it can be described as "high quality". "High quality disclosure" is measured in three ways: (1) a disclosure index is developed to measure compliance with International Financial Reporting Standards (this index is also used to measure disclosure in the interim report); (2) a disclosure index developed by Standard and Poor's to measure Transparency and Disclosure is used; (3) these are compared with the scores achieved by the same annual reports in the Financial Reporting Excellence Award 2003, decided by adjudicators in Kenya. The thesis also investigates the association between selected corporate characteristics and "high quality disclosure". Testable hypotheses are formulated based on disclosure theories and prior studies: univariate and linear regression analysis are used to test whether significant independent variables explain "high quality disclosure", with the aim of contributing to understanding the applicability of disclosure theories to a capital market in a developing country. Interview research is employed to explore further matters related to "high quality financial reporting" in this developing country setting and to complement the quantitative analysis, so as to contribute to understanding the relevance of International Financial Reporting Standards in achieving high quality disclosure in this capital market. Conclusions are made as to the usefulness of accounting theories and other influences in explaining "high quality disclosure" by Nairobi Stock Exchange companies. A definition of "high quality disclosure" is proposed. The implications of the research, its contribution and its limitations are discussed. Suggestions for further research are presented.

Neither empirical nor normative research on fair value accounting (FVA) provide rich insights into the usefulness of FVA for investment and credit decisions. Little is also known about what the use of FVA implies to financial statement users' perceptions and practice. Added to these empirical gaps, very few studies have explored FV A, and more generally aspects of financial reporting, within an interpretive theoretical framework. My purpose here is to contribute to sociological understandings of the use of financial reporting information. I thus examine UK investors' and analysts' perceptions of, and reactions to, the usefulness and implications of FVA for financial analysis. I analyse empirical information collected by interviewing 28 investors and analysts in London, observing International Accounting Standards Board-Analyst Representative Group (IASB-ARG) meetings and analysing investors' and analysts' comment letters to IASB's discussion papers and exposure drafts. In exploring why investors and analysts hold such perceptions of FVA, and react in such ways to the use of fair values in financial reports, I draw on Max Weber's types of rationality; namely, theoretical, practical, formal and substantive rationalities that coalesce and compete with each other guiding individuals' perceptions and actions. I also draw on tenets from neoinstitutionalism which allow the study of the symbolic qualities of FVA in addition to its rationalising ones. The concept of the user of financial reports as a neutral technician that has no free will but is able to make rational economic decisions is problematised here. Findings reveal that investors' and analysts' acceptance of, and resistance to, the use of fair values in financial reports are embedded in a social web of beliefs, interests and values. Implications from the analysis for our understandings of accounting standard-setting and for future research endeavours are also discussed.

This thesis aims to investigate the effectiveness of three recent policy changes which have been implemented in the UK or under discussion for future implementation and their association with earnings management. The three policy changes are the adoption of IFRS for UK listed firms, the potential mandatory rotation of audit firms, and the enhanced disclosure requirements of the different categories of auditor fees in the UK. The thesis contains three empirical chapters addressing the three mentioned issues. As to the first study, I investigate the effect of reporting under IFRS versus reporting under UK GAAP on earnings management in the UK. Prior studies find mixed evidence regarding the effect of voluntary and mandatory adoption of IFRS on earnings quality. I test whether the effect of reporting under IFRS on earnings management IS sufficient to overcome earnings management incentives. Furthermore, I test whether the effect of IFRS reporting is conditional on audit quality surrogated by audit firm size. I build my analysis on measures of discretionary accruals and earnings benchmark tests. I find evidence that reporting under IFRS generally reduces levels of earnings management measured by discretionary accruals and measures of managing earnings towards a target. Furthermore, the mitigating effect of IFRS is stronger for income decreasing than for income increasing earnings management. In addition, I find that audit quality plays a key role in IFRS reporting, with only firms audited by big four auditors having a significant IFRS reporting effect. In terms of the second study, using UK data, I investigate the association between audit firm tenure and earnings management and whether it is conditional on using the same set of accounting standards and audit firm size. UK data allows the examination of the impact of changing accounting standards because one group of firms continually reported under UK GAAP whereas another group of firms changed its accounting standards from UK GAAP to IFRS. I find, in accordance with prior studies, a negative association between audit firm tenure and earnings management for a pooled UK sample. However, I find that this negative association is only valid for those firms which had not changed their accounting standards; I also find that the significant, negative association is only valid for firms audited by big four audit firms. One possible explanation for both the accounting standards and audit firm size results is that auditors need a stable and strong learning environment if they are to mitigate earnings management. As for the third study, I revisit a controversial issue of whether auditor fees might compromise auditor independence which may result in relatively higher earnings management levels. Using data from the UK, it was possible to conduct separate tests for the components of non audit services fees (tax advice and other non audit fees). In addition, I test the effect of client importance (the ratio of each type of auditor fees to total audit firm revenue) on earnings management. Furthermore, I develop a number of relative client importance measures (ratios of each type of fees as a percentage of audit firm revenue generated from that specific type of service). The results suggest a potential compromise of auditor independence in cases of relatively high total auditor, total non audit, and-other non audit fees. The results suggest also that the potential compromise of auditor independence is stronger in cases of income increasing earnings management. Finally, the results conclude no potential effect of any of audit fees or tax advice fees on earnings " management levels. The results of the thesis have some key implications for policy makers and regulators. Firstly, the empirical results suggest that reporting under IFRS generally leads to better earnings quality than reporting under UK GAAP. Therefore, it is worth considering mandating IFRS for all firms. Secondly, the results of this thesis argue against mandatory rotation of audit firms which is currently under discussion in the UK and worldwide. The results suggest that longer tenure is better due to learning factors and leads to lower levels of earnings management. Finally, regulators were, to some extent, successful in mandating enhanced detailed disclosure of auditor fees. However, investors, among other stakeholders, need to assess the risks of potential compromise of auditor independence in cases of higher total, non audit, and other non audit fees especially where the fees represent a significant proportion of the audit firm revenues. A potential improvement in this regard for regulators is to make audit firms responsible for disclosing their fees as a percentage of their total revenues and revenues from the specific type of fees or to prevent auditors from providing some of the non audit services as is the case in the US.

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