In most developing countries there has been an uncritical acceptance of foreign accounting methods without taking into consideration their unique environmental needs. This situation has created chaotic practices and confusion in operations and procedures in these countries (accounting schizophrenia). Recently, some of these countries have rushed to apply international accounting standards, also without considering their individual circumstances. The basic premise on which the research rests is that this situation can not be allowed to presist. There exists a critical need for a model for identifying and managing accounting problems in developing countries. The building blocks of the suggested model are: (i) the three dimensions of the characteritics of the conceptual framework for financial accounting and reporting (structural organisational, and environmental), (ii) the applicability of the general medical model for disease regulation to accounting problems, and (iii) the applicability of the medical model for regulating schizophrenia to accounting problems in developing countries, having taken into consideration that accounting practices in these countries suffer from the two main symptoms (thought insertion or substitution, and will taken over and controlled by external forces) of the central syndrome of schizophrenia as a result of adherence to various foreign accounting influences. The proposed model comprised three interconnected processes: W case history, (ii) diagnosis which consists of preliminary examination and primary investigation, and (iii) treatment and management. it has the following advantageous characteristics: it is inductive and deductive, democratic and autocratic, comprehensive, systematic dynamic, and finally descriptive and prescriptive. It is believed by this writer that the attempt to develop the model should be accompanied by empirical study concerns with testing its applicability. The empirical study will be conducted in one of the developing countries, Egypt, because of the factors which will be discussed later. It has become apparent from the case history review that Egyptian accounting practices in the first studied period (from 1805 to 1956) suffered from accounting schizophrenia. In 1966, there was positive step for development with the issuing of the Egyptian unified accounting system which represents a reliable body of specialised knowledge for both the producers and users of accounting information. But there has been a long debate about the problems of the system because there is no diagnosis of them by empirical methods. Data for diagnosis process were collected through personal interview by structured questionnaire in the National Investment Bank in Egypt as a user of the information provided by the system. Statistical analysis of the data revealed that the system does work but it suffers from some problems which affect the usefulness of the provided information. These problems have been classified into three categories: structural, organisational, and environmental. Many of them are believed to result from important causes deeply rooted in human elements. The treatment must start from this key problem; human elements. Since 1974, the open Door Policy has been adopted and there are many new foreign pressure groups. The rush step towards the adoption of international accounting standards may cause the recurrence of accounting schizophrenia. In order to avoid this recurrence the strategy of 'prevention is better than cure' must be followed.

This study examines the causes, nature and consequences of deficiencies in Kuwait accounting; evaluates the accounting guidelines introduced in January 1987; and recommends a new approach for regulating accounting in Kuwait, to remedy the present deficiencies. After reviewing the theory related to accounting standardsetting, we examine in detail the laws affecting the Kuwaiti accounting profession, and the accounting practices currently employed. It is shown that inadequate, piecemeal regulation, a weak profession, and the lack of a sound theoretical base founded on the characteristics and needs of the local environment, have resulted in ambiguity, and diverse practices. The information provided is therefore not sufficiently reliable and comparable to meet users' needs. These assertions are supported by presentation and statistical analysis of the findings from an empirical survey of the views of users and preparers of financial information. A number of hypotheses are tested, related to the objectives and nature of financial information, and ways of improving the system. We recommend greater uniformity in Kuwaiti accounting, and submit detailed proposal for reorganisation of the profession, including the creation of a new independent regulatory body.

