THE EFFECT OF CONVERGENCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARD [IFRS]-BASED ACCOUNTING STANDARDS ON STOCK MARKET

Topics: International Financial Reporting Standards, Financial statements, Stock market Pages: 35 (9765 words) Published: December 12, 2013


THE EFFECT OF CONVERGENCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARD [IFRS]-BASED ACCOUNTING STANDARDS ON STOCK MARKET: EVIDENCE FROM MALAYSIA PUBLIC LISTED COMPANIES

EVI OKTAVIANI SORAYA

A project report submitted in partial fulfillment of the requirements for the award of the degree of Master of Business Administration

International Business School
UniversitiTeknologi Malaysia

JANUARY 2014

I declare that this thesis entitled “The Effect of Convergence with International Financial Reporting Standard [IFRS]-Based Accounting Standards On Stock Market: Evidence From Malaysia Public Listed Companies” is the result of my own research except as cited in the references. The thesis has not been accepted for any degree and is not concurrently submitted in candidature of any other degree.

Signature:
Name :EVI OKTAVIANI SORAYA
Date :JANUARY 2014

Dedicated to

ACKNOWLEDGEMENT

XXXX

ABSTRACT

xxx

ABSTRAK

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Table of Content

CHAPTER 1

INTRODUCTION

1. Background of Study

1.1 Background of International Financial Reporting Standard [IFRS]

Financial statements are important for investor in assisting them in making decision on where to invest globally. This is why high-quality accounting standards enables investors to receive appropriate information which in turn will give investor confidence in making decision . There is a drive to globalize accounting standards and practices that will be accepted by the regulators, certification bodies, the accounting profession and the business and academic communities around the world in order to minimize the potential dangers of bias, misinterpretation, inexactness, and ambiguity.

Over the years the business community has recognized accounting as the language of business and financial information as a form of language. Since accounting has been accepted as a language, it is advisable that companies around the world to speak in the same language. Recent political and economic events have focused on the pressing need for more uniformity in international accounting standards . There is a requirement for a universal set of accounting standards which can unite the language of accounting around the world and solve the problem of differences in accounting practice.

It is no surprise that the globalisation of capital markets has been accompanied by calls for globalisation of financial reporting. Indeed, the globalisation of the world's capital markets has created the need for comparable and reliable financial information to support the varied transactions and operations of the markets Hora et al. . The accounting profession has faced the pressure of globalisation and continues to look for ways to produce financial situation using a unique accounting procedures that can be understood by all business society in the last few decades . Not only that, to ensure usability, financial information also supposed to be understandable and comparable to make credit decisions and investment more easily retrieved.

Though the process of internationalisation might be difficult, Anderson said that “a set of international accounting standards will allow new horizons of financial statement evolution by the fact that the comparative analysis of the rate of return and profit/loss set written in balance sheet has made the competition between companies become more pertinent”.

In order to solve this problem, a novel global accounting standard International Financial Reporting Standard (IFRS) has been introduced. Currently IFRS has been increasingly adopted by accounting policy makers all over the world. It is estimated over one hundred countries are...
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