In a context of compelling evidence from both the US and UK suggesting that R&D investment is positively related to operating and/or market performance, at a first stance this PhD Thesis examines the relation between R&D investment and persistence in operating and market performance using a large dataset of UK companies during the period 1990-2003. The findings confirm the relation between R&D intensity and consistent growth in sales and gross income but only when taking the industry sector in which a firm operates into account. Moreover, the evidence found indicates a positive relation between R&D intensity and subsequent risk-adjusted excess stock returns among firms that engage in R&D. There is also shown that R&D intensity improves persistence in excess stock returns: the highest R&D intensity firms are found to earn higher risk-adjusted excess returns than the sample median return more consistently, compared to lower R&D intensity firms, as well as firms with no R&D. The weight of the evidence is consistent with some form of mispricing related to the market's slow adjustment to the emerging evidence of significant enhancement in operating performance following recent R&D investment. The Thesis also examines whether R&D plays a role in the relationship between dispersion in analysts' earnings forecasts and returns, given that R&D has been testified empirically in prior literature as an influencing factor for both forecast dispersion and stock returns separately, and forecast dispersion on its own has been identified as a factor with an impact on returns. In addition, in the context of existing evidence on R&D being positively related with greater analyst forecast errors, the Thesis goes one step further and examines the impact of R&D, intensity on forecast revisions. The hypothesis is in favour of a positive association between R&D and the magnitude of revisions, due to the inherent uncertainty of the R&D investment. These topics are examined again for UK listed firms in the period 1990-2003 and there is testified that R&D intensity is a contributing factor for analyst forecast dispersion for the UK, confirming prior findings for the US. There is confirmed a negative relationship between forecast dispersion and returns, which is found to hold even after controlling for the impact of R&D on returns. After decomposing dispersion in analysts' forecasts into analyst forecast uncertainty and a pure differences in opinion part, there is also found that as R&D intensity increases, the ability of R&D to influence returns also increases for high dispersion and high forecast uncertainty firms, but the ability of R&D to influence returns is getting very week for high divergence of opinion firms. This finding implies that in the presence of high R&D intensity, dispersion has an impact on returns mainly through the forecast uncertainty component of forecast dispersion, and not through the divergence of opinion component. Finally, there is generally found a positive relationship between R&D intensity and forecast errors and revisions, which is most times statistically significant though only in the case of revisions, when there exists a reasonable amount of time between the initial and the revised analyst forecast, after controlling for other factors.

This thesis investigates the evolution and quality of financial reporting in Ghana from 1988-1997. The issues examined are comparability of accounting measurement methods, adequacy of disclosure and relevance, promotion and observance of the standards of the International Accounting Standards Committee (IASC). The impact of three factors, namely, firm size, listing status and accounting regulation on financial reporting are evaluated. The accounting measurement and disclosure practices in Ghana were ascertained from the 1988-1997 annual reports of fifteen non-financial companies listed on the Ghana Stock Exchange (GSE) on 31 December 1997. Interviews with the executives and auditors of the sample companies, financial analysts and regulators of financial reporting in Ghana were also conducted. The data were analysed using nonparametric statistical techniques. This study reveals that the establishment of the Ghana Stock Exchange and the introduction of new accounting regulations in Ghana did not alter significantly the accounting measurement methods used by the companies studied from 1988-1997. While mandatory disclosure declined, overall disclosure, voluntary disclosure and, in a large measure, the disclosure of categories of information increased over the ten years. Firm size and listing status were found to be significantly positively associated with overall disclosure and voluntary disclosure. Accounting regulation was significantly positively associated with overall disclosure, but not mandatory disclosure. The impact of firm size, listing status and accounting regulation on disclosure of categories of information was mixed. IASC standards were perceived by corporate executives, statutory auditors, financial analysts and regulators of financial reporting in Ghana to be an influential factor in the development of the Ghana Stock Exchange. The Institute of Chartered Accountants (Ghana) and public accounting and auditing firms of the sample companies were noted to be active promoters of IASC standards in Ghana. On the whole, the observance of IASC standards in Ghana increased from 1988-1997 and was comparable overall to levels found in other countries. Listing status and accounting regulation, rather than firm size, were found to be significantly positively associated with the observance of IASC standards in Ghana from 1988-1997.

The exploratory research in this thesis analyses the influence of culture and politics on accounting change since independence. A theoretical framework is proposed within which historical studies of the influence of culture and politics on accounting and accounting change may be undertaken. In this framework, the accounting system is viewed as part of the whole social system in the country of study, providing information for decision making and providing a tool for economic and social development. Culture affects all the social systems in the country, including the accounting system and the outcome of the process for accounting change is affected by political processes. Using the framework, accounting changes in India are broken down into three phases, a source phase, a diffusion phase and a reaction phase. In the source phase, change to the accounting system is set in motion, usually from outside the accounting system. The diffusion phase of any change looks at how change is dispersed and accommodated within the system and the reaction phase of any accounting change looks at how the accounting system is modified subsequent to the diffusion phase. The diffusion phase and the reaction phase encompass both intra-system activity, activity between the different components of the accounting system and trans-system activity, activity between the accounting system and its neighbouring systems and both types of activity determine the outcome of any change. The framework is used to analyse key changes to the accounting system in India from independence in 1947 through to 1998. The source of accounting change is usually seen to coine from outside the accounting system in India and relates mainly to the social and economic development of India. In both the diffusion and reaction phases, intra-system activity takes place between the main regulatory authorities within the accounting system which are identified to be government institutions and proCessional accounting institutes. Trans-system activity too takes place in both the diffusion and reaction phases and the main social systems influencing the accounting system are identified to be the economic system, the political system, the tax system, the financial system, the corporate system and the international system. Culture, both nation-specific cultural values such as hierarchy and collectivism and universal cultural values of high power distance, low individualism, low uncertainty avoidance and high masculinity, affect all social systems and all three phases of the change. Culture is seen to influence the accounting system and accounting change in India with strong Government involvement in accounting, the extensive use of statutory legislation to promulgate accounting change, accounting regulated by both statutory legislation and an accounting profession and accounting change initiated for social and economic reasons. In addition, the accounting values seen in the Indian accounting system are uniformity, secrecy with some transparency and conservatism with some optimism, which are as expected, based on the cultural values of India. The process of accounting change is seen to be political with government involvement in accounting, accounting regulations promulgated through the parliamentary system and accounting change being the outcome of interactions, both formal and informal, between the main parties interested in accounting, identified to be government regulatory institutions, professional accounting institutes, the corporate sector and parliament. The theoretical framework is shown to be helpful in the analysis of both culture and politics on accounting change in India.

Several previous studies have provided empirical evidence concerning the pricing of audit services among different accountancy firms. These studies have examined the form of the auditor fee function by generally performing cross-sectional regressions of audit fees on a set of explanatory variables. This study is the first to investigate whether an "alumni effect" prevails the UK audit market and whether any "alumni effect" influences the pricing of audit services. The "alumni effect" has been defined in this study as the association between the auditor of the company where the director/chartered accountant is currently employed and the accounting firm that the director/chartered accountant originally qualified with, as a chartered accountant. The study has constructed an alumni network by matching the current director of the UK public company with the accountancy firm s/he qualified with as chartered accountant. By doing this, the "alumni effect" variable has been created which is a non-price factor conjectured to translate into price effects. The study provides a theoretical analysis and explanation of the "alumni effect" by combining several theories in microeconomics, organisational behaviour and socialisation of accountants. Using chi-square tests it provides evidence that an "alumni effect" does prevail the UK audit market for publicly traded companies. A classical regression model was constructed for the functional relationship between external audit fee and independent variables measuring the "alumni effect" and audit firm size. Other factors such as client size and complexity, client risk to fail, etc. are controlled for in the cross-sectional models. The findings show that the "alumni effect" leads to higher audit fees when a finance director, chairman or/and chief executive is/are alumni of the incumbent auditor in the large companies segment of the audit market. The findings also indicate that when the audit firm size is partitioned into three classes then a price premium is revealed.

This thesis provides one of the first (to the author's knowledge, the first) micro-economic analyses of audit regulation and auditor liability. The analysis draws on insights from the economics and law literature that liability and regulation affect behaviour of individuals and organisations. The major research questions addressed in the thesis are the following: 1) How is demand for external audit services affected by joint and several liability of directors and external auditors? 2) How do auditor liability and professional audit standards affect audit quality? 3) Is it in the public interest to use auditor liability and professional audit standards jointly to monitor audit quality? The analysis is general, in the sense that a number of alternative regulatory scenarios are considered, and therefore hopes to be of relevance to various legal environments. Propositions about audit demand and production behaviour are drawn, as well as corollaries about the welfare implications of audit regulation and liability. Some major conclusions from the economic analysis are the following. 1) Consistency in judicial reasoning should be promoted. Certainty about what constitutes 'due care' leads to compliance by directors and auditors. 2) Uncertainty about due care crucially affects behaviour, both of auditors and directors. 3) Liability insurance arguments are irrelevant for audit demand when the due care level for directors is fairly certain. 4) Statutory audit requirements should only be imposed under limited circumstances. 5) More prescriptive professional audit standards have a positive effect on audit quality, but one standard for all client situations can never lead to social efficiency. 6) Liability restriction has a negative effect on audit quality. It may however promote socially efficient behaviour when there is overproduction of audit quality. 7) The joint use of liability restriction and more prescriptive professional audit standards may lead to a status quo in terms of audit quality produced, and therefore not welfare improving.

This thesis aims to provide new behavioural finance insight into market anomalies through the use of a novel approach to measuring investor sentiment: the Facebook’s Gross National Happiness (GNH) index. The three empirical essays of this thesis investigate separately the relation between country-level investor mood – measured daily using the GNH index, and the following occurrences: the Monday Effect, return differentials in cross-listed shares; and herding. The empirical investigations are carried out with data (September 2007 to March 2012) for up to 20 international markets for which daily GNH data are available. In the first essay (Chapter 3), new empirical evidence is provided on the relation between mood and the Monday Effect. This chapter examines whether the well-documented evidence of Monday returns being significantly lower than other trading days of the week relates with mood. The results indicate that the Monday Effect become insignificant when mood is controlled for, and that such effect is more prominent within small capitalization indices and within collectivist and high uncertainty avoidance countries. These findings thus provide empirical support to a behavioural explanation for the Monday Effect, particularly the ‘Blue Monday’ hypothesis. The second essay (Chapter 4) investigates whether returns differentials in pairs of cross-listed shares is related to mood differential between the markets on which these securities are traded. The results, based on 281 pairs of synchronously traded cross-listed shares and controlling for arbitrage costs, support the hypothesized positive relation between return and mood differentials. Such relation is also found to be more prominent among small-cap firms, as these shares tend to attract small investors who are prone to sentiment-induced biases. The third essay (Chapter 5) adds to limited existing empirical evidence on the relation between investor mood and herding behaviour. This chapter investigates whether investors exhibit greater tendency to herd during days of extreme (upper or lower) moods, and whether such relation is affected by firm-size and culture. The results indicate the presence of herding during days with extreme mood, thus lending further empirical support to the notion that herding is mainly driven by psychological factors. Consistent with prior literature, the relation between herding and mood is found to be stronger within small capitalization indices and in countries with collectivist and high uncertainty avoidance culture. Overall, this thesis contributes to further understanding of the effect of investors’ psychological biases on the market.

This thesis investigates the value relevance of International Financial Reporting Standards (IFRS) and the effect of the financial crisis on European financial firms. The empirical work is divided into two parts. The first part examines the impact of mandatory IFRS adoption and of the financial crisis on the value relevance of accounting information. For a sample of financial firms listed in the European Economic Area (EEA) and Switzerland over 1998-2012, the results indicate that the combined value relevance of book value of equity and earnings has increased following mandatory IFRS adoption in 2005, thereby supporting the view that IFRS adoption improves the quality of accounting information. In addition, the findings suggest that the value relevance of book value of equity increases while that of earnings decreases as the financial crisis evolves. Moreover, during the crisis period the value relevance of equity book value appears greater for firms operating in countries with weak institutional environment as well as for firms with weak corporate governance mechanisms. The results are consistent for the whole sample of financial firms and a sub-sample of banks. The second empirical part of this thesis evaluates the value relevance of fair value hierarchy under IFRS 7 that requires firms to classify fair value measurements into three levels based on the valuation inputs. Using a sample of listed financial firms in the EEA and Switzerland over 2009-2012, the results show that the value relevance of level 1 and level 2 fair values is greater than the value relevance of fair values at level 3, although the difference is significant only for level 1. Furthermore, the evidence suggests that the value relevance of level 3 fair values is lower for firms domiciled in countries characterised by a weak institutional environment and for firms with weak corporate governance mechanisms.

This research attempts to measure the degree of trust and its impact and to understand the role of Management Accounting in creating and maintaining trust. According to Zucker (1986) trust consists of three different forms; organisational, process and personal trust. In this thesis it will be shown that trust is a multidimensional construct based on the working definition of Zucker's formulation and further expanded in this research. Several publications on different types of business organisations and other value-adding partnerships consider trust as a pillar for successful operations in an increasingly global competitive environment. Some authors go further and argue that “in the economy trust is nowadays more important than natural resources” and that “trust is the prerequisite for existence and successful control of organisations”. As facilitators of trust, Management Accounting has an impact on and is impacted by the level of trust within a business organisation. The Management Accounting (controlling) function is often associated with the conscience felt in many types of business organisations as it can be seen as a key for the management to make crucial decisions. However, the interaction between trust and Management Accounting has not yet been explored in detail. Therefore, the goal of this research is to identify or construct models, test several hypothesis, find a measurement of trust and to investigate the impact of trust on organisational performance and sustainability. Additionally, this research aims to develop and test new statistical methods to conduct intraorganisational research. To measure trust a questionnaire was developed and piloted. Part of this questionnaire was sociometric to allow the collection of data for social network methods to be applied. This meant that via the flow of communication the role and functioning of management accountants can be identified. This instrument was used in a private and in a public institution. From the analysis it was concluded that a dimension based measure of trust was developed as was a methodology for measurement. This allowed demonstration that as trust increases so does organisational performance. The method also exposed the key role of management accountants in facilitating the flow of trust between CEOs and line managers.